Scientific research accounts for big jump in spending

By SIMON COLLINS science reporter

Business spending on research and development has jumped by almost a third in the past two years.

A new survey by Statistics NZ shows businesses spent $520.6 million on R&D in the year to June 2002, or 0.4 per cent of the gross domestic product (GDP).

This was still a smaller share of national income than in 20 of the other 28 countries in the Organisation for Economic Cooperation and Development (OECD).

But, after adjusting for sampling changes, it was 30.5 per cent more than businesses spent in the last survey carried out by the Ministry of Research, Science and Technology two years ago.

More than half the increase came in the "scientific research" sector which includes biotechnology and medical research. Its spending jumped from $74.2 million two years ago to $128.4 million on the old sampling system, and to $140.9 million based on the latest, wider sample.

Dr John Kernohan of Auckland University's Uniservices said spin-outs from his university alone, such as Neuronz and Genesis, could account for up to $50 million of the increase.

"There are a lot more small start-up entities around that are spending money. There will be the Dunedin ones as well," he said.

But he said the figures were also being driven by a legal change two years ago which allowed companies to claim 100 per cent of R&D spending as tax-deductible expenses.

"We have noticed an increase in research spending from New Zealand organisations, including companies. A lot of them are spending more with us," he said.

"I think they are now categorising a lot of R&D expenditure because previously they were not able to expense it."

Outside scientific services, the biggest increase was in Machinery and equipment manufacturing, where R&D spending rose from $76.8 million to $94.5 million in the original sample, and to $105.4 million in the new, wider sample.

Computing services R&D leaped from $25.5 million to $42.2 million in the original sample, and to $62.4 million in the new sample.

Technical services R&D, including engineering and geology, rose from $18.9 million to $36.8 million on the old basis and to $42.9 million on the new count.

Government R&D increased by 14.4 per cent to $453.1 million on the old system or $459.8 million by the new method.

University R&D grew by 16.5 per cent to $435.8 million.

Local businesses funded 79 per cent of their own R&D spending, with the rest split between overseas partners (12 per cent) and government agencies (9 per cent).

Overall, Government R&D funding represented 0.5 per cent of GDP, local business funding 0.4 per cent, and funding from overseas, student fees and non-profit organisations 0.2 per cent.

Just over half the total spending ($768.2 million) was classified as "applied" research, with most of this ($411.6 million) in the private sector.

Another quarter of the spending ($361.5 million) was "strategic", or "likely to form the basis of the solution to recognised or expected problems". The biggest chunk of this spending was in universities.

The rest ($286.5 million) was classed as "pure basic research", with most of this again in the universities.

Business NZ chief executive Simon Carlaw said the increased spending was "encouraging".

Stats NZ