NZ SMEs outperforming Aussie cousins

New figures released ahead of the Australian Federal Budget show New Zealand small businesses are performing better than those across the ditch, according to leading accounting software developer MYOB.

The research comes as the Australian Treasurer is expected to announce a cut to the company tax rate in Australia, the first cut to company tax there in 15 years.

The latest MYOB Business Monitor research of more than 1,000 SMEs in both Australia and New Zealand conducted for MYOB by Colmar Brunton, saw 42 per cent of Australian SMEs predicting that the local economy will decline over the next 12 months – a net negative result of 18 per cent.

In contrast, confidence in the New Zealand economy improved markedly in the latest survey, up to net positive 5 per cent from net negative 30 per cent in September 2015.

“It’s interesting to see how much better New Zealand small businesses have been travelling than their Australian counterparts,” says MYOB CEO Tim Reed.

The lack of confidence in the Australian economy for the SME sector is underpinned by constrained levels of revenue seen in the last 12 months. Thirty-one per cent of Australian SMEs reported that their revenue declined in the last year – well outnumbering those that saw revenue growth (25 per cent). In New Zealand, revenue performance was much stronger in the last year than across the Tasman, with 37 per cent of local SMEs in positive territory, while just 21 per cent reported a revenue decline.

“For the Australian SME community, the last 12 months have been fairly challenging,” says Mr Reed.

“Businesses there have shown incredible resilience, but they’ll be looking forward to some relief from current conditions. Therefore it’s great news that the Australian company tax rate will be reduced for small businesses because that will drive investment and innovation in the local economy.

“While conditions in Australia have been difficult, New Zealand’s SMEs have been going along really strongly. Despite steep falls in dairy commodities putting pressure on the economy, we’ve seen good results across a range of sectors, from construction and trades, to retail and manufacturing.”

Pressures in areas favoured by Kiwis expats

For New Zealanders looking for work in Australia, the latest SME research also highlights key differences in revenue performance across the country.

The effects of the end of the mining boom are still very apparent in Western Australia, with 43 per cent of businesses in the region reporting falling revenue. Queensland SMEs are also seeing significant revenue declines, with 39 per cent reporting a fall in the last 12 months. New South Wales and Victoria are more finely balanced, with NSW the only state in positive territory, as 29 per cent of SMEs see revenue increase and 26 per cent report a decline. A slightly higher number of Victorian businesses (27 per cent) have seen revenue fall, while 24 per cent have shown a 12-month revenue rise.

In several key industries, businesses reporting falling revenue also outnumber those seeing their returns increase. Despite an ongoing building boom in several major Australian cities, a third (33 per cent) of all construction and trades SMEs in Australia say their revenue fell in the last 12 months, while less than a quarter (24 per cent) grew. The agricultural sector is also down (36 per cent revenue decline, 21 per cent revenue improve), as is the finance and insurance sector (28 per cent revenue down, 20 per cent revenue up).

“There are definitely still many small businesses adding jobs to the Australian economy, but they certainly will not be as plentiful as during the mining boom,” says Tim Reed. “For Kiwis looking to travel over to Australia to pick up work, it will certainly pay to look closely at the current conditions in your industry, and how parts of Australia are likely to be tracking over the next year.”

According to the MYOB Business Monitor, 12 per cent of Australian SMEs intend to add more full time staff and 14 per cent more part time staff in the next year.

Positive outlook on both sides of the Tasman

Looking ahead 12 months, SMEs in both countries are positive about their own performance. New Zealand SME operators are slightly more confident in their revenue expectations for 2016, with 37 per cent forecasting improved returns, while just 16 per cent expect revenue to decline.

Despite the pressures they face this year, 31 per cent of Australian SME operators expect to see revenue growth in the next 12 months, while 24 per cent are forecasting declines.

“New Zealand and Australia are incredibly close in terms of the way our economies are linked, so what’s good for one is often positive news for the other,” says Mr Reed.

“Over the last year or so, New Zealand businesses have certainly seen some real success, particularly in response to global pressures. There are also some lessons that could be learned in Australia from the way New Zealand supports its small business community, particularly in terms of the compliance regime and the Government’s efforts to work closely with industry to genuinely make it easier for businesses to manage things like reporting and tax.”

“It’s good to see New Zealand businesses reaping the rewards for their efforts over the last few years, and great to see the SME sector in both countries more positive about their own performance in the next 12 months.”

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For further comment or other information please contact:

Conor Roberts, MYOB NZ Communications and Public Affairs

M: 021 124 6004 / E: conor.roberts@myob.com

Gerard Blank, The Agency Communications Limited Director

P: 03 341 5841 / M: 0275 243 629 / E: gerard@theagencynz.co.nz

About MYOB

MYOB (ASX:MYO) is a leading cloud based business management solutions provider. It makes business life easier for approximately 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and in 2015 was awarded the BRW award for the most innovative large company for 500+ employees and placed 2nd in BRW’s Most Innovative Companies Award list across all categories nationally.  For more information, visit myob.co.nz or follow @MYOB on Twitter.

About the MYOB Business Monitor

The MYOB Business Monitor is a national survey of 1,000+ small and medium business owners and managers in both New Zealand and Australia. The survey includes businesses of all sizes, from sole traders to mid-sized companies, representing the major industry sectors. It has run since 2009, commissioned to independent market research firm Colmar Brunton. The Monitor researches business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the government. The weighting of respondents by both geographical location and sector is based on overall market proportions as established by Statistics New Zealand/Australian Bureau of Statistics and is drawn from an independent survey group, which includes both MYOB clients and non-clients.