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DEMM Engineering & Manufacturing - - CONTENTS -

With elec­tions loom­ing, the in­cen­tives the re­spec­tive po­lit­i­cal par­ties of­fer busi­nesses around Re­search and De­vel­op­ment (R&D) is likely to be­come a ma­jor is­sue, ac­cord­ing to a re­cent sur­vey un­der­taken by Grant Thorn­ton.

When asked what poli­cies would best aid the growth of New Zealand busi­nesses, 88.6 per cent of busi­ness lead­ers said that pro­vid­ing in­cen­tives for busi­nesses to in­vest in R&D would help in this area.

Peter Sher­win, Part­ner at Grant Thorn­ton New Zealand, said that Labour has al­ready in­di­cated it will of­fer a tax re­bate in­cen­tive so that for ev­ery dol­lar a com­pany in­vests in R&D, they could claim back $1.50 to $2.

“The gov­ern­ment on the other hand, is not in favour of such a pol­icy as they be­lieve there is too much scope for this to be abused.

“While they do have their own grant and in­cen­tive schemes through the likes of the Cal­laghan Fund, which will match dol­lar for dol­lar what a com­pany in­vests in R&D, this does have its f laws.

“I have a client who has de­vel­oped a great soft­ware of­fer­ing but he needs to in­vest a fur­ther $200,000 in more R&D. The prob­lem is that he does not have the nec­es­sary cap­i­tal to out­lay in the first in­stance so that he can get the gov­ern­ment’s money. Of­ten, in­di­vid­u­als or small busi­nesses just run out of cap­i­tal to in­vest up front.

“Per­haps we need some­thing like the large in­no­va­tion funds that Hong Kong has to co-in­vest or lend money to our en­trepreneurs.

“By the time the elec­tions come around in Novem­ber, the econ­omy is pre­dicted to be run­ning at around 4 per cent growth and it could be up to 10 per cent in hotspots like Christchurch. This will put tremen­dous strain on ca­pac­ity and the skilled work­force. R&D is just one way that com­pa­nies can look at help­ing them­selves do things smarter, quicker and more ef­fi­ciently.

“While tra­di­tion­ally we are a coun­try that does not in­vest heav­ily in R&D, of­ten pre­fer­ring to throw peo­ple rather than tech­nol­ogy at prob­lems, ne­ces­sity may see this change and be­come more of an elec­tion plat­form.”

Sher­win be­lieves the fo­cus on R&D needs to be widened much fur­ther than the pri­mary sec­tor.

“Ul­tra­fast broad­band, the cloud and in­ter­net tech­nol­ogy has re­moved the re­straints of ge­og­ra­phy from many sec­tors, al­low­ing New Zealand com­pa­nies to ex­port their In­tel­lec­tual Prop­erty in ar­eas of soft­ware, games and the like.

“A Wellington based com­puter games busi­ness (em­ploy­ing about 80 peo­ple), launched a new game this year. In this in­dus­try, you’re do­ing ex­tremely well if you can be in the US top 10 down­loads in the first 36 hours of re­lease. This Wellington busi­ness was in the top 10 within 24 hours. R&D in­vest­ment can make a great dif­fer­ence and was crit­i­cal in this suc­cess.”

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