Nats partially undo their cuts to R&D

Written By: - Date published: 10:28 am, May 12th, 2010 - 7 comments
Categories: budget 2010, science - Tags: ,

The Herald editorial is rightly damning of the government’s lacklustre approach to science funding:

Public money is about to trickle again into one of the economy’s least cultivated fields for economic growth, science and research.

In a pre-Budget announcement yesterday the Government committed $225 million over the next four years in the hope that good ideas can be turned into high-value innovations for businesses, exports and the economy.

It is a trickle barely replacing last year’s cuts. This ‘increase’ is just three times the annual budget of the John Key Memorial Cycleway. And we all know what a piddling joke that is.

The National-led Government has some ground to make up in this area. Soon after assuming office it turned off Labour’s science funding tap, from which flowed the generous research and development tax credits and the Fast Forward Fund, a long-term $700 million backing for the food and agriculture sectors.

Those programmes involved serious public money and the imperative of the recession, as much as ideological differences over how to spend it, no doubt led to short-term decisions. Since then the Government has announced a Primary Growth Partnership of $190 million but that has yet to develop primary, forestry or food production.

The loss of research and development tax credits has held back small and medium-sized businesses which do not have the capability to commit to R&D on their own.

A crucial difference between Labour and National has always been that Labour invests in the long-term success of the country and National makes short-term wealth grabs for the ruling elite, even at the expense of New Zealand’s future.

In the Great Depression the first National Government raised the school age to 6 to save money rather than make a tiny tax increase on the rich. In the early 1990s recession, they put up the price of tertiary education while cutting taxes to the wealthy. Last year during the economic meltdown they still found half a billion dollars to lavish on the already well-off but cut hundreds of millions from the science budget.

No wonder economic growth under National averages only 75% of what it does under Labour – they refuse to invest in it.

Yesterday’s Government initiative is smaller, too, than National promised in Opposition although it is possible it will claim that with other piecemeal spending on public science the total would be equivalent to its pledge.

Dear God, a broken promise from John Key? Can that be right?

The centrepiece is the $190 million funding for medium to large, research-intensive firms which want to undertake research.

They will apply for taxpayer-funded grants for up to 20 per cent of their research spending but will have the freedom to spend that money where they see fit.

No pre-approved projects or government-vetted inventions. Mr Key thinks they are the “R&D savvy” players and leaving it to them will reduce bureaucracy.

If the money is not enough and too late, then the way it is being delivered is a further problem. National is cutting money to health, social, and environmental funding (what happened to that agricultural emissions research?). It is laying of scientists at the Crown Research Institutes.

Instead, it will give private companies up to 20% of their research costs and let them spend it how they will – no checks, no approvals. It’s what the Nats call a ‘high trust’ model, Whanau Ora for R&D, where the government signs over taxpayer money and hopes that the private company spends it wisely. It creates all kinds of opportunities for rorts and low quality spending.

It is not clear if the private monies involved will all have to be “new” or in addition to current investment.

Oh dear, so taxpayer money could effectively just be a 20% kick back to businesses for doing research they are already doing. It might not lead to any new research at all – and it is being funded by cutting research in other areas.

The latest announcement is like so many made by so many governments over so long. New Zealand needs to lift its investment in public science and private R&D to lift the performance of the economy.

Message received. Now turn on the tap and direct it to the entrepreneurial and innovative so that the country begins to see a return.

Like so much else, in the vital area of R&D the Key Government promises big and fails to deliver.

7 comments on “Nats partially undo their cuts to R&D ”

  • Comments are now closed

  1. Akldnut 1
    12 May 2010 at 12:08 pm

    P.M.S.L at these monkeys, they take it away one year then re-introduce it the following year as new money. Much like their $50 tax cut, but wait on! lets include the $38 that labour already gave. There that’ll bewilder the horses without spooking them long enough for us to gourge outselves stupid and look after our mates.

  2. Scott 2
    12 May 2010 at 2:09 pm

    “the government’s lacklustre approach to science funding”

    Lacklustre in terms of amounts, but growing at least. And the CRI Taskforce has identified ways that the science funding system can be much improved, and, happily, the Government is implementing those recommendations. It’s not all bad, then.

    “Instead, it will give private companies up to 20% of their research costs and let them spend it how they will no checks, no approvals. It’s what the Nats call a ‘high trust’ model, Whanau Ora for R&D, where the government signs over taxpayer money and hopes that the private company spends it wisely. It creates all kinds of opportunities for rorts and low quality spending.”

    I believe the Nats used a similar argument to justify scrapping the R&D tax credit.

    • Draco T Bastard 2.1
      12 May 2010 at 3:42 pm

      I believe the Nats used a similar argument to justify scrapping the R&D tax credit.

      The difference is that the R&D tax credit was open to an IRD audit. With the new system the large company can ask the government for money, get it and then go off and research hookers on K’rd without any pesky IRD audits.

      • prism 2.1.1
        13 May 2010 at 10:00 am

        It sounds like the R&D tax credit wipe leaves an exciting open field for managing increments to business coffers and expensive conferences in attractive surroundings. Compare to the concerns expressed about an apparently loose rein on Whanau Ora spending, seems to offer the same flights of government money. Could be equivalent to the criticised Labour policy of offering free physio sessions to ACC clients, in that spending will climb steeply.

        When running their conferences the organisations should allow a little time for golf to balance the exhausting brain draining discussions, also spa baths. They must be wonderful ways to interchange face to face and really get down and dirty about the problems and solutions.

  3. freedom 3
    12 May 2010 at 2:31 pm

    here is one example of an international leader that would not have made it out of the garage under Nat’s new plan of funding established corporates

    i know little about them and i am in no way associated with the company, just the first example that sprung to mind, i am sure you all have others to share.

    The following information is from the above public resource link
    ‘Revenue has grown from zero in 2000 to NZ$20 million at the end of March 2008. 4RF was the 14th fastest growing company in New Zealand on the Deloitte Fast 50 list in 2006, Wellington Exporter of the Year in 2007 and recipient of a Wellington Gold Award for information technology leadership in 2008.
    Two years after start up, the company produced the first model in its Aprisa range. With investment of $217,000 from TechNZ the Foundation for Research, Science and Technology’s business investment programme 4RF quickly followed its initial invention with a faster, smarter and more powerful product, which has become the driver behind the company’s exceptional growth.’

    • prism 3.1
      12 May 2010 at 2:44 pm

      That’s an interesting link to a list of Wellington businesses with attitude. It does the heart good to read about what positive NZ businesses are doing 365 days round. Something besides dairying, financing cars and land speculation and buying up other businesses at a multi million level.

      Seeing most of our business is at the micro level by world measures, with under 5 employees, we need lots of these keen, competent, innovative, determined people running successful businesses.

  4. mickysavage 4
    12 May 2010 at 9:34 pm

    The worst aspect of the National habit of cutting a program, reducing the funding and then relaunching and rebadging it as something “new” and “innovative” is that it stuffs the industry up. Instead of there being a somewhat regular stream to apply to actual research there is a build up, an increase in dependence, the cut of funding and 18 months of nothing.

    National would do better if they kept the funding going but altered it to fit their policy needs. At least this way there would be a chance that research streams would continue.

    But you are right. They are not interested in results, just PR.