Bringing in tax credits for R&D is the first part of Labour’s package to put NZ back on the path of growing the economy. Its key aim is to incentivise our exporting companies to invest more in new research, lift skills and build the clean, green and clever society.
National’s decision to axe the R&D tax credits in 2008 to pay for personal tax cuts, when the scheme was already in operation, was incredibly shortsighted. It highlighted Bill English as a bookeeper not a leader of the economy. But it ignored what is seen as international best practice. Only a handful of OECD countries don’t offer their private sector tax credits on R&D.
Ironically, Australia has lifted our tax credit policy brought in by the Labour Government and is currently passing through their Senate now.
Tax credits incentivise business to do more R&D. They boost our private sector R&D spend – currently languishing at about one-third of the OECD average. And, at 12.5% if the full budgeted amount exempted tax is reached, the R&D spend by our companies will lift to more than $2 billion.
All the literature shows that increased R&D translates into greater productivity and lifts economic performance.
The grants and vouchers announced by Mapp last year – after a wait of two years after axing the tax credits – are effectively handouts from government. They lift government R&D spend slightly, but encourage business to put out their hand for a hand out.
And who gets a grant is decided by a Wellington bureaucrat not an entrepreneur. Only 40% of those applying for grants were successful. Those who missed out are the innovative entrepreneurs with smart ideas and need that lift.
It’s a first step to increase our productivity, but don’t underestimate the importance of pushing R&D.
Okay, so increase the cost of milk, cheese and meat. (At $50,000 per farm do you really think the farmers can absorb it or will the cost be passed on?)
On top of increasing unemployment for our most vulnerable (increasing min wage) and decreasing growth (scrapping infrastructure projects).
Great plan guys…
Its time to stop pandering to the farmers, New Zealand needs a better economic growth strategy than just one agricultural plank.
I do hope Sir Paul Callaghan’s presentation goes as public as is possible, more New Zealanders need to see it.
Hey, Oliver, the price of milk is set by the market if people don’t want to pay what it costs then farmers will have to find something else to do. Considering the record prices that they’ve been getting, I don’t think that they’ll be shifting just yet.
Yep, relying on agriculture to develop a better, more efficient economy will fail every time.
“Hey, Oliver, the price of milk is set by the market if people don’t want to pay what it costs then farmers will have to find something else to do. Considering the record prices that they’ve been getting, I don’t think that they’ll be shifting just yet.”
What are you trying to say? that Labour forcing prices of milk up means less families get milk and thats a good thing? huh?
@Oliver
Nope, Labour won’t be forcing the price of milk up as the price is set by the market – in theory. Of course, it is a delusional theory that’s not actually connected to reality in any way, shape or form but that’s the theory that the right like to cling to.
Oliver, didn’t national add 2.5% to the price of milk???
The price of milk – the possibility that the price of milk will go up with farmers joining the ETS earlier is baloney. Key is way off the mark. Just this morning Phil Goff and David Cunliffe met Fonterra who confirmed that milks prices in New Zealand set by the price they attract on international markets.
In a recent interview, Fonterra CEO, Andrew Ferrier, rejected the idea that Fonterra sets the prices: Question: You guys set the price of milk? Ferrier: Absolutely not. The world market sets the price.
@Draco and David – so the cost of production has nothing to do with the sale price of anything made at all on a farm in NZ and NZ farmers are just going to take an (average) hit of $50,000.
Oliver, I understand David to be saying that Fonterra takes whatever price the international market sets, it’s not that Fonterra goes to the market and say we want $X. I might be misunderstanding though.
Fonterra does not set the prices. As most of you (I hope) know prices of milk are set at online global auctions (I believe monthly). Just as a note trade weighted milk prices fell 1.1% just a couple days ago.
Up until yesterday when Goff announced this, I was going to vote for the Labour Party.
Not any more.
You’re correct about the price of dairy products.
But prices of sheepmeat and beef will skyrocket as a result of this. It also makes a mockery of all the criticsm your party gave john key about rising food prices too.
Also, despite what goff said tonight on the news, sheep and beef farmers will struggle to absorb the costs of the ets because you’re forgetting they are having to contend with rising input costs such as fertiliser, fuel etc…
Many are finally making a profit for the first time in years after years of poor returns in wool and lamb prices and the impact of droughts, and you want to cripple them with an ets.
At least Jm Anderton when he was agriculture minister had the sense to only bring agriculture into the ets if solutions had been found to mitigate the effects of agriculture emisions. Guess what – there’s nothing a farmer can do apart from destocking to mitigate livestock emissions.
I’ll give you some free advice that you won’t hear from those yes men that work in your research unit:
Go and spend a day or two on a few sheep and beef farm, with no cameras, no photo opportunities or media and open your eyes and ears.
Ask the farmer how he or she has coped over the past few seasons and take a look at their financials.
Ask them if an ets is affordable.
Ask them what impact it would have on their business.
Ask them if its fair.
“take a look at their financials.”
Phil Goff said that he himself sent a few head of cattle to the works and got an excellent price. But I too would like to see his financials for the year for his “Clevedon farm”. Is he making a profit?