By FRAN O'SULLIVAN
You have all heard the beef - can't we get the Government out of our hair? Not surprisingly, that loud call from New Zealand entrepreneurs is echoed by their counterparts throughout the 29 countries studied in Gem 2001.
Entrepreneurs frequently complain about their lives being tied up in bureaucratic red tape, and governments can also do a lot to accelerate the entrepreneurial process, as Gem 2001 reports.
If New Zealand wants to build a knowledge wave economy that is not just a transitory ripple, Government hype must be matched with action plans.
Plenty of policy ideas sprang up at the August Catching the Knowledge Wave conference. But those ideas have yet to be matched with an urgent Government action plan to boost long-term growth.
Gem 2001 identifies several international public policy priorities which are relevant to all the nations studied:
- Gem Priority - Governments must enhance education by making strong across-the-board commitments. The global study shows not only that people with limited education are less likely to take part in entrepreneurial activities, but that they tend to match their business aspirations to their skills and knowledge. Without a substantial injection of ambition, such entrepreneurs may frequently wind up with businesses that make little contribution to national economic growth beyond ensuring a job for the entrepreneur.
Why not: Give entrepreneurs a tax-refund on their education expenses? - Gem Priority - Government regulations should be simplified. Red tape is a hassle - period. Frequently national policies are devised to control large established firms, but are disproportionately expensive for entrepreneurial firms to understand and follow. The greatest negative impact of burdensome regulatory systems may be the time and cost regulations imposed on starting new businesses - a critical element to spurring economic growth
Why not: Give entrepreneurs company tax holidays until they hit minimum profit levels? - Gem Priority - Governments must strike a balance between economic security and self-sufficiency. This "New Agey" recommendation is not what it seems. Gem 2001 reveals strong negative associations between the level and length of unemployment benefits and the number of "necessity" entrepreneurs - those with the guts and gumption to provide for their own employment by setting up a business.
Why not: Make a virtue out of necessity by establishing clear time limits for the dole? - Gem Priority - Governments should compensate for gaps in the age structure. Many male entrepreneurs have dropped out from running their own show by the time they reach 44. But with the baby-boomer age bulge heading towards the senior citizen levels, Governments will have to encourage them to become entrepreneurs if they want to lessen the welfare burden.
Why not: Trade-off superannuation payouts against business tax? - Gem Priority - Governments should facilitate greater female participation in the workforce as entrepreneurs. Gem 2001 shows that on average women take part in entrepreneurial activities at about one-third of the male rate. As the Irish Government has correctly identified, the fastest way to encourage entrepreneurial growth is to get more women to participate. But changing attitudes about the role of women in society is a tougher task.
Why not: Increase entrepreneurship and business training for women? Also, news media can change perceptions by covering more female business success stories. - Gem Priority - Governments should encourage the commercialisation of technology. Extracting value from technological innovations is necessary to create wealth. But social acceptance of entrepreneurship is more challenging in countries where individuals are not encouraged to think for themselves and independently pursue economic gains. This latter factor is one of the single most important inhibitors of entrepreneurial success in New Zealand.
Gem recommends introducing tax structures that do not penalise successful firms. But while it may be comforting to know that other nations also experience envy of success and resentment of wealth, there is no comfort in the fact that the New Zealand Government has turned the clock back by introducing higher progressive personal taxes which do not favour wealth creation.
Gem 2001 suggests we all must accept the inevitability of business failures as being just part and parcel of creative destruction. But there is a long way to go before New Zealanders fully accept Gem's comment that the constant births and deaths of businesses have a positive influence on the economy by ensuring an efficient market for moving resources to more productive enterprises.
As the wave of high-profile corporate departures illustrates, New Zealand's future is dependent on how quickly new homegrown ventures spring up to take their place. Much of the action must still be bottom-up if New Zealand is to exhibit strong economic growth. Statistics New Zealand figures show that small or medium enterprises dominate the economy - 98 per cent of New Zealand businesses employ fewer than 50 people.
Thirty-five per cent of all of this nation's business units with turnovers of more than $30,000 are in the Auckland Regional Council area. But the Gem study suggests that only 40-45 per cent of SMEs will survive their first five years.
Unless Auckland's growth is galvanised by policies that promote strong business growth, the Queen City will continue to slip further below the levels of income per capita enjoyed by residents of Sydney, Melbourne and even Brisbane.
