The Government’s R&D tax credit policy has major flaws – it only benefits a small group of large companies, does nothing to help smaller businesses looking to grow, and will likely lead to rorting of the system, National’s Science and Innovation Spokesperson Parmjeet Parmar says.
Submissions are closing on the Government’s discussion documents today, and Dr Parmar has serious concerns about accessibility for a large section of the science and innovation sector.
“The removal of Callaghan Innovation Growth Grants mean many research intensive businesses will actually get less support for Research and Development,” Dr Parmar says.
“Most of our highly research active companies are currently getting 20 per cent of their R&D funding back through the Callaghan growth grants – which Megan Woods is axing. This will drop back to 12.5 per cent and only if you’re making a profit to set the credit against.
“Sadly most of the extra money will only go to companies that spend their time researching how to reclassify existing expenditure as R&D and give themselves a tax break. Indeed, Australia currently has had to redesign their own R&D tax credit scheme because of concerns with firms abusing the system.”
Ms Parmar says huge parts of the science and innovation sector are missing out completely because of Labour’s 12-year fixation on R&D tax credits.
“That’s not a commitment to innovation and high value products and services. It’s a plan for New Zealand to fall further behind other technologically advanced countries.
“This is a purely political move – Megan Woods is dumping the successful Callaghan Innovation Growth Grants only because they were put in place by National.
“We have been seeing big lifts in business R&D under the current grant-based system. The Government needs to convince the tech sector and the public that this change won’t just slow New Zealand down.”