Daniel Lynch

Digital business journalist for nzherald.co.nz

R & D help key for growing NZ business: survey

Almost 90 percent of business leaders surveyed said R&D incentives would best aid the growth of their business. Photo / Warren Buckland
Almost 90 percent of business leaders surveyed said R&D incentives would best aid the growth of their business. Photo / Warren Buckland

New Zealand businesses are calling for more research and development incentives from the Government, according to research by advisory firm Grant Thornton.

Of the 75 business leaders surveyed, 88.6 percent said providing Research and Development (R&D) incentives would best aid growing their business.

Grant Thornton partner, Peter Sherwin said that with elections looming this year the incentives the respective political parties offer businesses around R&D is likely to become a big issue.

Labour has already indicated they will offer a tax rebate incentive so that for every dollar a company invests in R&D, they could claim back $1.50 to $2.00, Sherwin said.

"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," he said.

Sherwin said the Government's grant and incentive schemes, such as the Callaghan Fund - which will match dollar for dollar what a company invests in R&D, does have its flaws.

"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," he said.

Individuals or small businesses often just run out of capital to invest up front, Sherwin said.

"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," he said.

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 by the time elections come around in November.

Sherwin said 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.

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," he said.

The Grant Thornton survey also found that 72 percent of business leaders where in favour of assisting business migrants to come to New Zealand.

"Skill shortages are already hurting our economy, so we do need to address that problem. But of equal importance is ensuring that skilled migrants don't all end up in Auckland, thereby exacerbating the existing housing and traffic problems.

"Part of an incentive scheme could be to make it more difficult to settle in Auckland, or easier to settle elsewhere," Sherwin said.

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