BUSINESS DEVELOPMENT PROGRAMME

The Coalition Government remains committed to supporting the role of small businesses in the New Zealand economy, Business Development Minister Max Bradford said today.

"We are determined to see the continued development of a strong and competitive business sector which encourages enterprise and innovation," he said. "However, this doesn't mean throwing money at a less than effective business development programme. This is not good use of taxpayers' money."

Mr Bradford said today's budget earmarked $14.3 million for Business Development in 1998/99. This is made up of $5 million operational funding for Business Development Boards, $1.9 million policy (Ministry of Commerce) and $7.3 million for new and on-going initiatives under a reshaped programme.

He said the $14.3 million total is down on the estimated $18.6 million spent during 1997/98 because the grants element of the current Business Development Programme ended last month. The 1997/98 total spent was also down on the total budgeted in 1996/97 because of underspending. Mr Bradford said it had become evident that the grants scheme was not an effective use of taxpayers' money.

"Only a small proportion of the total small business population has been using the grants scheme, and funding available has never been fully used - in fact only 60 per cent of money budgeted for grants over the past six years has been spent," he said. "The grants scheme has also been open to significant administrative difficulties as highlighted in the recent Controller and Auditor-General's report."

"The Coalition Government is in the process of reshaping the Business Development Programme to ensure the funding committed to assisting small to medium sized enterprises (SMEs) is spent effectively." Mr Bradford said the Coalition Government had consulted widely during the review, and decisions are expected to be made in the near future so that implementation of a new programme can begin in July.

"The direction of the new programme will focus more tightly on assisting SMEs to meet the challenges of operating in a highly competitive international environment, and to thrive," he said. "The new programme will emphasise the key areas of enhancing business skills and management capabilities. For example, we will be promoting greater awareness of the potential risks to SMEs of the Year 2000 computer problem."

He said the new programme will also be more flexible to meet the needs of SMEs, be less bureaucratic, and draw more on local expertise and knowledge. "Our businesses are responding to the rapid changes happening in the international business environment, but to compete effectively they need to focus on continual improvement and innovation.

For many, this requires developing a new set of skills, particularly in business capabilities including strategic and financial planning, risk management and customer focus. That is where the Government's help will be directed in future."