Labour wants small businesses to get a bigger share of government work
Labour says it would set a rule that 15 percent of all government contracts go to small businesses and start-ups. It is part of a policy package announced on 9 August 2026 that also promises faster payments, less paperwork, and a trimmed-down version of the government's Investment Boost policy aimed only at small businesses.
Labour's finance spokesperson Barbara Edmonds said the government buys about $50 billion of goods and services every year. She said the 15 percent target is a way to make sure a decent share of that money goes to smaller businesses, which currently find it hard to win government contracts. The party would also split big government contracts into smaller jobs so more businesses can bid for them, according to RNZ.
The package, called Labour's "Small Business Action Plan," would help small businesses get paid sooner, invest more easily, and spend less time on paperwork, according to the party's policy document published 6 August. Labour Party An Instagram post two days later promoted the same measures.
Labour also wants a New Zealand Business Number system. Think of it like a single ID that a business could show to any government agency, instead of having to give the same details over and over to different departments. The party said this would cut down on paperwork.
Revenue spokesperson Deborah Russell said Labour would review how small businesses pay tax. That includes provisional tax, which is where businesses pay tax in instalments during the year before they know their final income. She also wants to look at filing deadlines that bunch up in January and February, which put pressure on small firms' cash flow. RNZ
On Investment Boost, Labour said it would keep the current government's policy but make it smaller, so it only applies to small businesses rather than a wider range of companies. RNZ reported the plan on 6 August. RNZ
There is already a similar target for Māori businesses. It started at five percent of government contracts and went up to six percent in 2022 because demand was high, according to a Labour Party release from September 2024. Labour Party Labour's 15 percent small business target would sit alongside that existing Māori target, not replace it.
Labour leader Chris Hipkins raised procurement problems in a speech to Local Government New Zealand in August 2024. He cited figures showing 57 percent of construction businesses were having trouble with procurement and consent conditions, up from 36 percent the year before. Labour Party
The broader context here is that Labour is arguing the current system makes it hard for small businesses to compete for government work. With $50 billion in annual government spending, even a small shift toward smaller operators could mean real money changing hands. The Māori target shows this kind of rule can be adjusted over time — it went from five to six percent. But Labour has not said whether the 15 percent target would be brought in all at once or phased in gradually.
The tax review targets a well-known pain point. Provisional tax and the pile-up of deadlines in January and February have been recurring gripes from small businesses and tax advisers. The single business number idea would stop businesses repeating themselves to different agencies, but Labour has not said which agencies would come first or how long it would take.
Narrowing Investment Boost to small businesses only is a change from the current government's broader approach. Labour has not said what size a business needs to be to count as "small" for either the procurement target or Investment Boost. That is a detail the business community and the Treasury will want pinned down.
These are all election promises, so they would need new laws or regulations to happen. The procurement target would likely go through the Government Procurement Rules run by the Ministry of Business, Innovation and Employment. The business number system would need government agencies to agree to share data and link up their computer systems.
