Government in the dark on what business needs

The Mood of the Boardroom survey shows that the Government's moves to clamp down on Telecom's monopoly over the local loop - the lines connecting homes and businesses to local exchanges - is the only area (of the 12 policy areas examined) viewed by most New Zealand small businesses as a positive step.

The survey, which asked Business NZ members to rate whether government measures would have a positive, negative or neutral impact on productivity and economic growth, showed that 57.6 per cent of respondents said the planned telecommunications regime, due to be introduced next year, would have a positive effect.

But perhaps reflecting the antagonism towards the Government's policies, 24.2 per cent of respondents said it would make no difference.

The Government's policies on employment policies, immigration, the Resource Management Act, the Treaty of Waitangi, Local Government and management, regional development, climate change, energy and transport were at worst negative or would make no difference.

The Government believes boosting productivity - the value of goods and services produced per head of population - is a key way of overcoming the economic hurdles facing New Zealand.

Business reckons the government does not understand what is needed.

Its employment policies were singled out as the area of the greatest failing, with an overwhelming 77.3 per cent saying the planned settings were negative. Some 15 per cent were neutral on the measures, while 3 percent were positive. The remainder were indifferent.

Only last week manufacturers attacked planned legislation to set minimum pay rates for private contractors and measures to protect vulnerable workers as naive and unworkable.

"For a small economic force we are disincentivising good people by creating a massive dependency on the State.

"This will compound and implode when the economy is in more difficult times as our productive base will be diluted.

"The labour laws seem to be heading away from a flexible approach and government may be growing too big," said one small business owner in the survey.

The old bugbears of the Resource Management Act and the Treaty of Waitangi were regarded by 74.2 per cent and 69.7 per cent of small businesses respectively as hurting New Zealand's push towards lifting productivity.

The climate change agenda, which until recently included plans to introduce a carbon tax was dismissed as benign, with 68.2 per cent saying it would have little effect on productivity.

An overwhelming majority believe the essential ingredients to economic transformation are missing. They highlighted the need for tax cuts, financial incentives for research and development and a shortening of depreciation periods for assets such as high-tech equipment.

Tax cuts were seen as a key way that business could encourage and reward growth, and innovation. Tax reductions could also reduce the compliance burden.

"The Government needs to encourage business not treat it as a necessary evil," said another employer.

Others called for a cultural change in New Zealand and the Government's attitude to work and welfare and called for a repeal of redistributive policies such as the interest free student loans and the working for families' tax package.

"There needs to be less on welfare in order to encourage people to up skill and work," said one employer.

Another employer said: "I have worked in the stainless steel fabrication sector for 43 years, from apprentice to manager and now company owner. This Government needs to understand that over the last 43 years there has been and there still is a shortage of skilled trades' personnel."

Another said: there needs to be a "changed culture for regulation of employers - we need encouraging and nurturing and less government driven red tape and hassles in employing staff."

* The 2006 Business NZ/KPMG Compliance Cost survey will be published on September 26.

HOW THEY'RE BOOSTING PRODUCTIVITY

* Staff training

* Investment in plant rather than labour

* Finding the cheapest manufacturing costs

* Introducing more information technology

* Reviewing assets, organisations and finances

* Fostering innovation and encouraging new ideas with the business

* Looking at energy consumption

* Working more hours and outsourcing work

* Investing in brands to maximise life-time customer value

* Product improvements

* Developing new products, developing exports, trying to build a smart modern business leading its fields