Mood of the Boardroom 2012: SMEs share 'Big End' of town's concerns

Phil O'Reilly says BusinessNZ members are evenly divided over spending cuts. Photo / Mark Mitchell

Survey shows the loss of skilled workers from New Zealand is a major concern. Adam Bennett reports

Most big businesses want the Government to maintain its spending at current levels in order to avoid the economy slowing even further but medium-sized businesses are evenly split between those who want Crown spending cut or maintained.

The Herald's CEO survey found 56 per cent were against more aggressive spending cuts to reduce the Crown's deficit faster while 40 per cent were in favour. But BusinessNZ's snapshot of medium-sized companies found 40.4 per cent of respondents were in favour of deeper spending cuts while the same proportion were against.

BusinessNZ chief executive Phil O'Reilly said the "standard response" that might otherwise be expected from business was that the Government should cut spending. But the results from his organisation's survey were consistent with what members were telling him.

"They are supportive of this kind of track the Government's taking. You don't want to get so much austerity that you push the economy into recession - at the same time you don't want them to just blast money everywhere in the hope of getting the economy moving faster because a lot of it will be low-quality spend."

Those views were represented in comments respondents submitted to BusinessNZ, with one saying: "There are plenty of Government departments that need to be trimmed. They would never exist as a private company, with far too much money wasted". But another said: "The social costs of aggressive spending cuts need to be considered. "I'd prefer an extra year or two of deficit versus cuts to education and health".

O'Reilly said the SME Snapshot results largely reflected what business people told him every day. That included the widely held view among members that they generally supported the direction of the Government's "relatively conservative economic reform programme".

Building business competitiveness, reducing Government spending as a proportion of GDP, improving New Zealand's international situation, and building innovation and skills were all regarded as important.

"There will be some in the business community that will have concerns about the pace and execution of government policy, but they broadly support it. For example the survey says the Government should explain SOE sales better."

Though more than 70 per cent of respondents to the Herald CEO survey thought the Government should do a better job in that regard, that view came through in more muted form in the BusinessNZ survey with just over 55 per cent of respondents agreeing.

One theme that came through strongly in BusinessNZ's snapshot was concern at the size of the Kiwi diaspora and loss of highly skilled New Zealanders offshore. Almost 74 per cent of respondents cited that as a worry.

O'Reilly said the diaspora's not just the country's young best and brightest, "it's a slice of New Zealand society, it's also old people going to retire".

His members were also concerned about the "talent pipeline" they saw in New Zealand.

"We are not doing a good enough job on making sure all of our talent, migrants, the mature age group and so on have the capacity to be successful."

The solution lay in "making sure our companies are more competitive so they can be more profitable and pay more money to these people".

"You take every opportunity to make sure New Zealand's wealthy, so you see a lot of support in the survey for mining for example."