OCR cut welcome, but deeper reforms needed to revive NZ small business growth

CPA Australia has welcomed today’s decision by the Reserve Bank of New Zealand (RBNZ) to lower the Official Cash Rate (OCR) by 25 basis points to 3 per cent. The move will ease some debt costs for mortgage holders and small businesses, but the organisation warns that interest rate cuts alone will not fix New Zealand’s stalled recovery.

“Today’s OCR reduction is a positive step, easing debt costs for households and businesses already under pressure,” said Rick Jones, CPA Australia’s Regional Head. “But the underlying challenges for small business run much deeper than interest rates. Without structural reform, we risk leaving our small businesses at the bottom of growth rankings.”

CPA Australia’s 2024–2025 Asia-Pacific Small Business Survey shows New Zealand firms are already lagging their international peers. Only 36 per cent reported growth in 2024, the lowest of 11 markets surveyed and just 47 per cent expect growth in 2025.

One of the biggest barriers is low digital adoption. Just 22 per cent of New Zealand small businesses reported that technology investment improved profitability in the past year, the weakest result in the region. Younger owners (under 40) are far more likely to embrace technology, with 60 per cent generating online sales, compared to just 24 per cent for owners aged 60 and over.

“With 64 per cent of New Zealand’s small business owners aged 50 or older, well above the regional average of 24 per cent, we see a clear link between an ageing ownership profile, slower growth, and lower technology uptake,” Mr Jones said. “Younger entrepreneurs are more likely to invest in technology and achieve stronger growth, but they are the minority.”

CPA Australia is urging the Government to complement monetary policy with reforms that unlock long-term productivity improvements. This includes stronger support and incentives for digital adoption, so that small businesses can invest in and effectively use technology, not just replace outdated systems.

“Budget 2025’s Investment Boost for physical assets is useful, but our data shows the real gap is in digital capability,” Mr Jones said. “The creation of the Prime Minister’s Science, Innovation and Technology Advisory Council is a welcome step, however it must prioritise tackling New Zealand’s digital divide between small and large business.”

While today’s OCR cut provides short-term relief, CPA Australia cautions that New Zealand’s small business competitiveness depends on addressing structural challenges.

“Closing the digital gap is essential,” Mr Jones concluded. “If we want New Zealand’s small businesses to move from the bottom of regional growth rankings, we must help them innovate, adopt technologies, and build resilience. Lower interest rates can ease pressure, but only transformation will secure their future.”

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Frederika Walls
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