Crone on small business and Labour

Xero’s Victoria Crone writes:

I recently attended Labour and Opposition Leader Andrew Little’s State of the Nation speech and heard first hand how the Labour Party is throwing its weight behind small business by placing a big emphasis on the small business agenda. …

There are a few areas where I think that they’re barking up the wrong tree, one being around starting a business. The World Bank Group already ranks New Zealand as the easiest place to start a business.

However, with small business firmly on Labour’s agenda, this bodes well for a great policy debate around small business for the next election.

I agree. I hope they come up with some innovative policy.

I see a few challenges for Labour’s small business policy:  

– Labour has a dilemma as it tries to encourage small business to create jobs. The first is the dilemma between what is essentially a nation of very small and often fragile businesses (remember 92 per cent of our small businesses employ less than five people and these businesses have the highest death rates), who will be taking on additional jobs which represents massive risk for them. A small business has to be able to sustain the extra cost of an additional employee over the long run. The average business owner is already wearing 20 hats. Adding managerial and employment policy to their already long list of day to day tasks will provide extra pressure.  Labour’s policy on encouraging job growth while minimising business risk could be challenging philosophically for the Party.

Most of Labour’s current policies are bad for small businesses. Their policy to scrap 90 day trials especially. But also their policy to massively hike the minimum wage, and make it illegal for a small business to gain Government work unless they pay a “living” wage.