Budget 2020: How it will help small businesses develop 'new, innovative products and services'

Budget has been allocated to help businesses to innovate and operate online. Photo credit: Getty.

Thursday's $50 billion Budget 2020 delivered a few wins for small businesses, including an eight-week wage subsidy extension, funds for innovation and development of online platforms.

BusinessNZ chief executive Kirk Hope said the $150 million short-term loan scheme, which complements the research and development (R&D) tax incentive, will give businesses access to funds for ongoing research.  

“It recognises the importance of small businesses in developing new, innovative products and services,” Hope said.

The COVID-19 lockdown period showed the value of online trading to help businesses stay afloat.  For those wanting to incorporate wider online solutions into their business models, the Budget 2020 e-commerce fund will provide incentives and grants, including more trained digital advisors. 

However, $10 million seems inadequate to support the changes required to take advantage of this shift.

"Businesses that continued some or all of their operations online will have emerged from the worst of the crisis in a stronger position going forward.

“E-commerce is becoming an essential tool for small business and we’d like to see greater support for small business getting into e-commerce in the future,” Hope added.

Michael Whybro, small business owner and managing director of SOS recruitment, said that targeted spending, like the $1.6 billion trades and apprenticeships programme, will help to address the need for workforce talent.

To ensure the money is put to good use, he urges Government and ministries to work closely with industry sector experts to ensure they meet immediate business needs for skilled staff. 

"There must be greater attention to the actual qualifications and standards of the training institutions as many in the past have [not] met the needs of business owners," Whybro said.

"They must also work to try to forecast future needs and then ensure we have an ongoing reasonable match between trained staff and industry demand."

The SME sector represents over 700,000 small businesses and sole traders, equating to around a third of the country's GDP.  Whybro says there needs to be engagement from Government decision-makers to get the right workforce skills in place, particularly in engineering and trades. In the near-future, this includes looking at implementing safety measures around border controls.

"We must urgently work with industry, health and immigration to bring back many of the talented people we lost before and during COVID-19 plus more," Whybro said.

"This same approach must be urgently resolved for the education providers who rely on overseas students for their livelihood – if they wither on the vine, our ability to train new domestic and overseas staff diminishes significantly," he added.

In an ANZ Bank webinar on Friday, Finance Minister Grant Robertson reiterated that Budget 2020 was about an "investment in jobs". 

He said that the wage subsidy and other Budget initiatives will mean that up to 140,000 jobs have been saved and the initiatives will contribute to a growth in jobs in the future (around 372,000 jobs added to the economy over the forecast period of five years).

Delivered as part of the 'response' phase of the Budget, the wage subsidy extension scheme is more targeted.

"We've extended it, particularly with a focus on the industries that aren't operating at level 2: hospitality, retail, tourism [are] all operating at a much lower level.

"That subsidy gives more time to start to reorientate a business, to think about what you might want to do in terms of your plan going forward," he said.

The package for trades and apprentices training is the biggest put in place for the sector. During the GFC, in industries like construction, employment fell away and apprentices were laid off, an issue this year's Budget has addressed.

"We're going to be funding people to support them to keep their apprentices on, [and] providing free trades training and apprenticeships in critical industries, like construction, manufacturing, agriculture, community care and healthcare," Robertson added.

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