New Zealand Budget: will anyone ever invest in the backbone of the New Zealand economy?
Yesterday, the government delivered New Zealand’s first ever Wellbeing Budget, which was said to measure and focus “on what New Zealanders value – the health of our people and our environment, the strengths of our communities and the prosperity of our nation.”
Given that what someone values can differ wildly from person to person, the Wellbeing Budget was always going to mean different things to different people.
The official Treasury documents outlines wellbeing as when people lead fulfilling lives with purpose, balance and meaning to them. “Giving more New Zealanders the capability to improve their wellbeing requires tackling the long-term challenges we face as a country, like the mental health crisis and breaking the cycle of child poverty and domestic violence”. It is also regarded as improving the state of our environment, the strength of our communities and the performance of our economy.
As a small business owner myself, who relies on the money I make to support my own wage, and those of my employees, I found it surprising, and possibly problematic, that the performance of our economy appeared last on the list.
Surprising because of the much lauded political line that year after year, party after party rolls out: small business is the - backbone - lifeblood - insert snappy adjective here - of the New Zealand economy.
Possibly problematic, because the performance of our economy is the never ending engine room of the country’s income - the thing that creates the money the government then has the privilege of spending on our behalf.
When I asked fellow SME owners what they wanted from the upcoming Wellbeing Budget, the responses ranged significantly:
“Wellness for SMEs?, It would have to be a integrated setup of growing, thriving, looking ahead, planning and execution compared to shrinking income, and sales staff turnover, abuse of any kind…”
“I would want those that tap into into the Wellbeing budget to be able to show what impact or value they created from that funding. For instance: They should be able to trace from their product or service to less overnight stays in hospitals or something like that. I wanna see the push for evidence.”
“The challenge with a wellbeing budget is going to be how to measure it. I believe that a community’s wellbeing is directly impacted by the wellbeing of the businesses in it. The wellbeing of the business is directly related to wellbeing of the owner. A stressed out SME owner will make poor decisions for them & the stakeholders of the business. Possibly a stress test (like a NPS) that would measure out of ten how stressed business owners feel? 0 being not under pressure at all and 10 being I’m so stressed I don’t know what to do or where to go. Then you could measure the reduction in that number? Overall an awareness that SME’s don’t have whole departments or roles to comply with legislative changes whether it be health + safety, employment, tax (as businesses do collect, retain and report most of the taxes for the country for all risk and no reward) or wider reaching changes that impact their business.”
“Practical support to enable organisations ...to flourish, champion and resource SME’s in sustainability and growth... translated - $$$ to PROVIDE PRACTICAL RESOURCES that make a difference.”
“I’d love to see businesses using and reporting on the same measures instead of solely focusing on cash and profit. Personally I would love to see govt support SMEs in how to do this!”
But not one of them called for a direct cash injection into their operation. Not. One. All were looking for investment in support around the way they run their business. Either for the day to day obligations, or to invest in new ways of measuring things: so SME owners can ensure their spend is going where they want it to be - to meet whatever their personal values consider important.
Can we define Wellbeing for SMEs?
Given that snapshot of feedback, I’m doubtful.
But in light of Treasury’s definition, I’d like to assume then, that Wellbeing for SMEs - for all business owners - is about living the life you want to live. Some people would shudder at the fact my life revolves around politics and political parties - I love it.
But what “living the life you want to live” also means is finding a way to monetize what you love to do.
I said it to the 60-odd rangatahi at Seed Waikato’s Techweek19 Dreamshop Event last week and I’ll say it again: “If you can’t monetize it, you can’t live!”
That’s cool and all, but how do SMEs fare in Wellbeing Budget 2019?
In short: goose egg.
So it’s an anti-business budget?
No, its not that either. From a purely business-based standpoint, there was considerable good news that arrived in the last quarter of the Finance Minister’s remarks under the subject heading of 'building a productive nation’.
"Productivity growth is a key driver of incomes, both at a household and country level," the Minister said. "But New Zealand has struggled for decades to be productive. We are committed to turning this around."
The government then announced $157 million to an innovation package, with "initiatives to support businesses to become more productive and develop high-value, low-emissions products".
What will this look like in practise? We will have to wait and see.
I’m skeptical that any of this innovation package to support businesses become more productive will flow to the SME sector - especially given $26 million of that is dedicated to commercialising local science and research in a bid to generate new products and services - but I’m absolutely raring to be proven wrong!
In addition, Economic Development Minister David Parker astutely identified an area that has troubled New Zealand business growth for decades: if you’re looking for support post start-up phase, you will seldom find it.
“New startups are well-served but mid-sized ones, between about $2 million and $15 million in size, are not well supported," Hon Parker said. “The world is in the middle of a technological revolution and we need to chase down as many of these commercial opportunities as possible.”
So the Wellbeing Budget introduced a new fund worth $300 million for the New Zealand Venture Investment Fund as a way to fill the capital gap for startups.
The Finance Minister said the fund will help keep more startups in New Zealand for longer and support the proportion of New Zealand ownership.
So do New Zealand SMEs really get nothing?
I haven’t identified anything new and shiny in the Wellbeing Budget for SMEs - though I haven’t ruthlessly poured over the Budget documents either - it is timely to remind ourselves of the myriad of tools and support mechanisms already available to us:
Regional Business Partners (I use this)
Te Puni Kokiri (I use this)
ONECheck (I use this)
Just to name a few.
But it was nearly a year ago that SMEs were “set to become a focus for the New Zealand” thanks to the establishment of a Small Business Council by the Government. So like many, I’m sitting here wondering when will the focus from last year turn into laser sharp action?
According to the latest MYOB Business Monitor survey of more than 1,000 local business operators, nearly half (48 per cent) of the sector expects the New Zealand economy to worsen in the next 12 months.
Given SMEs comprise more than 97 per cent of all businesses in the country, contributing 28 per cent of the GDP, investment in training or structural support to help SMEs shore up established and growing businesses, would have provided a vote of confidence SMEs are seeking from the government.
Contrast this with the fact that while hurdles to access support are openly and proudly being lowered for other groups, the sector that is lauded as the lifeblood of our economy, is having to learn to pole vault new changes at a rate even Eliza McCartney would be proud of.
Many SMEs are feeling the pinch following a range of legislative tweaks, so any investment in the SME sector is an investment in the wellbeing of the 584,000 people working in this ecosystem. [That’s 30 per cent of the workforce in case you wondered!].
Unlike those I solicit advice from, I haven’t been an SME owner for very long. But like all SME owners, I have lived (and live) the true entrepreneurial journey: a life of sparsity, paying everyone else before yourself, knife-edge cashflow management and regular 60-hour working weeks.
So I doubt it will be a shock to SMEs in New Zealand that another budget has been and gone without a direct SME offering: I guess that is why our SME sector is lauded as the backbone: we don’t wait for anyone to give us anything.
But one day - hopefully soon eh Minister Nash? - someone might just make the call to invest in the backbone of the New Zealand economy.
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