By DANIEL RIORDAN
If someone offered you money to help run your business - no strings attached - you would probably be grateful.
So why the outcry from manufacturers and employers at the Government's decision to help business offset research and development costs with grant money?
Details will be announced in the Budget on June 15, but Treasurer Michael Cullen already knows the champagne corks won't be popping in the boardrooms. The problem is many in business were expecting the Government to honour its pre-election pledge to introduce tax breaks on R&D.
Broken election promises may be as newsworthy as cold winters, but the timing of this latest policy flipflop could not be worse for Labour.
Business confidence in Dr Cullen and his colleagues is near an all-time low, despite a robust economy. The sector's opposition to ACC and workplace reforms has been loud.
Any hopes the Treasurer had of recapturing lost ground with a pre-Budget "smoked-salmon offensive" of business leaders were severely dented by this latest faux pas.
Business has long lobbied for R&D tax breaks similar to those in Australia (where 125 per cent of certain types of R&D spending can be written off) and the United Kingdom (150 per cent).
Surely 100 per cent in New Zealand wouldn't be too much to ask for?
Well, the Government has decided it would be.
Dr Cullen justified his choice by citing black holes in crown revenue, too much scope for tax rorts and little benefit to fledgling firms.
"Grants are what business wanted," trumpeted the Treasurer.
"We wanted tax breaks," wailed manufacturers and employers.
Alasdair Thompson, chief executive of the northern branch of the Employers and Manufacturers Association called the decision "silly."
Just who did Dr Cullen and his advisers speak to before making their decision?
Manufacturers Federation chief executive Simon Carlaw suspects the mandarins' ears were bent by the "pure researchers" within the scientific community whose R&D tends to benefit the primary sector far more than it does manufacturing.
Mr Carlaw's claims echo those of John Manning, the former head of Technology NZ, one of the more successful Government agencies funding scientific research.
Mr Manning lost his job last year after voicing his concerns at the effectiveness of Government spending on primary industry research.
He claimed the primary sector was getting about 60 per cent of taxpayer-funded research money, but contributed little of its own funds compared to the software and electronics industries. Last year only 12 per cent of the $289 million of public money spent on R&D went to manufacturing.
No one questions the need for New Zealand to raise its game.
But for many in a business community the Government is keen to placate, the route Dr Cullen has chosen is the wrong one.
<i>Between the lines:</i> Cullen's flipflop all flop
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