21st May, 2021
Yesterday’s Budget announcements sees investment targeting long-term social challenges identified by the government, but what’s in it for businesses?
On the 30th anniversary of what’s dubbed “Mother of All Budget’s”, Finance Minister Grant Robertson has handed down a ‘Wellbeing Budget‘ aimed at targeting social challenges.
It’s also a spending Budget, taking the government’s operating allowance to $3.8 billion per year, bringing the largest increase to benefits in a generation, more investment in infrastructure to support the labour market, as well as additional investment in solutions that address climate change.
“Today, we address the most inequitable of the changes made 30 years ago. We will restore dignity and hope for some of the lowest income New Zealanders by righting the wrong of those benefit cuts by boosting main benefit rates by up to $55 per week,” said Robertson during his Budget 2021 speech.
“This not only continues our quest to reduce inequality, it also acts as further support and stimulus to our economy as we recover from COVID-19.”
Meanwhile, for New Zealand’s small and medium businesses, there are a handful of initiatives in this year’s Budget worth looking out for.
Building on the recent success of the Digital Boost programme, which launched late last year (and was funded by Budget 2020) and helping to future proof their success, this year’s Budget has seen $44 million allocated to the continuation of the programme over the next two years.
Of the new investment, MYOB SME senior sales manager, Krissy Sadler-Bridge, said digital strategy and investment is of critical importance to small-to-medium enterprise (SME)
“Our teams see the benefits of digital adoption every day through our engagement with SMEs across New Zealand – from its ability to increase productivity, efficiency, and resilience, to how it can help small businesses become nimbler in how they respond to unforeseen change.
“Our recent Tech Snapshot highlighted that more than half of our local SMEs would like to make changes to improve digitisation in their business in the next 12 months.
“Leading up to the Budget, 58 percent of SMEs we polled said they were in support of business digitisation and technology funding, so they will be encouraged to see more investment going into this.”
Prior to this year’s Budget, a 62 percent of small and medium business owners surveyed by MYOB said they would like to see an increase in spending on infrastructure and Budget 2021 certainly delivered.
An increase on top of what the government already had in its books, has seen Crown spending from 2021 to 2025 reach $57.3 billion, with a focus this year on rail, schools, District Health Boards, and even Scott Base.
For more than one-in-10 SMEs (17 percent) who wanted to see more spending specifically targeting road infrastructure, a $4.5 billion investment in transport services and infrastructure through the National Land Transport Fund may also be good news.
“Infrastructure is an area that SMEs were particularly keen to see increased investment in, and this year’s Budget has delivered a solid focus on infrastructure, and through this, projects that will create more employment opportunities,” said Sadler-Bridge.
“While it’s great to see some of this funding allocated to much-needed areas we know SMEs were in favour of – like public schools and hospitals – and likewise see the government considering how to keep our economy moving, SMEs will now be looking to understand what opportunities there will be to be involved in any local contracting opportunities.”
In addition to these bigger projects, Budget 2021 also sees $10 million allocated to boosting rural connectivity over the next two years.
“When it comes to digital infrastructure, SMEs will also be pleased to see additional investment in improving rural connectivity,” she said.
“This will play a critical role in empowering businesses in these more remote areas to start considering the use of more digital solutions to boost their business.
“We know greater connectivity enablers like 5G are among the top technological tools SMEs expect to have a significant impact on how they do business over the next five years, and this spend will be key to ensuring they can realise the potential they’re seeing in these digital developments.”
Another area SMEs were hoping to see further investment in as part of the Wellbeing Budget was climate change. In fact, 41 percent of SMEs said they wanted to see the government spend more combating climate change and 30 percent said they wanted to see less investment in non-renewable energy.
Today’s announcement sees this addressed, with $300 million set to be invested in low-carbon technology.
More specifically for businesses, $14 million has been allocated to ensuring the Energy Efficiency and Conservation Authority (EECA) can scale up its support for businesses as they navigate their way through changes that could see them reach their low emissions targets.
“Nearly half (47 percent) of SMEs we polled in the lead up to Budget said they would like to see the government spend more on renewable energy, so it’s pleasing to see a continued focus from Minister Shaw on accelerating investment in low carbon technology and likewise a boost to EECA efforts to help businesses on their low-emissions journey,” said Sadler-Bridge.
One notable area not addressed within today’s Wellbeing Budget that SMEs were hoping to see, is an investment in mental health and wellbeing support specific to small business owners.
“Beyond some of what’s been allocated within the recent tourism funding announced by Minister Nash, it’s surprising to see there’s been no allocation of investment to further support the mental wellbeing needs of small business owners,” said Sadler-Bridge.
“Our latest MYOB Business Monitor revealed that more than a third of SMEs have experienced a mental health condition since starting or running their business, and more than half of those polled leading up to Budget said they’d like to see the government spend more on mental health.
“As uncertainty and low economic confidence remains, there is a real need to support them through this time and we remain committed to doing what we can and working with government to help them navigate the physical and mental stresses of running a business.”