NRT: A low R&D economy

Written By: - Date published: 1:24 pm, November 18th, 2014 - 12 comments
Categories: Economy - Tags: , , ,

no-right-turn-256Reposted from No Right Turn

The Herald this morning reports that New Zealand is near the bottom in global R&D spending:

New Zealand’s world ranking for research and development spending continues to drop, despite increased incentives for companies to invest, according to a report by Grant Thornton, which puts New Zealand near the bottom of the table.

Paul Kane, spokesman for the global business consultancy, said the number of companies in New Zealand that expected to increase their spending on research and development had dropped significantly, with just 12 per cent of firms expecting to increase their spending in the next year.

“We’re really at the bottom of the table, we’re fourth from the bottom behind Estonia, Argentina and Russia, and we’ve been steadily dropping,” Kane said.

Economic Development Minister Steven Joyce is in full denial mode, saying that this doesn’t reflect what he’s seen. From which we can conclude that he did not read his own department’s Briefing to the Incoming Minister, which explicitly says (in bold, so the Minister won’t miss it) that NZ’s level of R&D investment is “low by international standards”. Its also very clear about who is at fault:

While New Zealand is spending a lot more on science and innovation, our investment is still very low when compared with the small advanced economies. This is true in both absolute terms (the total that we spend) and in relative terms (the size of our science and innovation investment relative to our GDP). The 1.28 per cent of GDP New Zealand spends on science is well below the OECD average of 2.06 per cent. There are many reasons for our comparatively low science spend, although a significant portion of the disparity is due to our low investment in the business sector.

According to the BIM, the government wants to increase business-sector R&D spending. Perhaps the first stage to doing that is admitting that we have a problem, rather than trying to deny it.


 

lprent: As someone who has spent most of their working life in the business innovation sectors that Stephen Joyce is just being a fool. The short-term thinking about cuts in the R&D tax credits back in 2009 simply stopped most kinds of innovation and R&D in businesses. 

The John Key and Stephen Joyce run government gave a very clear and unambiguous signal that they thoroughly disapproved of doing R&D, and funding dried up even more than it’d already done under the GFC. This was hardly surprising as it is hard to find a business person in his government, including Stephen Joyce who has ever done any innovation at all. They have a mixture of crony and vulture capitalists who perform the business equivalent of being scavenging Hyenas and Jackals on the African savanna. 

It hasn’t rebounded because what effort the government is putting into business R&D follows the same pattern. They donate taxpayers money to the companies that don’t really need it in boondongles like the Callaghan fund.

12 comments on “NRT: A low R&D economy”

  1. RedLogix 1

    Economic Development Minister Steven Joyce is in full denial mode, saying that this doesn’t reflect what he’s seen.

    That’ll be those damn lying statistics again.

  2. Sable 3

    You don’t need R&D just lots of semi educated plebs who will work in US factories for a pittance and go home to a yummy GM meal. That’s the future these pricks have in mind for this country…..

  3. Al 4

    Low R & D spending is the norm for Tory run countries – why look at research when you can just leave innovation to the market!

  4. Paul Campbell 5

    I’ve worked most of my life for startups in silicon valley, now days I do a lot of R&D here in NZ – maybe 30% of my time – pretending that the cost of developing your new product is not a cost of doing business is just silly – more importantly not allowing on to carry forward those costs from the years (more than 1!) when you didn’t make any money into the years where you do is equally silly.

    Even more, if you want to encourage new startup businesses in NZ, especially in the tech sector, you need to be able to handle companies that spend a lot of money and then die – ie that never make a profit they can take a credit against.

    From the point of view of a tax-payer you have to think of these as investments in jobs and future taxation – you let companies that are developing new products pay a little less tax in exchange for a hoped for future where they pay more (and employ more people who pay more PAYE)

    You’ll all remember that Labour brought in a (small) R&D tax credit, National removed it and shifted it to a small number of cherry picked friends – large companies trhat they approved of, cutting it off to all startups.

    Having said this, a blanket R&D credit is probably a bad idea, it’s rife for abuse – it needs carefully targeted rules aimed at companies in different stages of their lifecycle – having the guy from the IRD coming around every year or so to check out my lab/office is completely OK from my point of view

    • greywarshark 5.1

      @ Paul Campbell
      There is a big dollop of wisdom in what you say. This sort of advice is what Labour will need. If you throw it before the Nacts it would be just pearls before swine.

    • Draco T Bastard 5.2

      Even more, if you want to encourage new startup businesses in NZ, especially in the tech sector, you need to be able to handle companies that spend a lot of money and then die – ie that never make a profit they can take a credit against.

      Real Monetary Reform

      Having said this, a blanket R&D credit is probably a bad idea, it’s rife for abuse

      Yep and there’s research out there showing that they simply don’t work. National was right about that of course they then put in place their own system that was nothing more than crony capitalism.

  5. McFlock 6

    it really does seem that those “briefings to incoming ministers” are becoming “detailed outlines of how National has fucked things up”

  6. Tracey 7

    explains why slylands was focusing on wierd corruption stats today… To avoid this kind of reality.

  7. Richard@Down South 8

    It reflects the attitude of the times… like when the GFC hit… the Government yelled slash costs, and apparently slashed costs, come hell or high water… paying no mind to what economic damage it did to the country…

    What did business do? It looked at the Government, and naturally decided that it was time to cut costs (staff etc), and put off hiring new staff unless essential to the bottom line. Thus, we were given a perfect case of leadership by example

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