The Government is planning to reduce support for business research and development in New Zealand’s fast-growing R&D intensive tech firms, National Party Research, Science and Innovation Spokesperson Parmjeet Parmar says.
“Hidden way down the back on page 31 of their proposal to introduce R&D tax credits is the news that they plan to cancel R&D growth grants at the same time,” Ms Parmar says.
“This will negatively affect hundreds of New Zealand’s most innovative technology focused companies.
“All of those companies will drop from getting 20 per cent of their research and development expenditure re-funded down to 12.5 per cent.
“And start-ups making a loss may have to wait until they are making a profit to cash-in any tax credit, that could take years compared to the current system which provides grant funding immediately.
“How is this supposed to grow R&D? How is it supposed to speed up development of our high-value tech sector?
Ms Parmar says that the change from growth grants to R&D tax credits will also lead to a big boost in business for accountants.
“When suddenly everyone can get a tax credit for any R&D, it will be amazing how much R&D your average business will find it was doing
“All over the world these tax credit schemes are ripe for abuse, with their introduction always leading to a lot of ordinary expenditure being ‘reclassified’.
Ms Parmar says that it is telling that the Government’s first practical move in the science and technology sector is to reduce investment rather than increase it.
“These people have talked a big game in science and innovation for a long time. It’s sad for the science and tech sectors, and for New Zealand’s future, that their first move is to take us backwards.
“While small as a percentage of the economy, R&D has been rapidly growing under the previous Government’s settings. Ms Woods needs to explain how it will grow faster when they are reducing the incentive.”