New Zealand, a great place to do business

Written By: - Date published: 12:36 pm, March 10th, 2008 - 42 comments
Categories: national, workers' rights - Tags: ,

  • At 30%, the corporate tax is lower than or equal to most developed countries’.
  • Our GST is only 12.5%, in most developed countries it is 15-25%.
  • The economy has grown every year for a decade
  • Inflation has averaged below 3% for over 20 years
  • Workforce participation is 68%, very high by international standards.
  • ACC provides no-fault income insurance, meaning businesses to not have to go to massive expense insuring themselves against litigation by injured workers and hiring lawyers to defend themselves.
  • The RMA provides a cheap resource approval process, under which only 0.5% of applications are denied.
  • Ease of doing business is New Zealand is second in the world only to Singapore.
  • This is the least corrupt country in the world.
  • Corporate profits were up 60.5% in just six years from 1999 to 2005.
  • Only 0.54% of businesses failed last year.

If there’s one problem being a businessman in New Zealand today it’s this: years of growth mean unemployment is very low and since supply is constrained the price of labour is rising: wages are climbing. What is spent on wages can’t be kept for profits.

Despite having business conditions amongst the best in the world, all business leaders can do is whine that wage rises for working kiwis are ‘corrosive for profit growth‘. Small wonder, then, that the party of businessmen, National, has opposed every law that increases incomes and work rights, moans about rising labour costs (code for wages), and would ‘love to see wages drop‘.

42 comments on “New Zealand, a great place to do business ”

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  1. Daveo 1
    10 March 2008 at 12:41 pm

    Nice to see it all laid out like that Steve. I think what this shows is Labour’s years of sucking up to business have been fruitless- business will always side with National and nothing Labour does will ever make them happy.

    Business has it easy. It’s time workers got their fair share.

  2. Satan 2
    10 March 2008 at 12:47 pm

    I’ve found my business is stalling a bit, Steve. There are a lot less souls for sale than during the eighties and in the nineties you could get them for a loaf of bread and some packet soup… Ahhh… the Faustian days. Now all I get is Herald columnists… They were good times my friends. Good times…

    And speaking of the 80’s, cap is: “Merchant jumping” – oh yes they were the days…

  3. the sprout 3
    10 March 2008 at 12:49 pm

    gosh i wonder if APN will publicize these facts? who am i kidding, it wouldn’t do their Elect National campaign any good at all.

    if anything they’ll make exactly the opposite claims, and say them enough times that they’ll become more public misperceptions.

    APN knows you need quite convincing and pervasive misconceptions to elect National after all.

  4. Steve Pierson 4
    10 March 2008 at 12:49 pm

    You’re right, there is this real fear of pissing off business (because they’ve got that threat of capital flight hanging over us all the time), and so concessions are made. But the more you give them the more they want.

    It’s time workers got a better deal – legislation that backs up the unions more is needed, and it’s time to start to look at a fifth week’s leave .. most devleoped countries have five weeks and more leave is one of the reasons people cite for going to aussie.

  5. Bryce Edwards 5
    10 March 2008 at 1:29 pm

    A good post. It illustrates very nicely why the Labour Party is indeed a party of business. In the 1980s the Labour Government restructured the economy in favour of business, and then in the 2000s the Labour Government has retained the economic framework that favours business. It’s hard to see how businesspeople could have much to complain about.

    Bryce
    http://www.liberation.org.nz

  6. Satan 6
    10 March 2008 at 1:31 pm

    Hello Bryce. I must take this opportunity to thank you for all your hard work.

  7. Phil 7
    10 March 2008 at 1:48 pm

    I’ve always had suspicions about studys like the ‘ease of doing business’ and more generally comparing business here vs anywhere else.

    I suspect they don’t take into account the compositional effect of having a huge number of SME’s (as we do) when they’re looking at the ease of working with something like the RMA

  8. Satan 8
    10 March 2008 at 1:57 pm

    Phil, you really are grasping for straws there mate.

  9. Tim 9
    10 March 2008 at 2:29 pm

    Yup, excellent post Steve.

  10. Satan 10
    10 March 2008 at 2:34 pm

    I’ve gotta say I’m a big fan of the world bank. Big. Big. Fan. An how about that IMF, eh, eh?

    cap: “Hellmann Metro” – I ride it everyday… the air-conditioning could be improved though…

  11. higherstandard 11
    10 March 2008 at 2:37 pm

    Steve

    You might like to update the ease of doing business link to the world bank link as below

    http://www.doingbusiness.org/

    Interesting site although not sure how accurate their results are for some of the economies they’re looking at.

  12. higherstandard 12
    10 March 2008 at 2:50 pm

    Steve just noted in the report on NZ they quote 30 days to get resource consent and then building consent from a local body. Having dealt with the local bodies on the North Shore I’d love to know which local bodies in NZ can have resource or building consents through in 30 days.

  13. Pablo 13
    10 March 2008 at 3:00 pm

    “Steve just noted in the report on NZ they quote 30 days to get resource consent and then building consent from a local body. Having dealt with the local bodies on the North Shore I’d love to know which local bodies in NZ can have resource or building consents through in 30 days.”

    Your wish is my command HS:

    http://www.mfe.govt.nz/publications/rma/annual-survey/2005-2006/summary/index.html

    Highlights:

    – 51,768 resource consents were processed through to a decision.
    – 0.69% (357) of resource consent applications processed were declined.
    – 4.1% (2,129) of resource consents were publicly notified.
    – 1.5% (768) of resource consents were notified to affected parties only (limited notification).
    – 73% of all resource consents were processed within statutory time limits.

  14. Steve Pierson 14
    10 March 2008 at 3:05 pm

    cheers Pablo, your industry covers for my laziness beautifully.

  15. Steve Pierson 15
    10 March 2008 at 3:12 pm

    Bryce. I know as an Alliance old-boy you feel embittered towards the Left and hope we will all go down in flames like you lot did, leaving us in a neo-liberal dystopia where you can walk around waving your finger and saying ‘I told you so’ but your ability to turn anything into an anti-Labour argument beggars belief. I want to test it further:

    Please construct an anti-Labour statement in response to this: “Ryan Sidebottom’s hattrick was the first in a test played in New Zealand in over 70 years. However, a stronger performance by all the New Zealand bowlers in England’s second innings eclipsed Sidebottom’s individual magic.”

  16. James Kearney 16
    10 March 2008 at 3:23 pm

    “Good point Steve. This is yet another example of Labour using ‘national identity’ to push through its neo-liberal agenda. We saw it during with the anti-nuclear policy and we’re seeing it again with cricket.

    “Labour’s continued support of cricket – a deeply conservative and colonial institution riddled with corporate sponsorship – shows just how right wing and nationalistic Labour is. PS. Labour and National are exactly the same.”

  17. Pascal's bookie 17
    10 March 2008 at 3:47 pm

    “While many may celebrate the recent ‘victory’ over England it should be noted that it was in a ‘test’ match. A form of the game that takes 5 days to complete and usually ends in a draw.

    That labour has so lost contact with the working class that this blog would find it comment worthy is revealing.

    Many of the oppressed players in this tory entertainment are being forced to seek employment in a third world sweatshop due to the neoliberal conditions supported by this faux Labour government. I’m surprised you havn’t noticed this Steve, or consider it worth talking about.

    For all of that I am unsurprised that you missed the symbolism of how this ‘victory’ played out.

    As you say, the ‘hattrick’ (third way anyone?) was never enough to face the purer collective of our own bowling team. It is to their undying shame that this faux Labour government cannot see this simple truth, and take me more seriously.

    Vote Nader ’00 ’04 and ’08.

    They are all the same.

    The perfect is the enemy of the good.”

  18. infused 18
    10 March 2008 at 4:09 pm

    Unless you guys have actually run or do run a business in New Zealand I’d shut up. You make it sound like flowers and butterflies.

  19. infused 19
    10 March 2008 at 4:10 pm

    It’s the small businesses you want to look after. Stop looking at these big enterprises since they make up such a small number in NZ.

  20. Tane 20
    10 March 2008 at 4:18 pm

    The vast majority of New Zealanders in work are employed by large companies. And don’t assume that none of us have run businesses.

  21. Satan 21
    10 March 2008 at 4:20 pm

    Unless you guys have actually run or do run a business in New Zealand I’d shut up. You make it sound like flowers and butterflies.

    Two questions:

    Ever run a small business elsewhere?

    What do you think needs looking after for small businesses?

  22. infused 22
    10 March 2008 at 4:23 pm

    It’s quite easy to assume Tane by what people are saying.

    There is no other country in the world that has the same amount of small businesses per capita. New Zealand is unique in that respect. I have to go out though, will come back to this.

  23. the bean 23
    10 March 2008 at 4:24 pm

    And also infused, running your own business is always going to be hard. No one is trying to claim it isn’t. No government can completely take away that risk and difficulty (unless you want a totalitarian state) however the measures and stats mentioned above demonstrate how much IS being done to help out. The difficulties of running business are supposed to be outweighed- when finally successful- of doing something you really love, working for yourself, hopefully having more flexible working hours, and receiving vast profits from your own genius! But anyone who starts their own business knows that none of these things are guaranteed and all the hard work and sacrifice may pay off or your business idea may not be viable through no fault of the government.

  24. Steve Pierson 24
    10 March 2008 at 4:42 pm

    infused. Fewer businesses are folding today than in the past.

    As John Key’s ex-favourite band might say “nobody said it was easy/ but face it,its not too damn hard”

  25. Dean 25
    10 March 2008 at 4:48 pm

    “Bryce. I know as an Alliance old-boy you feel embittered towards the Left and hope we will all go down in flames like you lot did, leaving us in a neo-liberal dystopia where you can walk around waving your finger and saying ‘I told you so’ but your ability to turn anything into an anti-Labour argument beggars belief.”

    Your continued willingness to play the man rather than the ball is honestly quite interesting. I’m not sure who’s idea it was to get you writing for the Standard, but I can say that I did enjoy how you managed to slip in the John Key quote right at the end – you had me on the edge of my seat.

    Bryce has a point though. It’s amazing that for all the bluster, Labour has indeed left in place the legislation and framework that makes running a business easy. They are to be commended for this, including from me, a small business owner. Why do you have a problem with this?

  26. Dean 26
    10 March 2008 at 4:51 pm

    “No government can completely take away that risk and difficulty (unless you want a totalitarian state) however the measures and stats mentioned above demonstrate how much IS being done to help out.”

    Quite right, the bean. In which case, please tell me exactly what the current Labour government has done to make it easier to run a small business, apart from leave National’s legislation relatively untouched?

    If you mention tax cuts, please remember that with the added cost of an extra week’s holiday and Kiwisaver, this has amounted to two parts of no cut for most small businesses.

  27. Dean 27
    10 March 2008 at 7:14 pm

    “At 30%, the corporate tax is lower than or equal to most developed countries’.”

    Yeah, Steve, I’ve just checked out the chart in the wikipedia link you posted.

    You’ll notice that corporate tax rates are in purple, right?

    How on earth did you come to this conclusion then? I’m picking blind faith that you’re right, because oh boy, you are not.

  29. Dean 29
    10 March 2008 at 7:33 pm

    Sorry, the bean, but I’m asking you.

    Perhaps you’d like to have an informed opinion that wasn’t just a hyperlink? You know you can do it!

  30. the bean 30
    10 March 2008 at 9:04 pm

    My apologies Dean, subtleties are obviously lost on you. All of those sites detail the support networks, mentoring and information the government provide to people starting up and running a small business. Or do you only count money? Well here you go, under a Labour government:

    “(2) Industry New Zealand Enterprise Awards Scheme. Small businesses and entrepreneurs can apply for 50 per cent of the total costs of a project, and the scheme will fund up to $10,000 in any one year. Funding can cover such things as feasibility studies; prototype design; business planning; market research; business appraisal; and mentoring.

    (3) Industry New Zealand Investment Ready Programme to improve innovative small businesses’ and entrepreneurs’ chances of raising development finance.”

    I won’t give you the hyperlink cos I know you don’t like them

    Or from the Minister for Small Business
    “I was able to tell them that one of the areas that we have already improved since their last survey was the ease with which you can get a tax number when forming a company. Since last month New Zealand businesses have been able to apply for their business tax number and register for GST when they incorporate their companies online. This means that setting up a company in New Zealand has become a one-step process, which in most instances will take less than an hour to complete.”

    Or this one “The Minister for Small Business, Lianne Dalziel, has welcomed the release of the 5th Compliance Cost Survey, which indicates compliance costs are down for small business.”

  31. K1 31
    10 March 2008 at 9:52 pm

    Satan: “Ever run a small business elsewhere?”

    Yes I have, both there and here. There I had the crap taxed out of me and no help from the mindless petty bureaucrats I had to interact with, bribes were commonplace, late penalties and the like were steep, systems were paper based and slow… Here things are way better. Low cost of entry, much more info and help available, far better systems, the functionaries I interact with are generally pleasant and helpful. Many business ecosystems (postal, telecommunications) work waaaaaay better than there. Although the two businesses I ran/run were small (

  32. K1 32
    10 March 2008 at 9:58 pm

    Bah. Cut my comment off because I used a “less than” sign. Continuing on, if I can remember what I wrote:

    …were small (fewer than 10 staff) I am also closely involved in the management of a somewhat larger entity here. By and large we can just get on with the business we’re in rather than having to hassle about tax and compliance issues.

    NZ is not perfect in many ways, but anyone who whinges about business compliance here needs to take a big dose of HTFU.

    As an aside re: wages – today’s Sudden Debt (http://suddendebt.blogspot.com/2008/03/variations-on-theme.html) has an interesting corollary (and highly recommended piano piece!) for the low wage brigade.

    [lprent: try (remove space and quotes) ‘& lt;’ – that is the html for a less than sign eg <>]

  33. Dean 33
    10 March 2008 at 10:24 pm

    the bean,

    It’s actually difficult to begin, because you’re so idealogically blinded on so many levels. Being so breathtakingly incorrect or misguided isn’t something I’m used to having to deal with.

    “(2) Industry New Zealand Enterprise Awards Scheme. Small businesses and entrepreneurs can apply for 50 per cent of the total costs of a project, and the scheme will fund up to $10,000 in any one year. Funding can cover such things as feasibility studies; prototype design; business planning; market research; business appraisal; and mentoring.”

    That’s so fantastic it makes me wonder why small businesses are so highly taxed. But just like WFF, if you can’t take it off them first and then make them jump through hoops to get it back again then it must be wrong, right? Besides which, small businesses with motivation and determination don’t bloody well need this kind of airy fairy BS – they just go and do it. And there have been loads of examples of this in New Zealand, without I might add this kind of “We can help you!!!!!!” attitude.

    You’re going to have to try harder, because you just don’t get it yet.

    “(3) Industry New Zealand Investment Ready Programme to improve innovative small businesses’ and entrepreneurs’ chances of raising development finance.’

    I won’t give you the hyperlink cos I know you don’t like them”

    Because Industry New Zealand does so much for small businesses. I’d encourage you to talk with small businesses to see what kind of difference they’ve made instead of how you seem to get your news, which is hyperlinks from government websites. Because you’re wrong. Again.

    “Or from the Minister for Small Business
    “I was able to tell them that one of the areas that we have already improved since their last survey was the ease with which you can get a tax number when forming a company. Since last month New Zealand businesses have been able to apply for their business tax number and register for GST when they incorporate their companies online. This means that setting up a company in New Zealand has become a one-step process, which in most instances will take less than an hour to complete.'”

    Yeah, because getting a tax number and registering for GST took so very, very long beforehand and was something small businesses did all the time, almost every day. Have you got any idea of how much of a non event this was? Obviously not.

    Honestly. Is this the best you can do?

    “Or this one “The Minister for Small Business, Lianne Dalziel, has welcomed the release of the 5th Compliance Cost Survey, which indicates compliance costs are down for small business.'”

    That’s true.

    Unfortunate that we’re taxed so highly though, isn’t it? And before you claim otherwise, perhaps you’d like to read Steve’s link. It says it all.

    Seriously, the bean. Until you can do better, you’d be best to not make yourself look uninformed anymore than you already have. It’s not amusing anymore.

  34. Dean 34
    10 March 2008 at 10:44 pm

    “Steve, much as I hate to agree with Dean above, I can’t see how you support that claim with the wikipedia page that you link to as a source. Since I think this is an excellent post in general, I’d like to see a fix or your comment on how you interpret this?”

    What’s even better, rOb, is that Steve has selectively quoted the parts he likes and left out the parts that don’t agree with his dogma. For instance, from the article in the Herald he quoted, he left out the part that said “However he predicted business failures would increase in the next two years, as a downturn in the housing market and tougher economic conditions began to bite.”

    Similarly, he fudged the stats on the corruption ranking, which actually places us 1st equal with 2 other countries. No doubt he will claim that adding up the stats over the years before will prove him right, but that’s like so many Labour apologists who take the stats from years before only when it suits them, when all that really matters is how it is at present.

  35. r0b 35
    10 March 2008 at 10:19 pm

    At 30%, the corporate tax is lower than or equal to most developed countries

    Steve, much as I hate to agree with Dean above, I can’t see how you support that claim with the wikipedia page that you link to as a source. Since I think this is an excellent post in general, I’d like to see a fix or your comment on how you interpret this?

  36. r0b 36
    10 March 2008 at 11:18 pm

    What’s even better, rOb, is that Steve has selectively quoted the parts

    No Dean, the further examples that you quote don’t seem out of spec to me. Downturns may be predicted as a consequence of a worldwide financial crisis, but that doesn’t invalidate claims relating to current achievements.

    Also, while we’re looking at taxes, note what the linked wikipedia page shows us about personal tax. Third lowest of the thirty countries listed! That puts a lot of right wing bleating about how overtaxed people are into context doesn’t it. Where is the case for personal tax cuts based on this data?

    The pressure put on Labour over this issue has been immense, and it is to their credit that they withstood it for so long. In my opinion Labour should put a hold on the currently proposed personal tax cuts. Recent events have shown how fragile the government’s supposed huge surpluses are – here today, gone tomorrow. Cullen is looking increasingly like a very prudent and successful manager of the economy wouldn’t you say?

  37. r0b 37
    10 March 2008 at 11:24 pm

    Ahh yes – that was what I meant to add re company tax too. Labour recently reduced it. National voted against the reductions (and has not, as far as I recall, ever reduced company tax while in government). Why did National vote against? Looks to me like Labour is more business friendly, wouldn’t you say?

  38. Dean 38
    11 March 2008 at 12:58 am

    “Also, while we’re looking at taxes, note what the linked wikipedia page shows us about personal tax. Third lowest of the thirty countries listed! That puts a lot of right wing bleating about how overtaxed people are into context doesn’t it. Where is the case for personal tax cuts based on this data?”

    It’s an idealogical deal, much the same as the calls for higher wages is. Personally I’m on the fence about personal tax rates, but I would point out that it’s only as much bleating as is the call for higher wages.

    “The pressure put on Labour over this issue has been immense, and it is to their credit that they withstood it for so long. In my opinion Labour should put a hold on the currently proposed personal tax cuts. Recent events have shown how fragile the government’s supposed huge surpluses are – here today, gone tomorrow. Cullen is looking increasingly like a very prudent and successful manager of the economy wouldn’t you say?”

    Hardly. Refer to high interest rates, low productivity, highest overall welfare payments in years, kiwisaver and 4th weeks holiday… really. If you want to continue down the line of Cullen being such a great manager of the economy and being so small business friendly then you are on a hiding to nothing.

    Like I said earlier, the company tax cut doesn’t count for small business, because it’s been pretty much nullified by the increased costs the government has introduced by the 4th weeks holiday and kiwisaver contributions.

    So, apart from leaving National policy intact, what exactly has Labour done to make the life of the small business owner easier?

  39. Robinsod 39
    11 March 2008 at 7:39 am

    Dean, I’d say today’s announcement of an R&D fund that can be accessed by any primary sector business (including small businesses) is a pretty good policy.

  40. the bean 40
    11 March 2008 at 9:45 am

    “Being so breathtakingly incorrect or misguided isn’t something I’m used to having to deal with.” Well you obviously don’t bother to read the tripe you come up with then.

    This is my favourite line “Besides which, small businesses with motivation and determination don’t bloody well need this kind of airy fairy BS – they just go and do it”

    Ahh yes so they can make it all by themselves but your going to complain when they fail that the govt didn’t help enough? You need to calm yourself donw Dean. Personal attacks and swearing don’t make up for the fact that you are wrong

  41. r0b 41
    11 March 2008 at 9:16 am

    Personally I’m on the fence about personal tax rates, but I would point out that it’s only as much bleating as is the call for higher wages.

    Ahhh – no. Bleating about personal tax cuts was pretty much held to define the agenda at the last election. Higher wages didn’t get a look in. Fast forward to today and it’s the same story, every second headline seems to be about tax cuts, and outside of places like The Standard wages still don’t appear on the agenda (recent ripples over Key’s comments notwithstanding).

    low productivity

    By what measure?

    highest overall welfare payments in years

    Welfare to working age population is significantly down and still falling. It’s only up if you include superannuation from our growing and ageing population (as you well know when you use the word “overall”). Should we send the elderly to the poorhouse then?

    kiwisaver and 4th weeks holiday

    Kiwisaver creates funds for long term investment and growth, and a 4th week of holiday still leaves us only on a par with or behind most similar economies.

    So, apart from leaving National policy intact, what exactly has Labour done to make the life of the small business owner easier?

    Hmmm – cut their taxes? (Something National has never done as far as I recall). Created local funds for long term investment (Cullen fund, Kiwisaver). Modern apprenticeships to upskill the workforce. The kinds of initiatives that Robinsod and the bean referred to above. In short, plenty.

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