A change in Govt funding policy – but perhaps not before Apple gets a $25m bite

There’s only so much money in the Government’s science funding pot so it’s always worth keeping an eye on how much will be in the pot and who gets how much of it to do what.

At Fairfax’s Stuff site, Science, Research and Innovation Minister Megan Woods has confirmed the Labour, NZ First and Green Government will be reintroducing research and development tax credits.

Under the scheme, companies wanting government money to keep up with technology trends will no longer need to apply for grants from Callaghan Innovation.

Instead they will have the option again of claiming back a credit for privately funded research.

This was portended by Labour’s campaign commitment to a 12.5 per cent tax credit for research and development.

According to the Stuff report (HERE) –

The National Party axed tax credits when it was elected in 2008. They were replaced by Callaghan, which handed out $113 million in grants to hundreds of businesses last year.

Woods did not outline any specific changes to come for Callaghan and, prior to the election, said her party was not proposing any, despite criticising National’s system as “bureaucratic” and “picking winners”.

This week she said she would be meeting with respective government officials – likely from the Ministry of Business, Innovation and Employment and Callaghan – to discuss a roll-out plan for the scheme.

Woods said Callaghan occupied a “really important space” in the innovation industry and more businesses undertaking research and development would be a “huge cause for celebration” for the agency.

Business leaders seem to be welcoming the change.

ManufacturingNZ executive director Catherine Beard said businesses would happily welcome back tax credits, especially those that did not fit Callaghan’s criteria for growth or project grants.

However, she said the Government should ensure that applying for the tax rebates involved little paperwork.

And –

The Manufacturers’ Network (previously named the New Zealand Manufacturers and Exporters Association) chief executive Dieter Adam said it was great to see tax credits return.

But he was concerned that if Labour was only in government for one or two terms, the credits could easily be axed again by the opposition.

“That would be a huge waste,” Adam said.

The Taxpayers Union, meanwhile, is critical of money being dished out under one of the the old Government’s funding programmes.

Union executive director executive director Jordan Williams says the world’s most profitable company is set to receive up to $25 million a year in corporate welfare grants, thanks to Callaghan Innovation’s ‘growth grant’ programme as a consequence of Apple buying  PowerbyProxi, a major recipient of the R&D grants.

Williams said:

“First it was money for Larry Ellison’s Oracle, then French company Gameloft, and now Apple is getting in on the action. Our Government’s corporate welfare schemes make New Zealand a laughing stock. We pay for R&D and don’t even require the results to stay in New Zealand.”

“Designed in California, funded by Kiwi taxpayers. Anything that results from the R&D ends up in the pockets of Apple’s shareholders. It’s nuts.”

“Callaghan Innovation is trying to defend the grants by pointing out that they couldn’t have known the business would be bought by Apple. But that’s mischievous. Korean giant, Samsung, has owned a substantial equity stake since 2013.”

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