How Budget 2023 stacked up against SME expectations

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Jo Tozer is a spokesperson for MYOB.

OPINION: New Zealand’s SME community wasn’t expecting a lot from Budget 2023. When we recently asked more than 500 local SME leaders whether they thought the Budget would deliver for them, almost two thirds – 62% – felt it was unlikely that it would.

As it turned out, they weren’t wrong, with little in the way of direct business investment in Wellbeing Budget 2023: Support for today, Building for tomorrow.

However, when we consider the priorities SMEs highlighted for the Budget, the Budget did provide some of the elements they were looking for and a boost to some sectors more than others. The spending priorities SMEs wanted the Government to focus on included healthcare (63%), education (43%), living standards (40%), and infrastructure (37%). Just under a quarter (24%) also wanted to see more put toward skills and training initiatives, like apprenticeships.

In short, SMEs’ low expectations around any direct benefit for themselves meant many were simply hoping to see community-focused investment, recognising the squeeze on households from inflation and the rising cost of living, and likewise calling for more resilient and future-ready infrastructure to keep our country moving.

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In terms of how this translated in the Budget with a focus on the future, there were some key announcements.

Training for the skills we need: The announcement of an additional $17.1 million investment in extending the Apprenticeship Boost until the end of 2024 is designed to help 30,000 people start or continue in career training. With almost a third of businesses finding it difficult to fill vacancies, this will be a help for businesses desperate for skilled workers, but commitment to this programme long-term would probably be welcomed.

Boosting the tech talent pipeline: The technology sector and appeal around tech careers continues to grow, but the talent pipeline of those entering this workforce has struggled to keep up. This year’s Budget sees $26.6m invested in a Digital Skills package with funding aimed at supporting the development of apprenticeship type programmes. This includes components like part payments for trainee wages, employer support, and set-up costs for trainees.

Infrastructure resilience: the Government’s Infrastructure Action Plan, which commits $71 billion of investment over the next five years is one of the big-ticket items of the Budget – and a focus businesses have been calling for. According to our insights, off the back of the recent extreme weather events, 70% of SMEs wanted to see the Government prioritise roading network resilience, 54% said the same of power network resilience, and 48% echoed these sentiments for telecommunications network resilience.

New Zealand’s SME community wasn’t expecting a lot from Budget 2023.

STUFF/Stuff

New Zealand’s SME community wasn’t expecting a lot from Budget 2023.

Healthy communities: While 2022 was the big year for health, all eyes will be on how quickly a continued focus on wages and staffing in the latest Budget can improve the status quo. Interestingly, there was little directly applied to mental health this year.

What wasn’t in Budget 2023 was a greater commitment to address the things that stop local businesses from building on that foundation like the red tape and the growing costs, or support for innovation by smaller businesses.

One area where the Government could have made a real difference is in managing the growing cost of compliance. According to the SME leaders we surveyed their compliance costs rose by an average of $240 per month.

Jo Tozer is a spokesperson for MYOB.

Supplied

Jo Tozer is a spokesperson for MYOB.

In terms of supporting business productivity, we would have also liked to see greater investment in business digitisation. While the gaming industry was a big winner – with significant investment, more than a third of businesses support the concept of tax incentives or financial support for digital investment, according to the recent MYOB Business Monitor. With potential gross benefit to our economy of up to $8.5b, this remains a missed opportunity.

Overall, in addition to a stronger foundation for local businesses to succeed, more help is needed in tackling our ongoing productivity challenges, channelling business support in the right places, and ensuring local businesses aren’t burdened with excessive costs in challenging conditions.

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