MYOB BUSINESS MONITOR POLITICAL SPECIAL REPORT

November 2011

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MYOB New Zealand Business Monitor Government Issues Report November 2011 - Highlights

New Zealand business owners almost twice as dissatisfied as satisfied with Government’s support

While New Zealand business owners have almost returned to the level of satisfaction they had with the Government in April 2010 (18% now, 19% then), the level of dissatisfaction with the Government’s support of small businesses like theirs (34%) remains nearly twice as high. While New Zealand SMEs quite dissatisfied, SMEs in Australia most dissatisfied ever While one third (34%) of New Zealand SMEs remain dissatisfied with the National Party Government based on their support for businesses like theirs, the situation is worse in Australia, where the majority (56%) are dissatisfied (and only 14% are satisfied) with the Gillard Government. This matches the highest dissatisfaction scores previously obtained (in June 2008 and September 2008 MYOB Business Monitors) for a Federal Government in Australia. Just as in April 2011, Nationals remain set to rout Labour at upcoming parliamentary election When asked which party they intend to vote for at the upcoming parliamentary election, an amazing 6 in 10 (59%) say National Party, only 1 in 10 (11%) say Labour, with a further 2 in 10 (22%) uncommitted. (These results are almost identical to those obtained in the April 2011 survey, where the figures were respectively 62%, 10% and 21%.) Support for the National Party is higher among business owners with an annual revenue between $1m and $5m (72%); owners of small businesses (71%); and business owners that have enjoyed revenue increases compared with a year ago (69%); as well as business owners in Finance and Insurance (67%); and business owners in Agriculture, Forestry and Fishing (65%), Labour would now enjoy the most support from business owners in the Transport and Warehousing sector (22%, although 49% of business owners in this sector would vote for the Nationals). As SME-preferred PM, John Key holds a mammoth 10 to 1 preference over nearest rival Phil Goff An extraordinary 69% of business owners surveyed in New Zealand would prefer John Key to remain as Prime Minister as a result of the upcoming election, only 7% would prefer Phil Goff, while the eternal Winston Peters garners 3%, and Don Brash 2% of the preferences of all New Zealand SMEs surveyed in September 2011. (And no other potential candidate is preferred by more than 1% of all business owners surveyed in September 2011.)

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Simplified tax rules and processes to help businesses comply, would easily win most votes When asked to name which of the 17 potential policies or initiatives would win their vote for the Party that proposed them, ‘simplifying provisional tax rules and processes to make it easier for businesses to accurately determine and meet their tax obligations’ remains the top vote getter for three quarters (74%) of SMEs, as it was in April 2011 (76%) and November 2010 (75%). Those by far the most likely to back this initiative with their vote are business owners in the Transport and Warehousing sector (97%) and business owners in the Agriculture, Forestry and Fishing sector (81%). All other business owners would fairly equally prefer this initiative over all the others tested. Increased funding for innovation, removal of GST on essential goods and services, ‘Buy Kiwi Made’ policy and more investment in urban transport infrastructure, would also attract majority votes

Almost three fifths (58%) would vote for ‘Increased Government funding for innovation, research and development by New Zealand businesses’. This potential initiative was also preferred by three fifths (61%) of business owners (although stated slightly differently) in the April 2011 survey. Most business owners would vote for this initiative in equal measure, with business owners in the Transport and Warehousing sector (66%) just slightly more likely to be influenced by this move.

Almost three fifths (58%) would vote for ‘The removal of GST on selected 'essential' goods and services (like fresh food and doctors’ visits). Some business owners are considerably more attracted to this potential initiative, led, as in April 2011, by business owners in Transport and Warehousing (74%) and in Construction and Trades (67%); by owners of low revenue ($40-70K pa) businesses (69%); by younger business owners aged 18-39 (68%); and by Female business owners (65%). Just over one half (51%) of all business owners surveyed in September 2011 would vote for ‘The introduction of a ‘Buy Kiwi Made’ policy for all central and local Government procurement where possible’. Keenest on this policy are business owners in Transport and Warehousing (61%) and those much less likely to be influenced by the policy are in Finance and Insurance (41%). Just over one half (51%) of business owners surveyed would vote for a Party proposing ‘More Government investment in transport infrastructure in New Zealand’s major Cities’. Understandably, this potential initiative has much more appeal in Wellington (62%), Auckland (61%) and Christchurch (57%) than it does in the Rest of New Zealand (40%). Unsurprisingly, it also appeals a great deal to business owners in the Transport and Warehousing sector (62%).

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Proposals to introduce Capital Gains or Carbon Tax, or conduct a partial sale of State Assets would lose more SME votes than any other policies The least popular of all the possible policies or initiatives surveyed would be ‘The introduction of a Capital Gains Tax (CGT)’. Three fifths (59%) of business owners are prepared to vote against it and only 19% of business owners are prepared to vote for it. Those most opposed to a CGT are (just as in April 2011) business owners in Professional and Business Services (70%) and business owners of an established (>10 years) business (70%) and now, also business owners in Wellington (66%). ‘The introduction of a Carbon Tax’ would lose as many votes as a Capital Gains Tax would. Close to three fifths (58%) of business owners are likely to vote against the Party which proposes the introduction of a Carbon Tax. Those most opposed to a Carbon Tax are business owners in Agriculture, Forestry and Fishing (68%); in established (>10 years) businesses (68%); in Transport and Warehousing (67%); in Construction and Trades (65%); and in Rural New Zealand (65%). Close to half (46%) of business owners would still vote against ‘The partial sale of State Assets’, which closely parallels the April 2011 survey result (44%). Those most opposed to a partial sale of State Assets are business owners in Wellington (57%); owners whose business revenue has declined versus a year ago (54%) and Female business owners (52%), compared with 43% of Male business owners. Local City and Regional Councils across New Zealand far too unsupportive of local business As far as SMEs are concerned, most Local City and Regional Councils in New Zealand need to start making things better rather than worse for local businesses, since the September 2011 results highlight the dissatisfaction with local Councils (42%) and returned to November 2010 levels (44%). Those business owners more likely dissatisfied than others with their local Council’s support are led by those who report a revenue decline compared with a year ago (54%). Taranaki and Waikato Councils perform worst, while Wellington Council performs best for local business Although some Councils’ (e.g. Gisborne, Marlborough, Nelson) had insufficient respondents in this survey to be accurately measurable, the ten measured in September 2011 showed that the most dissatisfied business owners are likely to be in Taranaki (48%), Waikato (48%), Northland (47%), Hawkes Bay (45%) and Auckland (43%). Conversely, local business owners are almost as satisfied with Wellington Council (21%) as they are dissatisfied with it (27%), in terms of this Council making things better for local businesses.