More SMEs back tighter immigration laws despite skill shortages

More New Zealand business owners back cuts to immigration levels over those that want to keep current settings, according to research by accounting software provider MYOB.

MYOB's Business Monitor survey of the owners of 1,015 small-to-medium sized enterprises found that 43 percent believe New Zealand's immigration policies should be tightened, one-third believe they are just right, and just 11 percent say they are too stringent.

MYOB general manager Carolyn Luey says the economy clearly benefits from additional workers coming into the country, but worries about the impact on public services and housing are likely behind the current high level of concern.

"It's a very tricky issue for New Zealand. Businesses need skilled migrants to bring in the expertise and experience needed to help them grow and to fill shortages, yet a large number of business owners would like to see policy tightened up," says Luey.

The findings come on the back of steady economic activity in the sector, with a five percentage-point fall in confidence in the prospects for the wider economy down from 46 percent in September 2016 to 41 percent in the latest survey, with one-in-five businesses saying general economic conditions will get worse.

Overall the numbers are still positive, although they mirror other research showing a slight softening in sentiment across the economy, says Luey.

The proportion of SMEs reporting increases in revenue fell back to 36 percent – from 39 percent last year.

At the same time, several of the country's key sectors continue to see strong gains.

"What our latest data highlights is real positivity in some key sectors.

"Given the housing crisis being felt in many parts of the country, it's no surprise that the construction and trades sector continues to be our best performer," she says.

"But what is perhaps most significant is the growth we are seeing in the local SME manufacturing sector, which not too long ago was being written off for dead."

The retail and hospitality sector is also continuing its bounce back, with above average growth over the last 12 months, Luey adds.

Growth continues in the regions

In contrast to recent Business Monitor surveys, when growth in the three main centres outstripped the rest of the country, 38 percent of businesses in the regions are reporting increased revenue over the last 12 months, compared to 36 percent in Auckland, 34 percent in Wellington, and 32 percent in Christchurch.

"Star performers are places like the Waikato, Northland and Otago/Southland, where revenue returns are well above the national average."

"This is really good news for communities that have not seen the same levels of growth over the past five years as their big-city counterparts," Luey says.

Forty-seven percent of SMEs in Waikato reported revenue growth in the year to March 2016, 45 percent in Waikato and 41 percent in Otago.

Consistent growth ahead but pressures rising

Ms Luey says, based on the research, SME performance should remain steady over the coming year, with 38 per cent of SMEs expecting revenue growth in the next 12 months.

"This is underpinned by a strong work pipeline for this quarter, with 41 percent of all SMEs reporting more work booked over the three months to June.

"However, slight increases in competitive pressures, the impact of rising fuel prices and an increasing squeeze on cashflow and margins mean that local SMEs need to keep a careful watch on key performance indicators," Luey says.