While cost is the key impediment, the encouraging news is that businesses’ expenditure on R&D is continuing to grow with the private sector spending $1.8 billion on R&D in the year to August 2017, up from $1.6 billion in 2016.
Not so encouraging is the fact that NZ still lags significantly behind the OECD average. R&D is critical to NZ’s sustained economic growth – research indicatesg that a one percent increase in business R&D can lead to a 0.04 percent increase in GDP.
For businesses looking to invest in R&D, the government offers a number of grants and funds, together with a supportive tax regime introduced by the former government for companies that make losses during their growth and innovation journey.
Additionally, the Labour Government has recently announced plans to introduce a non-refundable R&D tax credit from April 1, 2019 (see http://www.mbie.govt.nz/info-services/science-innovation/rd-tax-incentive).
After taking power in the 2008 election, the National Government repealed Labour’s previous R&D tax credit regime, believing that businesses would merely recharacterise existing R&D expenditure to obtain the credit. It seems the Labour Government is intent on reintroducing a tax credit regime under a new guise. Whether it addresses the concerns the National Government had with the old regime remains to be seen.
View the rest of Grant's article on BOP Business News here.