Big companies to gain from research boost

Prime Minister John Key. Photo / Mark Mitchell

The Government is picking proven winners with its new $321 million science funding boost rather than taking a punt on smaller unproven firms, say critics of the plan.

Prime Minister John Key yesterday unveiled his Government's plan to allocate $225 million in new money and $96 million in "reprioritised" science spending to support commercially focused research and development (R&D) and science.

The $321 million plan will be the third largest allocation of new spending in the upcoming Budget, Mr Key said.

"We're trying to send a really strong message to New Zealand business that we want them to invest in their future," he said.

The largest portion of the new plan is $189.5 million over four years in new grants targeted at "medium to large, research-intensive firms, which can show that their activities result in wider benefits to New Zealand".

The Government will give 20 per cent of firms' expected R&D spend for three years.

Labour says the new spending is less than half of what was available under its own R&D tax credit system which National scrapped.

Mr Key said the scheme would "avoid the sorts of inventive accounting and lack of cost control that plague tax-based measures".

Research Science and Technology Minister Wayne Mapp said the Government was not "picking winners" as firms that would benefit from the new grants had "chosen themselves by their own success".

Virtually all of those companies were already receiving taxpayer-funded assistance via Technology NZ grants made for specific projects. Those grants, totalling $50 million this year and $55 million next year, were separate to the funding announced yesterday.

However the pickings are slimmer at the small end with just $20 million over four years trialling "technology transfer vouchers".

The vouchers, typically worth $100,000 to $200,000, will allow smaller firms with little R&D capability to access public research institutes including universities.

Labour's research, science and technology spokesman David Shearer said Mr Key had promised $315 million in new R&D spending over three years but had now delivered $225 million over four years.

"John Key's commitment to innovation should be treated with scepticism. Today's sudden enthusiasm is little comfort for Kiwi firms who needed help 18 months ago when times were tough."

The NZ Manufacturers and Exporters Association raised concerns the plan did little to support small- to medium-sized businesses.

Dr James Renwick, the president of the New Zealand Association of Scientists, said the allocations were "steps in the right direction" but not "particularly bold".

He said the new money was mostly being given for private sector research that could promise an immediate financial gain. "Ultimately the business development side of things has to come from a base of more fundamental research."

The Prime Minister's science adviser, Sir Peter Gluckman, said the new funding was a major improvement on the system.

He acknowledged that more spending was needed before New Zealand would catch up with other developed countries.

SCIENCE SPENDING

$321m total in spending for R&D and science. This includes:

$189.5m in R&D subsidies

$20m for firms through tech vouchers

$23.7m commercialising public research

$25m to assist NZ's most talented scientists

$9m to lure top science entrepreneurs

$44.3m to expand infrastructure

* 9.5m in miscellaneous costs