Dr Woods confirms the end of Growth Grant programme at end of 2018/19 tax year

Science, Research and Innovation Minister Megan Woods has made plain that the $657.2 million Growth Grant programme will be terminated at the end of the 2018/19 tax year.

Critics of the programme expressed disappointment on Budget Day that Dr Woods had not reaffirmed the phase-out of the grants in favour of the new R&D tax credit.

Taxpayers’ Union Executive Director Jordan Williams, for example, complained that when the Minister announced Labour’s R&D tax credit scheme earlier in the year, she said it would replace the growth grant scheme administered by Callaghan Innovation.

“But buried in the Budget appropriations we see that Callaghan Innovation’s funding for corporate welfare hasn’t been cut by a cent. Not even one,” he said.

“Megan Woods has let down taxpayers, and we will be working day and night to redouble our efforts to defeat this corporate welfare industry that picks winners and favourites, and keeps Callaghan Innovation’s feather-nesters in their taxpayer funded make-work scheme.”

But the Minister’s Office has confirmed to AgScience that – as reported by National Business Review yesterday – the Growth Grant scheme will be closed to new applicants on March 21 2019.

She told the newspaper:

“Businesses with an active Growth Grant on March 31, 2019, will have the option to continue receiving their grant until March 31, 2020.

“A temporary grant scheme mirroring the R&D tax incentive will be implemented to provide support for former Growth Grant recipients with insufficient tax liability to use an R&D tax credit immediately.”

A core focus for Callaghan’s 384 staff is now gone and a sharp round of redundancies is presumably on the way, NBR reported.

But Dr Woods emphasises Callaghan Innovation will have a continuing role in support areas.

“All of Callaghan Innovation’s other services and products, including R&D Project Grants [a smaller scheme that typically tops out at $100,000 per grant compared to Growth Grants’ $15-25m] and R&D Student Grants are not affected by the R&D Tax Incentive,” the minister says.

A minister staffer told AgScience a paper went to Cabinet on April 19 about the R&D Tax Incentive Discussion Document.

The R&D Tax Incentive discussion document and the Growth Grant transition consultation document (HERE) outline the main features of the Government’s proposals.

Submissions are open until 1 June.

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Sorry, folks, but “science” was not mentioned in The Speech

A quick observation about Finance Minister Grant Robertson’s maiden Budget speech:

He did not mention “science”.  Not once.

Or rather, I failed to find the word in a quick search through what he said.

But he did quote a famous scientist.

And, fair to say, he did mention (twice) “research and development”.

Here’s what he said:

It is vital for our economy to be better prepared for the future. This will require a new approach with fresh thinking. As Albert Einstein is reported to have said: “No problem can be solved by the same kind of thinking that created it.”

This is why Budget 2018 gives a major boost to innovation, with $1 billion over four years to finance a tax incentive for more Research & Development by Kiwi businesses. We have committed through the Coalition Agreement with New Zealand First to lifting our Research & Development spending as a country by 50 per cent – to 2 per cent of GDP inside 10 years.

The word “innovation” was slipped into the paragraph above.

It was given an earlier mention:

To transform the economy we have to be more productive. We have to work smarter, build our skills and resilience, explore new innovations and adapt to change. We cannot continue to rely on merely increasing our population, exporting raw commodities and an overheated housing market to drive economic growth.

That was it – at least, so far as this Budget speech was concerned.

But as you can see from AgScience’s other Budget posts today, some extra appropriations have gone towards the work of scientists.

Science boost for Overseer farm management tool

The Coalition Government and the primary sector will work together to boost the science behind the valuable Overseer farm management tool, Agriculture Minister Damien O’Connor and Environment Minister David Parker announced in a Budget press statement.

Overseer is a tool used by a range of primary industries and regional councils to help measure nutrient use and greenhouse gas emissions.

“Well-used, it can assist farmers to minimise waste and maximise profits,” says Mr O’Connor.

The Budget includes an investment of $5 million of operating funding over the next four years to enhance it.

The extra funding for Overseer will enable:

• quicker adoption of environmentally friendly farm practices

• the inclusion of a wider range of land types and farming systems

• a more user-friendly interface.

“All farmers and growers want to keep their fertilisers on their paddocks and crops, and they want the best tools to manage their environmental responsibilities,” Mr O’Connor says.

Mr Parker says the extra funding in the Budget opens up opportunities for farmers to trial new technologies, techniques and tools that would otherwise be too risky or expensive to try.

“We need practical, science-backed tools to achieve this Government’s goals to improve land use, achieve a net-zero-emissions economy by 2050, and help clean up our rivers so our kids can swim in them without getting crook.”

The Ministry for Primary Industries, AgResearch and the Fertiliser Association of New Zealand each hold one-third stakes in the Overseer intellectual property.

 

Budget provides $1 billion for Govt’s R&D tax incentive

The Coalition Government is delivering on its plan to support a stronger and more productive economy with higher wages by injecting $1 billion into business research and development (R&D), Research, Science and Innovation Minister Megan Woods and Revenue Minister Stuart Nash say in a Budget press statement.

New Zealand spends just 1.3 per cent of GDP on R&D, whereas the OECD average is 2.4 per cent, Dr Woods says.

“We need new ideas, innovation and new ways of looking at the world if our businesses are to build a more productive economy,” she says.

“That’s why this Government is putting $1.0 billion of operating expenditure over four years on the table to finance an R&D tax incentive, giving eligible businesses 12.5 cents back for every dollar they spend on R&D. This funding will be available to all businesses spending more than $100,000 a year on R&D.

“This system will help us transition away from the current Growth Grants model, which is available to a narrower range of firms. This represents a significant increase in the amount available to help smart Kiwi businesses to innovate.”

Mr Nash says the design of the R&D tax incentive is currently out for public consultation and productive conversations are being held with businesses around the country.

The billion-dollar boost for innovation would make the New Zealand economy stronger and more productive, he says.

Film pays tribute to Sir Paul Callaghan while feedback flows in on R&D funding proposals

Scientists will learn on Budget day – Thursday – how much money the Government will be investing in science over the next year or so. A few days later a documentary film about nuclear physicist Sir Paul Callaghan, titled Dancing with Atoms, will have its world premiere in Wellington on Sunday.

Directed by Shirley Horrocks, the film was funded by the MacDiarmid Institute with the support of most New Zealand universities, including Massey University.

We can only conjecture on how Sir Paul would rate the performance of Callaghan Innovation, which was named to honour him. But a performance review this year found it wanting:

“Callaghan Innovation’s people need to put their passion into the effective execution of a clear plan and they need agile internal systems and processes.”

A report by Rob O/Neill in Reseller News says the Performance Improvement Framework report, completed in January, grades performance across different areas on a four colour scale: red for weak, orange for needing improvement, lime for well-placed, and green for strong. He wrote:

“Callaghan’s latest review is an improvement on one completed in 2015, but it still hasn’t received a green rating across any of the multiple measures employed – it scored 11 orange ratings and seven lime in 2018 compared with three red, 20 orange and two lime in 2015.

“The review says the lack of a plan is already being addressed by Callaghan’s new leadership, with a 12 month strategy roadmap, a three to five year strategy and new 90 day plans which effect the 12 month roadmap and promote clarity, discipline and accountability.

“However, Callaghan is not moving fast enough on system and process improvement. Legacy IT systems must be streamlined, the report says, rather than relying on the ongoing rollout of point solutions.”

Chief executive Vic Crone told Mr O’Neill Callaghan Innovation’s new vision and strategy has now been signed off and implementation will be under way from July.

“I’m confident that will shift a big chunk of our next round orange to green,” she says.

Callaghan Innovation was further embarrassed – or should have been – when the Taxpayers Union disclosed it had spent almost $3 million on travel and entertainment in 2015/16.

Among the entertainment spending was a $50 tip after a dinner at Wellington’s Dockside restaurant.

More than $300,000 was spent on entertainment.

The agency’s future is interwoven with the Government’s proposal to end Callaghan Innovation’s growth grants and introduce a 12.5 per cent research and development tax incentive.

Research, Science and Innovation Minister Megan Woods released a discussion document on April 19 which sets out the funding proposal.

For the following six weeks, she said, the Ministry of Business, Innovation and Employment, Inland Revenue and Callaghan Innovation will be seeking feedback through a variety of channels.

The Government’s aim, the Minister said, is to lift spending on R&D to 2.0 per cent of gross domestic product by 2027.

If the proposal is implemented, the tax credit on eligible expenditure will be available to businesses doing R&D in New Zealand from April 1, 2019. A business would need to spend a minimum of $100,000 on eligible expenditure, within one year, to qualify.

According to the Government’s proposal, businesses with an active growth grant as at March 31, 2019, will continue receiving their grant until March 2020. A temporary grant scheme mirroring the R&D tax incentive will be implemented to provide support for growth grant recipients with insufficient tax liability to use the R&D credit immediately.

But the growth grant scheme will be closed to new applicants on March 31, 2019.

One question raised by this will be answered in the Budget on Thursday: how much more funding over and above allocated under the previous national government will be allocated for Callaghan Innovation and other science agencies?

Another of several written questions put to the Minister by National’s Dr Parmjeet Parma in recent weeks (HERE) asked if the Minister will honour all the projects/contracts funded through Callaghan Innovation?

Dr Woods reply wasn’t an unqualified yes.  She said:

I expect that Callaghan Innovation will honour its contracts as long as the terms of the contract are adhered to.

Asked what changes she is planning for Callaghan Innovation and from when, she replied:

“No changes are currently planned to Callaghan Innovation, however future policy decisions may impact on aspects of Callaghan Innovation’s operations. Of course changes to the way the Government incentivises R&D could impact some of the existing administrative functions relating to Callaghan Innovation grants.”

Asked if she had received any advice from officials on any changes to the workings of Callaghan Innovation, the answer – given in writing on March 15 – was bemusing:

 “I have not received any advice on material changes to Callaghan Innovation’s operations. Callaghan Innovation is responsible for its day to day operations, and regularly keep me updated on any issues I need to be aware of.”

On a different tack, Dr Parmar asked if the Minister had sought any advice from officials on any changes to the workings of Callaghan Innovation. Dr Woods’ reply was emphatic:

“No.”

This suggests either that she sought no advice or that she worked furiously between March 15 and April 19 to incorporate advice before releasing the proposals for phasing out the growth grants.

We can only wonder what Sir Paul Callaghan would make of this.

A news item on the Massey website reminds us of his illustrious career. 

Sir Paul joined Massey’s staff as a lecturer in 1974 and he was appointed Professor of Physics 10 years later.

Sir Paul was appointed the Alan MacDiarmid Professor of Physical Sciences at Victoria University in 2001, the same year he became the 36th New Zealander to be made a fellow of the Royal Society of London.

He was awarded the Royal Society of New Zealand Hector Medal in 1998, the Ampere Prize in 2004, the Rutherford Medal in 2005, was appointed a Principal Companion of the New Zealand Order of Merit following year and, with the restoration of traditional honours, was formally knighted in 2009.

He was awarded an Honorary Doctorate of Science by Massey in 2010.

Callaghan Innovation was named after him when it was established in February 2013 with the Crown Research Institute Industrial Research Limited merged into it. The agency’s task is to make New Zealand business more innovative.

Film premiere:

The world premiere of Dancing With Atoms is at 3.30pm, Sunday May 20 at the Embassy Theatre, Wellington. Tickets $25/$15 for children 16 and under and students with ID available from eventbrite.co.nz

All proceeds from the film premiere screening go the Cancer Society of NZ.

Click here for a documentary preview.

 

Minister announces opening of 2018 Partnerships investment round

Research, Science and Innovation Minister Megan Woods has announced the opening of the 2018 Partnerships investment round, which will provide up to $26 million over seven years to support high-quality, industry-led research.

Partnerships support research organisations and research users, particularly industries, in working together to establish long-term research programmes.

Achieving the Government’s goals, such as raising total investment in R&D to 2 per cent of GDP in 10 years and transitioning to a net zero emissions economy by 2050, will require changes to the research, science and innovation system, Dr Woods said.

This includes developing a new overarching strategy to guide Government investment in science and innovation.

“Our recently announced R&D tax incentive is an initial piece of this strategy and will play a crucial role in lifting total R&D investment and transforming New Zealand’s economy to be inclusive, productive and sustainable,” Dr Woods said.

“These changes could affect the funding landscape surrounding Partnerships. We will be better placed to consider how to invest effectively in research to support Government priorities once the scale and nature of the changes to the system become clear. As such, the Government is not currently committing to any further Partnerships investment rounds beyond 2018.

“The Government invests across a range of sectors and funds in science and innovation, and this decision is about ensuring New Zealand’s publicly funded research aligns with this Government’s priorities.

The decision not to commit to further Partnership investment rounds is not a research funding cut, Dr Woods said.

She will be taking advice from the Ministry of Business, Innovation and Employment to ensure the funding will be invested effectively in the future.

Applications to the 2018 round are eligible for up to seven years of funding. Existing Partnerships contracts will not be affected.

“There is still a range of alternative funding sources for would-be future applicants to apply to, such as the Endeavour Fund and the upcoming R&D tax incentive, Dr Woods said.

“In the meantime, I encourage a diverse range of businesses and industries to apply for the 2018 round.”

The website can be visited HERE for more information and to apply for the 2018 Partnerships round.,

Aapplications are due by noon on 24 July.

Source: Minister of Research, Science and Innovation

For good measure, let’s lop Callaghan Innovation’s admin costs, Taxpayers’ Union says

The eradication of Callaghan Innovation’s controversial Growth Grants in favour of a rules-based R&D tax incentive is a major victory for taxpayers, the New Zealand Taxpayers’ Union.

Taxpayers’ Union Executive Director Jordan Williams for years has been campaigning against these handouts to businesses hand-picked by Callaghan Innovation.

“Governments shouldn’t be in the business of picking winners – it rewards businesses for political connections rather than productivity, and it’s unfair on the winners’ competitors,” Mr Williams says.

“Despite countless examples of businesses receiving grants and then going bust (or being bought out from overseas), the National Government refused to accept criticism of Callaghan grants. On this issue, the Honorable Doctor Megan Woods has shown far better business sense than her National Party counterparts.”

With the primary function of Callaghan Innovation being phased out, the Taxpayers’ Union is pressing for a downsizing of the Callaghan Innovation organisation, which employs 386 staff with an average salary of $112,000.

It believes taxpayers could be saved up to $86 million a year in administration costs.

“An across-the-board tax incentive is a far tidier and less risky solution than gambling taxpayer money on a handful of fat grants to select businesses,” Mr Williams said.

But an even better solution – he argues – would be to simply reduce the corporate tax rate. That would avoid any boundary issues and risks of gaming of the new R&D credit.

The Taxpayers Union will be submitting to MBIE on these issues. weeks.”

Source: Taxpayers’ Union