Published on the 20/02/2025 | Written by Heather Wright

CPA Australia calls for NZ Govt support…

Kiwi SMBs are lagging ‘well behind’ larger local businesses and their Asia Pacific counterparts when it comes to digital adoption, and it’s contributing to slower growth, CPA Australia has told the New Zealand government.

In a Budget submission, CPA Australia says New Zealand needs to increase investment in technology to enhance digital interactions between business, intermediaries and government; incentivise RegTech development and introduce investor incentives focused on increasing investment in digital, among others.

“Our research shows a positive correlation between Singapore’s introduction of these programs and increased technology adoption.”

The Budget Policy Statement Submission also includes a recommendation for the government to introduce financial incentives to help SMEs and not for profits access professional advisers such as IT consultants – and accountants.

The accounting body, whose members include more than 3,000 accounting and finance professionals in New Zealand, says its annual Asia-Pacific Small Business Survey highlights much lower levels of online sales, social media engagement and adoption of technologies such as business intelligence software and AI compared to small businesses across Asia.

“We believe this digital gap is contributing to slower growth among New Zealand small businesses,” the CPA Australia says. “In 2024, only 36 percent of New Zealand small businesses reported growing, compared to the survey average of 64 percent.”

The Kiwi growth was the lowest rate recorded among the 11 markets surveyed.

It’s not the first time the CPA Australia, which was ‘advising and collaborating’ with the Ministry of Business, Innovation and Employment in its now defunct Digital Boost initiative has lashed New Zealand’s small businesses for their alleged lack of digital use. The organisation has repeatedly called for New Zealand small businesses to improve their digital capability, highlighting a lack of online sales and use of digital payment technologies and social media by smaller Kiwi businesses.

Last April, on the back of its Asia-Pacific Small Business Survey 2023-2024, it said the fact Kiwi small businesses were experiencing fewer cyber attacks that counterparts across Asia Pacific was evidence of relatively poor integration of technology in the SME sector, with New Zealand small businesses ranking last for tech use among the 11 economies surveyed.

The report echoes a litany of previous reports –often courtesy of technology companies targeting small businesses – pushing for Kiwi small businesses to up their digital game.

A Ministry of Business Innovation and Employment report last July found while larger enterprises are actively embracing digital, their smaller counterparts were struggling to keep up, with smaller businesses – and older owners – having lower levels of usage of internal tools such as cloud accounting, storage, collaboration and payroll, project management software or computerised payroll.

The story was even less positive for ‘external’ digital tools such as social media, digital marketing, online advertising, internet marketplaces and website payment, where usage by smaller businesses is decreasing.

The report noted that the growth in use of online channels to discover and buy goods and services means a lack of use of ‘external’ tools, which lend an online presence, could marginalise some businesses.

It noted concerns from small businesses about security, which was holding them back from digital, along with a need for support and help choosing the right digital tools.

The CPA Australia says to begin addressing the small business digital gap, the government needs to ‘significantly’ expand the size and scope of current digital support programs and incentives for SMEs and NFPs to help businesses build their capacity to select, purchase, implement and leverage the ‘right’ technologies.

It has proposed that support be modelled on Singapore’s suite of well-designed and funded programs, which includes the Tech Depot platform offering pre-approved tech solutions for SMEs, Productivity Solutions Grants, and a program supporting businesses to pilot advanced solutions, sustainability solutions and e-commerce platforms.

The Productivity Solutions Grants offer access to more than 400 pre-approved digital solutions, providing up to 50 percent of eligible costs for solutions to improve productivity.

Singapore’s lineup also includes SME GoCloud to help businesses adopt cloud technologies, and SMEs Go Digital, providing support including consultancy services and grants, for digital transformation.

Singapore’s Infocomm Media Development Authority, has hailed the success of the programs encouraging SME digital adoption, noting that 94.6 percent of Singaporean SMEs have adopted digital in at least one of the six key digital areas of cybersecurity, cloud, e-payment, e-commerce, data analytics and AI. Eighty-five percent have adopted at least one sector-specific digital solution.

“Evidence from our research shows a positive correlation between Singapore’s introduction of these programs and increased technology adoption rates among its small businesses,” CPA Australia says, adding that the programs are tailored to support and incentivise businesses at different stages of their digital transformation.

Victoria’s former Small Business Digital Adaption Program, which provided a AU$1,200 rebate for small businesses purchasing pre-approved technologies, was also held up by CPA Australia as an example the New Zealand government should look to.

Earlier this year MBIE axed its Small Business Services unit, after earlier having killed off the Digital Boost program, which failed to gain further funding in Budget 2024.

The Digital Boost program, which ran in New Zealand from late 2020 to 2024 was designed to support small businesses to adopt digital hardware and software, process changes, skills and capabilities and gain insight into their business through data.

A June 2023 evaluation of the free government funded program found half of participants in wave three had changed their use of existing tools and started using new digital tools, with 24 percent budgeting to develop the online/digital capability of the business.

One in four said they had a website with a payment facility, and one in five were using digital marketing or social media engagement tools after three months on the program.

Seventeen percent reported increased revenue, with increased business resilience (26 percent) and less time spent on existing business tasks (23 percent) also cited by those on the program.

The CPA Australia document also calls for incentives such as grants to boost SME investment in AI infrastructure and employee upskilling, saying a lack of resource, technical knowledge and limited data available meant smaller businesses face difficulties adopting AI.

A New Zealand Institute of Economic Research’s quarterly survey of business opinion last year found 68 percent of New Zealand SMEs had no plans to evaluate or invest in AI technology.