Labour’s small business focus and their problem with it

Liam Hehir has identified a problem with Labour’s focus on small business.

It is obvious, their complete lack of talent in their caucus of anyone who has run a small business…and of course their spokesperson who has only ever written a few papers while interning in the House of Commons a few years back.

It was encouraging to see Andrew Little push his party to update its definition of working people beyond the narrow paradigm of the cloth-capped worker on the assembly line.

The man has a pretty good chance of being New Zealand’s next prime minister, after all, so it’s good to see him take a realistic view of work in the modern economy.

One difficulty he might have is that his caucus remains light on small and medium-sized business experience. There are only a few members of the caucus, for example, who will have an understanding of what it actually means to grapple with GST, manage debtors, meet payroll and personally bear the costs of regulatory requirements. These are unique pressures that you don’t get as an employee of the state or working in a large company.

I have always liked the story of how former United States senator and Democratic presidential nominee George McGovern came to appreciate this. After losing a re-election in the Republican wave election of 1980, McGovern needed something to do in his retirement years. Having long held an interest in hospitality, he decided to use his savings to buy a small hotel and conference facility in Stratford, Connecticut.

It was not long before a terrible truth dawned on McGovern: being a small businessman was much, much harder than it looked when he was a history professor and a politician. His business went under in less than three years. Most of McGovern’s savings went with it.

In the years that followed, McGovern often wrote about his business failure with great intellectual honesty. He said a big part of the reason his business went bust was that the costs of complying with tightening health and safety requirements had become crippling. Complicated tax rules and business regulations also meant that hotel management had to dedicate a lot of time to form-filling and reporting to various agencies. That left less time to spend actually running and promoting the hotel so that it could attract paying customers.

This is important. The problem is Andrew Little has stated that the one major help to small business in New Zealand, the 90 Day bill, will be repealed, harming small business not helping it.

Labour needs to ditch that policy forthwith if they are truly to be taken seriously on small business.

Will Labour’s and Little’s union backers allow that?

Hehir continues with the McGovern theme.

He also validated two concepts that people drawing a salary from the state or large corporations could sometimes struggle to comprehend.

First, the culture of bureaucracy and compliance hits small businesses particularly hard.

Many of the health and safety requirements that dragged his hotel under were easily absorbed by the established luxury hotels in New York. This was not so for smaller businesses operating in price-sensitive, provincial markets.

Second, many regulations designed to protect employees end up hurting those working for smaller enterprises. When his business failed, McGovern took comfort in the fact he could always make money on the lecture circuit. “But what about the 60 people who worked for me in Stratford?” he asked. “While running my struggling hotel, I never once missed a payroll. What happens to the people who counted on that, and to their families and community, when an owner goes under?”

That real sense of anguish and personal responsibility can come only from bitter experience. It’s not something that a bachelor of arts followed by a career in the public service can prepare you for.

McGovern didn’t become a Right-winger as a result of all this. He did, however, lament the fact that he only learned what small business people go through after leaving politics. He wrote that, had he been armed with this knowledge before going into public life, he would have made “a better US senator and a more understanding presidential contender”.

Oh, well. Better late than never, right? Except that McGovern’s epiphany was too late for him to be able to do anything about it (other than letting the experience serve as a useful parable).

Will Andrew Little have an epiphany? Is he capable of such a thing?

Or will he stick to his union dogma?

We can’t possibly know because all Andrew Little or Jacinda Ardern have delivered is bumper sticker slogans and zero policy.

Does Andrew Little really have the stones to look at regulatory reform and removing silly barriers to small business? I suspect not, his example of what works well was from mega business Fonterra, which shows just how out of touch he is with the tradies, the multitude of employers with less than 50 workers and other businesses beset with compliance costs that large companies just soak up.

Is Little prepared to reduce company tax and remove FBT for small businesses? Somehow I doubt it.

Perhaps the single best thing Labour could do is declare a small business crisis…that is the only thing that ever seems to work.

Switching back to Little’s speech, a more concrete step in this direction would be for him to use his influence as leader to promote diversity within his party. I am not referring to matters like gender or ethnicity. Those are things Labour thinks a great deal about.

What I mean is that Labour would do well to make an effort to ensure entrepreneurs have a higher public role in the party – including higher rankings within caucus.

We’re not talking plutocrats here, but those everyday business owners with fewer than 50 employees. Collectively, these people employ an enormous number of New Zealanders, often risking their livelihoods in doing so.

They also suffer under inflexible and overly prescriptive business laws and would have borne the brunt under a David Cunliffe administration.

When it comes to speechifying, Little has made a good start.

Let’s see whether the delivery keeps up with the rhetoric.

We aren’t talking about corporate bludgers either like Selwyn Pellett.

So far all we ahve is bumper stickers…if policy doesn’t turn up soon then that’s all they’ve got, but then again with a caucus whose talent is as shallow as a bird bath and list that isn’t much better we really shouldn’t expect that much.

 

– Manawatu Standard

 


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

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