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NZ – still a great place to do business

Written By: - Date published: 10:00 pm, September 10th, 2008 - 33 comments
Categories: economy - Tags:

We can do good news here on the Standard! According to a World Bank survey shows New Zealand is still ranked second in the world when it comes to ease of doing business. Singapore ranked first with the United States third. According to Clayton Cosgrove:

…positive findings included that New Zealand was the easiest country in which to start a new business – taking just an hour, compared with an average of 13.4 days in developed countries.

New Zealand businesses also paid less tax as a percentage of their profits than either Australia or the average across all developed countries.

33 comments on “NZ – still a great place to do business”

  1. sean 1

    it might be a good place to come and do a business deal, but actually running a SME based in New Zealand is extremely difficult.

  2. CarlF 2

    Well, this certainly is cheering news. Can’t wait to share it with the next homeless person who taps me for small change.

  3. I thought this was supposed to be some sort of leftwing blog site. But you seem to be celebrating and heralding that the NZ economy is so ultra-business friendly.

    Isn’t this indicator one that reflects the degree that the neoliberal economic framework is still deeply embedded under this Labour Government?

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

  4. Quoth the Raven 4

    sean – What? Did you read it?

    CarlF – I suggest you take a walk on the streets of a major american city like L.A. or New York.

  5. Bryce. does being a dick give you pleasure?

  6. burt 6

    Steve P.

    I think Bryce is correct. The neoliberal economic framework is still deeply embedded under this Labour Government. That’s not all bad Steve, don’t throw the baby out with the bathwater. A framework is a framework, the best ones are ambivalent to their usage.

  7. Sorry Steve, but he’s right.

    All these ‘good’ things for business, are thanks to the ‘failed policies’ of the ’80s and ’90s.

    Just another example of a Rogernomics reform that everyone has adopted – because it works.

  8. “Bryce Edwards
    September 10, 2008 at 10:59 pm
    I thought this was supposed to be some sort of leftwing blog site. But you seem to be celebrating and heralding that the NZ economy is so ultra-business friendly.

    Isn’t this indicator one that reflects the degree that the neoliberal economic framework is still deeply embedded under this Labour Government?

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

    I think it shows the Labour Government has been doing a pretty good job. There needs to be a balance between social and economic policy. With the reforms of the 80’s it has been massively shifted towards economic policy, and society has suffered for it (not without some benifits, but it still has suffered.

    Policys like minimum wages do have the potential to hurt business, but they are socially important. This shows that things like the minimum wage, 4 weeks leave, continuation of the resource management act (far out imagine trying to make that law today!) are not hurting businesses in a greater way than they are beinifting society (hard to measure I know, disagree with me if you like).

    I think that Labour have done a good job because it is not something you want to push to far. As seen in the 80s when you push policy too far in one direction the consequences can be pretty full on. Labour has been slowly shifting the balance back towards social policy, in a way that is not seriously harming the business enviroment.

  9. jbc 9

    I notice that NZ is #1 in starting a business. This is not something a business does every day. Most only do it once so it is not particularly significant.

    How the hell are these things weighted? There is a yawning chasm between the top two countries.

    Paying Taxes, Employing Workers, and Trading Across Borders are things that many business do on an ongoing basis. These are the real “ease of doing business” factors. On these NZ is ranked 12th, 14th, and 23rd.

    Not quite so spectacular.

    Note that the country at #1 is ranked 1st, 2nd, and 1st on these factors.

    I’m sure that most ethical companies won’t find trouble with NZ’s employment law – but paying tax and trading across borders are surely key for attracting business to NZ.

  10. Paul Robeson 10

    Marleybone Cricket: When the ‘failed policies’ are refered to they mean the altruistic ideological madness that went hand in hand with Rogernomics.

    A more open economy than the one Muldoon ran has it’s advantages.

    However, slashing all our tariffs with out much reciprocity, fire selling our assests and shipping the profits overseas with reduced investment on key infrastructure, and declining productivity and wages because of a repressive labour market policy are generally the ones referred too…

    perhaps deregulation of the building industry as regards the standard of timber required (leaky homes made by cowboy developers- man was it easy for them!) or shortage in the trades due to the cutbacks in the apprenticeship scheme.

    These too are examples of failed policies. ACC,a major plus, compared to some alternatives isn’t a neo-liberal scheme.

    My take on the Standard is that it is a left wing NEW ZEALAND blog site. It likes New Zealand to do well and everybody to get their fair share of that.

    Or do you mean business friendly as in two or three people do well and the rest of you can just shut up and eat cake Bryce?

  11. Draco TB 11

    Bryce:

    I thought this was supposed to be some sort of leftwing blog site. But you seem to be celebrating and heralding that the NZ economy is so ultra-business friendly.

    People will always find a way to trade because it does bring benefits. Nobody can do everything so ease of trade is important to maintaining a high living standard. Being on the left doesn’t stop people from realising this simple fact.

    Isn’t this indicator one that reflects the degree that the neoliberal economic framework is still deeply embedded under this Labour Government?

    The embedding of the neoliberal paradigm is a worry – not because it eases trade but because it still centers around the capitalist/mercantalist class system that started a few centuries ago. Free trade’s fine but you can’t have free trade in a capitalist system.

    SP:

    Bryce. does being a dick give you pleasure?

    That’s uncalled for SP. Do try to debate the point rather than using ad hominem attacks on the poster. We really don’t want this place dropping to Kiwiblog standards.

  12. T-Rex 12

    jbc –

    Re: Tax. Take a look at the countries that are ahead and behind us respectively. We might not be top, but 12th is pretty good when you consider that the people beating us are places like Quatar, Saudi Arabia, Maldives.

    Paying company tax in NZ is a breeze. Within the space of 6 months last year I started a company, completed several transactions, filed FBT & GST quarterly returns and a final annual return, and ceased trading. Total cost was less than $200, I’ve never run (or held a senior position in) a company before, and my experience with accounting is limited to “I dated an accountant once, and my father’s a consulting economist so some of it probably rubbed off”. I don’t imagine either of those contributed anything other than a general mindset of “well, how hard can it be really?”. Answer – not very hard.

    International trade, on the other hand, I have little idea about, though having worked in a company that does the majority of it’s business internationally with a very small staff allocation to that role I have to assume it’s not particularly difficult. I wonder how much of our “score” in that regard relates to geographic isolation…

    Employing workers – like you say, ethical companies probably don’t run into many problems in this regard.

    So I’d say that our #2 spot on the list is well deserved really, or at least reasonably justified.

    Tax is reasonably competitive (in line with others in the area anyway) and companies in growth mode rarely pay much tax anyway. I’d say that the biggest thing NZ could do to attract business is train skilled workers. NZ is a bloody cheap place to employ highly skilled staff with experience.

    Me – I left, because at the moment my living costs are a tiny fraction of my income, and I while the proportion remains the same (in fact it’s probably proportionally more expensive where I am now) the absolute numbers are significantly different. Also, there’s a world that needs exploring. However, I imagine that once family etc starts coming along NZ will once again look like a pretty attractive place to head back to.

    For the short term, I think NZ needs to market itself to potential employees. Having f*cks like Peters and his racism out of parliament have got to help with getting skilled immigrants from places like China, India, Malaysia, South Africa etc.

  13. jbc 13

    T-Rex,

    Regarding Tax. True: although Ireland at #6 is possible a more relevant comparison (and also one that has transformed their wealth and OECD rankings over the past two decades).

    Your experiences with NZ tax are one thing. Mine are another. I worked as a contractor for a few years and IRD seemed to have an excellent ability to make things unnecessarily complicated. I had a tax agent but that didn’t seem to spare me the mess.

    Now I’ve been away for a few years I had almost forgotten the IRD knots. That was until earlier this week when I phoned the IRD non-resident centre with a simple NRWT question and hung up the phone feeling less informed than when I started.

    I guess my time in a simpler tax regime has distorted my reality or tainted my view of NZ tax. I know there are worse places.

    Back to the thread topic: my impression now is that NZ has taken de-regulation too far in some areas. Way too far. Yet in other areas it has put up obstacles, quicksand, mazes and minefields for people to navigate. All the result of narrow thinking taken too far in single policy areas.

    If a business comes knocking on NZ’s door – a business that ticks all the boxes for the things that NZ wants to foster – then NZ should roll out the red carpet, grease the wheels, escort them to their new home, and not walk away until they feel welcome. There is no such unified, coherent view at present.

    Sorry if this seems to be overly pro-business. I do not share the “profit at any cost” view. I despise shysters and business crooks as much as anyone. Peters and his pinstriped National ilk with the same MO can go to hell for all I care.

    I’d just like to see some attention spent at the top end of the economy as much as the bottom. Arguing over which end is more important is pointless. Both will always be with us.

    I have a family (all since leaving NZ) and I’d love to be back there. Oddly enough we are more welcome in our adopted home (as a family unit) than in our home countries. NZ seems to automatically presume my wife (with two university degrees and a professional career) is a criminal until proven otherwise. Waiting for a sign…

  14. Tane 14

    Bryce, we’re a broad church. I have a rather different view, which I may expand on if I have time later on.

  15. Lew 15

    jbc: I think you’ve declared it before, but forgive me if I can’t search the archives – what country? (Do I recall Singapore?) And where’s your wife from that she’s so misunderestimated by NZ folk?

    L

  16. Rubbish, we are nowhere near no 2.

    It is not the most difficult place in the world to do business(I run my own business so I should know)but high compliance costs, record high taxes/ACC costs, massive difficulties related to government imposed Labour legislation make my job way more difficult than it should be.

    Not good news at all.

    Cheers, Darren

    CAPTCHA “con” 🙂

  17. Paul Campbell 17

    i run a small business too – I’ve done that in California too – I really can’t get over how easy it is in NZ – especially stuff like PAYE and GST – ACC is annoying – but I was paying more in insurance and state disability insurance combined in CA (it just showed up in different places on the balance sheets).

    I did my monthly payroll/paye this morning – spent more time writing checks manually than I did filling out forms – spreadsheets rock – the tax changes next month? 2 lines in a spread sheet. GST? 5 minutes to fill out the form and they send ME a check most months

  18. randal 18

    darren…who do I believe…you or the world bank? that is a no brainer and if you cant run yur business then either what you are producing is not wanted by the consumer or you are not very good at it? which is it?

  19. Randall, as I explained, the high taxes, red tape and restrictive Labour laws have serious impacts on New Zealand Businesses.

    The World Bank also pushes the myth of Global Warming, so I know who I would rather believe.

    Cheers, Darren

  20. Vanilla Eis 20

    Now why is it that I’m more inclined to believe Paul Campbells post (who claims to have run a business in two countries, including the one given the #3 ranking) than Darren Rickard, who comes across as an ignorant buffoon?

  21. Phil 21

    “I dated an accountant once”

    Could she do it without losing her balance, ‘rex?

  22. randal 22

    darren you still have not explained the connection between the world bank and your business…methinks you have gathered up a colllection of the ‘hard done by party’s’ slogans and fitted up some sort of shonkey argument to strike fear into ordinary kiwi’s hearts.

  23. Paul Campbell 23

    I didn’t add that I’m also paying tax at a lower rate in NZ – in California I was paying a marginal rate of 33% federal, 10% state (plus 6% social security up to ~$90k) – so 43% in CA compared with 39% in NZ

    To be fair (the tax steps kick in at lower levels in NZ but are offset by that added flat 6% in the US (basically for govt super) on the first $90k.

    Capital gains tax in the US is the same as income tax unless you own the investment for 2 years or more when it’s 25% (compared with 0% in NZ)

    Sales tax in CA is ~8.25% compared with 12.5% in NZ – compliance costs are much much higher though because every county has a slightly different addition to that base 8.25% so you have to keep carefull records of where you sell stuff to

  24. Dom 24

    Darren, your whole ‘I should know’ argument appears to be a matter of opinion, not fact.

    I run my own business too and have since 1993 so re your “massive difficulties related to government imposed Labour legislation” argument – my experience is that I spend less time than I did in the mid-1990s under a National government.

  25. Vanilla, I cant reply to you because your post has no content and only insults.

    Randall, I made no connection to The World Bank/ Business and therefore my business. You did in your initial post!

    There are a whole host of other business taxes, local and state that you guys are not being honest and upfront with when doing business in New Zealand.

    I would rather listen to people like Don Braid from Mainfreight who echo the sorts of things I am saying.

    Why do you guys insult others with different opinions to yours?

    Cheers, Darren

  26. CarlF 26

    Quoth the Raven writes:
    “I suggest you take a walk on the streets of a major american city like L.A. or New York.”
    So the United States, with 20 per cent of its population living in poverty and its discombobulated middle classes, is our socioeconomic model then is it? With the number of US programmes on TV I should have recognized that.
    The rot began of course a half-century ago, long before Condi was to drop in on her parishional rounds. Oldies may recall the student refrain:
    “Peter Fraser used to raise a flag of bloody red,
    Shouting out the battle cry of Freedom,
    But when we see him now he waves the Stars and Stripes instead . . .”

  27. Darren Rickard, what you are saying is that your subjective experiance of doing business in one country is superior, more accurate and better informed than the world banks objective survey of many many countries. That is why people here don’t believe you.

  28. Gosh who’d have thought that little ol’ NZ was still a great place. Certainly NOT the National Party, according to them NZ sucks.

  29. jbc 29

    Lew,

    NZ Immigration wants police reports from Korea, Australia, and Singapore (being country of citizenship plus countries of stay greater than X years – forget the number) plus a couple of thousand dollars cash for the trouble of considering the application. I’m not sure what kind of snooping they will do to determine whether we are a genuine family.

    Contrast with the present situation. We are all foreigners. Applying to stay is a breeze. I vaguely recall needing a copy of a university degree and/or marriage certificate way back whenever. It might have cost $20 or $40. Certainly nothing significant.

    I know that the basis of our permission stay here is different to what it would be in NZ – but the net effect is that NZ doesn’t exactly make it easy (me and the kids are all NZ citizens).

    The need for all those police reports is curious when you consider that most people think Singapore would be more strict than NZ.

  30. jbc 30

    I should also point out that my comment on immigration is not a complaint, just an observation. Of course we can deal with the process if we want to – but if you’re undecided then it does give you pause. My partner’s first reaction to the request was not overly positive (putting it mildly).

    For the people that would walk over broken glass (or at least tile some MPs roofs) in order to live in NZ I suppose the police report is an insignificant matter. 🙂

  31. Jarvis Pink 31

    I’ve been running a small business for 5 years. I have a low pain threshold when it comes to paperwork and spreadsheets and I’ve found the process to be pretty straightforward and stress-free.

    On Bryces original point: even if one takes the view that NZ is TOO business friendly, the WB assessment is good news politically for the left. It undermines National’s message that businesses are struggling under the oppressive weight of an over-burdensome regime from which only the Nats can rescue them.

  32. Paul Robeson 32

    Darren people always attempt to get a better deal for themselves. That’s why they are vocal about the things that are difficult for them.

    Doesn’t mean the one they have got is fairly darn good.

    You would be suprised. Labour laws? Don’t make me laugh. In Queensland until fairly recently jobs would be advertised at ‘award wages’. That’s Australia where everything is allegedly greener with the 8 or 9 Labour governments. It was even law for a while there in recent history to have to pay time and a half on the weekend I seem to recall.

  33. higherstandard 33

    A more detailed analysis here for those interested.

    http://www.nbr.co.nz/comment/nevil-gibson/nz-second-best-country-business

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