By RICHARD BRADDELL
WELLINGTON - The Manufacturers Federation is slating Government plans to abandon tax breaks for research and development. It says a proposed grant system will lead to increased capture of funding by the scientific research community.
Finance Minister Michael Cullen said this week that it had been decided to inject more money into the funding agency Technology New Zealand and restore the target of raising public R&D funding to 0.8 per cent of GDP.
The Government's change of heart seems to have been prompted by concerns that direct tax write-offs could result in rorts of the tax system and that businesses not yet making a profit would have no taxable income to offset anyway.
But the Manufacturers Federation chief executive, Simon Carlaw, said the Government's proposal to finance R&D through grants rather than tax breaks ran a "huge risk of capture by the research community that professionally lives off these funds."
Mr Carlaw said the scientific community had failed to deliver research or make technology transfers to small and medium-sized businesses.
Accusing the Government of breaking an election promise, he admitted he would have been quite happy if it had done so with its ACC and Employment Relations Bill reforms.
He also questioned who the Government had consulted in formulating the policy, which will be detailed in the Budget.
He said the northern branch of the Employers and Manufacturers Association had argued against a move away from tax breaks with Ministry of Economic Development officials in April. He had been unable to find any other members engaged in high-tech activities who had been consulted.
R&D policy switch riles manufacturers
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