Budget 09: Verdict from business on frontline

Finance Minister Bill English. Photo / Mark Mitchell

It may be seen by some as a poetic sign of the times that the Vero Excellence in Business Support Supreme Award was won this week by the Insolvency and Trustee Service.

Certainly the Government agency has been kept busy with a 40 per cent increase in company failures and a similar rise in personal insolvencies.

The service won the gong for its implementation of the new Insolvency Act, the first major change to insolvency law in 40 years.

The awards are run in conjunction with the Bizzone Business Expo, held this week at Auckland's ASB Showgrounds.

As more than 200 enterprises offering support services to the small and medium enterprise (SME) sector touted their wares to visiting business owners, the new National Government delivered its first Budget.

Attendees eyed the Budget with interest. But in the final event there was little for them to get excited about, with no new incentives for the SME sector.

You would have expected to hear whingeing echoing around the expo halls.

But businesspeople the Weekend Herald spoke to were surprisingly understanding.

"When you go into business you can't expect to be given a handout," says Ann-Marie Fenwick, who was manning the stand for her small freight-forwarding company Groupage Freight Services.

Business has slowed, she says, but companies carrying too much debt will be the ones that are really hurting.

She is pleased there are to be no tax cuts because now is not the time.

She and her business friends are expecting things to pick up around the first quarter of next year, and in the meantime it's about getting the house in order.

"[The recession] is bringing us back to basics, and we're trying to get value for money now rather than just wasting our money. It's basically just a huge correction for everybody."

As he fronted the booth for his outsource marketing consultancy Outsourced Brand Support, Glen Keeley viewed the Budget as prudent.

He also agrees with the lack of tax cuts: "That's just sensible at the moment."

He says he is reasonably happy with what National is doing for small business, in particular the introduction of the 90-day probation period for new employees.

"I have dabbled with staff and I didn't have a great experience with it. It gives me a bit more hope to do it again."

Outsourcing is a topical word at the moment, he says, and he's noticing a lot of new work from companies whose marketing manager has left for some reason and has not been replaced. "My phone's going bananas. I think people are just starting to get on with things."

Gordon Legge runs television production company Legge Work, which makes sponsor-driven programmes such as Road to Ellerslie.

He also offers his services as a mentor to budding businesspeople and chatted as he staffed the Business Mentors New Zealand stand.

While he feels the Budget was uninspiring, he concedes it was solid.

He too had no expectations of help for business - "you want something to happen you get off your arse and make it happen" - but says one of the best things Government can do is to smooth the compliance road.

For example, a change in the taxman of late has been welcome.

"Suddenly you've noticed out of the IRD in the last two or three months a much more 'we're here to help' attitude, and that's just fantastic. So I think more of that would be good." Also on his wish list is "somebody in OSH who doesn't think the entire population's got an IQ just over room temperature".

Jas Kohli runs Ecobags. He imports from China, and also does a bit of exporting. He's happy the Government has managed to keep debt under control but he's concerned about cuts to the NZ Super Fund.

He says while they've attended to the immediate concerns, what's needed now is some direction. "In the end we [small businesses] do need help from the Government, because we're marketing New Zealand to the world and for us to be competitive we need that edge."

Industry figures agree Finance Minister Bill English's first effort was right for the times.

"On reflection I think it was a really sensible, safe and solid plan that gives me a lot of confidence," says Andy Hamilton, chief executive of business incubator The Icehouse.

He does not lament the lack of incentives for small business. "The Government is not going to create economic growth, we are."

Matt McKendry, accounting and advisory partner at Deloitte, is not so sure. Access to capital at the moment is "incredibly difficult", he says, and there was nothing that directly addressed that. "And the other thing is you know, where's the vision, where is New Zealand business going at the moment?"

Having said that, keeping the nation's credit rating under control flows through into maintaining the cost of capital, he says.

Businesses could take heart that National seemed to be providing a steady pair of hands at the helm. "They're running it like you would run a business, pretty conservatively given the external environment."

He also points out that it made very few changes to Vote Economic Development, taking a steady-as-she-goes approach to various business support and development programmes.

Ian Craig, tax partner at BDO Spicers, says there was never likely to be anything in the Budget for small business for two reasons.

Firstly, the Government offered its help in the form of a relief package in February. Measures included lower provisional tax and lower "use of money" charges from the IRD. "The big guns for tax had already been fired," Craig says. Secondly, it has just put together a tax reform working group. "It would be imprudent for the minister to move on tax reforms or do things that would then prejudge the outcome of that working group."

Craig believes one "big ticket item" that would help small business is an alignment of the personal, company and trust tax rates to 30 per cent.

He also believes the interest rates and penalties the IRD charges for overdue tax is too punitive.

John Walley, chief executive of the Manufacturers and Exporters Association, says the Government had few options in putting together its Budget and the ones it chose were probably the best of a bad bunch.

"But we really haven't done very much to change the game or try to encourage investment in growth and those sorts of issues."

Unlike Australia the Budget had not offered any incentives for investment in capital such as new plant. An additional problem for exporters is the buoyant dollar, he says.

"The import and domestic side's had a party for seven or eight years, we need to do something for our exporters."