Budget 2018 packed few surprises for science and innovation, with the stand-out figure being a billion dollars for an R&D tax incentive for innovation that was flagged last month.

Science and Innovation Minister Megan Woods said New Zealand spent just 1.3 per cent of GDP on R&D, when the OECD average was 2.4 per cent.

"We need new ideas, innovation and new ways of looking at the world if our businesses are to build a more productive economy."

The billion dollars of operating expenditure over four years would finance an R&D tax incentive, giving eligible businesses 12.5 cents back for every dollar they spend on R&D.


The funding would be available to all businesses spending more than $100,000 a year on R&D.

"This system will help us transition away from the current Growth Grants model, which is available to a narrower range of firms," Woods said.

"This represents a significant increase in the amount available to help smart Kiwi businesses to innovate."

Elsewhere in the space, $10m would go towards improving New Zealand's science investments through a National Research Information System (NRIS).

Another $1.9m, also already announced, would restore funding to the country's contemporary longitudinal child development study, Growing Up in New Zealand.

Commentators approached by the NZ Science Media Centre were not surprised at what was banked this year.

Professor Shaun Hendy said there had been considerable doubt about whether the previous government's direct R&D grants to business administered by Callaghan Innovation were working so a change in approach was probably needed.

But he questioned whether even the new boost would be enough to lift the country's "woeful" business R&D investment.


"A potential disadvantage of the tax credit to the government is that the better it works, the more it will cost them, and this may mean we are in for fairly conservative series of science and innovation budgets until the effects of the tax credit on the government's coffers are better understood," Hendy said.

"Nonetheless, the government will need to keep thinking creatively about its science and innovation policies if it is to meet its goal of lifting our R&D investment to 2 per cent of GDP."

Associate Professor Nicola Gaston, co-director of the MacDiarmid Institute for Advanced Materials and Nanotechnology, didn't see science and research as direct winners from the Budget.

"This year's budget reminds me of nothing else so much as Sir Paul Callaghan, seven or eight years ago, standing up in a room full of scientists and asking us to calculate how many hip replacement operations could be funded by the sums of public money invested in our research," she said.

"It's a sobering calculation for any of us, but a reason to respect other calls on the public purse rather than to undermine the case for research funding."

While the R&D tax credit was a big change, its impact would likely be muted in the first instance, as it replaced previous Callaghan Growth Grants, she said.


"It is one of the elements of this budget that will most bear watching."

Gaston also noted the new investment in the NRIS.

"We have seen the administrative cost of our research organisations expand in recent years, due to the establishment of the National Science Challenges, the continuing low success rates in contestable funding applications such as the Marsden Fund, and increased emphasis from funders on the reporting of 'impact', which is not a simple thing.

"While it is a positive move to be scientific about analysing the relative effect of different funding mechanisms, there is a real concern that this eats up a large part of baseline funding if the onus is put on researchers to spend significant amounts of time on reporting.

"It is therefore to be hoped that this investment is part of the solution in terms of streamlining reporting requirements on researchers."

Hendy was also happy to see continued backing for the NRIS.


"Remarkably we currently have very little evidence about what policies or funding mechanisms work best in our research system, and this is partly because of poor data collection practises across the sector," he said.

"The previous government agreed to support a national science and innovation data system to track the progress of research and researchers across the sector and I am very pleased to see that it will continue to be developed under this government."

But he was disappointed not to see any specific support for post-doctoral fellowships - something that "desperately" needed further attention.

"Currently, the government subsidises PhD students but not post-doctoral fellows, and this creates an imbalance in our research workforce.

"Furthermore, after receiving incorrect advice from officials, the previous government axed a scheme that supported around 90 fellowships across the country.

"It then refused to engage further on the issue, with the word 'post-doctoral' completely disappearing in the final version of the National Statement of Science Investment.


"Labour campaigned on reintroducing the scheme, so it is disappointing to not see it addressed in this government's first budget, but I would hope we will see an initiative in this area as soon as possible."