Restore the R&D Tax Credit

The New Zealand Manufacturers and Exporters Association (NZMEA) is calling for the Government to front up and restore the Research and Development (R&D) Tax Credit. The Innovation Index of New Zealand launched yesterday showed that R&D investment had been flat between 2000 and 2007, and dropped in 2008. John Key’s science advisor Sir Peter Gluckman also described our R&D investment performance as “dismally low.”

NZMEA Chief Executive John Walley says, “With most other countries offering significant tax benefits for R&D activity, is it any surprise that more activity is occurring overseas rather than in New Zealand? Australia has recently introduced a 45 percent tax credit.”

Gluckman noted that New Zealand had “paid the price” for failing to invest in knowledge-based sectors and went on to ask, “why is that the case?”

“The absence of specifically targeted support for R&D and generally better balance in fiscal and monetary policy spells out why pretty clearly; who would invest in new products or processes when returns are so uncertain?” says Mr. Walley.

“The policy framework has ignored the tradeable sector for years – in the 1990s added value exports grew by 50 percent; for the most of this decade that growth has stalled.”

“We cannot expect better performance from the tradeable sector without investment, and that investment is unlikely until our policies at least match those of our competitors.”

ENDS

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