Everyone wants to break free of red tape

By KEVIN TAYLOR

Lower taxes and less red tape loom as big election issues for business people, but they are cynical about the ability of politicians to offer solutions.

Some spoken to by the Business Herald are also concerned that the Green Party will hold the country to ransom after the election.

But businesses also think the election will be a big yawn - and a foregone conclusion.

While nobody is overjoyed at the prospect of Labour being returned to power - and possibly governing alone - nor are they quaking with fear at the prospect.

The business community has clearly all but wiped National from contention this election.

Their main concerns centre on lower taxes and the need to do something about the cost - in time as well as money - of complying with government regulations and laws.

A survey of people in business, while unscientific, found that the smaller the company, the bigger the worry about compliance costs.

Those costs, and tax, are the issues identified by Simon Holdsworth, managing director of jigsaw and game maker Holdsworth Thos & Sons.

But he does not think anything will be done about them - reflecting the fatalistic attitude of many of those spoken to by the Business Herald.

Holdsworth believes New Zealand's company tax rate needs to be the same or below that of Australia.

As for compliance costs: "I don't think there's a will by either party to reduce business compliance costs," he says.

Holdsworth's dream result on July 27 would be a new government with Act holding the balance of power - because, he says, it is the most pro-business of any opposition party.

His nightmare scenario is a government held to ransom by a third party - like the Greens holding Labour to ransom over GM.

Hamilton-based Gallagher Group managing director Bill Gallagher wants high growth, less government spending and lower taxes - but holds little hope Labour will deliver.

"Unfortunately Dr Cullen doesn't seem to be convinced of it, but there's some very good evidence that lower overall taxes does help international growth."

For Gallagher what's good for business will be good for the country - and that means lower company and overall taxes.

He is also concerned about compliance costs and regulations, including labour laws, proposed workplace health and safety law changes, and the Resource Management Act.

He says labour laws are unclear and have swung the balance back too far in favour of unions.

"The Employment Relations Act has certainly added costs and created inflexibility."

Gallagher also worries unions have been given back the power to create "anarchy", although they have not done so yet.

A major exporter, Gallagher Group makes agricultural and security products, and employs 530 people in New Zealand and more than 400 overseas in associate and subsidiary companies.

The owner of Auckland importer Beer Force International, Grant Willoughby, rates compliance costs his biggest concern.

"I negotiate with the suppliers, buy the beer, fight with the bank, motivate the reps, try and maintain some order in the office, try and complete all the PAYE, ACC, GST, FBT etcetera, etcetera in line with what I understand the rules to be."

On top of that Willoughby is grappling with new food labelling rules which come into force in December. That means, for example, spending a recent weekend trying to understand 500 pages of new rules.

He estimates he spends a day a week - sometimes more - on government requirements.

"I don't have enough time Monday-Friday to run the business and comply with the Government, so most of that work is done at the weekend or evenings."

Willoughby is 58 and says if he was a little older he would simply shut the doors of his firm, leaving seven staff out of work.

"I'm really driven to distraction," he says.

He has no dream or nightmare election outcome; one politician is as bad as another in his book.

But one thing he would like - if politicians are really sincere about helping small businesses - is for fringe benefit tax to be axed.

The owner of designer uniform company Uniform Update, Pamela Ellis, rates company tax rates and bureaucratic form-filling as her biggest concerns.

Hers is a micro-business - employing only two staff - but she contracts others to do work for her as well.

She knows of other small firms wary of hiring staff because of the protection provisions of current employment law, which raise the possibility that employers will get sued if they dismiss somebody.

Ellis thinks that discourages small firms from taking on staff on a trial basis.

"It makes you think twice about expanding," she says. "I know a lot of people in business who are reducing staff. If someone leaves they don't try to replace them."

But her major concerns about complying with government requirements are in areas such as tax and ACC.

"I don't read all the forms that come in. My time is far more precious than sitting down reading forms. I need to work."

Ellis does not want Labour to win another term, and she wants to see radical changes from whoever forms the next government.

"I certainly like some of Act's ideas," she says.

She believes many Labour politicians are not business-friendly - and certainly not small business-friendly.

Rob Angelo, owner of a physiotherapy practice in Motueka, would welcome paying less tax, but says the form-filling for the taxman, ACC and other government departments is the biggest issue.

"The paperwork is a nightmare," he says. "ACC is a bit of a challenge. You are never quite sure what the bills are from ACC."

"It's all on my shoulders, I can't just say to someone 'you do that'."

Angelo says he tends to ignore the Government as much as possible. "The more they keep out of my business the happier I am."

Paul Lyon, manager of Auckland company Technical Forgings NZ, thinks the election will be a yawn.

He says he would welcome lower company taxes and wants something done about staff shortages.

The firm has 10 staff but Lyon cannot find two more to operate forging presses.

He would welcome the three-month grace period from dismissal provisions that National is promising, because it would mean he could hire and test someone without fear of a personal grievance action.

His ideal scenario is a National-Act government which will lower company tax and reduce benefits to force people into work training and jobs.

At the same time, Lyon welcomes Industry New Zealand's grants schemes, one of which his company is trying to use.

David Grant, general manager of Mt Wellington-based Rakon Industries, thinks the election will make little difference to his business.

While businesses still have concerns about issues such as tax and compliance costs, he expects little will change.

But Grant, who oversees a staff of 350 making frequency crystals for global positioning system (GPS) receivers, is worried the Greens will hold the Government to ransom over GM next year.

He points out that this will be while the country talks of "knowledge waves" and attracting high-technology industries.

While Rakon is not involved in GM work, Grant is concerned some people are prepared to stop technical progress without the evidence to back up their claims.

"New Zealand can't afford to shut its doors on those things," he says.

Chris Liddell, Carter Holt Harvey chief executive, says his key issue is how New Zealand can achieve sustainable economic growth above 4 per cent so the country can get back into the top half of the OECD.

The head of a company employing 11,000 staff, Liddell says achieving those growth rates requires action on several fronts.

"I would start with free trade agreements because I think export-led growth is going to be critical - in particular with countries such as the US but also with the ASEAN countries and China for example."

Liddell says he would also look at the costs of doing business in New Zealand - including compliance costs, tax, the Resource Management Act, energy costs, and infrastructure.

"If you looked at every element of cost in New Zealand there is an enormous amount the Government could do."

He says there is a danger in business concentrating on one solution, such as taxes.

"That may be part of the solution but it's not the only solution. There's a lot of other things that need to be attacked and progressed."

Liddell also says the Government should put "solid policy and resources" into innovation rather than rhetoric.

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