By Richard Braddell
WELLINGTON - A good idea if it could work, was the conditional approval accorded Alliance plans to establish an economic development fund to help regions and industry expand into hi-tech production.
For the most part, business leaders reserved their position on the Alliance proposals that were officially unveiled yesterday, although there was a sense that they were yet another round in a developing bidding war on industry policy between the major parties in the run-up to the election.
The chief executive of the Employers and Manufacturers' Association - Northern, Alasdair Thompson, said the establishment of a ministry responsible for economic development and employment gave the focus deserved while a strategic industry policy to encourage more hi-tech production was one his association would strongly support.
But in what he emphasised was a provisional view, he said the Alliance's plans to set up a venture capital bank with an initial $200 million funding had its merits, but the establishment of regional development agencies did look like simply another rearrangement of the delivery.
"We had regional development boards, for example. We've just canned them and put BizInfo in their place," he said.
While harbouring reservations about the ability of local councils to effectively manage industry assistance, Mr Thompson saved his largest gripe for political parties of the left who would offer assistance with the one hand while taking it away through the repeal of the Employment Contracts Act and the privatisation of workers' compensation.
"We've just done a survey of members saying that, taking everything into consideration, the average savings [on ACC] for our members has been 35 percent," Mr Thompson said.
Also yet to study the proposals, a senior fellow at the NZ Institute of Economic Research, John Yeabsley, said the concept of funding the venture capital bank through the issue of tax free bonds appeared to favour high income earners because of their higher marginal tax rate.
He also said the proposals also raised questions such as what it was that was broken and needed fixing, how the money would be allocated and mechanisms for accountability.
Meanwhile, a former head of the government's business funding agency Technology New Zealand, John Manning, cautioned against throwing money into research and development without first clearly defining objectives.
Technology New Zealand, which is an offshoot of the $300 million Public Good Science Fund, is widely regarded as the outstanding success story in industry assistance having funded a list of successful "knowledge" oriented industry projects.
But Mr Manning recently negotiated his exit from the Crown agency after he was suspended earlier this year for commenting on the large proportion of science funding directed towards agriculture oriented Crown research institutes.
"I think that before you throw any more money at science in New Zealand, people have to work out why they are doing it and what return they expect from it," Mr Manning said yesterday.
His concern was that the government's Forsight Project review into research and development priorities may be getting captured by a scientific lobby intent on building a platform for "long-term" benefits.
"My view is that New Zealand doesn't have the luxury to wait for the long-term. We need to do things that show a financial profit in less than five years," Mr Manning said.
Mr Manning said New Zealand had tremendous opportunities in software development and electronics, as it did in pharmaceuticals and herbal extracts.
The mussel extract Lyprinol, for all its controversy, highlighted a class of high profit margin opportunities that did not call for the capital investment normally associated with pharmaceuticals.
Anderson's fund fails to impress
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