Vouchers replace free assistance

Greg Howard, golf glove maker, got a leg up with a $20,000 development grant. Photo / Mark Mitchell

Small businesses no longer have access to free training, thanks to a Government restructuring of its business assistance programmes.

Instead, SMEs will now have to apply for vouchers that will provide half the cost of approved business development training courses. Only firms that meet certain criteria will qualify for funding.

The old Enterprise Training Programme, run by New Zealand Trade and Enterprise (NZTE), was axed in July and the new system is not yet up and running. The new arrangement involves appointing "regional partners" - a network of organisations such as Chambers of Commerce, business associations and economic development agencies - that will decide which businesses get the assistance.

The new system is being jointly set up by NZTE and the Foundation for Research Science and Technology (FRST). It will incorporate and expand FRST's existing regional partnership arrangements which provide research and development assistance to firms.

In the past two years, FRST spent $7.1 million on 580 applications from companies. Euan Purdie, acting director of business improvement for NZTE, said the overall budget for business training remained the same and eligible businesses would be able to get vouchers worth up to $5000 a year.

This was more than would have been spent on individual businesses under the Enterprise Training Programme, which was open to all. "There's a sentiment of having perhaps a greater investment in some businesses than spreading it so thinly across all."

The idea was to work with businesses that could potentially go into NZTE's pipeline for exporting assistance.

"We're looking for businesses that are prepared to innovate and grow and invest in themselves, and for many of those regions they'll be looking to work with businesses that are adding value to the economic strategy of their own regions."

The concept of the regional partners was to offer SMEs advice and feedback on what kind of development work they needed to do. Sometimes firms didn't know what they didn't know, said Purdie. "Sometimes people can double their volume of sales and double the loss they don't know they're making.

"Just having a voucher available to small businesses wouldn't necessarily mean that they would still be proactive in going out every day to look for that capability development."

The system was also designed to allow the private sector the opportunity to provide training as well, thereby creating more choice.

The agencies wanted to establish a stronger relationship with primary providers and a stronger network of providers delivering those government services.

NZTE and FRST were in the process of signing contracts with regional partners and identifying training providers. They hoped to have the scheme up and running by the end of the year, Purdie said.

In the meantime, an interim management training scheme was available, funded on a 50 per cent basis.

However, Sarah Trotman, founder of the Bizzone small business services expo, believes most SMEs will miss out under the new system.

She said an established business such as hers that had invested "truckloads" had never qualified for FRST funding because it was not technology focused. "That excludes 99 per cent of New Zealand businesses.

"If they're only prepared to back businesses that are of a certain size or calibre, where's the support for the startups?"

She was also sceptical the scheme would be operating by the end of the year and critical of the gap between the old and new systems at a time when business needed all the help it could get. "Why did they turn the tap off before they got it all sorted?"

New scheme helps experienced exporters

Possum skin golf glove maker Greg Howard says he is interested in learning more about the Government's new training voucher scheme.

He has never done any development training before. "I have just kind of been a one-man band."

He received a $20,000 Market Development Grant from NZTE, which covered half of his costs of going to the Canadian PGA golf show.

He is about to sign with a "massive" sports brand, he says.

The grant scheme has now ended and Howard was told when he got the funding that he could not apply again.

It has been replaced by the International Growth Fund, a scheme aimed at experienced exporters that NZTE is working intensively with.

Exporting companies are segmented according to their growth aspirations, says an NZTE spokeswoman.

In comparison, anyone could apply for the Market Development Grant and it was allocated on a first come, first served basis.

An economist replies ...

Comment from Tony Alexander, BNZ chief economist:

"The recession ended over a year ago and we are finding many SMEs have their balance sheets and cash flows in good order. But confidence to invest and hire is still fragile though likely to improve next year as rising exports to Australia and China help lift the economy's growth rate above 3 per cent."