Home > Updates > The Wellbeing Budget (Take 3) – what was in it for small business?
This is the third Budget the Government has set under their principles of wellbeing.
The first area dealing with Covid measures is easy for most people to understand, however it would appear some of this funding may not have been necessary had the Government been collecting payment up front for returning New Zealanders. Time will tell as to the extent of this given there is currently in excess of $20m outstanding.
In terms of the other main areas, it is good to see a significant investment in operational and capital funding for the health sector, and funds allocated to teacher pay parity will be welcomed by the teaching sector.
The most notable factor of the Budget however, was the group that was left out. The Budget acknowledged that “SME’s are at the heart of job creation in NZ”, however, outside of the wage subsidy schemes, and low interest loans that were already in play, very few breadcrumbs have been directed to SME’s. The only initiative of any significance being digital business skills training and digital business action plans for small business (whatever that may actually mean).
Small businesses are the backbone of the NZ economy. SME’s and their owners have endured a tumultuous time during Covid. Significant additional costs have been incurred by SME’s in dealing with life under Covid. Business owners have been placed under stress to keep their businesses viable and retain their staff in paid employment.
As if dealing with Covid wasn’t enough, over the past year, the Government has imposed many additional employment costs on small business and employers in general. These include raising the minimum wage (which creates a bottom up effect) and as announced separately today, the enactment of additional sick days bringing the annual entitlement to 10 days per annum. These are on the back of other changes such as adding an additional public holiday. All of these costs impact small business and eventually place a squeeze on how many people are able to be employed.
It would therefore appear that little or nothing has been provided to SME’s in this Budget (with the exception of the tourism sector). This is a missed opportunity as SME’s are the job creators who assist in getting people off benefits and into paid employment.
In terms of the large funds earmarked for infrastructure, it would seem there is a mismatch between this and the availability of skills, particularly given the closed door on migration. There are clearly still not enough skilled workers in the construction and civil industries to be able to undertake this work. This was seen previously when 100,000 houses were to be built in four years and only 7,600 since 2017 have been. The Budget also did not help those struggling businesses (such as in horticulture) who have not been able to secure enough workers resulting in substantial wastage of their crops and a significant impact on the viability of their businesses moving forward.
Lastly, I note a complete absence of any tax changes. Pre Budget the proposed denial of interest deductibility on residential rental properties was announced, which the Budget material clearly confirms the intention for this to proceed. The changes are expected to take place from 1 October 2021, however detail on these changes has yet to be released. No doubt there will be an announcement about that announcement in due course.
If you have any questions or wish to discuss the impact of the budget on your business, please contact your Nexia advisor.