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Parties' visions for small business Covid-19 recovery don't inspire industry leader

Small businesses are struggling to recover from the Covid-19 pandemic, and the lack of election policy isn't helping the case, says a former Business NZ chief executive.

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Former Business NZ chief executive Phil O’Reilly discussed the post-pandemic economy. Source: Breakfast

Phil O’Reilly, now the managing director at Iron Duke Partners working with the Government and business clients on public policy, told TVNZ1’s Breakfast this morning small businesses needed to be at the forefront of the economic recovery, but it wasn't currently happening. 

“I’m not seeing enough promises on the campaign trail to make me confident that it will happen in the next three years,” he said.

He said the “biggest single thing” the current government did to help small businesses was re-open the economy quickly after lockdown. 

O’Reilly said he was hearing from small business owners that while the wage subsidy helped “a lot” to cover their wage costs, it didn’t help with other costs, like rent and leases.

“[The Government] could’ve done a lot more about really putting small business at the centre of their thinking. They really didn’t do that. 

“They continued to put big government at the centre - and you see the shovel-ready projects and all these kinds of things that they’re announcing.”

Instead, he said small businesses needed to have the confidence to be able to employ new people and invest and grow in new markets. 

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“Most small businesses are cashflow businesses. They get cash in at the start of the month and spend some and hopefully make a bit of a profit.”

But, because of the lack of cashflow through lockdown, the small businesses that have survived so far are now “relatively fragile” to any further disruptions, he said.

O’Reilly said the Government’s small business cashflow loan scheme is “not a bad policy”.

“But it could have been a hell of a lot better if the Government had simply said during the lockdown time, let's put some cash in business owners’ pockets to make sure they can look after their rent and that they can still look after their home mortgage.”

This was important because small business owners usually borrowed against their family home, he said. 

In September, Labour announced it would extend the small business loans for three years if elected. The party also promised to extend the interest-free period of the loan to two years, from the initial one year. They also want to regulate fees charged to retailers for debit and credit card transactions.

Meanwhile, National announced in May it would help small businesses by granting $10,000 per new employee hired between November this year and March next year, up to the value of $100,000. It also promised people access up to $20,000 from their KiwiSaver acccount to start a new business. 

ACT announced yesterday it would bring back 90-day employment trials and freeze the minimum wage for three years if in Government.

‘We need a lot more’ - Small business owner 

Emma Fraser, the owner of a nail studio in Tauranga, said business confidence had been growing over the past two weeks as more people felt comfortable heading out. 

She said some of the Government’s policies so far “have been fantastic”, like the wage subsidy.

Fraser said the cashflow loan scheme was also helpful when she needed it, but “it does become a liability”. 

“As a small business, apart from the liability we came out with, it was good at the time we needed it.

"Going forward, we need a lot more.”

Current policies were mainly focused on helping employees, she said.

“They haven’t actually released, at this stage, any policies for small business.”

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She pointed to Labour’s promise to double sick leave day entitlements.

“If we do increase sick leave days - that’s another cost to small business … where’s that going to come from?”

It may force her to reduce people’s hours or make them redundant, Fraser said.