By DANIEL RIORDAN
Fisher & Paykel chief executive Gary Paykel has joined the chorus of business leaders critical of the Government's decision to sacrifice promised tax breaks on research and development (R&D) spending and plump for grants instead.
His comments come as business leaders across the Tasman tell Canberra that R&D tax concessions of 125 per cent are not enough for Australia to remain competitive.
"It is very disappointing, particularly for the larger-size companies who pour the money into R&D to employ New Zealanders and to earn offshore dollars," Mr Paykel told the Business Herald after the company's profit announcement yesterday.
"In healthcare, out of 450 staff, 100 are involved in R&D. [The Government's decision] sends a poor message ... Grants are very subjective and very bureaucratic. That's been our experience in the past but we'll reserve judgment until we see how this Government handles that."
Fisher & Paykel's competitors in Australia are among those complaining that their Government's 125 per cent tax break should be raised to 150 per cent because its value has been eroded by Australia's lower company tax rate.
Australian media reported yesterday that a business advisory group had told Prime Minister John Howard R&D tax breaks were "a major flagship for innovation."
The group is understood to have accepted that the Government will not restore the previous 150 per cent tax break, but is investigating other possible tax incentives for research investments.
These include a tax credit scheme which would deliver benefits to small start-ups not yet making a profit and therefore not eligible for a tax break, an "innovation bond" loosely modelled on the former infrastructure bond scheme, and an indexation scheme which would reward firms for raising their R&D efforts.
Paykel hankers for tax breaks
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