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Labour unveils SMB policy… National rejects it

06 Aug 2014

Small businesses with fewer than 20 staff will get a bigger bite of the procurement pie under a Labour Government, leading to National branding the plans half-baked.

According to opposition leader David Cunliffe, too many small businesses are “struggling in today’s tough economic environment.”

As a result he claims Labour will reverse that trend, making the lives of small business owners “easier and more productive through a more responsive government.”

“Our plan to increase the portion of government procurement undertaken by smaller companies, by at least $300 million by the end of our first term, presents significant opportunities for the sector,” he adds.

“Some of our most successful companies got their start via Government procured contracts. There is no reason smaller firms should miss out only because of their size.”

But in reacting to the proposals, Small Business Minister Steven Joyce says the party appears to have “misplaced the second page of their Small Business Policy”.

"The paper they released contained a number of business-as-usual items that the Government is already doing,” he claims.

“Like the IRD’s transformation project for simplifying taxation and compliance costs for small businesses, the flexi-wage wage subsidy, and changing the Government procurement rules to encourage small businesses.”


Another bugbear of the small business owners, according to Cunliffe, is overly burdensome tax compliance.

“This will be addressed by a Labour Government, by building on the New Zealand Institute of Accountants proposal of ‘no more than one hour, one return and one payment each month for income tax and GST compliance’,” he adds.

“We will also consider alternatives to the provisional tax regime and explore options around the taxation of the smallest businesses, review out-of-date regulations, do away with unnecessary red tape and work with regions to establish a more effective central Government presence for the small business sector.”

Small businesses taking on a young unemployed person can also apply for a $9,100 subsidy as part of Labour’s youth employment package with Cunliffe adding that under this just- released policy the party will spend $183 million in its first four years to get unemployed youth into work or training.

“New Zealand’s future prosperity depends on our ability to build on our skills and anticipate and meet future market needs,” he claims.

“A thriving small business sector can contribute much to that.”

But in one final downplay of the policies, Joyce claims Labour “seems to have missed out” a number of key new initiatives they are proposing that would have a much bigger impact on small businesses than those announced.

These include:

• dropping the 90-day trial for new employees• dropping the starting-out wage to encourage businesses to take on young people• immediate big increases in the minimum wage• KiwiSaver contribution increases• a comprehensive capital gains tax on all businesses• a much more expensive ETS which would slow down economies in regional New Zealand• tough new taxes on water use• a national award pay system that would require small regional businesses to pay the same pay rates as large big-city businesses

“Unfortunately Labour's short list of what they say they would do for small businesses is far outweighed by their long list of what they would do to small businesses,” Joyce concludes.

“It's just a pity they didn't release the full policy. The reality is that small businesses would only get smaller under Labour.”