Written By:
- Date published:
4:06 pm, August 6th, 2026 - 8 comments
Categories: business, Economy, election 2026, labour, uncategorized -
Tags:
In the week that the Prime Minister offended small business, unemployment rose to 170,000 and over 6% in the North Island, and the Reserve Bank continues to raise interest rates, Labour showed, again, why the public knows they are better for small business than any other party.
· Require big businesses to pay small suppliers within 15 days on invoices of $25,000 or less and to publish how quickly they pay their suppliers.
This measure is incredibly important to the construction and utilities industries. There are five big construction enterprises in New Zealand who control invoices and payments to the tens of thousands of small tradie businesses.
In this economic climate it only takes one or two invoices owed by the big constructors of Accionia, Downer, Fulton Hogan, Vinci-HEB, and McConnell Dowell, together with the Big 4 electricity gentailers and Big 3 telco giants, and your 1-3 person business heads towards firstly no Christmas presents and then straight after it’s bankruptcy and liquidation and there’s not a thing they can really do about it given the concentrated market power the Big End wields. And more often than not, that subbie runs a high risk that bankruptcy also means losing their house that they mortgaged the business on.
So this Big Stick name and shame is a big deal including of course for the government’s own massive billing to subbies across the 30% of the economy that the government invoices for services.
· Lift the asset write-off from $1,000 to $10,000 for businesses with annual turnover below $10 million, so small businesses can immediately deduct the cost of new equipment from their tax bill.
This means buying big new equipment and tools and computer upgrades gets a whole lot more inviting. Your local farmer won’t be able to get a tractor or ute with it, but it’s just the incentive to do all the small upgrades without the IRD getting their sticky mitts on it as expenditure.
· Raise the GST registration threshold from $60,000 to $80,000 meaning around 35,000 of the smallest operators will no longer have to register for GST.
IRD don’t have a reported figure on the number of businesses that will no longer need to pay GST. So to give you an idea of how big a deal that raising of the GST reporting threshold is, approximately 73% of all New Zealand businesses or 448,213 businesses operate with zero paid employees.
That 448,000 is huge number of sole traders and their families –many of whom will under Labour be given new tax relief of 15%.
The biggest earthquake these measures will cause is across the public sector entities, who are quite happy to make you beg whether you are delivering services to Health, MBIE eg immigration, or MPI eg stormwater catchment groups or Corrections funding little rehab trust efforts who are living off the smell of an oily rag.
Excellent practical stuff from Labour and Hipkins today.
I worked many years for multiple of the Big 4 Electricity Gentailers. Usually, they pay 20th the following month, so you send the invoice on the last day of a month and you receive the money 20/21 days later. Apart from the first invoice of a new contract (their internal process might not have been set-up properly), I do not remember a single time where I haven't been paid on time.
Lifting this limit is probably a good idea. It was higher of COVID ($5,000?). A new powerful computer is usually more than $1,000 nowadays.
I guess this depends on your business. How does "new tax relief of 15%" work? GST is usually paid by the end consumer, a business is simply collecting GST on IRDs behalf (minus GST from deductible expenses). So the only way to see it as "additional income" (tax relief) for the business if the business does not adjust the price from N+15% GST to N (the customer pays the additional 15% to the business instead of IRD). A business with a high proportion of expenses probably still prefers to have GST included.
I volunteer a lot, and having to do GST returns for smaller non-profits e.g. clubs is a pain in the rear. The administration isn't impossible, but it can easily be a sufficiently painful burden that non-profits lose volunteer time to do that instead of something more relevant, or can't find a volunteer and have to pay someone to do it, so either have to put up fees or do less with the income they have.
While I am well aware that in those situations, the club is not paying the tax, it just collected and passed on, it's still either an increase in fees, or a reduction in usable income, for no other reason that the club got big enough to cross a threshold.
For non-profits, anything that avoids having to register for longer is great.
Satty, your pride to be paid on time only illustrates the complacency of the Sorted.
Even before I get to the private sector, I have extensive anecdotes from people who provide subcontractor services to MoJ, MoE, NZTA, MPI. MoH, and many others who have had to go to the bank about deferring a mortgage payment because these Departments decided to hold payments up with petty queries.
Over 33% of New Zealanders live payday to payday with nothing left. So a delay in an invoice to a small trader is a very, very serious matter.
On your last note, the bleeding obvious point is that those earning $80,000 or under won't have to register for GST. That is a big administrative saving, as well as an income saving.
The
BusinessNZ begrudgingly likes ‘elements’ of Labour’s policy aimed at SMEs. Specifically, they don’t like to redistributive element of redirecting money from the big end of town to grassroots small businesses.
https://www.scoop.co.nz/stories/BU2608/S00060/small-business-relief-welcome-but-tax-and-threshold-neglect-is-the-real-story.htm
Awesome sauce from Labour!
Ms Rich has to be careful to look after her paymasters. Lovely slip that Business NZ doesn't support means testing, that'll be fun when some business type starts hooking into beneficiaries. Then she points out exactly why the mandated payment timeframe is essential. Nice work Katherine
Luxon had a point with his criticism of NZ business mentality, pity (for National) he didn’t have the skills to get it across tactfully.
About 'redistributive element of redirecting money from the big end of town to grassroots small businesses.'
Small business – what does that category comprise? Smooth talk from Business NZ aside; note below that the category of small businesses' annual turnover ranges from $60,000 to $10 million. That is an irrational distance from lowest to highest with asymmetric concerns.
https://www.mbie.govt.nz/assets/defining-small-business.pdf July 2019
…Small businesses in New Zealand.
New Zealand is a nation of small businesses. ...Of the approximately 535,000 businesses in New Zealand, an estimated:
• 401,000 (70.5%) have no employees
• 101,000 (19%) have 1-5 employees [therefore 500,000 businesses can be classified as tiny one-man or very small]
• 40,000 (7.5%) have 6-19 employees
• 10,000 (2%) have 20-49 employees
• 5,000 (1%) have 50 or more employees…
New Zealand’s business community and government commonly use the following definitions in discourse:
• sole trader – 0 employees
• micro business – 1 to 5 FTE employees
• small business – 0 to 19 FTE employees
• medium business – 20 to 49 FTE employees
• small and medium enterprise (SME) – 0 to 49 FTE employees – [so referring to a business with no or very few employees as a 'small' business in the NZ business context is misleading, ineffectual and wrong]
• large business – 50 or more FTE employees
In 2018, approximately 61,000 small businesses were started and around 60,000 closed down. This rate of churn in the small business sector is the product of an increasingly dynamic business environment, and it enables the renewal necessary
for the small business sector to adapt to a rapidly changing world. [Weasel words.] Sole traders are becoming increasingly common with the overall number increasing by around 45,000 or 12 per cent in the last 10 years compared with an increase of 1 per cent to 3 per cent across other segments.
Further links with info:
business.govt.nz https:/www.business.govt.nz › browse-our-resource-library › business-planning-online-learning › data-for-business
abnr.co.nz https://www.abnr.co.nz › blog › post › 71898 › business-size-categories-in-new-zealand-definitions-and-why-they-matter
https://datainfoplus.stats.govt.nz/item/nz.govt.stats/234da6a7-c2bf-4274-b654-c53f4bd72983
https://www.myob.com/nz/resources/guides/accounting/annual-turnover
Huh?? Where did this mess of a copypasta come from? An AI on DUI? Is there a point to this morass?
https://newsroom.co.nz/2026/08/07/labour-zeroes-in-on-small-business-relief-not-big-business-stimulus/
Arguably, Investment Boost hasn’t delivered and doesn’t work as intended (or promised; https://newsroom.co.nz/2026/08/07/labour-zeroes-in-on-small-business-relief-not-big-business-stimulus/#comment-665536).
This is a theme that emanates from Labour’s policy announcements so far, which all seem small fry each on their own (aka timid & incremental), and it is to make a more direct & immediate difference at grassroots level that actually means something real & tangible to people.
I don’t know if this is behind Labour’s thinking but to me it feels like they’re trying change the so-called ‘wealth effect’ of the ‘wealthy & sorted’ (aka ‘the few’_ and alleviate the corresponding ‘cost-of-living burden’ of ‘the many’ to thriving small businesses & communities and spread it much wider.