MYOB: NZ could compete on an even footing with Australia

Kiwi businesses shouldn't be satisfied with 'the crumbs from Australia's table', with nothing fundamentally stopping the two economies from competing on an even footing and achieving similar outcomes, according to MYOB chief executive Tim Reed.

He says MYOB is seeing through the regular research in the MYOB Business Monitor that there is no fundamental difference in terms of capability or performance between Australian and New Zealand businesses.

"In fact, our Monitor reveals that Kiwi business owners actually performed better through the global financial crisis, even though Australia never technically declared a recession."

The MYOB Business Monitor is a survey of more than 1,000 business owners in New Zealand and 1,000 in Australia and it found that at the peak of the global financial crisis 35% of New Zealand businesses reported a fall in revenue over 12 months, compared to 39% in Australia.

In the April Monitor, 26% of Kiwi business owners reported a rise in revenues, compared to just 22% in Australia.

Reed says these results, and MYOB's examination of other key capability measures, reinforce that Kiwi business owners are easily able to match their Australian counterparts.

"What's holding the New Zealand economy back isn't the things that have been held up as Australia's great advantages, like a mining industry.

"In fact, the existence of a strong resources sector in some countries has made it actually more difficult for their economies to compete in other areas because a heavy reliance on oil and mineral sectors tends to drive up exchange rates - inhibiting other export sectors."

He says Singapore is a shining example of a country of around 4.6 million people that has continued to develop strategies to raise GDP per capita well above levels of many countries that have more natural resources.

Reed believes a successful economy has much more to do with New Zealand's regulatory environment and the support Kiwi business owners get from the Government and private sector investors.

"The differences in these areas in Australia are what have set up the rapid bounce-back in the economy we are now seeing."

In the April MYOB Business Monitor, 37% of Australian businesses owners report an increase in work forecast for the next quarter, compared to just 29% of New Zealand businesses owners.

Reed says over the past 20 years there have been five key structural reforms to the Australian economy: financial deregulation, lowering/removal of trade barriers, introduction of the GST, compulsory superannuation and liberalisation of the labour market.

"New Zealand implemented the first three of these before Australia, but is lagging in the latter two," says Reed.

"In particular, a compulsory KiwiSaver scheme is something we'd really encourage the New Zealand Government to consider.  Not only does it start to address the challenges of an aging economy, but it also builds the foundation for a financial services industry."

He says in Australia, the compulsory savings scheme has led to a significant level of local business investment and turned Australia into a local financial services hub for the Asia Pacific region.

"By making key changes to the regulatory framework to give New Zealand business owners more flexibility in managing their business - especially in the Employment Relations Act - and fostering greater investment for business development, New Zealand would make huge strides in matching Australia's economic performance," says Reed.

He says there is no fundamental reason why New Zealand could not have its own 'seat at the table', except that business owners are being frustrated by a lack of support and investment."

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