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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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.

Government to honour existing commitments while winding down irrigation funding

The Government has begun winding down public funding for large-scale irrigation through Crown Irrigation Investments Limited (CIIL), in line with the Coalition Agreement and the Confidence & Supply Agreement.

Its decisions are the result of an extensive review of how to wind down funding through CIIL while honouring existing commitments, as provided for in the agreements signed on the formation of the Government.

These decisions will provide certainty to the individual schemes which had applied for Government funding alongside private investment, Finance Minister Grant Robertson says.

“This represents a shift in priorities to the previous government. Large-scale private irrigation schemes should be economically viable on their own, without requiring significant public financing. We must also be mindful of the potential for large-scale irrigation to lead to intensive farming practices which may contribute to adverse environmental outcomes.”

All existing CIIL commitments for development contracts will be honoured to the close of the current phase of each contract. In addition, three schemes will be funded for their construction phases due to their advanced status, subject to meeting the normal requirements of the fund. One is already under construction and the two other schemes have signed term sheets with CIIL.

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