Ongoing challenges to NZ businesses - especially small businesses - are highlighted in recent Reserve Bank and Treasury updates.  Meanwhile, moves to reduce red tape, update health & safety rules, and get better payment times from government agencies will be applauded by small businesses.  From the policy desk we include BusinessNZ's submission to the Royal Commission Inquiry into Covid-19 Lessons, along with a recent BusinessNZ study that points out the risks to productivity from multi-employer collective bargaining.  Welcome to the latest updates and analysis from the BusinessNZ team.  

        Tēnā koutou katoa!  Katherine Rich, Chief Executive

Economic reports this week indicate ongoing challenges for business. The Reserve Bank’s Financial Stability Report says business deposits relative to GDP have declined over the last 2 years, and lending growth has been weak as firms put investment plans on hold. Firms are relying more on credit for working capital and are more prone to non-performing loans, it says. A Treasury update says consumer demand is yet to respond to falling interest rates and given NZ’s current GDP growth rate of 0.0, it expects a further OCR cut this month.

The Govt is fixing some of the red tape that’s burdening businesses but more action is needed, small businesses say. Small businesses took part in recent BusinessNZ Network roundtable discussions, raising examples of outdated or excessive regulations, and calling for simplified rules, and better online engagement by the govt agencies in charge of regulations. They also want govt agencies to use a centralised data hub instead of making repetitive information requests. Their recommendations have been sent to the Minister for Small Business and all govt agencies mentioned in the report.

Businesses will welcome the Govt’s directive to govt agencies to pay their bills on time, BusinessNZ CEO Katherine Rich says. “Many businesses supply goods and services to government and can experience hardship from late payment times. Firms can now look forward to their invoices being paid within 10 business days, given explicit requirements placed on government agencies. We also welcome the intention to require government agencies to use e-invoicing from 2026. BusinessNZ has consistently advocated for improved procurement practices, and appreciate this directive and other planned changes to the Procurement Rules.”

BusinessNZ’s draft submission to the Covid-19 Inquiry says during the pandemic businesses suffered from overly restrictive controls and capricious decision-making by authorities. The submission says in any future pandemic, the rules should not unfairly disadvantage small businesses, and all businesses should be allowed to operate if they can do so safely. It says decision-making powers should be shared more widely including with Parliament and business-facing govt agencies, instead of being limited to a few Govt Ministers and the Ministry of Health.