R&D: Our future

Written By: - Date published: 6:27 am, May 25th, 2011 - 82 comments
Categories: business, labour - Tags: , , ,

National are bleating about Labour’s Research & Development tax credit – largely because as they have no economic plan of their own, so they can only talk about other parties’.  It’s a sad sight after 2.5 years of government.

Having worked all my life in the hi-tech productive exporting sector, I believe we need strong investment in R&D if we are to move forward as a country.  Sir Paul Callaghan’s brilliant address shows us that tourism won’t generate the revenue we need to catch Australia’s wealth.  Agriculture is great, but it’s not scalable.  Technology, on the other hand, is our second largest export sector (above meat!), and requires few resources other than brains and entrepreneurship.

In Sir Paul’s talk he mentions that we have 10 hi-tech companies that generate $5bn in revenue for the country – these without us trying.  If we could expand it to 100 companies that successful, we’d close the $45 billion wealth gap with Australia – National’s seemingly forgotten mantra.

So Labour have put out a plan to foster those companies and grow them and our economy.  At $800 million over 5 years, it will require $6.4 billion worth of R&D from the private sector.

But companies will only get it if they actually invest in R&D.  That’s why almost all OECD countries have R&D tax credits – it’s an effective way to get the private sector to invest.  Australia thinks it’s a good scheme – that’s why they’re currently implementing the scheme we had in 2008.  Our Treasury knows it’s a good scheme too – Bill English ignored their advice not to cut it when he came in.

And our businesses know it’s a good scheme.  The likes of Fisher & Paykel are praising it, even if Business NZ head Phil O’Reilly can’t bring himself to back good policy if it comes in Red.

Sir Paul gave a version of his address to the recent Labour Congress, which had a couple of extra slides, making fun of poor old Don Brash.  Don thought we invested well above OECD average in R&D, and concluded that R&D funding was not useful in his 2025 Taskforce report (never lets the facts get in the way of a good story…).  This Herald editorial seems to make the same mistake, complaining that we’ve “encouraged company research and development at public expense for years.”  But we haven’t really made much effort; our investment in R&D both public & private has been anaemic – we rank only above Mexico & Turkey in the OECD for our percentage R&D spend.  That’s right Don, not well above average but 3rd to bottom – and do we really want to be emulating those 2 economies?

China gets how important our hi-tech sector is, and reports on it.  National apparently don’t get it.  Whilst they pick a few winners with their TBG grants, the fact that the rest of the industry get nothing and that National cut $55million from skills training last year and are presiding over a massive skills deficit shows that they aren’t looking after its future.  Tax credits are great for the entrepreneurial start-ups we need (they get them before they make a profit), and the skilled workers in hi-tech will lift wages and help reduce income inequality.

.

Some quick thoughts on paying for it by introducing farmers to the ETS 2 years earlier…  Do you want to pay the tax for their pollution for them?  Everybody else will be paying in 2013, so it’s a question of fairness.  And National’s complaint that it’ll have agriculture in an ETS before anywhere else in the world… that’ll still be true in 2015 under their plan, so they can’t be that worried about it in reality.

And Red Alert pretty comprehensively deal with John Key’s “milk and cheese will be more expensive” lie.

82 comments on “R&D: Our future”

  1. Putting it as simply as I can – Ben you haven’t got a clue.
    No energy = no technology
    I just hope you have children

    • Colonial Viper 1.1

      Robert you are the fool here. NZ has hydro and coal. We have great potential for wind and tidal generation.

      In the future we may not be able to sustain energy use at 600-700kW/h per household per month.

      But in this country at least, a figure close to that is entirely possible going forwards. Lifestyle adjustments will need to be made and people better get fitter, but it is not all doom and gloom like you suggest.

      By the way, a wooden cart wheel is considered low energy technology.

      • Afewknowthetruth 1.1.1

        Robert is absolutely right.

        Practically all the NZ hydro capacity was utilised decades ago. And if you think using coal is a good idea, you must be completely insane. There is no faster way to wreck the local environment and the global environment than to continue using coal.

        Of course, nothing NZ does will make any difference because the big game is being played out by the US and China, and both of them are committed to getting fossil fuels out of the ground and burnt as quickly as possible.

        So nobody has a future beyond 2030 or so anyway, whether fools try to do R&D in NZ or not. Actually, you’d better make that 2020, since little of the industrial system will be functioning 15 years after peak oil.

        We could prepare for the collapse of industrial civilisation, which is now underway, by implementing policies based on sanity, i.e. protection of what is left of the environment and establishing wide scale local food production.

        Sanity seems to be too hard for most people. They prefer the delusions of techno-fundamentalism -the irrational belief that everything has a highly technical solution.

        . .

        • Draco T Bastard 1.1.1.1

          Practically all the NZ hydro capacity was utilised decades ago.

          And we’ll have the benefits of those forever. We will have energy to power an industrial future. It won’t be as consumptive as today but we will have it.

          There is no faster way to wreck the local environment and the global environment than to continue using coal.

          Coal can be used in ways that don’t involve burning it. We may have to develop some of them but that’s what R&D is for.

          The real issue with Peak Oil isn’t industrialism per se but how much will be left? and how can we transport it? It’s the lack of transport (98% of transport today is powered by oil derived fuel) that’s really going to hit hard.

          We could prepare for the collapse of industrial civilisation, which is now underway, by implementing policies based on sanity, i.e. protection of what is left of the environment and establishing wide scale local food production.

          /agreed

          • PeteG 1.1.1.1.1

            Practically all the NZ hydro capacity was utilised decades ago.

            And we’ll have the benefits of those forever.

            No we won’t. Depends on how fast they fill up.

            Although large concrete gravity dams have a theoretical design life of 80-100 years, the actual lifespan of a dam is determined by the rate at which its reservoir fills with sediment. In severely eroding catchments, millions of cubic metres of sediment can be transported annually. The average lifespan of a large dam in China is 45 years.

            The Roxburgh dam will probably be the first large concrete gravity dam to be decommissioned in New Zealand. The obvious question is, when? In 2007, Contact Energy was granted consents to continue operating its dams on the Clutha River for another 35 years. It seems highly unlikely that the reservoir will remain viable until 2042.

            Lake Dunstan has slowed down the silting of Lake Roxburgh, but it has just moved the problem as is filling up quickly now, the Kawarau arm is noticeably silted already.

            • Draco T Bastard 1.1.1.1.1.1

              Silt can be dredged you idiot.

              • Lanthanide

                Everything I’ve ever seen about the siltation of hydro dams has suggested that it’s irreversible without destroying the dam.

                • Colonial Viper

                  I had thought that dredging of old hydrodams was pretty routine.

                  One example listed here.

                  http://www.anthonybates.co.uk/capital%20dredging/inland.htm

                • Draco T Bastard

                  Got link on that?

                  I certainly can’t think of any reason for it to be impossible. Difficult, yes, but not impossible.

                  • Lanthanide

                    No, no specific links, just everything I ever remember reading about siltation and dams is that it’s often impossible to solve.

                    Interview with this guy provides some background:

                    http://www.hcn.org/issues/43.6/muddy-waters-silt-and-the-slow-demise-of-glen-canyon-dam/siltation-expert-we-need-more-dams

                    He states that lots of dams built in 1960’s and 70’s were ‘designed’ to last 100 years, but he says they can be extended if proper management is done. This is likely the nugget behind the things I’ve read, and Pete’s statement.

                    Also:
                    “A couple of years ago, I did a study of the Tarbela Dam in Pakistan. The reservoir is 100 kilometers long and rapidly silting up. It provides 30 percent of the power and 50 percent of the irrigation water for 160 million people. Flushing is feasible there, but it would take the system out of commission for about three months, and then you need something else to fill in during that time. They don’t have that. In many places around the world, we need more dams. “

                    • Draco T Bastard

                      Both of those indicate that dredging is feasible but expensive. The question we need to ask is if it’s more expensive than decommissioning because it’s one or the other.

          • Robert Atack 1.1.1.1.2

            The NZ grid is 100% dependent on imported ‘wing dings’ such as ummm computers, copper wire and many many items made in factories dependent on coal fired power plants over seas
            The world has been set up like the Soviet Union was, with everyone dependent on each other for that magic stuff called technology, a good example would be a battery for your hybrid car, which travels nearly as far during its manufacture than during its use.
            Most of the power pylons going in and out of Haywards substation and all the way up the line need replacing …. like 20 years ago, they are about to start this project, if they can import the structural steel etc.
            We shouldn’t be so smug about our collective situation, even Japan is borrowing several power turbines from South Korea, as opposed to going down to the local energy shop and buying one off the shelf … this may be an indicator we are also at peak turbine 😉
            What are the logistics of getting a dredge into a dam?

            How about insulin for diabetics? They import that as well, and ‘they’ don’t even know how many weeks worth we have in storage, but what the hell most diabetics are Maori so who cares?

            • Draco T Bastard 1.1.1.1.2.1

              The NZ grid is 100% dependent on imported ‘wing dings’ such as ummm computers,

              Pretty sure it worked before we connected the computers up to it and I’m also pretty sure that, if we needed to, we could make the computers here to (We do, after all, seem to have some leading lights in the industry, Rakon, Tait Electronics). We have copper here as well, not much, but some. Throw in some recycling and we could probably maintain it into the foreseeable future.

              …if they can import the structural steel etc.

              Considering that we make the stuff here why would they be importing it?

              How about insulin for diabetics? They import that as well,

              And that means that we can’t make it here?

              What are the logistics of getting a dredge into a dam?

              I suppose it would be similar to getting the Earnslaw into Lake Wakatipu. The hard part would be deciding what to do with the silt after you’ve dredged it as you can’t put it back in the lake. Although, I’m thinking it would probably be fairly good nutrient source for farms.

              We can shift to being self-sufficient – we have the resources available.

              • McFlock

                The main issue is global warming, not peak oil (although PO is a bad thing). We’ve only been reliant on oil for what – 60 or 70 years? Air travel is an issue, but ships and trains don’t have to rely on oil.
                 
                And as for hydro, R&D might produce more stable and clean fission or even fusion reactors, not to mention alternative fuel sources for lower-efficiency transportation (i.e. cars the holiday highway is being built for).
                 
                Is there a problem? Yes. Will it be solved by the capital elite’s current gouging attitude? No. Should we expect the rapture at 2030? Probably not.

            • Colonial Viper 1.1.1.1.2.2

              The world has been set up like the Soviet Union was

              Well this is untrue for starters.

              When the collapse hit the USSR it was a land full of pretty fit, survival smart people used to adversity.

              Not at all like the automobile reliant fatlands of the US and other western countries.

  2. I completely agree re the need for promoting R&D, but think you guys need to be heading off this stuff from National and affiliated bloggers that says a tax break will only result in accountants getting creative to make non-R&D expenditure eligible for it. Given the almost obsessive unwillingness of NZ’s businesses to invest in R&D, that scenario is all too plausible – it really needs to have Labour address it convincingly.

    • PeteG 2.1

      I agree, in the past R&D credits have been little more than yet another tax “minimisation” loophole. Why would this be any different?

      And would Labour give with one hand and take with the other?
      Would they put company tax back up? They seem to be convinced that companies can “afford” a lot more expenditure.

      Would R&D credits help companies research ways of reducing their number of employees, especially if the minimum wage is bumped up?

      • RedLogix 2.1.1

        Would R&D credits help companies research ways of reducing their number of employees, especially if the minimum wage is bumped up?

        Higher labour costs give employers incentives to find better ways to get more value from them. This is the crucial factor missing in the NZ economy. While we have very high rates of labour force participation (ie lots of us work) and we work very long hours… we don’t create very much value for all this effort.

        If you have to dig a large hole it’s far better to employ one skilled driver at $50 per hour sitting on an expensive hydraulic digger than 20 coolies with spades earning a cup of rice per day. In the first case you might ask what happens to the 19 other people not driving the digger? What happens is that they are then available for other productive work, presumably similarly or more productive.

        This is where NZ is lagging the OECD badly… our labour is still so cheap that employers find it easier to use us like semi-skilled coolies than take the risk of investing in R&D and more productive plant and equipment.

        • PeteG 2.1.1.1

          So higher wage rates will encourage the replacement of cheap labour with machines?

          Those replaced will be available for other work, but other work may not be available.

          • Eddie 2.1.1.1.1

            PeteG, that is literally what the Luddites said. They were textile artisans who opposed mechanical looms, which meant that one person could do the work of many. They just saw the fact that this put lots of artisans out of work.

            But an economy is a dynamic system – higher productivity can destroy jobs but it means there is more free labour for the same amount of output. That allows new enterprises which create new jobs and higher total output, meaning a higher standard of living.

            Honestly, PeteG, this is the story of the industrial revolution and all progress. Do you oppose the assembly line, robot car construction, container shipping, office computers etc etc? All these innovations allow higher productivity and destroyed some jobs in the process but in the end mean more jobs and better pay and more output.

            The Left simply argues that the wage egg comes before the productivity chicken

          • Akldnut 2.1.1.1.2

            So higher wage rates will encourage the replacement of cheap labour with machines?

            So nothing is changing PeteG, this has been happening for decades

            Those replaced will be available for other work, but other work may not be available.

            Too late numbskull – we’re already at that stage

            • PeteG 2.1.1.1.2.1

              I know, and Eddie doesn’t seem to get it – we’re losing most of our coolie jobs to Asia, and if we put our base rates higher that will keep happening.

              If our minimum rates are pushed higher we squeeze out more workers, and there’s more pressure to raise Unemployment and other benefits to go with that, for an increasing number of unemployed.

              Add to that the pushed up pensions for a rapidly growing number of oldies.

              R&D should be trying to figure out how to pay for all of that. It hasn’t managed to keep up in the past.

              • wtl

                We can’t compete with Asia on a low wage basis so there is no point trying. You said yesterday that you weren’t supporting a “low wage low productivity” economy, but that’s exactly what you are suggesting, by saying that we should be competing with Asia on the basis of wage levels.

              • Colonial Viper

                Hey PeteG you are a moron.

                Just look at all the high tech, software and electronics companies based in Australia. They prove everyone of your assumptions wrong. Even with wage rates 40% higher than ours, they continue to prosper and have not been forced to offshore to China.

                You are a backward looking luddite scaremongerer.

                And so are your Money Masters.

                R&D should be trying to figure out how to pay for all of that. It hasn’t managed to keep up in the past.

                Gawd you have no idea how high tech research and development works do you? Obviously not doing an engineering or computer science major, you’re fit to become just another NZ politician.

        • Huginn 2.1.1.2

          Red Logix, you are so right!

          NZ has a serious problem with productivity.

          The R&D credit should be seen as one part of an overall strategy to improve productivity – raising the minimum wage is another.

          What’s missing is a commitment to improve the skills of the 19 other people who don’t get to drive the digger

          . . . oh, and of course a government that has some faith in the people of NZ.

    • lprent 2.2

      Sure it does. But that it is like saying that you should kill off the DPB because a small minority of people abuse it…. Oh wait.. They do say that…

      That is a regulatory function and has been done quite well. But the simple way to remove the game playing is to restrict into companies that either export or who are developing products for export. Quite simply NZ is a puddle of a market. Not one of the companies I have worked in over the last 20 years has gotten more than 10 percent of their revenues locally

      • PeteG 2.2.1

        How do you stop existing export related R&D being credited? If that’s all that happens it’s simply a tax credit for selected sectors.

        • wtl 2.2.1.1

          No f**king shit. It is a tax credit for sectors doing R&D for export. Isn’t that the point?

          Since PeteG and other National supports seem to think Kiwis are too dumb to design a tax credit system that is reasonably robust, its not surprising that they are against R&D – they probably think Kiwis don’t have the necessary brains for R&D.

          • PeteG 2.2.1.1.1

            If they get a tax credit for R&D they are already doing the benefits are limited.
            It’s very difficult to ensure it promotes additional R&D.

            • Colonial Viper 2.2.1.1.1.1

              You’re grasping at straws here.

              I thought you Righties were all about providing incentives to the market to get the private sector to do the right thing. But obviously you don’t believe your own tripe.

              • Draco T Bastard

                Righties aren’t about incentives. They’re about subsidising themselves and their mates with our money and protecting themselves from competition.

                • Colonial Viper

                  What? They help themselves to OUR money for their own benefit? Wait, isn’t that what they always accuse the Left of doing? 🙂

            • mickysavage 2.2.1.1.1.2

              Yep we should do stuff all like Turkey and Mexico.
               
              There is no way that we should be like Finland which has a comparable population, is at the end of the world, has little natural resources but does exceedingly well because at least in part they spend truckloads on R&D.

              • Colonial Viper

                Turkey’s doing pretty good these days comparatively…

                As an aside, Finland’s Nokia used to be a forestry and wood processing company.

  3. Tangled up in blue 3

    Not do mention the effect on job growth in the R&D industry because of $6.4 billion being spent there.

    Of course there will need to be strict rules on what constitutes R&D to prevent abuse.

  4. joe bloggs 4

    There’s clearly some benefit from increased investment in R&D spending – just look at the outstanding successes of the knowledge economy to see this.

    However Labour’s approach to funding this R&D is morally bankrupt and utterly despicable.

    Labour worked its little rocks off to convince the electorate that the Emmissions Trading Scheme was an environmental policy, and that the scheme would not raise tax.

    Now all of a sudden Labour’s proposing an ETS impost on farmers to pay for Research and Development.

    So… following the money trail – the proposed farm payments on ETS go into the consolidated accounts and get used to pay for other ‘stuff’… The ETS is nothing more than a way of getting money out of taxpayer pockets and handing it to the treasury for them to spend.

    Looks like a tax, sounds like a tax.

    • Colonial Viper 4.1

      Looks like a tax, sounds like a tax.

      Yeah its a tax, and its going to pay for R&D tax credits. Get over it.

      • joe bloggs 4.1.1

        And Red Alert pretty comprehensively deal with John Key’s “milk and cheese will be more expensive” lie.

        Just this morning Damien O’Conner admitted on NewstalkZB that consumer prices would rise as a result of Labour’s ETS impost on farmers.

        The sooner you get out of your ivory tower, CV, the better. You champagne-and-caviar-socialists just don’t get it, do you.

    • Draco T Bastard 4.2

      Now all of a sudden Labour’s proposing an ETS impost on farmers to pay for Research and Development.

      They don’t say that at all. They say that the savings we get from not subsidising farmers for the pollution they create will pay for it.

      Having said that, even if it was an extra tax rather than a removal of subsidies I still wouldn’t be against it. Hell, I don’t think it goes far enough and that we should be looking at getting state paid for R&D up to aprox. $1b/year – not a measly couple of hundred million.

  5. PeteG 5

    What sector are we likely to get the best bang for R&D buck? Food production.
    Who is going to pay for the R&D credits? Food producers.

    It seems to be a money shuffle to try and appear to be doing something, creating overheads and innefficiencies and interference.

    Why don’t they just tax them less and even the playing field, internally and internationally.

    • Colonial Viper 5.1

      Wow…more prognostication from someone who has no idea about R&D and is making stuff up as he goes along.

      Why don’t you view Prof Callaghan’s presentation that Ben linked to before you keep posting shite.

      • PeteG 5.1.1

        I’ve worked directly in R&D and in companies heavily into tech R&D, with export markets, for about fifteen years. And you?

        • mickysavage 5.1.1.1

          Well then share some of your experience with us.  I made the comment below that food does not seem to be an area where there is a great deal of gain to be made but that our high tech companies seem to be doing the best.
           
          What has worked PeteG?
           
          And what overseas models work best?
           
          This should be a debate about making something work, rather than just point scoring by criticising.  The country needs a plan and improving R&D by whatever means is vital.
           

          • PeteG 5.1.1.1.1

            Reducing company tax will help.

            Also direct government spending on R&D rather than subsidy shuffles, this ensures it is additioanl spending. Spin off to private enterprise when it is commercially ready.

            • Colonial Viper 5.1.1.1.1.1

              Reducing company tax will help.

              Frak off Mr 15 Year R&D professional.

              All reducing company profits tax will do is encourage companies to not invest in R&D and to instead try and suck out that money in terms of short term profits instead of putting it back into their business.

              You really have no idea. Lame. Especially lame for a 15 year high tech industry professional.

        • Colonial Viper 5.1.1.2

          I’ve worked directly in R&D and in companies heavily into tech R&D, with export markets, for about fifteen years. And you?

          Meh, more likely that you’re a young NAT kiddo not much older than 24, who has no idea how companies actually work. OR you have been asleep at your desk your whole working life. OR you started working when you were 9 years old.

          • PeteG 5.1.1.2.1

            You should stop making things up.

            In the 80s I worked for a manufacturing company, export and local market, doing product design, CNC programming and selling machine time to others doing R&D. Some of that was taken over by F&P and I moved and worked for them for a while.

            Then I replaced someone at Taunton Mews who is, I believe, well known here. Who do you think might have left a boot message in autoexec on a PC at 4XO that said something like:
            “I’ll be back tomorrow to finish fixing this- LP”?

            • Colonial Viper 5.1.1.2.1.1

              Meh. Your copy and paste impresses no one.

              Particularly since I know any number of people who still do that work now and you simply have no fraking idea about anything.

              From your two dimensional thinking patterns I’ll be surprised if you are older than 24, which means you were programming CNC machines (badly, given your inability to look at a problem from all sides) in your diapers.

            • Huginn 5.1.1.2.1.2

              Pete!
              What a fabulous career! You’ve been on fire, mate!
              In the mean time they’re still surfing the Knowledge Wave here . . .

              from 2007 ‘Optima Chief Operating Office, Andrew Goldie, says the technology, which he believes is a world first, could not have been successfully developed without the support of the Foundation for Research, Science and Technology which provided investment totaling almost $500,000 through its Technology for Business Growth (TBG) scheme.’
              http://www.frst.govt.nz/news/Ambulances_worldwide_pick_up_on_software

              and in 2011: ‘While the company is securing contracts in Europe and the United Kingdom, Mackay said North America remains the main focus. Optima’s growing number of “smart health” products continues the company’s move away from the industry it worked with when founded 13 years ago by students and staff at the University of Auckland’s engineering faculty.

              In its early years the company provided software models for airlines. Its first project was a system to manage crew rosters for Air New Zealand, saving the airline $14 million a year.’
              http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10723014

              Optima is one of a cluster of technology start-ups spun out under the 5th Labour Government.

              Not many minimum wage jobs in this sector – engineering grads start at $45k + with offers going out before finals to snap them up.

              • Huginn

                . . . and here’s another one
                a hi-tech Auckland start-up that ticks all the boxes.

                Derceto

                ‘gives water utilities the power to slash energy costs, lower carbon emissions and boost quality and resource efficiency . . .reduces energy bills by 10 to 20 percent, which can amount to savings of millions of dollars per year for many utilities.’

                http://www.derceto.com/about-us/About-us

        • rod 5.1.1.3

          and who do you work for now PeteG John Key’s office or Crosby Textor.

    • What sector are we likely to get the best bang for R&D buck? Food production.
       
      BZZZT wrong.
       
      As said by Sir Paul Callaghan the best performing tech sectors are those who then their product is described to you your response is “what the??”
       
      Labour did concentrate on the food sector a few years ago for disappointing results.  This is one aspect where a certain amount of free market can actually be beneficial, hence the tax credit.
       
      Gee did I just say that?
       

      • Colonial Viper 5.2.1

        Isn’t it odd how PeteG with “15 years experience” in high tech companies can get it all so wrong.

    • Draco T Bastard 5.3

      What sector are we likely to get the best bang for R&D buck? Food production.

      Nope, go read the post again and watch Paul Callaghan address (I was going to say “again” but it’s obvious that you haven’t watched it).

      Who is going to pay for the R&D credits? Food producers.

      Wrong again. The food producers are paying for the pollution they create. We, as taxpayers, will pay for the R&D tax credits.

      It seems to be a money shuffle to try and appear to be doing something, creating overheads and innefficiencies and interference.

      Only to the really stupid people such as yourself. To everybody else it’s necessary directing of the economy.

      Why don’t they just tax them less and even the playing field, internally and internationally.

      Because that results in the money being used for overseas holidays, BMWs and generally making a few people who think that having lots of stuff feel better about themselves rather than advancing the economy.

  6. Eddie 6

    It would release money to the government because currently the government is paying for agriculture.

    It’s not a tax. It’s the end of a subsidy.

  7. tsmithfield 7

    Whatever they gain in tax credits they will probably lose in the increased minimum wage. So, how exactly are employers better off with Labour at the helm?

    • wtl 7.1

      Do you really think that companies doing R&D are employing many people on the minimum wage?

    • Colonial Viper 7.2

      Whatever they gain in tax credits they will probably lose in the increased minimum wage.

      Gawd you righties are dumb.

      High tech industries don’t pay many of their workers minimum wage so they will barely be affected by a minimum wage increase. Unlike say, KFC.

      High tech industries pay their workers (assembly technicians, software engineers, testing personnel, lab staff, plus all the standard business functions of sales marketing etc) relatively well.

      And that’s the point of encouraging high tech, high value per employee businesses.

      EDIT – snap! WTL 🙂

      • Lanthanide 7.2.1

        We don’t pay anyone minimum wage at my work.

      • tsmithfield 7.2.2

        Duh. A factory that employees people on the minimum wage can also have a R&D department. Dairy factories for example. Don’t be so thick.

        • Colonial Viper 7.2.2.1

          Oooooh clever response!

          Trust me mate, Fisher & Paykel Healthcare and Raykon have only a few people on the minimum wage compared to service industries like fast food and cleaning. So its no problem.

        • Lanthanide 7.2.2.2

          What is a dairy factory?
           
          I have a hard time believing this is actually true, as well. Seems to me that they are very different business areas, and it’d be more likely that one or the other operation was a subsidiary.

          • Colonial Viper 7.2.2.2.1

            Fonterra does employ quite a few Masters and PhD types working on product and process development. But even so I suspect its a fairly low ratio compared to their ordinary process workers.

            • KJT 7.2.2.2.1.1

              Well! I know more than a few Fonterra factory process and farm workers. They are all on more than minimum wage.

              • Colonial Viper

                Seasonal workers employed by dairy farmers (not by Fonterra) often fall under the minimum wage as far as I know. Particularly if they are immigrants and particularly if you take into account the number of hours they are asked to work.

                A $32,000 p.a. salary where you have to work 55 hours a week…well, the math is clear.

                • KJT

                  My experience has been that seasonal workers are nominally paid minimum wage, but when you get into hours, accomadation payments and piecework, such as pickers are paid, it is well below.

  8. Lanthanide 8

    My work is highly placed on that list. They highlighted the R&D tax credit that Labour announced in the 2008 budget as a positive thing going forwards. Of course it never really eventuated ’cause National slashed it.

    It would have applied to the R&D work we are already doing. But I get the distinct impression they were intending to use the free’d up money to employ a few more people.

    • PeteG 8.1

      In that case it’s positive, but it’s effectively an employment subsidy.

      • Colonial Viper 8.1.1

        Yes it is also a subsidy for higher wages, better jobs, reducing our balance of payments deficit, and skill development/retention for the economy.

        You got a problem with that? You really have that much of a problem with NZ helping it’s industry and it’s skilled workers get ahead?

        Contrast that with NAT’s ETS scheme. An employment subsidy for farmers to pay foreign dairy workers less than the minimum wage. More your style, that.

      • Lanthanide 8.1.2

        What else were you expecting?
         
        Either we have a company that employs 100 staff, with 20 of them doing R&D, and with the tax credits, they re-structure and get 25 of their staff to do R&D: net increase in R&D being done by this company.
         
        Or we have a company that employs 100 staff, with 20 of them doing R&D, and with the tax credits they employ another 5 people to do R&D, and therefore have 25 doing R&D: net increase in R&D being done by this company.
         
        R&D doesn’t just magically happen. You need people to do it. The tax credit makes it cheaper to hire more people to do the work.

        Or, alternatively, they take the tax credits and use them to invest in new plant and equipment that makes them more efficient or opens up new products/market opportunities: more R&D being done by the company.

        Or, they were already in a difficult position, and the R&D tax credit will let them stay in business a little longer, or have to cut fewer staff: more R&D being done by the company than they otherwise would.

        By contrast, they didn’t make a single peep about the company tax being reduced from 30% to 28%.

  9. PeteG 9

    Departing expert reflects on a long taxing career – deputy Inland Revenue Department commissioner Robin Oliver:

    His proudest moment was when a meeting of New Zealand businesspeople and accountants rejected the previous government’s research and development tax credits as bad policy.

    “All the big four [accounting firms] had to pay off staff and close parts of their businesses, but they never lobbied to keep [the tax credits] because it wasn’t right in their view.”

    Hopefully if Labour bring it back it is right this time – for effectiveness, not for accountants.

    • Colonial Viper 9.1

      But helping farmers to shelter income is right in their view.

      So why would you believe these advisors to the big corporates PeteG?

      Why would you not believe instead the companies who make up the high tech sector?

    • Draco T Bastard 9.2

      All I can say is thankfully we got rid of that fuckwit. Now maybe we can start putting in place proper tax forms that actually help the country.

  10. Paul Campbell 10

    I run a small company – mostly there’s just me here – I’ve worked for startup companies most of my life, mostly in Silicon Valley, but I’ve moved back home to NZ.

    A budget or two ago the Nats axed the R&D tax credit only leaving a form which is really open to a few large established companies.

    In NZ (unlike Silicon Valley) you can’t have a bright idea, assemble a team, impress a few VCs, raise some money and go off and work for a couple of years to make a product for sale. Here they really expect us to have a product ready for sale the next day after you get financed – you need to have designed your product in your garage in your spare time which means we just can’t move as fast as that other team in the US with the same bright idea.

    We really need a way to bridge that gap – R&D funding for garages

  11. Afewknowthetruth 11

    Any discussion about the future that does not factor in collapse of the globalised economic arrangements over the period 2012-2015, due to declining internationally tradeable oil, is like debating how many angels can fit on a pinhead.

  12. Draco T Bastard 12

    …that’ll still be true in 2015 under their plan, so they can’t be that worried about it in reality.

    Except that JKey has said that they’ll review bringing them in in 2015 as well. Which, IMO, pretty much means that National wouldn’t bring them into the ETS in 2015.

    Agriculture is due to come into the ETS in 2015, but Key yesterday suggested a re-elected National government could push that date out further.

  13. randal 13

    they only have one plan and that is to sell the soe’s and get out.

  14. ZeeBop 14

    Can we have some of that R&D money spent on analysis about when too much milk production is harmful, when too much debt is taken on by farmers to pay for new dairy farms is too much. Seems we never consider when the limit is, and get into a situation where citizens are supporting the farm sector debt who pay little tax and those same citizens do pay tax and can’t afford to by milk. Seems to me we need to start with some government policy R&D. Its like we could never produce too much milk, export too much top soil, use too much water, expose ourselves to too much debt, because milk will make us all rich, yeehaa…

  15. Any R&D funds should only go to companies based in NZ and majority-owned by people who actually live here – whether as residents or citizens. The last thing we need is to be funding R&D for multi-nationals who use it to kill (or threaten to kill in order to ‘force’ buy-outs) our own start-ups through cut-throat competition.

    Over the years I’ve watched company after company be bought out and usually within a small number of years the operation here is scaled back and the jobs and intellectual property…and the profits….go overseas.

    If that’s all we’re going to get…then don’t waste our money.

    • Colonial Viper 15.1

      As part of any R&D funding, the Govt has got to get the first right of refusal on buying shares offered in a sell off. Other requirements around this could also be put in to place.

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