Editorial: Labour needs to find much better ideas

Labour Party leader Phil Goff. Photo / Dean Purcell

The Labour Party's annual congress held at the weekend should have seen some interesting new ideas. The party has been out of power for the best part of three years and another election is six months away. Polls put Labour well adrift of National, which is another reason to expect some bold thinking. Labour has little to lose.

But there were not enough interesting or innovative ideas from the party at the weekend, though the word innovative was heard frequently. Labour proposes to encourage research and development with a 12.5 per cent tax break. Leader Phil Goff reckoned this would increase private investment in R&D by $1.5 billion a year, especially in high-tech industries that would create jobs and exports.

How often have we heard this? This country has encouraged company research and development at public expense for years. One of the ways Mr Goff proposes to pay for his tax break is by cancelling the present Government's incentive, worth $70 million a year. The bulk of the cost, $800 million, would be raised from farmers by bringing agriculture into the Emissions Trading Scheme earlier than National has scheduled. It would be proper to spend that money on methane reduction research but it hardly spells new products for the economy.

Despite decades of assistance, private sector research and development remains a fraction of publicly funded science in this country. But if we are to believe advocates of yet more public investment in the sector, it would work wonders, lifting the country at last out of dependence on commodity trade and into the nirvana of finished products.

The latest to beat this drum is one of the country's top scientists, Sir Paul Callaghan, who has been attacking the Budget delivered last week for its lack of high-tech investment. His prescription for economic success is very precise. It is not tourism, "a classic low wage activity", not wine, "nice lifestyle but frankly the revenue per job is poor". The future lay in technology. "If you look at the profile of high-tech companies in New Zealand you see some surprising strength," he says. "We have the capacity of growing this sector significantly."

But it is not clear what the Government should do beyond ensuring the country is equipped with up-to-date infrastructure for high-tech providers to use. There are fears that even in financing an ultra-fast broadband network the National Party might be exceeding its competence. Tax concessions for genuine product research and development are as far as prudent public policy should go.

Probably the best investment the Government can make is in university research, a sector where it should pick winners more carefully. The last time Labour was in power Auckland University organised a "knowledge wave" conference. A decade on, it is hard to see what came of it. Too much public money continues to go into research into the obvious, particularly in social subjects. Labour is probably the last party that would redirect that money to science and technology in the universities but that is where it should go.

Public money is needed for science aimed at discoveries that do not carry an obvious commercial value, though they often produce unforeseen applications. Neither scientists nor public officials are well placed to predict what may come of research and development of any kind.

The best governments can do is maintain a reasonable public research budget balanced against all other calls on their revenue, and allow tax write-offs for the development of exportable products. To pretend that research and development assistance is the answer to the nation's economic needs is not credible. It is an admission of a lack of better ideas.