R&D tax incentive update: Minister says legislation will be introduced in October

Reporting progress on the Government’s plan to introduce a research and development (R&D) tax incentive, Research, Science and Innovation Minister Megan Woods reiterates the aim to lift New Zealand’s economy-wide spend on R&D from 1.3% to 2% of GDP over the next 10 years. The tax incentive will be a key lever in reaching this goal.After a consultation period, officials are now producing final recommendations on the design of the scheme.

There will be further opportunities for people to have their say on the design of the R&D tax incentive during the select committee process later this year.

Legislation will be introduced in October for the R&D tax incentive to be in place by 1 April 2019. Eligible businesses paying tax will be able to benefit from this policy from day one.

Over time, the Government intends to have a full package of support for New Zealand’s Innovation system, including support for start-ups.

“We recognise it is vital to have the right kinds of support in place for pre-profit businesses that are in tax loss or those that have insufficient taxable income to benefit from a tax credit,” Dr Woods said.

She has noted concerns that R&D-intensive firms and start-ups would not be able to benefit from the incentive.

The policy issues involved in supporting companies in tax loss through a tax incentive were complex, she said, “but we are committed to having a solution in place by April 2020”.

In the meantime start-ups and businesses in tax loss can continue to get support from the range of grants and incubators from Callaghan Innovation.

Source: Minister for Research, Science and Innovation


Banana-growing project among the winners of Māori science funding

Research, Science and Innovation Minister Megan Woods and Māori Development Minister Nanaia Mahuta have announced funding for 34 new projects worth $3.8 million over two years through the sixth round of Te Pūnaha Hihiko: Vision Mātauranga Capability Fund.

Te Pūnaha Hihiko: Vision Mātauranga Capability Fund invests in people and organisations undertaking or planning research which supports the four themes of the Vision Mātauranga Policy: indigenous innovation; taiao achieving environmental sustainability; hauora/oranga improving health and social wellbeing; and mātauranga exploring indigenous knowledge.

“This fund has a strong focus on investing in Māori people and organisations that can create unique opportunities and innovative solutions through science research,” says Minister Woods.

“The projects funded through the Vision Mātauranga Capability Fund reflect the high calibre of diverse research aimed at creating a healthier, more sustainable and better future for all of New Zealand.”

Nanaia Mahuta says the new projects in this year’s round include sustainability in the Chatham Islands, improving biodiversity and kaitiakitanga (guardianship) in South Westland, and developing a climate change strategy for Te Arawa.

“The contribution Māori make to our research, science and innovation sectors is distinctive and essential to the growth of New Zealand,” says Minister Mahuta.

“Māori have valuable knowledge to help solve our country’s unique problems. Investment into Māori knowledge and resources, and building a better understanding of Māori values creates resilient communities.”

Up to $4 million per investment round is available through two different schemes in the fund.

A full list of successful projects is available on the MBIE website.

At the top of the list, AgResearch is being funded for three separate projects.

One of these (with $93,455 of funding) is to nurture the growth of a banana industry through “the rapid expansion of commercial Banana growing in Tārawhiti” in partnership with a company, Tai Pukenga Limited.

The Institute of Environmental Science and Research has secured $100,000 for the validation of a food safety framework for mahinga kai Te Rūnanga o Ngāi Tahu.

The Rakiura Titi Islands Administering Body / Te Rūnanga o Ngāi Tahu, in partnership with Callaghan Innovation, has secured $100,000 for a project to find ways of utilising tītī by-products and add value to mahinga kai.

Source: Ministers of Science and Māori Development

Red Zone project aims to boost the endangered bee population

The Minister for Greater Christchurch Regeneration, Megan Woods, has announced that the Residential Red Zone will become the new breeding ground for the embattled global bee population.

May 20 has been declared World Bee Day by the United Nations.

Dr Woods used the occasion to announce the initiative to protect and grow native bee stocks.

Land Information New Zealand (LINZ) has created a trial in the Residential Red Zone after an extended search for appropriate and safe areas to place and grow beehives.

The first trial involves 10 beehives with around 600,000 bees at a Dallington location, but that number of locations can be increased in the future.

“This trial is another wonderful example of a transitional project to use the red zone effectively and created eco-friendly activities in this area until the final regeneration plan has been formed,” says Dr Woods.

“The Government recently extended the amount of time red zone land can be used for community projects.”

Christchurch beekeeper Simon Phillips, who manages the hives on behalf of LINZ, says declining bee numbers are a worldwide problem. “

It is a constant battle, with new diseases appearing every month, so we constantly have to develop new treatments to deal with each new virus.”

Jeremy Barr is General Manager of the Canterbury Recovery Group of LINZ, responsible for managing the red zone areas.

“It is only a small first step, but with this trial LINZ wants to do its bit to protect and grow the local bee population,” he says.

Mr Phillips has timed the introduction of bee hives with the end of the honey season, before splitting his strongest hives in two new hives.

“We then introduce a new queen from our breeding programme and hope the new hive will grow to house around 60,000 bees each by next year.”

Mr Phillips says the red zone is the ideal area to grow bees.

“Normally we would have the hives on farms or in open fields where there is not always much for them to feed on, but the red zone is full of fruit trees that will be able to sustain the bees.”

Despite the large open spaces in the red zone, Mr Barr says that the project team had to be careful in deciding on the location for the hives.

“We are trying to keep them out of sight of the public and places with no traffic and little pedestrian traffic,” says Mr Barr.

The hives will be well sign-posted and fenced off after LINZ conducted a robust health and safety assessment.

Mr Phillips says that the hives only need 10 to 20 square metres. “But we wanted to make sure there will be no safety concerns, for the public, and the bees.”

A video interview with Mr Phillips can be seen HERE. 

Source: Minister for Greater Christchurch Regeneration 

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:


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 makes two appointments to Science Board

Research, Science and Innovation Minister Megan Woods has announced the appointment of two members to the Science Board – Dr Liz Wedderburn as a new member to the Board and Professor Parry Guilford, who will return for his second term.

Dr Wedderburn, an Assistant Research Director at AgResearch, has a PhD in ecology and more than 30 years research and management experience in sustainable agriculture in pastoral-based livestock systems.

Professor Guilford is a research Professor and Principal Investigator in the Cancer Genetics Laboratory in the Department of Biochemistry at the University of Otago. He is co-founder and Chief Scientific Officer of Pacific Edge Biotechnology Ltd as well as Deputy Director of the National Science Challenge ‘Healthier Lives’.

The Science Board is responsible for investing Government funds in research, science and technology.

Board members must have considerable experience in research methodologies, processes and risks, and a great understanding of New Zealand’s research and technology sectors, Dr Woods said.

She was confident the appointees’ strong research experience and achievements in the New Zealand Science Sector made them well suited for the role.

Dr Wedderburn and Professor Guilford will serve terms of three years.

Source: Minister of Innovation, Science and Technology

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