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20 minutes with Minister of Small Business, Craig Foss

Idealog: So let’s start with the basics. What’s the lay of the land for small business in New Zealand at the moment? What are the issues facing SMBs and SMEs in 2016?

Minister for small business, Craig Foss: Most of the issues facing businesses in New Zealand, but smaller businesses in particular, are around the changing dynamics of the market – I’m talking about things like the challenges businesses face from new competitors overseas and issues around the greater levels of connectivity we have.

Businesses in general adapt slowly over the course of years. Now, things move more quickly. That speed of change – the internet, internet business, the internet of things – brings challenges. Using technology to add productivity to your business – that brings its own challenges. These days you can do almost everything as a service, you can now contract almost everything out, and that’s difficult for a lot of businesses.

So is it a case of only a small percentage of businesses really taking advantage of the emerging tech, while a large percentage of businesses remain ‘offline’, and simply not exploiting those opportunities?

Some embrace change early and some don’t, but it’s not a great divide. There are those on the bleeding edge – and that can be costly – those that haven’t and those in-between that are moving with the times.

Everyone used to be licking stamps, now everyone uses email. Now it’s just part of the furniture. It’s being driven by the consumer and it’s the same for everyone. Whether you’re in produce, a consultancy service, a tourism provider, you name it, it’s about collaboration, it’s having that online presence, it’s about being able to communicate that you’re there.

So what is the government doing?

Leading that charge is business.govt.nz, which has all sorts of online tools for business. Using the site you can learn about your market, find out about new products, price compare suppliers and a lot more. It’s really exciting and there’s a whole lot more coming. We’re taking anonymised data from Government agencies and crunching that in a way that’s useful.

They’re already doing this in ‘the real world’ – companies like Xero, MYOB, banks – and our mission is to make that sort of data available, accessible to businesses usable and relevant. As taxpayers you’ve already paid for it.

Has the Government looked at creating partnerships to get the most from that government data?  

Yes, we’re already doing that through partnerships with MYOB and Xero. We’re trialling the sharing of data and trying to enrich what we’ve already got. And we’re also working on opening up a lot of raw data for analysts.

How long has this project been underway?

Business.govt.nz was given a refresh 12 months ago and now we’re trying to really pump up what you can do with those statistics, making the information more accessible and user-friendly, because data is gold, but how you use it is key.

Are Kiwi businesses luddites when it comes to the way we use the available tech?

At the end of the day, it’s their business and we’re not telling anyone how to run it. Governments are terrible at running businesses, so I’m not criticizing anyone for being slow on the uptake, but there is a huge benefit in taking up the technology.

And it’s not just sharp ICT companies I’m talking about. It’s about those business that are adopting the tech, just maybe at a slower pace. Because it’s worthwhile. Businesses that extensively use the internet have a 6% gain in productivity. That’s a 6% increase on the bottom line.

There seems to be something of a split personality when it comes to Kiwi entrepreneurship. On one hand we applaud ourselves for our world-class ingenuity, yet we seem to have a bit of an inferiority complex when we actually look at what’s going on overseas. Does the truth lie somewhere between those two extremes?

I’ve lived all over the world and take it from me, we are a nation of entrepreneurs. We have a talent for lateral thinking and it’s an approach that serves us well. We adopt early, we use things in unthought-of ways and we’re endlessly innovative. We’re an island nation wanting to secure the advantages of being in a first world country, and now the tyranny of distance has been smashed.

So now that we’re competing more fully in these markets, what’s our angle? What do these other countries see in New Zealand?

Essentially, they’re buying trust. That’s a huge advantage for us. Many places can’t offer that. That’s the Kiwi premium.

What are the coming challenges facing New Zealand business over the next year?

The issues will be same: cash flow and cash flow management. Many businesses have their home on the line. They’ve borrowed against their homes to start their businesses. That’s commitment. I take my hat off to the entrepreneurs who take a risk like that to back their idea.

So what’s the government doing to support that?

We’re doing a lot around the tax transformation package – making business’s interaction with the government as simple as possible and trying to find ways to lower the tax burden people face.

The IRD website has something of a notorious reputation…

Sure, if we were designing our tax system tomorrow we probably wouldn’t do it the way it is now. It’s a 1992 mainframe. Do you remember the computer you were using in 1992? Well we’re in the process of rebuilding that, bringing out apps, letting people pay their tax online, things like that. We’re pouring a lot of resources into it and we’re focusing on the bits that are most annoying first.

And of course I have to ask you about the TPP. You’re a fan?

I am a huge supporter of the TPP, and the last agreement and the next one, because I back Kiwis for a fair and level playing field. We’ve done very well out of these agreements. What’s better? A market of 4 million or a market of 800 million? A lot of people think they’re somehow not involved in export, but they are. We all are. We’re an exporting nation.

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