A recent survey by BusinessNZ has revealed that the high cost of doing business is the main concern for New Zealand enterprises, as they face increased challenges from the government’s policies and the COVID-19 pandemic. The survey also showed that most businesses are not in favour of raising taxes to address the country’s fiscal issues.
Survey highlights business sentiment ahead of election
The Deloitte and Chapman Tripp Election Survey conducted by BusinessNZ is New Zealand’s premier survey of business sentiment in the lead up to the General Election. Each election year, the survey asks businesses their views on current political issues and poses the same questions to New Zealand’s main political parties, so comparisons can be made between business needs and political parties’ promises.
This year, 880 businesses and seven political parties (Labour, National, ACT, Green, Te Pāti Māori, NZ First, and TOP) were surveyed. The results were released on Tuesday, 5 September, 2023.
The results show that the business community’s main concerns are the increased costs of doing business and the lack of a plan for raising New Zealand’s economic performance. Businesses are also worried about the impact of COVID-19 on their operations and the future of the country.
Businesses feel the pinch from government policies
According to the survey, 93 percent of respondents said changes made by the government had increased their cost of doing business. These changes include higher minimum wages, increased sick leave entitlements, new environmental regulations, and more compliance requirements.
Additionally, 85 percent of respondents said they did not think the current government had a plan for improved economic performance. They cited issues such as low productivity growth, skills shortages, infrastructure deficits, and trade barriers as major obstacles to achieving higher living standards.
The survey also revealed that businesses are not satisfied with the government’s response to the COVID-19 pandemic. Only 38 percent of respondents said they felt supported by the government during the crisis, while 55 percent said they felt unsupported. Businesses also expressed concerns about the lack of clarity and consistency in the government’s COVID-19 alert level system and border policies.
Businesses oppose tax hikes to fix fiscal challenges
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 compliance cost of business tax was also a significant concern for many, with 64 percent of respondents saying their tax compliance costs had increased over the last three years.
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. They have expressed a desire for stability on tax that shows that businesses may see greater value being achieved through enhanced clarity and deliberateness of the spend, rather than increasing the amount available to spend through significant tax change.
Businesses call for collaboration and innovation
Despite the challenges and uncertainties facing them, businesses are also looking for opportunities to collaborate and innovate in the post-COVID-19 world. The survey showed that businesses are keen to work with the government and other stakeholders on issues such as climate change, digital transformation, social wellbeing, and regional development.
The survey also showed that businesses are proactively looking for ways to stay ahead of the curve when it comes to new technologies such as artificial intelligence (AI). The most common steps taken by businesses to adopt AI tools are experimenting (32 percent) or investing (21 percent) in new AI tools, dedicating more resources to AI use (20 percent) and working with third party AI vendors or experts (18 percent).
However, businesses are also aware of the risks and ethical challenges posed by AI tools. The top actions taken by businesses to manage these risks include creating policies and guidelines for employees (26 percent), providing training to employees on identifying biases or inaccuracies (25 percent) and seeking written consent from clients/customers before using AI tools (23 percent).
Businesses have also expressed concerns about AI development and adoption outpacing regulation, as well as the potential impact of AI on worker displacement, data privacy, and sensitive information disclosure.
