Finance Minister answers criticisms of R & D tax incentive scheme

Finance Minister Grant Robertson was given the chance to respond to criticisms of his first Budget – including criticisms of the research and development tax credit scheme – when Simon Shepherd questioned him on Newshub’s The Nation.  

He probably didn’t need being reminded that the Budget has been been praised as solid and sensible while critics say it was boring and a bit too timid.

The interviewer brought R & D into the reckoning when he raised questions around the billion dollars in R & D incentives.

The questioning was not as exhaustive as scientists might like.

Simon Shepherd:  “But a company has to spend $100,000 on R & D in a year to qualify. So that’s going to cut out all the small, upcoming tech start-ups, isn’t it?” 

Grant Robertson: “Yeah, there are other means by which they will be able to get funding and get support. The R & D tax incentive is targeted at businesses, giving them some certainty about the spending that they will do.

“We know that internationally, these schemes exist, and we know that if we want to be competitive in getting innovation going, we need a big, large-scale scheme like this. But this is the point – in order to start transforming the economy, we need to lay the base properly.

“R & D tax incentives, the Green Investment Fund, the Provincial Growth Fund, the money we’re putting into transport and infrastructure – they’re the basis of an economic transformation.”

Question: “But there’s been some criticism of first the Provincial Growth Fund – there seems to be just a big pot for forestry and rail and not the kind of transformational technology – clean, green regional technology.” 

Answer: “Well, we’re in the first year of that, and I think as I said on Budget day, I expect the balance and mix of the Provincial Growth Fund to change over the years. But that forestry work will be part of transforming that industry.

“One of the big issues is that we continue to rely on the export of raw commodities. What we want to do through establishing the New Zealand Forestry Service is start to move that industry up the value chain.

“So part of what the Provincial Growth Fund will do is actually move us in to areas of prefabricated timber, adding value to those products in New Zealand. But you’ve got to start somewhere. And the issue we’ve got is that the regions have not been given the attention they should’ve over the last nine years. We are now putting our stake in the ground on that.”

 

Source: The Nation

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The Budget’s provisions for science and innovation — SMC seeks expert reaction

The Science Media Centre has gathered several comments on the Labour Government’s first Budget, which includes funding for the R&D tax credit (announced last month), a new Green Investment Fund to transition to help the transition to a low-carbon economy and funding towards healthier homes.

The SCM notes the budget’s inclusion of:

• over $1 billion in an R&D tax incentive to encourage businesses to innovate

• $10 million for improving the performance and transparency of New Zealand’s science investments through a National Research Information System

• $100 million for the Green Investment Fund, designed to encourage private-sector investment in high-value, low-carbon industries, clean tech and new jobs

• $45 million for promoting energy efficiency, including just under $13 million for a grant scheme for warm, dry homes.

Among the key players in the science and innovation sector who expressed their opinions were –

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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.

Budget provides $15m extra for the Sustainable Farming Fund

Budget 2018 includes $15 million of new operating funding over the next four years for the Sustainable Farming Fund to support more inspiring ideas in applied research and extension projects that deliver economic, environmental and social benefits for New Zealand.

In a joint press statement to announce this, Agriculture Minister Damien O’Connor and Climate Change Minister James Shaw say the Government is investing in projects to build sustainability, productivity and resilience across the primary sector as the Government works alongside farmers and rural communities to provide leadership on some of New Zealand’s most pressing issues.

The Sustainable Farming Fund (SFF) encourages unique collaborations among farmers and growers, scientists and researchers, iwi, local government and others who are making a real difference for our rural communities and the wider primary industries, Mr O’Connor says.

“There has been a massive oversubscription to the fund in recent years, meaning good projects aren’t getting a look-in because the previous Government did not provide enough investment for the fund,” he says.

“In the last SFF round, 86 eligible applications were received but only 28 of these could be accepted.”

Mr Shaw says these projects are led by those on the front line and help find ways to optimise the use of the country’s natural resources and protect the environment for future generations.

“We have set an ambitious target for New Zealand to become a net-zero-emissions economy by 2050,” Mr Shaw says.

“A range of forward-looking measures are required to achieve this. Cleaner, smarter farming is central to our plan for sustainable growth.”

Mr O’Connor says the SFF funding boost builds on work the Government has already prioritised.

Last year, he announced the pilot for SFF Tere, which translates to “be quick, swift or fast”.

“Smaller producers are often key innovators, and four SFF Tere projects are already progressing,” Mr O/Connor says.

“I’m looking forward to doing more to help our primary sector increase value and resilience, with a head start on ever-changing consumer tastes.”

The move announced today was included in the Confidence and Supply Agreement between Labour and the Green Party.

Mr Shaw says the Government is committed to partnering with the agricultural sector to achieve shared goals for sustainability, modernisation and profitability.

“This boost to the Sustainable Farming Fund injects fresh energy into projects that explore how to farm less intensively and more in tune with the environment, while retaining profitability.”

Find out more about the Sustainable Farming Fund at mpi.govt.nz/SFF.

 

$9.3m in Budget to strengthen biosecurity and protect the foundations of NZ’s primary sector

The Coalition Government’s biosecurity initiatives receive $9.3 million in new operating funding in Budget 2018 over the next four years to improve offshore biosecurity systems and  better manage the risks posed by imports.

Further investment in biosecurity is needed as New Zealand’s global trade and tourist numbers increase, Biosecurity Minister Damien O’Connor says in a press statement

When he took up his portfolio six months ago, the Ministry for Primary Industries had several biosecurity responses under way, including Mycoplasma bovis, myrtle rust, Bonamia ostreae and kauri dieback.

Furthermore, ships carrying the brown marmorated stink bug have been turned back.

Besides the new funding, the Government will speed up the review of import health standards.

“Our plan makes sure the exotic pests and diseases that could devastate our economy and wildlife have less chance of making it here in the first place, giving growers and farmers greater certainty about the health of their crops and animals,” Mr O’Connor says.

“This Government’s leadership will improve the resilience of our primary sector. We moved quickly this year to put up $85 million new operating funding in 2017/18 for the frontline response to Mycoplasma bovis in partnership with the primary sector.”

 
An update will be provided in coming weeks on the next steps of the plan to deal with Mycoplasma bovis, a disease which Mr O’Connor described as a regrettable example of why biosecurity in New Zealand must be properly funded.

Another concern had been the underfunding of the Ministry for Primary Industries (MPI) during a time of increasing workload, he said.

“Budget 2018 addresses this with new operating funding of $38 million over two years for MPI to ensure our primary sector is well supported by Government initiatives as we work together to grow New Zealand’s reputation as the most trusted source of sustainable and premium natural products in the world.”

The Government is already reorganising MPI to house four business units so officials can concentrate on their core responsibilities of biosecurity, food safety, fisheries and forestry.

People around the world increasingly were buying products that align with their values, Mr O’Connor said.

New Zealand has a natural advantage, with a good record of animal welfare, grass-fed stock and brand recognition and the Government is determined to help this continue by properly funding MPI and the  critical biosecurity system.

 

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.

Science Minister is coy (not surprisingly) when quizzed about her Budget priorities

We will have to wait for the Budget to find how much money the Governemnt will be pumping into science over the next few years but Dr Megan Woods, the Minister of Research, Science and Innovation, has said she is making a bid for more.

She acknowledged this in answer to a written question from National’s Dr Parmjeet Parmar.

But she is coy about her priorities.

Dr Parmar further asked for what areas of Science and Innovation, if any, the Minister is bidding for funding in Budget 2018.

The response:

“I have bid for funding in a number of priority areas across my portfolio.”

Minister coyness about Budget planning was to be expected but Dr Parmar at least gave it a go.

But does this mean Dr Woods has not bid for funding in non-priority areas?

Source: Hansard