New Zealand Government A i f SME i hAssistance for SMEs in the Recession

Patti Poole Senior Advisor SMEs March 3, 2010

THE SMALL BUSINESSTHE SMALL BUSINESS RELIEF PACKAGE

1. Suite of tax changes1. Suite of tax changes2. Expansion to the Export Credit

Scheme3. Extended jurisdiction for the Disputes

Tribunal4 Prompt payment requirement for4. Prompt-payment requirement for

Government agencies 5 Expansion of business services and5. Expansion of business services and

advice

PRESENTATIONPRESENTATION•Detail about the package•Detail about the package

• Some initial findings one year onOth i iti ti•Other initiatives

•Future plans to assist SMEs

BACKGROUNDBACKGROUND•MED/Treasury led proposal•MED/Treasury led proposal •Package similar to other jurisdictions•Modelled on the NZ drought recovery packagerecovery package

1 TAX CHANGES1. TAX CHANGES•Reduced tax paymentsReduced tax payments•Reduced ‘use of money’ interest rates on underpaid tax and increased threshold•Reduction in number of times smaller business have to file PAYE and FBT returns Increased threshold for GST registration from•Increased threshold for GST registration from

$40-$60k•Simplifying rules around tax deductibility for legalSimplifying rules around tax deductibility for legal expenditure

IMPACT OF TAX CHANGESIMPACT OF TAX CHANGES

• All provisional taxpayers are entitled to reduced tax in 2008-9 and 2009-10 •The first year for reduced ‘use of money’ and•The first year for reduced use of money and increased threshold will be the 2010. •Filing frequency – an increase in paying PAYE t i thl d i i FBT fili lltwice monthly and increase in FBT filing annually. •GST registration numbers fell in September 2009 as compared with Sept 2008.p p•No information yet about the impact of simplifying tax deductibility for legal expenditure

2 EXPORT CREDIT SCHEME2. EXPORT CREDIT SCHEME•Extension of Export Guarantee Scheme•Extension of Export Guarantee Scheme •Funded to the value of $100m S t t h h h d th i•Support exporters who have had their

private trade credit insurance withdrawn dit th bon creditworthy buyers.

•By May 2009 the fund had reached it d h d t k f th $50capacity and had to seek a further $50m

IMPACT OF EXPORT CREDIT SCHEMESCHEME

•83 policies•83 policies•Key sectors supported include wool & textile, wine, meat, timber, pip-fruit, processed foods, agri-tech, p , g ,specialised manufacturing and telecommunicationtelecommunication

3. DISPUTES TRIBUNAL3. DISPUTES TRIBUNAL

•Expansion of the jurisdiction of the•Expansion of the jurisdiction of the Disputes Tribunal. Maximum claim l l i d f $7500 $15000level raised from $7500 to $15000.•To allow SMEs to use the Disputes pTribunal rather than district courts for small disputes thus saving time andsmall disputes thus saving time and expense.

IMPACT OF DISPUTESIMPACT OF DISPUTES TRIBUNAL EXPANSION

•Too early to tell•Too early to tell. •The Ministry of Justice is tracking numbers, $ value of cases and the length of time each case is takingg g

4. PUBLIC SECTOR PROMPT PAYMENT REQUIREMENTPAYMENT REQUIREMENT•Government departments and crown•Government departments and crown agencies to review their systems to pay invoicespay invoices •Bring forward payment datesT i t SME h•To assist SMEs who are

government suppliers to pay their i i d tiown invoices and wages on time.

IMPACT OF PUBLIC SECTORIMPACT OF PUBLIC SECTOR REQUIREMENTS SCHEME

•Improvement from 49 8 days in•Improvement from 49.8 days in December 2008 to 48.1 days in D b 2009December 2009.

5. BUSINESS ADVICE AND5. BUSINESS ADVICE AND SUPPORT

•Enhanced 0800 help lineEnhanced 0800 help line•Free business health check•Free seminarsFree seminars•$100 registration fee for free mentoring servicesservices•Many NZ businesses have never had to survive in such difficult times & did not &know where to go for help.

IMPACT OF ENHANCED SUPPORT AND ADVICE –AND ADVICE –

0800 numberFigure 1. Jobs logged as per Biz Networks monthly reports for calls to the four main Biz metro

offices (Akld, Wgtn, Chch, Dun) that receive the Biz 0800 calls from July 2008 to Jan 2010

1000

1200

ffice

s600

800

1000

o fo

ur m

ain

met

ro o

f80

0 nu

mbe

r)

0

200

400

Logg

ed c

alls

to (08

0

Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10

Month of Activity

IMPACT OF ENHANCED SUPPORT AND ADVICE – HEALTH CHECK

•More in-depth version launched inMore in depth version launched in September 2009www.business.govt.nz

• Capability• Financial• FutureFuture• Marketing• Product/service

September December 5000 page visits•September – December 5000 page visits and 900 downloads

IMPACT OF ENHANCED SUPPORT AND ADVICE – SEMINARS

•13 seminars funded by NZTE:13 seminars funded by NZTE:• Business survival guide• Highlight business assistance already g g y

available• Gather feedback on local needs

Go ernment agencies increased regional•Government agencies increased regional presence, upgraded telephone services, hosted seminars in conjunction with eghosted seminars in conjunction with eg NZICA

IMPACT OF ENHANCED SUPPORTIMPACT OF ENHANCED SUPPORT AND ADVICE – BUSINESS MENTORS NZ•Increase of 46% in client•Increase of 46% in client registrations and 49% increase in

i i f 2008mentoring sessions from 2008

Business Mentors NZ clients -Business Mentors NZ clients BUSINESS SIZEN b f E l

19%13%4%

Number of Employees

0

10%

6%

13% 0

1

2

30%

19%

3

4

5 ‐ 10

> 10

Business Mentors NZ clients -Business Mentors NZ clients ANNUAL TURNOVER

A lT

8% 4%

Annual Turnover

Up to $50 00024%

15%

12%8% 4% Up to $50,000

$50,001 to $100,000

$100,001 to $200,000

$ $15%

16%

21% $200,001 to $500,000

$500,001 to $1million

$1 to $2million

$2million+

Business Mentors NZ clients -Business Mentors NZ clients YEARS IN BUSINESS

Y i B i

26%16%

Years in Business

> 0 ‐ 1 year

17%

> 1 ‐ 2 years

> 2 ‐ 3 years

> 3 ‐ 4 years

17%

11%7%

7% > 4 ‐ 5 years

> 5 ‐ 10 years

> 10 years

Business Mentors NZ clients -Business Mentors NZ clients INDUSTRIES

Industry of Clients

5% 4%18%

Industry of Clients

AccommodationAgricultureBusiness

11%1%

8%

5%12%

2%4%

18%CommunicationConstructionCulturalEducationElectricityFinance

3%

5%13%

6%

FinanceHealthManufacturingNotforProfitPersonalRetail

1%1%

1%

RetailTransportWholesaleNot Indicated

Business Mentors NZ clients -SKILLS ASSISTANCESKILLS ASSISTANCE

REQUESTED

3% 3% 1%

Skills RequestedStrategic/Business 

29%7%

5%4%

3% 3% 1%Planning

Sales & Marketing

Fi & A i

24%24%

Finance & Accounting

Human Resource Management

Process Management

Legal/Compliance

OTHER INITIATIVESOTHER INITIATIVES•90-day trial period for new employees90 day trial period for new employees•Restart Programme•NZVIF Annex FundNZVIF Annex Fund•www.business.govt ‘Help in Tough Times’ bannersbanners•DoL ‘Surviving Tough times’•Assistance from IR to be flexible with taxAssistance from IR to be flexible with tax payments

COMING ATTRACTIONSCOMING ATTRACTIONS•Tax changesTax changes•Support for high growth firms•Infrastructure spendInfrastructure spend•Proposed changes to management development and business informationdevelopment and business information services•Regulatory reform agendag y g•www.business.govt.nz developments

CONCLUSIONSCONCLUSIONS•Package was implemented as announcedPackage was implemented as announced•Fine tuning and expansion of original initiativesinitiatives•Some uptake can be measured•Too early to assess impact of manyToo early to assess impact of many initiatives•Ongoing programme of providing g g p g p gassistance