19th May, 2022
Today’s Budget announcements pitch spending initiatives to address the cost of living, support for tourism operators as well as incentives for innovation.
The Government’s fourth Wellbeing Budget was announced today by Minister of Finance, Grant Robertson, who outlined a $1 billion dollar package to address the cost of living, on top of a number of measures designed to support the economy’s ongoing recovery.
“Our economy has come through the COVID-19 shock better than almost anywhere else in the world,” Prime Minister Jacinda Ardern said in a statement.
“But as the pandemic subsides, other challenges both long-term and more immediate, have come to the fore.
“This Budget responds to those challenges.”
Public infrastructure, climate change, health and education have received some of the biggest spending announced in the Budget, but for business owners it was access to capital, boosting regional business growth and the tourism sector that took centre stage.
Forty-eight percent of business respodents in MYOB’s 2022 Business Monitor stated that access to finance will be a pressure point on their business this year, making the announcement of a new, independently managed Business Growth Fund (with a $100 million investment by the Government) targeted at helping to provide a new source of capital for growing business, likely to be well received.
Further insights from MYOB show growth is also an ongoing business concern, with 44 percent saying that growing their business is a priority.
On the announcement of the new fund, MYOB’s Head of Go-to-Market, Jo Tozer, said that New Zealand is well-regarded as a great place to start a business and that this measure would help it continue to as such.
“We know that most business owners start their ventures because they’re passionate about what they do and how it could benefit others.
“But even in the early stages, more than a quarter say concerns around their finances make them think twice about pushing on and ongoing challenges like access to finance, can really influence whether or not [small and medium business] owners can reach their true potential and fulfil their growth ambitions.
“Access to capital can impact a business’s ability to take on more people, invest in the right systems and pursue opportunities for further innovation, so for the sake of their businesses and likewise the impact fuelling their growth can have on our wider economy, many SME owners will be hopeful the fund gets the backing it needs from the Reserve Bank and the private sector, to get off the ground.”
The events of recent years has taken a serious toll on the local tourism industry, and more than a third (35 percent) of respondents in MYOB’s Consumer Snapshot research said they thought the Government should be spending more to help business operators out in this sector.
In response, the Government has committed a further $54.1 million to help rebuild tourism in New Zealand, with a particular focus on sustainable business pratices and innovation.
“It’s no secret that tourism has historically been a significant contributor to our GDP and employment, so while it doesn’t offer an instant reprieve before our borders reopen and COVID-19 restrictions are dropped, some tourism operators will be pleased to see the Government introduce funds to help the industry reset – and with a forward-looking focus around innovation – after a particularly challenging couple of years,” said Tozer.
Extending the theme of innovation for the future, this year’s Budget also includes a $148 million package to deliver industry transformation plans with a view for boosting productivity and growth.
This spending arrives on top of the Digital Technologies Industry Transformation Plan announced in the lead up to the Budget, and sees advanced manufacturing and agri-tech sectors rising in prominence.
Further investment in construction has also been outlined in the Construction Sector Accord Transformation Plan.
“Combined, manufacturing (9.3 percent) and construction (6.6 percent) contribute 15.9 percent of our GDP, so these business operators will be pleased to see the Government recognise their importance and move forward with some funding to implement initiatives outlined in their respective strategies to improve productivity and capability in these key sectors,” said Tozer.
“While they won’t feel the effects of this spend immediately on their bottom line, with most of the planning done, many will be hoping these investments mean it’s time to ‘get down to business’ and speed up the delivery of the actions and outputs these industries need to grow and succeed.”
Climate change and mental health have both benefited from investment in this year’s Budget in a general sense, but we note specific initiatives for business owners and operators are missing.
Eighty-two percent of business respondents say they’d like to see more done to help them address climate change on a business level.
“When we asked them about what initiatives would be most helpful for their business to become more climate friendly or sustainable, 44 percent said they would like funding/tax incentives for climate initiatives for small business, and 32 percent said subsidies for using cleaner, renewable energy.
“But it isn’t just about dollars – more than a third said they wanted more guidance from the Government on what their business can do.
Likewise, mental health is another area in which we know that business owners are clamouring for greater Government-led support.
“It’s great to see the Government invest in improving mental health support more broadly in this Budget – a move also supported by business – however it’s disappointing not to see some more targeted support for [businesses] this year to build on some of the more regional or sector-specific packages released last year.”