A survey conducted by BusinessNZ reveals that the majority of New Zealand businesses are worried about the high cost of doing business and the lack of a plan for improving the country’s economic performance. The survey also shows that businesses are opposed to increasing business-related taxes to address the current fiscal challenges.
Businesses Feel The Pinch Of Government Policies
The Deloitte and Chapman Tripp Election Survey, which is New Zealand’s premier survey of business sentiment in the lead up to the General Election, asked 880 businesses and seven political parties (Labour, National, ACT, Green, Te Pāti Māori, NZ First, and TOP) their views on current political issues. The results show that 93 percent of respondents said changes made by the Government had increased their cost of doing business. And 85 percent said they didn’t think the current Government had a plan for improved economic performance.
Some of the factors that contributed to the increased cost of doing business include:
- The minimum wage increase from $18.90 to $20 per hour in April 2023
- The extension of paid parental leave from 22 weeks to 26 weeks in July 2023
- The introduction of a new top income tax rate of 39 percent for earnings above $180,000 in October 2023
- The implementation of the Zero Carbon Act, which aims to reduce greenhouse gas emissions to net zero by 2050
- The tightening of immigration rules, which made it harder for businesses to hire skilled workers from overseas
Businesses Reject Tax Hikes To Fix Fiscal Deficit
The survey also highlighted a high degree of business interest in tax policy issues and clear views about proposed tax changes. Respondents were reluctant to endorse proposals for changing business-related tax policy either through introducing a capital gains tax (61 percent against), wealth tax (67 percent against) or windfall tax (70 percent against). Many were also against changing GST (75 percent against) or corporate tax (60 percent against) as part of a policy prescription to address current fiscal challenges.
The Government has projected a fiscal deficit of $28.3 billion for the year ending June 2023, due to the impact of the COVID-19 pandemic and the stimulus measures taken to support the economy. Some political parties have suggested raising taxes on businesses and wealthy individuals to help close the gap, but businesses have shown that they have a high level of understanding of taxation options and trade-offs, sending a clear message to political parties seeking to raise taxes to address current fiscal challenges.
Businesses Call For More Investment In Infrastructure And Resource Management
The survey also revealed business thinking on infrastructure, resource management and investment – policy areas that can deeply affect the environment for business. Businesses expressed their frustration with the slow progress and poor quality of infrastructure projects in New Zealand, especially in transport, energy and water sectors. They also called for more streamlined and efficient resource management processes, which are often seen as a barrier to development and innovation. Furthermore, businesses urged the Government to create more favourable conditions for investment, both domestic and foreign, by reducing red tape, improving regulatory certainty and enhancing competitiveness.
Deloitte Chief Executive Mike Horne said respondents identified major structural challenges that will need to be addressed by any post-election government. “But some responsibility also lies with the business community to work alongside government to facilitate and support the change that is needed. It can be acknowledged that it is much easier to navigate these shifts in a strong economy – something the post-election government will need to address first.”
BusinessNZ Chief Executive Kirk Hope said the survey results showed that businesses were looking for a clear vision and direction from the next government. “Businesses want to see policies that will enable them to grow and thrive in a post-COVID world. They want to see a government that understands their needs and challenges, and that works with them to create solutions that benefit not only businesses, but also workers, consumers and society as a whole.”
