Major parties commit to Callaghan
Callaghan Innovation critics say the government grants agency amounts to ‘‘corporate welfare’’ and should be closed.
Manufacturing experts suggested the money used to run Callaghan could be better spent through tax credits.
ACT leader David Seymour said Callaghan was ‘‘just another example of politicians thinking they know what is best for business’’. He said he would rather see a drop in the company tax rate from 28 per cent to 25 per cent so businesses had more money to invest in their own research and development.
‘‘Company tax cuts are fairer than grants and subsidies [tax credits] because they benefit all businesses, not just politically fashionable industries or firms with government connections,’’ Seymour said.
Callaghan gives booster grants to businesses that spend 1.5 per cent of their revenue on research and development each year.
Firms could ask for about 20 per cent of their R&D spending back, up to $5 million. The aim is to help them grow and create more jobs.
In the 2015-16 financial year, the Government gave Callaghan $223m. Out of that, Callaghan provided nearly $86m in growth grants to to 51 businesses.
Almost $23m went to hundreds of businesses in project grants and another $4m was given to students.
A Ministry of Business, Innovation and Employment spokesperson said Callaghan spent $68m in ‘‘operational funding’’ such as programmes and services.
Science and Innovation Minister Paul Goldsmith said Callaghan used the remaining money for its own research and industry facilitation, including organising overseas delegations and events.
Manufacturers and Exporters Association chief executive Dieter Adam said Callaghan’s model favoured larger companies that could already afford to innovate.
‘‘The Fisher and Paykels of this world are happy, [but] most manu- facturers only get project grants; it is onerous to get into the system.’’
ManufacturingNZ executive director Catherine Beard said big manufacturers wanted to keep growth grants and Callaghan, while many smaller firms missed out on funding because project grants were difficult to apply for.
‘‘It would be wise to look at trying to strip out administrative hoops for project grants,’’ she said.
Adam said small manufacturers wanted tax credits to be reintroduced. A tax rebate on R&D would result in more businesses investing in innovation, he said.
Labour has committed to reintroducing a 12.5 per cent tax credit for businesses that research and develop new products.
But neither a National or Labour-led government would change Callaghan’s model.
Labour research and development spokeswoman Megan Woods said the party was not proposing any changes to Callaghan, despite agreeing that its system was ‘‘picking winners’’.
National axed Labour’s tax credits when it was elected in 2008, and replaced it with Callaghan grants. Goldsmith said tax credits had proved insufficient and complicated the tax system, making Callaghan a better option.
Green Party innovation spokesman Gareth Hughes said the party supported tax credits over Callaghan’s funding model and leadership.