2023 budget falls short for most small businesses

In his pre-budget speeches, Minister for Finance Grant Robertson had warned that even though businesses are feeling the pressure of increasing prices and slowing activity, the much-hoped-for tax cuts were “not an economic policy appropriate to this time in New Zealand”. He flagged that this year’s budget would instead focus on health, education, housing and infrastructure as the country continues to recover from several years of economic shocks.

Most big ticket items are concentrated in those areas – there isn’t much specifically targeted at small businesses – however there is some good news for business owners in the digital and technology space.

“For Kiwi small businesses struggling to navigate the harshest cost of living crisis in decades, the federal budget will come as a relief for those SMEs forced to live month-by-month,’ says Prospa Managing Director NZ Adrienne Begbie.

Minister for Small Business Ginny Andersen says that elements of the budget are designed to boost these sectors because they are a “creator of high-skill, high-wage jobs – aligning with our vision for a low-emissions, high-wage economy, helping to lift our productivity and wealth”.

The horticulture industry also received an extra boost to help the sector recover from Cyclone Gabrielle.

Gaming sector rebates

In recognition of the increasing contribution to GDP from the gaming sector, a 20% rebate will be available for game development studios that qualify and meet the minimum $250,000 expenditure threshold per year. Individual studios will be able to receive up to $3 million per year in rebate funding, with the scheme backdated to 1 April 2023.

“The rebate will help attract and retain gaming studios to operate in New Zealand, and provide a long-term incentive to build their business here. We also want to make sure that we have the right people trained and ready to help grow the gaming and wider tech sector in New Zealand,” Minister Anderson said.

Tech sector training package

A Digital Skills package worth $27 million will support the development of apprenticeship-like pilot programmes, including part payments for trainee wages, employer support and guidance, and set up costs for trainees.

There will also be a nationwide in-school programme and an internship-matching service that will integrate in school learning and work-based learning with local employers. Students will gain credits as they work towards completing a Level 4+ tertiary qualification in Information Technology.

Funding to increase horticulture productivity

A Horticulture Technology Catalyst initiative costing $29.9 million (part of the Agritech Industry Transformation Plan) will allow horticulture technology experts to provide services such as business coaching and support to growers and the sector.

“Through this initiative, services will be focused on improving industry connections, developing talent, working with firms and universities to tailor education to industry needs, and supporting businesses to commercialise their projects and research,” Minister for Economic Development Barbara Edmonds said.

Boost for Pasifika community businesses

A range of investments will help Pasifika communities boost business and employment. The package worth $51 million includes:

• $14.1 million investment in Pasifika community resilience and wellbeing, some of which is aimed at strengthening the capability and leadership of the Pasifika workforce through targeted programs and tools.
• $12.8 million to implement the Pasifika Employment Action Plan, covering a Tupu Tai summer internship programme supporting Pasifika young people to gain policy experience in the public sector, a worker’s toolkit that supports employers to engage with and support Pasifika workers in culturally responsive ways, and a contestable fund for community-led employment and training initiatives.
• $3.1 million to support the growth, resilience and sustainability of Pasifika businesses.

Tourism sector funding

The Tourism Better Work Action Plan, launched in March this year, has received $18.2 million. The plan aims to build a more resilient sector and address challenges in the tourism workforce. The funds will be used to increase capabilities and opportunities by upskilling workers, raising employment standards, building cultural competency, increasing productivity, and helping the industry attract and retain workers.

Small businesses may also benefit indirectly from budget initiatives such as funding for 100,000 more insulating and heating retrofits of homes, building another 3,000 public homes by mid-2025 (in addition to the 4,500 under construction) and more than $1 billion allocated to support communities and business in the previously announced Cyclone Recovery Package.

“With 546,000 SMEs making up 97% of companies across the country, small businesses are the backbone of the New Zealand economy and are the beating hearts of our communities,” Adrienne Begbie says. “We urge the Government to consider how it can support the livelihoods and well-being of small business owners.

“The 2023 budget was the opportunity to step up and support the many Kiwi small businesses who are doing it tough. By investing in our small businesses, we can help ensure their continued success and contribution to the New Zealand economy.”

For more information about the budget, visit the Budget website.