While public infrastructure, climate change, health and education have received some of the biggest spending announced today, for SMEs – access to capital, a focus on boosting regional business growth and further recovery funding for the tourism sector, will be on the radar. Unfortunately however, there’s little instant reprieve to mitigate rising costs and supply chain challenges.
New funds to fuel business growth
With 48% of SMEs in MYOB’s 2022 Business Monitor stating that access to finance will be a pressure point on their business this year, an announcement of a new, independently managed Business Growth Fund (with a $100m investment by the Government) targeted at helping to provide a new source of capital for growing business, will be welcome news.
Further insights from MYOB show growth is high up in the minds of many local small and medium enterprises, with 44% stating in the annual Business Monitor that growing their business is a priority over the next couple of years.
On the announcement of the new fund, MYOB’s Head of Go-to-Market, Jo Tozer, says: “New Zealand is known to be a great place to start a business and 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 SME 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.”
Tourism recovery boost
After bearing the brunt of the response to COVID-19 and the economic disruption that followed, more than a third (35%) of SMEs polled in MYOB’s latest Snapshot believed the Government should be spending more in this year’s Budget to support New Zealand’s tourism industry.
In line with the theme of a secure future, an investment of $54.2m announced today to help rebuild the sector with a focus on sustainable business and innovation, will help in some part with a reset.
“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,” explains Jo.
Industry transformation investment
Also aligning to its emphasis on investment for the future, the Government’s spend on industry transformation sees five key sectors getting a share of $148million to start delivering against Industry Transformation Plans focused on innovation, improving productivity and boosting growth.
In addition to the Digital Industry Transformation plan funding announced pre-Budget, Advanced Manufacturing and Agri-tech also get a share of the prize this year.
This will be welcome news particularly amongst local SMEs and slightly larger mid-market businesses, with 41% and 62% of key decision makers or operators in these sectors respectively, naming Manufacturing as a sector they wanted to see more investment in from the Government.
Adding to this, further investment in construction to boost delivery of initiatives in the Construction Sector Accord Transformation Plan, will also be heartening for businesses in this industry.
“Combined, manufacturing (9.3%) and construction (6.6%) contribute 15.9% 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,” says Jo.
“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.”
SME-specific support missing on climate change and mental health
While climate change and mental health have both benefited from investment in this year’s Budget overall, spend in these areas for policies specific to SMEs hasn’t eventuated this year – despite growing appetite for more support.
On climate change and the attitudes of SME around this issue, MYOB’s Jo Tozer explains: “82% of SMEs we polled earlier this year see climate change as a concern and the appetite to take action is certainly there. When we asked them about what initiatives would be most helpful for their business to become more climate friendly or sustainable, 44% said they would like funding/tax incentives for climate initiatives for small business, and 32% 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/implement, while more than a quarter (28%) said time with a professional who can give advice on how to make their business more climate-friendly or sustainable would be helpful.
“While it’s good to see the Government looking to support small business to make an equitable transition in its first Emissions Reduction Plan – many SMEs would have been hoping for specific actions or plans and more details on targeted support,” she says.
When it comes to mental health, MYOB insights show around a third (32%) of SME owners or operators have experienced a mental health condition since starting or taking over their business.
“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 SMEs this year to build on some of the more regional or sector-specific packages released last year.
“This support has been high on the wish list for a couple of years now and our pre-Budget poll shows a quarter of business operators were hoping that the Government would have gone further to introduce initiatives specifically targeting the need of business again in 2022,” explains Jo.