Bosses give Labour R&D credit pass mark

Mike Daniell says Labour's previous tax credit programme saved Fisher and Paykel Healthcare about $4 million a year. Photo / Paul Estcourt

The bosses of two listed manufacturing firms say a research and development tax credit, similar to the one unveiled by Labour during its party conference at the weekend, would benefit their companies.

Fisher & Paykel Healthcare chief executive Mike Daniell said a scheme "based on absolute percentage with no cap on R&D" would, depending on the percentage, help the company more than the existing funding framework under National.

Labour revealed various election-year policies, including a plan to stimulate economic growth through a 12.5 per cent tax credit to firms conducting research and development.

A 15 per cent R&D tax credit existed when the party was in Government but was scrapped by National after its election victory in 2008.

The Government announced a new $321 million science, research and development funding package last year.

Part of that funding is the Technology Development Grant, through which Fisher & Paykel Healthcare, which spent $35.5 million on R&D in its past financial year, will get $7.2 million over the next three years.

Twenty-five other companies, including Rakon and Weta Digital, were also awarded funding through the $92 million programme.

But last May Daniell said Labour's tax credit programme while in existence had saved Fisher & Paykel Healthcare about $4 million a year.

Yesterday he said: "We were beneficiaries of the original [tax credit] scheme and we're beneficiaries of the current scheme and we're grateful for that support of R&D which is quite substantial."

Labour leader Phil Goff said the 12.5 per cent tax credit would cost about $800 million over five years on top of the savings gained from cancelling National's R&D funding programmes.

It would be paid for by applying the emissions trading scheme to the agricultural sector from January 2013, rather than 2015, charging farmers for about 10 per cent of their emissions.

Labour's proposal prompted a scornful response from Federated Farmers president Don Nicolson who said it was yet another attack on farmers by the opposition.

Ross Green, chief executive of Auckland electric motor manufacturer Wellington Drive Technologies, said the company had benefited from Labour's tax credit scheme.

But it had not been able to secure funding through the Technology Development Grant scheme, which had strict eligibility criteria, he said.

Green said a return to the tax credit system would help NZ's entire innovation environment, although he was unsure if making farmers pay for such a scheme was the right approach.

"New Zealand has to accept ... the agricultural sector is really the current engine of the economy."