Budget 2013: Extra funding for R&D

Fisher & Paykel Healthcare chief executive Mike Daniell has welcomed plans for research and development funding. Photo / Dean Purcell

The Government has boosted the amount of cash available for its research and development grant schemes, saying the extra funds will increase the impact of the programmes and allow more businesses to gain access to them.

This year's Budget earmarked $130 million for Callaghan Innovation - the new public high-tech development body.

An additional $98 million over four years would be added to the R&D grant schemes, which are overseen by Callaghan, said Economic Development Minister Steven Joyce.

He said the increase would bring the total funding for the schemes to $566 million over four years, or $141.5 million a year.

A new Growth Grants scheme, which replaces the former Technology Development Grant programme, will continue to provide 20 per cent of R&D expenses for large, research-intensive firms.

But the cap on the funding has been lifted from $2.4 million a year to $5 million a year, over three years.

Mike Daniell, chief executive of Fisher & Paykel Healthcare, which has been a recipient of a Technology Development Grant, welcomed the increase in the cap.

"We invest more than $40 million a year in research and development and that grows every year and we look forward to taking advantage of any increase in support - it will help us to continue to grow our R&D and do some things we'd otherwise be unable to do," Daniell said.

Shaun Hendy, a professor of physics at Victoria University, said he was supportive of the increased spending on the R&D grants schemes.

"One of the things that stands out about our economy is the low R&D spending of our businesses and I think the Government has an important role to play in stimulating R&D spending in the private sector," Hendy said.

Project Grants will be provided to companies with smaller R&D programmes than those receiving Growth Grants.

Joyce said the Project Grants would be repayable under certain circumstances, particularly if a business shifted its R&D to another country.

The Business Herald understands the growth grants may also be repayable in cases where research work is shifted overseas.

A scheme was also announced intended to allow "small, R&D-intensive start-ups" to claim tax losses on research and development spending, which is currently not available.

Deloitte chief executive Thomas Pippos said the cashing up of losses was just another form of government grant such as Labour's R&D tax credit.

Joyce also said $31.3 million would be invested over four years to provide repayable funding - essentially loans - to start-ups, which would need to be matched with investment from private sector business incubators.