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Chris Penk: Making Things Easier for Small Businesses in New Zealand
The recent Cabinet reshuffle has indicated the government’s urgent priority on economic growth. This is unsurprising, as New Zealand’s economy has taken the biggest hit in the world in 2024 according to HSBC.
Small businesses are a critical part of the economy, making up 25% of New Zealand's GDP and 28% of employment. As the Minister for Small Business and Manufacturing, Chris Penk sat down with NZBusiness Editor David Nothling-Demmer to discuss SME’s key challenges today and his plan to foster growth in a volatile climate.
Here are some of the notable points for SMEs.
Regulatory and compliance burden
One of small businesses' biggest hurdles is getting approvals from local councils. These businesses also face issues navigating the many compliance measures that can affect their agility and resources.
“Over the years, successive governments have added layers of compliance – often with good intentions – but the reality is that these requirements disproportionately impact small businesses,” Penk said.
“If local councils require small business owners to fill out forms or obtain licenses that overlap with central government regulations, we need to ask why. There’s room to streamline processes and remove duplication.”
For example, Penk mentions that while complying with anti-money laundering regulations is necessary, it can be particularly challenging for small businesses.
“If we can work with our international partners to ensure our compliance is fit-for-purpose without placing undue strain on SMEs, we should explore that.”
Penk is working on initiatives to simplify reporting, reduce administrative burdens, and refocus small business priorities from paperwork to growth.
Supporting small businesses in the broader economy
Penk mentions that he is working closely with Finance Minister Nicola Willis to put small businesses at the front and centre of New Zealand’s recovery strategy. Willis also holds an additional government portfolio that includes economic growth.
“SMEs are major drivers of growth, and my role is to ensure Minister Willis understands the challenges these businesses face so they can be factored into broader economic policies.”
Penk mentions that the government is exploring more economic measures to support small business growth. This includes managing high inflation and interest rates, which have significantly impacted SMEs.
Finance access
As banks become more conservative, strict lending policies have made it more difficult for small businesses to get financing. Coupled with high interest rates, it has created a challenging environment for SMEs.
Penk believes the government can encourage banks to implement more SME-friendly lending rules. For example, regulatory changes can be made to incentivise banks to offer more flexible financing options, particularly for startups and SMEs looking to expand.
“We have a relatively small number of dominant banks in New Zealand. By applying pressure and promoting competition, we can encourage them to prioritise small business lending,” Penk said.
International trade
Export growth is highly important for small business manufacturers, and Penk is keen to make it easier for SMEs to navigate international trade and secure market access. While trade negotiations fall under the Trade Minister’s jurisdiction, Todd McClay, Penk emphasises how SMEs must be included in trade discussions and supported with resources for global expansion.
“Exporting is a huge opportunity for New Zealand businesses. The US is now our second-largest export market, and we need to ensure our trade relationships remain strong regardless of political changes overseas,” Penk said.
Technology adoption
Recent technological advancements remain a huge potential that can help SMEs grow and improve their business. From AI-driven automation to digital invoicing systems, these new systems can improve efficiency, cut costs, and open new opportunities.
According to Penk, removing regulatory barriers that hinder technology adoption will be critical in fostering a more innovative SME sector.
“There’s a need for ongoing support in digital upskilling, whether through education programmes, grants, or incentives that encourage businesses to adopt new technologies,” Penk said.
Government support
As more economic uncertainty looms ahead of SME’s, these businesses will rely on more government support to help them weather financial challenges. This includes having a more business-friendly environment at the local government level.
“Many of the challenges small businesses face – such as zoning restrictions, licensing, and resource management – are determined by local councils. We need to ensure central and local government are aligned in reducing barriers to growth,” Penk said.
“One of the most practical things we can (also) do is ensure government agencies pay small business contractors on time. Cash flow is a major issue, and ensuring timely payments can make a real difference.”
Encouraging entrepreneurship
Going above financial and regulatory changes, Penk wants to encourage more entrepreneurship in the New Zealand environment. According to Penk, educational and vocational training is crucial in equipping the next generation with the business skills needed to succeed.
Young Kiwis must be encouraged to see entrepreneurship as a viable career. This includes strengthening vocational training, promoting apprenticeships, and ensuring school leavers have the skills to start and run a business.
Key Takeaway
Penk remains optimistic about the future of New Zealand’s small businesses. As the government creates a more business-friendly environment, SMEs should take proactive steps to secure their capital and prepare for growth with the right risk management initiatives.
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