Thumbs down for compliance costs under Labour

By JIM EAGLES

Compliance costs have increased markedly under the Labour-Alliance Government as far as Auckland businesses are concerned.

A Business Herald survey of more than 700 Auckland Chamber of Commerce members conducted last week produced an overwhelming verdict that compliance costs have worsened in the past three years.

Of those surveyed, 44 per cent said compliance costs had increased considerably and a further 41 per cent thought they had increased a little.

Only 1 per cent of businesses thought compliance costs had fallen, while 12 per cent felt they had stayed about the same. Businesses have consistently identified compliance costs - along with taxes - as the single biggest obstacle to growth.

An informal Business Herald survey of business views (reported in our election report on C9 and 10) found compliance costs still rate as the top election issue.

Because of that, the Government has made reduction of compliance costs an important part of its growth strategy. Announcing Labour's commerce policy last week, Commerce Minister Paul Swain hailed the progress in cutting through red tape.

But chamber chief executive Michael Barnett said yesterday that the survey results showed very clearly that Government promises to reduce compliance costs were not going very far.

"Either the policies are taking an awfully long time to trickle down to where they have a measurable impact on the cost of doing business, or the policies themselves are flawed," he said.

"I suspect it is the latter because, while I have seen a lot of reports and announcements about reducing compliance, I have yet to see any hard evidence of a substantial change of process or practice by Government agencies."

One chamber member said: "Recently [the Inland Revenue Department] sent me a tax calendar showing ... that I have to pay tax on five days every month. I run a similar business in Australia and pay tax four times a year."

Another said: "Something like 50 per cent of our income goes to IRD through GST, company and personal tax and [accident compensation].

"In addition, IRD's indirect compliance costs associated with in-house and external accountants are excessive for small businesses. Why not simplify all this?"

In fact, the Government has given a high priority to making tax easier for small businesses, and 10 tax simplification measures were included in bills before Parliament when it dissolved for the election.

After tax administration, survey respondents picked accident compensation, employment law and occupational safety and health as the most burdensome areas.

Several business also identified the Resource Management Act and local government as major sources of red-tape difficulties.

The general attitude to compliance costs was probably summed up by a chamber member who said: "If I had to pay less to Government, while still maintaining a credible obligation to the country, I would spend much more on the future of my company and its growth potential."

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