According to the World Bank’s Doing Business in 2005 report, New Zealand is the best country in the world to do business. They base this wild accusation on five criteria: starting a business, hiring and firing workers, enforcing contracts, getting credit and closing a business.
The ability to start a business is paramount to the survival of any company. However, the unfriendly style of taxation, in particular the provisional taxation of a company’s profit (paying tax on profit you have not earned yet), makes it not exactly easy to start a business. It is a sad fact that the tax bill is always at the top of the list to pay while other arguably more deserving and definitely more needy bills are often relegated to be paid at a later date, simply because of the penalty system for tax.
Hiring and firing workers is also important for business survival. Unfortunately the labour laws in this country make it near impossible to fire someone who is simply lazy and does no gross misconduct. It is also not possible to take people on for a short time to try them out, because if this does happen the worker will say that they were still unfairly dismissed and many small businesses are not prepared to take that risk. And I thought we had a labour shortage? How does the inability to find suitable workers benefit business? All this before the new employer unfriendly union friendly labour laws come about next year. One of the proposals is to force the company not to be able to pay non-union staff extra benefits that the union has successfully bargained for. Another is for the unions to be able to bill non members for a ‘bargaining fee’. Needless to say which party is supported by the unions and whose pockets are being lined! If I got such a bill I would tell the union to go stick it somewhere unpleasant. Apparently non union members will not be able to get any benefit that the unionists (de-facto Labour members) can. Not good for workers or for business. Somebody pass the red tape.
Enforcing contracts and getting credit are things I know little about so maybe someone could write about this in comments.
But since when has the ability for a business to close been good for business? I thought that a successful business would never have to close, so why is this being included in a study on the easiest place to do business?
Also omitted is the effect of a high company tax rate, and compulsory red tape such as ACC levies and other regulations. In reality this study shows little because of the omission of such factors.
This is not something that the government can take credit for as this is the result of the reforms in the mid eighties and nineties.