Budget 2011: Little hope of R&D increase

NZICT chief executive Brett O'Riley. Photo / Supplied

Many industry commentators did not want to speak publicly about what the Government will do but indicated it was unlikely to put more into research and development spending. Those who did offer a forecast were pessimistic about funding increases.

The MacDiarmid Institute's deputy director Shaun Hendy said public spending in science and technology was tipped to remain static.

"I don't think it will be a great Budget for science, but I don't think it's going to be a potentially disastrous Budget either," he said.

However, while spending might not be cut, Hendy said increasing funding was an essential part of boosting high-value exports.

"Both our government R&D spending and our business R&D spending is pretty tragic, both in terms of our percentage of GDP and in absolutes. A lot of the work I've done shows that you get what you pay for. If you want a high-tech, export-based economy then you actually need to put both public and private sector money into it and we haven't had a Budget in my lifetime that's actually addressed that."

Hendy said the high-tech sector would need to grow fives times bigger if the Government is serious about closing the gap with the Australian economy.

"One of the things we certainly need [to close the gap] is a high performing advanced manufacturing sector and we probably need to multiply the number of people working in the sector by five - that's something that other countries have done," he said.

Xero's general manager of finance Paul Williams agreed there was little hope tomorrow's announcement would give more funding to the tech sector.

"At this stage we're not really expecting anything to come out because the Government tends to give a heads up of a lot of the things that are in the Budget," he said.

Williams said the Government would be wise to put more into developing this part of the economy.

"We've got so much potential and throwing money at the high-tech industry certainly makes a lot of sense."

NZICT chief executive Brett O'Riley said the sector also has to play a part in encouraging public money.

"The Government has quite clearly signalled, that their goal is to increase R&D spending over time on a per capita basis, but I think we need to develop some proof points around the expenditure in last year's Budget to justify the increase."

Williams said the problem for the Government was working out which businesses would be able to turn funding into export dollars.

"How do you actually target the money in the most efficient way?"