Consumers and SMEs aligned on 2021 Budget investment hopes
12 May 2021
Driven by noticeable impacts affecting their local shops, more than a fifth of New Zealand consumers want the Government to provide more support for local SMEs in this year’s Budget, according to new research from leading business management platform, MYOB.
There’s also clear alignment between consumers and the businesses they support, on where they’d like to see more spend allocated to address key societal issues.
In the latest MYOB Consumer Snapshot, 22% of New Zealanders said they would like to see more financial support for small business in the 2021 New Zealand Budget – something businesses are positive that the Budget will deliver. MYOB’s SME Snapshot revealed that 51% of SMEs are confident that the policies announced will deliver good news for businesses like theirs, while 44% are not.
Consumers recognising COVID-19 impacts
A call for the Budget to continue to deliver support for SMEs follows a year where the spotlight on small business was unmissable, and the new insights show the impact of COVID-19 on New Zealand’s SMEs has remained in consumer consciousness since.
According to the new Snapshot, more than a third of consumers (37%) have observed that businesses they regularly buy from have reduced staff numbers, while 28% said a ‘noticeable number’ of businesses in their area have closed due to COVID-19.
Business closures appear to be most evident in Canterbury, with 37% of consumers in the region saying they have noticed closures due to COVID-19, compared to 33% of consumers in both Auckland and Waikato. Only 12% in the capital said they had seen business closures.
Consumers continue to do their bit for local business
Almost a third of consumers (31%) polled said that changes like staff reductions or business closures made them appreciate and visit their local shops more often – a trend that continues today.
The buy-local focus adopted during the pandemic has remained a key way in which consumers are backing local SMEs, with more than half (58%) saying they are making an effort to support more local businesses, while 28% claim to have increased their spending at local businesses as a result of COVID-19.
MYOB SME Senior Sales Manager – Krissy Sadler-Bridge, explains the ongoing support for local businesses made a real difference to SMEs in their time of need.
“One of the real bright lights of the COVID-19 response has been the way Kiwis have rallied around our local SMEs – for many businesses it made a life-or-death difference. And with the majority of local consumers continuing to make an effort to support local businesses, it is easy to see why many see it as a priority for the Government to do the same in the upcoming Budget,” says Krissy.
Business priorities from the upcoming Budget
As businesses continue to navigate the risks and uncertainty of the post-COVID recovery, and thinking about their own business needs, SMEs revealed that tax changes, training and infrastructure investment are amongst what they’d like to most like to see announced in this year’s Budget.
According to the MYOB SME Snapshot, the top five Budget priorities include:
1. A reduction of the company tax rate to 25% (38%)
2. A permanent increase to the provisional tax threshold (23%)
3. More support and training for apprentices (20%)
4. Increased investment in roading infrastructure (17%)
5. Additional targeted financial support for COVID-19 relief (15%)
Consumers and business aligned on spending focus
The dual surveys also highlighted that SMEs and consumers are aligned on broader priority areas for Government spending.
When it comes to what consumers would most like to see addressed in the Budget on the 20th May, the MYOB Consumer Snapshot found that 44% are hoping to see more action on housing affordability, while 30% would like to see more financial support around mental health, 24% want strong action on child poverty, 20% hope to see new initiatives to support the unemployed into jobs, and 20% would like to see financial incentives to boost climate change action.
When asked about which areas they would like to see the Government spend more, SMEs’ revealed they would like to see more investment in areas that have greater benefits beyond business, including infrastructure (62%), education (59%) and mental health (57%). Additionally, 41% believed more should be spent on combating climate change.
Echoing consumer concerns around housing affordability, the high cost of housing is also on the minds of SMEs. More than a quarter (27%) of those polled said the problem impacts consumers’ ability to spend, while 24% said it makes it harder for them to attract skilled employees in their area. One-in-five also said that the issue limits their ability to borrow or finance growth (20%).
“Last year’s budget delivered COVID-19 relief packages that made a fundamental difference to SMEs in terms of survivability through some of the toughest stages of the COVID-19 crisis. This year, as we look more towards recovering from the pandemic, SMEs have different needs, and they aren’t as straightforward as 2020,” explains Krissy Sadler-Bridge.
“Overall, most SMEs are confident there will be something for them in this year’s Budget, but, like local consumers, they will be watching to see how the Government addresses key issues like housing, education support and training, mental health and climate change – all key areas the Finance Minister has acknowledged in the lead up to May 20th.”