4. SUE MORONEY (Labour) Link to this
to the Minister of Research, Science and Technology
What reports, if any, has he received about the research and development tax credit that was introduced earlier this year?
Hon PETE HODGSON (Minister of Research, Science and Technology) Link to this
Several reports are already to hand. Both anecdotal evidence and formal monitoring show that our best and most innovative businesses are the ones most likely to benefit from this policy. In short, those businesses are delighted because it means they can expand faster and it means they are more and more competitive with Australia. The news from the policy leaked this morning that National intends to cut the credit will be received by many of those companies with dismay; it is a shameful policy.
Apart from National’s plan to cancel New Zealand Fast Forward, the main additional news is that there is no money—no new money—going into research and development in New Zealand for the next 3 years. That is to say, the only new funding going into universities or Crown research institutes is money taken off some of the best businesses in this country. There is not one dollar of extra research and development in the next 3 years—not even one dollar of research into where all those leaks came from.
Hon Bill EnglishDoes the Minister agree with the statement by the Prime Minister, Helen Clark, who said: “the design of research and development tax incentives is difficult and … without great care one can see great leakage from the revenue base without the extra research and development you hope to attract.”; if he does not agree with that statement, why not?
Yes, I do. That is why when this Government put the research and development tax credit together, whilst we made sure that research and development was broadly defined—one of the best definitions in the world—we also made sure that some areas of research and development were capped, most notably software, so that the situation the member refers to will not occur. The member thinks that this is a great source of leakage of tax revenue into the private sector. My view is that this is the best and most effective way to ensure that the best, most innovative businesses in our country have the opportunity they need to grow faster and to beat those Aussies. After all, the National Party was on about that just in the last question.