High cost of compliance leaves minnows smarting

Compliance costs are king among the issues for small businesses in the lead-up to the election.

Small business leaders identify the cost and frequency of complying with Government regulations as the most pressing issue facing the more than 300,000 small to medium-sized enterprises - those that employ 19 or fewer people - which make up 96 per cent of local companies.

Auckland Chamber of Commerce chief executive Michael Barnett said chamber surveys showed small businesses were spending almost four weeks a year on compliance and the costs had not been much reduced.

"I think for any business to be losing three to four weeks of productive time annually ... is an issue of some urgency."

Last month, Small Business Minister Rick Barker said the Government had been working to ease the compliance cost burden and 139 separate compliance requirements had been removed.

He said Labour, if re-elected, would continue with its programme to reduce compliance costs alongside the initiatives for small and medium enterprises outlined in the Budget in May.

These included:

* Aligning depreciation rates more closely with the useful life of assets.

* Raising minimum thresholds for fringe benefit tax.

* $9.9 million to develop an improved Government Business Information Zone [BIZ] portal [link below], allowing easier access to Government services.

* $6.62 million to be spent on mentoring for small and medium enterprises.

* A subsidy for small businesses to hire a payroll agent.

* Aligning GST and provisional tax payment dates to reduce the times a business had to deal with Inland Revenue.

"We're going to continue doing what we've been doing, because it's working," said Barker. "We have been reducing compliance costs and we will continue to do that over time."

This country's number one ranking in a World Bank report as the easiest country in the world to run a business, showed New Zealand was business friendly.

"The challenge I face as Minister for Small Business is to ensure we remain at the top of the World Bank table."

National Party small business spokesman Lindsay Tisch said steps to reduce compliance costs had not gone far enough and his party was promising a "bureaucratic bonfire" to do away with excessive red tape.

"If you talk to businesses on the street, the paper war they've had to go through has got worse in the past six years," he said. "I'm in business and I haven't had one benefit."

National wanted to introduce a regulatory responsibility act and watchdog agency, similar to the Canadian Red Tape Commission, to vet legislation affecting small businesses before it got into Parliament. Existing laws would also be reviewed. 

WHAT THE PARTIES PROMISE

National

Cut corporate tax rate to 30 per cent from 33 per cent by 2008.

Substantially amend the Resource Management Act.

Let employers choose their own workplace insurer.

Introduce an optional 90-day trial period for new employees.

Investigate setting up a commission to minimise red tape.

Bring in a new act incorporating the best of the Employment Contracts Act 1991 and the Employment Relations Act 2000.

Improve health and safety regulations.

Labour

Continue to address regulatory burdens on small business.

Continue to enhance Business Information Zone [BIZ] portal [link below]. 

Enhance communications between small business and Government through the business consultation website and through the Small Business Advisory Board.

Progressives

Cut company tax rate from 33 per cent to 30 per cent.

Support and promote reductions in compliance costs; support streamlining of the Resource Management Act.

Increase the business support services of NZ Trade and Enterprise.

New Zealand First

Reduce company tax rate to 30 cents and increase the minimum wage to $12 an hour.

Tax new export earnings at 20 cents.

Reduce compliance costs for small businesses and company taxes, particularly for new export earnings.

Tax rebates for research and development.

Develop industry and regional cluster groups to increase their influence.

Establish a research-based export plan to help small businesses to export.

Encourage business angel networks to better link entrepreneurial opportunities with investment.

Act

Reduce the company tax rate to 25 cents.

Reform laws which impose the highest compliance costs on small business (Resource Management, Employment Relations, Occupational Safety and Health and Holidays Acts). Introduce regulatory responsibility legislation to constrain politicians' ability to impose new regulations.

Stop giving handouts to big business. It is not fair that small businesses' taxes are used by the Government to give big handouts to selected multi-million-dollar companies who are big enough to look after themselves.

United Future

Reduce company tax to 30 cents over the next three years.

Biennial review of the Resource Management Act.

Review all compliance cost legislation.

Upgrade the www.biz.org.nz website and hotline so businesses have a single point of contact for Government inquiries.

Educational resources to encourage more people to become entrepreneurs and to promote positive attitudes towards wealth creation and business success.

Review legislation to ensure it reflects the reality of workplace relations in small businesses.

Green Party

Set up a commission to develop a strategy for further ecological tax reforms looking at existing taxes and possible new eco taxes.

Replace tax on the first $5000 of income with eco-taxes.

Investigate capital gains tax.

Introduce ethical investment guidelines for Government venture capital funds and other Government funds.

Introduce a "buy local" campaign to support jobs and business in New Zealand.

Reduce compliance costs through single points of contact with government and by case-by-case management.

Maori Party

Cut corporate tax from 33c to 30c tied to environmental standards.

Support carbon tax.