Minister Chris Penk on growing New Zealand’s SME sector

The recent Cabinet reshuffle by Prime Minister Christopher Luxon signals a renewed focus on economic growth, an urgent priority after New Zealand was identified as the worst-performing economy in the developed world. With this in mind, the appointment of Chris Penk as Minister for Small Business and Manufacturing has come at a significant time. SMEs are the backbone of the country’s economy, contributing significantly to employment, innovation, and GDP. Minister Penk is now tasked with ensuring these businesses not only survive but thrive.

NZBusiness Editor David Nothling-Demmer sat down with Minister Penk to discuss his priorities, the key challenges facing SMEs, and his strategies for fostering growth in a tough economic climate.

From the outset, Penk made it clear that his primary objective is to ease the regulatory and compliance burden on small businesses. “Over the years, successive governments have added layers of compliance – often with good intentions – but the reality is that these requirements disproportionately impact small businesses.”

One of his immediate goals is identifying and eliminating redundant bureaucracy. “If local councils require small business owners to fill out forms or obtain licenses that overlap with central government regulations, we need to ask why. There’s room to streamline processes and remove duplication.”

For SMEs, particularly sole traders and micro-businesses, these compliance demands can be overwhelming, sapping valuable time and resources. Penk is working on initiatives that simplify reporting and reduce administrative overheads, ensuring that small businesses can focus on growth rather than paperwork.

He is working closely with Finance Minister Nicola Willis, whose portfolio includes economic growth, to ensure small businesses are at the forefront of New Zealand’s recovery strategy. “SMEs are major drivers of growth, and my role is to ensure Minister Willis understands the challenges these businesses face so they can be factored into broader economic policies.”

One pressing issue is the burden of compliance with anti-money laundering regulations. While these laws are essential for financial security, Penk acknowledges they can be particularly challenging for small businesses. “If we can work with our international partners to ensure our compliance is fit-for-purpose without placing undue strain on SMEs, we should explore that.”

Beyond regulatory reform, the Government is looking at broader economic measures to support business growth, including addressing high inflation and interest rates, which have created a challenging environment for investment and expansion.

Another major hurdle for SMEs is access to finance. Tight lending policies and high interest rates make it difficult for businesses to secure capital. Penk believes the Government can play a role in encouraging banks to adopt more SME-friendly lending practices.

“We have a relatively small number of dominant banks in New Zealand. By applying pressure and promoting competition, we can encourage them to prioritise small business lending,” he says. He also notes that regulatory changes could incentivise banks to offer more flexible financing options for SMEs, particularly startups and those looking to expand.

For small manufacturers, export growth is key. Penk is keen to assist SMEs in navigating the complexities of international trade and securing market access. “Exporting is a huge opportunity for New Zealand businesses. The US is now our second-largest export market, and we need to ensure our trade relationships remain strong regardless of political changes overseas.”

While he acknowledges that trade negotiations fall primarily under the jurisdiction of Trade Minister Todd McClay, he emphasises the importance of ensuring SMEs are included in trade discussions and supported with the resources they need to expand globally.

Technology is an area where Penk sees significant potential for SME growth. From AI-driven automation to digital invoicing systems, technology can improve efficiency, cut costs, and open new opportunities. He acknowledges the work of his predecessor, Minister Andrew Bayly, in driving digital transformation and intends to build on it.

“There’s a need for ongoing support in digital upskilling, whether through education programmes, grants, or incentives that encourage businesses to adopt new technologies.”  He believes removing regulatory barriers that hinder technology adoption will also play a role in fostering a more innovative SME sector.

With economic uncertainty continuing, Penk stresses the importance of resilience in the SME sector. He sees government support playing a role in helping businesses weather financial challenges. “One of the most practical things we can do is ensure government agencies pay small business contractors on time. Cash flow is a major issue, and ensuring timely payments can make a real difference.”

Additionally, he sees value in fostering a more a business-friendly environment at the local government level. “Many of the challenges small businesses face – such as zoning restrictions, licensing, and resource management – are determined by local councils. We need to ensure central and local government are aligned in reducing barriers to growth.”

Beyond regulatory and financial relief, Penk says he is passionate about ensuring New Zealand remains a place where entrepreneurship flourishes. He believes education and vocational training have a crucial role in equipping the next generation with the skills needed to succeed in business.

He says that as a country we need to do more to encourage young Kiwis to see entrepreneurship as a viable path, and that strengthening vocational training, promoting apprenticeships, and ensuring school leavers have the skills to start and run a business will be critical for our long-term economic success.

Despite the challenges, the Minister remains optimistic about the future of small businesses in New Zealand. “If we can reduce red tape, improve access to finance, and create a more business-friendly environment, SMEs will be well-placed to drive the country’s economic recovery.”

He hopes that by the end of his term, business owners will feel the difference. “I want small business owners to say their lives are easier, not harder. If we can reduce stress, cut compliance costs, and give people the freedom to grow their businesses, then we’ll have succeeded.”

Penk’s message to SME owners who may be feeling overwhelmed in the current economic climate: “Thank you for the work you do. Your contribution is vital to our economy. Help is on the way, and while times have been tough, I believe we’re turning a corner. There are better days ahead.”

Join us for the next NZBusiness Networking & Note-taking event and panel discussion on unlocking growth – seizing opportunities for SME success in 2025. Join Simon Bridges, CEO of the Auckland Business Chamber and others as we discuss growth opportunities for your business. Get tickets here.