New Zealand's powerful economic engine of small-to-medium enterprises (SMEs) are mostly confident the May 20 Budget will be good for their business.
Just over half of the SMEs surveyed (51 per cent) stated that they felt confident the Budget would be beneficial. Conversely, one-third is not very confident – and 13 per cent not confident at all.
The most recent MYOB SME snapshot (a national survey of over 500 small and medium business owners and decision makers), conducted in April) revealed some interesting insights into SME confidence levels and priorities, as related to the Budget.
The finance and insurance sectors are voicing the most optimism around the Budget offerings, with 63 per cent of SMEs in these sectors confident the Budget will deliver value.
Interestingly, one of the industries hardest hit by Covid also voiced the high levels of confidence, with 57 per cent of retailers believing the Budget would deliver value.
Krissy Sadler-Bridge, senior sales manager at MYOB, says: "It's interesting looking at revenue projections [for retail] because many retailers are expecting to be sitting flat year-on-year. But some retailers have experienced significant gains post-Covid, and consumers are spending more on local business."*
SMEs are vital engines of the New Zealand economy; 97 per cent of all businesses have 20 employees or less, they provide jobs for roughly a third of all Kiwis and produce about 29 per cent of our GDP.
But these business owners have been doing it hard over the last 12 months. Covid-19 created a raft of issues for these vital contributors to the New Zealand economy, with supply chain disruptions, lockdowns and uncertainty changing the usual rules of engagement.
However, MYOB's latest snapshot seems to show that New Zealand's (so far) successful navigation of the Covid-19 epidemic – from a health and economic perspective – has resulted in some optimism around what the government may be offering in in the 2021 Budget.
When it comes to wish lists, 38 per cent claim they would like to see a reduction in company tax to 25 per cent. Nearly a quarter (23 per cent) say they would like a permanent increase to the provisional tax threshold (put in place due to Covid-19) and 20 per cent would like to see more support for training and apprentices.
Seventy per cent of SMEs voiced support for increased innovation, research and development; 69 per cent supported increased funding for mental health initiatives that helped SMEs.
Sadler-Bridge says the relative optimism from the SMEs could be due to the "halo effect" around how well the Government was seen to handle Covid-19. She believes that there is a general mood among SMEs for policies leading to wider societal good.
"Broad societal gains are good for SMEs," she says. "There is a lot of support for gains in infrastructure, mental health [in this survey], which aligns well with what the government says that they will be investing in."
She says those societal gains are likely to see increased activity in the finance and insurance sectors: "The bigger societal gains that will come from the Budget are likely to support a boost in the economy overall, which feeds back into these sectors."
One policy that a huge majority of SMEs claimed they would support was simplification of tax processes (81 per cent).
"Small and medium business owners didn't get into business to do tax," says Sadler-Bridge. "What we are seeing is a greater need for support for SMEs around tax processes."
The future is still uncertain, with the tragic surge in Covid-19 in countries such as India revealing there is still a long way to go in this particular struggle.
Sadler-Bridge believes the bottom line for SMEs in 2021 is a desire to weather the current international crisis and come out the other side relatively unscathed. The optimism around Budget offerings reveals that New Zealand's SMEs are up for the challenge.
*Another MYOB survey, the April MYOB Consumer Snapshot data reflects this trend in consumer behaviour. In this national survey of over 500 consumers, 28 per cent reported increased spending at local businesses, and 58 per cent claimed they were making an effort to support local businesses.