Cuddling up to small business?

How the parties drooled over small business in the election campaign. Did they really mean it? Ask in three years and your answer will likely be no.

Parties ritually proclaim that it is small business that creates most jobs. To this in recent years has been added adulation of high-tech startups as the country’s deliverance.

So during the election campaign ACT and National promised more hiring and firing freedom, lower ACC premiums and tax cuts, to which National added some very limited assistance for high-tech entrepreneurs and low-level advice and ACT added cutting red tape, local body rates Inland Revenue Department oppression.

Labour and the Alliance promised showers of state help. Special small business policies detailed venture capital help, grants, local initiatives, mentors, export help and much, much more. To this the Alliance added $100 million and Labour added a small business office and getting the Inland Revenue (IRD) and Statistics Departments to share more information to stop businesses having to fill in statistics surveys.

But did they actually mean it – in the sense that they knew what they are talking about and knew what small business would most benefit from?

Almost certainly not. Very few MPs have run small businesses and most of them quickly forget when in the hallowed halls.

Otherwise why would they have agreed that Graham Holland could earn bonus points by firing workers while dumping the work on to small employers? Now businesses have to do much of the PAYE work the IRD used to do – and with heavy threats of reprisals if they get a number wrong or miss a date.

Moreover, the IRD, backed by supposedly small business-friendly MPs in every party, sends out the forms later so that small businesses, who don’t have the resources and flexibility of large firms, run a bigger risk of missing the filing date. Nice one, that.

And small business is supposed to save the nation’s bacon by creating jobs!

The ACC reform works for big business. But try, as a very small business, picking your way through the maze to better the old automated arrangement. More forms, more cheques, more threats – and, if you tried to take the easy way out and leave the legislation to take its course, more muddle from a government agency (At Work).

The Statistics Department takes a different tack. It has decided all firms are the size of Fletcher Challenge and Telecom. Huge forms come addressed to the “financial controller” and other such loftily-titled beings, demanding (on pain of prosecution) information that the statisticians could get from the tax people – if the politicians could be bothered implementing the recommendations of their own 1998 select committee that the two departments should talk to each other.

And has the Statistics Department stopped to ask whether the information asked of small businesses – measured in tens or hundreds of dollars – is actually worth collecting? Has any politician thought to ask the department whether it is? Some say they have – but, if so, they have been surprisingly easily fobbed off.

Yet small business is supposed to save the nation’s bacon by creating jobs!

The point is that the politicians don’t need to bother. Small businesses are captive and they are not organised into a voting pressure group. Their electoral weight is not felt. But the electoral weight of lawyers and accountants for whom bureaucratic demands on their small clients generate more work is organised and felt.

But then, actually, small business does not create jobs – or not nearly as many as legend has it. Big business creates jobs by creating business for small business.

Only a proportion of small business sells direct to the public and whenever a segment of that sort of business looks promising the big guys move in and set up chains. The most obvious examples are the supermarkets and the Warehouse. In any case a lot of small business does not create jobs at all – only the owner and owner’s family (free of charge) work there.

So perhaps politicians are right to gear their policies to big business. Small business not only doesn’t count electorally but it doesn’t really count economically either.

No politician will say that. Cuddling up to small business is the modern-day equivalent of the age-old cheap shot (revived by Jenny Shipley this election) of cuddling up to babies. It shoots good vibes. But as soon as the cameras have gone, the baby is got shot of. That’s politics.