By Richard Braddell
WELLINGTON - The Government has shied away from immediate tax breaks for industry but has outlined measures to help research and development and reduce compliance costs for business in its Bright Future package.
The Government has undertaken to review research and development deductibility but the Minister for Enterprise and Commerce, Max Bradford, said the full business environment had to be taken into account.
Referring to a potentially large Motorola development facility, Mr Bradford said it had become clear the company regarded access to highly trained people and the general business environment as more important than R and D writeoffs.
"We've got a 20 per cent advantage over Australia when you look at all the costs businesses face," he said.
Mr Bradford said Australia was also reconsidering its generous research and development incentives in the light of rorts in which companies were claiming for expenditure that was not true R and D.
Key features in the Bright Future package:
* Government assistance to the Stock Exchange's small companies exchange. It aims to provide access to capital for companies smaller than the present $5 million capital threshold and who would typically seek between $500,000 and $1 million. The Stock Exchange for Small Businesses, as it is dubbed, is expected to be operational in April 2000.
* A new Invest New Zealand incubator programme aimed at linking people and businesses with innovative ideas to expertise and funding that would take them to the point where they could list on the Stock Exchange for Small Businesses.
* Lowering the cost of raising finance by broadening the category of investments exempted from Securities Act prospectus requirements to include offers to wealthy and experienced investors or people with appropriate knowledge of the particular investment.
In doing so, innovative companies could be saved between $75,000 and $300,000 in prospectus costs. Another measure would permit pre-prospectus advertising, giving companies intending to issue a prospectus the opportunity to test the market.
* Update a Ministry of Commerce directory on sources of capital, including risk and venture funding, which would be made available on the Internet.
The object would be to connect companies with investors willing to provide money on the basis of entrepreneurial and innovation track records rather than requiring bricks and mortar security normally demanded by the banks.
* Promote New Zealand through conferences and other forums as an investment destination for biotechnology, software and "well-health" sectors.
* Review solvency laws with the aim of simplifying the management of financial risk.
On the compliance front, the Government's programme would target redundant laws with an aim of getting rid of between 12 and 25 per cent of regulations within 12 months.
The tax system would also be targeted to reduce business compliance costs.
Smaller firms to get a boost
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