-Leeanne Watson, CE, Canterbury Employers’ Chamber of Commerce
Perhaps unsurprisingly New Zealand’s first Wellbeing Budget isn’t a business budget and it’s certainly not about to transform our economy.
Yes, there were pockets of funding for innovation, research and development, skills and infrastructure which will help some businesses develop at higher levels and contribute to growing the economy.
This included the Government’s $300 million fund for investing in New Zealand’s venture capital markets, $157 million to assist firms in developing high-value low-emissions products, $197 million allocated to vocational education, and $1 billion earmarked for rail.
At a local level we are also very pleased to see an increase in funding for the Christchurch Schools Rebuild Programme.
However, the focus of the Budget was largely on dealing with pressure points in respect to key social issues such as education, health and housing.
While investment in our most important asset – our people – is significant, it needs to be remembered that only through strong economic growth and a business sector that is willing to invest can many expenditure programmes be supported over the long term.
The key aspect that has been overlooked is an explanation of how the Wellbeing Budget approach will support and enable business growth, lift productivity and reduce the burden on business.
We need to focus on productivity as the main driver of economic prosperity. This isn’t news – in fact, it’s far from it. Comparative to other countries in OECD, our economy has long had the challenge of how to increase productivity.
According to the OECD, New Zealand performs about 30% below the OECD average in terms of GDP per capita.
While the Government seems to have skirted the whole productivity issue, for manufacturers, there is one area where the Budget did deliver – with the Future-Proofing New Zealand’s Manufacturing Sector by Driving Industry 4.0 Uptake and Skills Development initiative which received a $6.8m allocation over four years.
This will assist New Zealand’s manufacturers in adopting new technologies to help them deliver process improvements, further efficiencies and innovation, and build their globally competitive position.
Considering our national manufacturing sector makes up half of our exports, 12 per cent of GDP and employs over 241,000 people, being able to build on this and create more high-value jobs in the sector is hugely significant.
With manufacturing globally undergoing massive technology changes, New Zealand manufacturers are well-positioned to embrace automation and technological advances.
Another recurring theme we hear from businesses across a range of industries is the increasing amount of legislation and therefore burden, resulting in increased costs for business. It is of concern that following the handover from Treasury to MBIE, the Government is no longer monitoring the cost of compliance.
A New Zealand Institute of Economic Research (NZIER) report commissioned by the Employers and Manufacturers Association (EMA) estimated the cost to be at $5b (based on last recorded figures from 2012 – as these have not been updated by Government).
That’s hugely significant when you consider that is approximately 2.5% of GDP, resulting in lost productivity among other adverse factors.
New Zealand is a small country, so we should be able to be nimble and adaptive – not hamstrung by bureaucracy.
Maybe in time for the next central Government elections, we will see our governing parties place a greater emphasis on reducing compliance and increasing the ease of doing business as a step towards lifting productivity and prosperity for all.
In short, we believe we need a greater focus on the wellbeing of business. After all this is the livelihood of our community that we are talking about – the very people whose ‘wellbeing’ the Budget is so focused on.