Whangarei Business Archives - Page 2 of 2 - Whangarei Accountants - Elevate CA - Tax, Xero, Business Development, Accounting

You get what you reward, right?

You get what you reward, right? Give a monkey a handful of nuts every time he jumps through a hoop, and he’ll jump through hoops all day. Compliment a young child every time they say “please” and “thank you”, and pretty soon you’ll have a well mannered kid. Give people massive tax incentives for investing in residential rental property, and before you know it that’s what is happening.

I’m hot on this topic right now, having just returned from Boston and seen firsthand what the American federal and state governments reward. Yup, entrepreneurial behaviour.

I had a coffee with a Kiwi guy in Boston on Sunday. He is an Auckland University graduate and has a very cool Life Sciences venture which might just change the way some aspects of mental health are managed. Potentially a big success story within a small niche of the US$2 trillion American health market. He is located in Boston with a staff of seven techies. The city of Boston pays the rent and utility bills for his offices, because they want to keep him from relocating to Cambridge City, 30 miles to the west. The federal government has stumped up serious six figure cash as an SBIR grant (not a loan) to fund his research and development.

The US machine bends over backwards to make sure his innovation stands the best possible chance of success. Why? Because if he succeeds – and if hundreds of others like him also succeed, then that is great for the American economy. Sure, some will fail. But for the Americans, investment in guys like him is a no brainer.

So if he had stayed in New Zealand, what would the same guy need to do to get massive government support for a venture? Yup, that’s right – he would probably be more incentivised by the system to get a salaried job, and then negatively gear himself into as many residential rental properties as his salary would allow. The benefits for him personally? Government subsidised wealth creation. The positive benefits for New Zealand as a whole? Absolutely zero.

Don’t get me wrong, I’m not dissing the New Zealand political machine completely here. There are some great initiatives going on to encourage entrepreneurship – and I have blogged about some of them before here.

But what if the massive tax incentives (I don’t know what the total is, but I’m guessing in the hundreds of $millions annually) were removed from investment in residential rental property and redirected to NZTE’s budget in support of Kiwi entrepreneurial activity that stands a chance of dominating some niche out there in the wider world?

Why are we still so fixated on the old hand’s off market doctrines of “sink or swim” when even the free market Americans have long ago abandoned that ethos and seen that everyone benefits from nurturing entrepreneurial activity?

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.

Bill and Phil Show in Whangarei

Elevate CA sponsored the Bill English and Phil Heatley show in Whangarei tonight. Its not that we have a particular political agenda. Actually, if we’re honest it was more about getting our brand out there in front of 100 or so local business people. Chipping in for the beer and nibbles was a small price to pay.

So now that I have that out the way, I can say that Bill and Phil put on a good show in Whangarei tonight at the NZ Institute of Building function. I found myself agreeing with a lot of the stuff Bill English had to say around making it easier for Kiwi businesses to do business internationally.

This is something I have been banging on about for some time: As a country we need to generate wealth internationally if we want to live a first world lifestyle, because funding that lifestyle from borrowing just isn’t sustainable. So it was good to hear Bill English talking about investing in the things that will help kiwi businesses become more competitive internationally. Stuff like improving our roading infrastructure, our electricity generation and distribution, our broadband network – and reducing the pervasive burden of red tape in our business world.

The rhetoric was encouraging.

But the single obvious incentive to encourage Kiwis from “borrowing to spend” towards “saving to invest” was clearly not on Phil and Bill’s political agenda. In this country, a person will almost always do well over the long term by borrowing to invest in residential real estate. The interest and all expenses can be made tax deductible against personal income, while the ultimate capital gains are typically tax free. Nice. Why wouldn’t you do it? Especially with the 24% price increases forecast for Auckland residential property by certain economists over the next three years.

Nice for the individual investor who has the means to borrow hard. But is that productive or beneficial for the country? Hell no. It increases our indebtedness to the rest of the world, and achieves nothing that generates income for the country in the context of the world at large. The wealth generated is not real, so why is our tax system encouraging this behaviour?

How about ending the very generous tax incentives to buy and hold residential real estate in this country, and in turn target those incentives to the parts of the economy that generate real wealth for all of us. Namely entrepreneurial Kiwi businesses that can market innovative, world class products into niches internationally.

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.

Taking Great NZ Health Ideas to the World

New Zealand is a hotbed of innovation. We have all heard that before. The number 8 fecing wore mentality, punching above our weight in all sorts of areas from winning yacht design through to dairy farming techniques. But why is it that this innovation translates into so few world beating businesses?

Numerous studies have been done on this question, and one of the factors which repeats itself is the lack of specific skills in taking these fantastic innovations to the world. New Zealand Trade & Enterprise is well aware of this, and they have identified the Health sector as one area where we are rich in innovation but poor in taking these innovations global.

Hence the NZ Focus on Health innitiative, designed to take great Kiwi health ideas to the world – particularly the lucrative US market where annual health spend is a staggering US$2 Trillion.

Participants submit their health innovation ideas in the form of a robust executive summary – and will compete for $750,000 in prizes designed to help commercialise your great health related idea in the US market.

Up to Twenty semi-finalists will be selected by the Judges. The semi-finalists will be able to attend a “pitch” training workshop to prepare the semi-finalists for pitching their ideas to the Judges in Round Two.

If you operate in the health space, entering this competition really is a no-brainer. Our very own BrightMind LABS from Tutukaka will be there competing for the action, and we would encourage others to join us in getting involved. Entries close on 31 August. Check it out , and watch this space where we’ll keep you posted on progress.

Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.