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Business knows Nat’s R&D cuts disaster for NZ

Hon Pete Hodgson
Minister for Economic Development

9 October 2008
Media Release
Business knows Nat’s R&D cuts disaster for NZ

New Zealand businesses know what a disaster National’s plans to axe the research and development tax credit would be for our country’s long term prosperity, Economic Development Minister Pete Hodgson said today.

“New Zealand needs more innovation and more investment in research and development, but National has cut the R&D tax credits for businesses in their short-sighted tax package. Today we have had several business leaders criticising National’s plans,” Pete Hodgson said.

Selwyn Pellet, CEO of Imarda, said:
We are right this minute deciding where we do R&D whether it's New Zealand or Australia and the removal of the tax credit here negatively incentivises the decision to bring it back to New Zealand.

Mike Riley CEO of Endace, which employs 70 people in Auckland and is worth more than $150 million and has been growing at 50% a year, said:
I think it flies in the face of the country's wish to, ah, to create a knowledge economy and it's certainly going to force companies like us to consider very carefully where we make our investments.

Phil O”Reilly, head of Business New Zealand, said in his press release: Companies that have already invested significant amounts to get ready to take advantage of the tax credit will be unhappy with this policy change.

“John Key has also claimed the tax credit had not created any new R&D. This is obviously nonsense,” Pete Hodgson said.

New Zealand Manufacturers and Exporters Association Chief Executive John Walley said in his press release:

The comment that, "evidence of real increases in R&D is harder to find" is daft given that the R&D credit applies for the first time in the 2008 income year. We have already sunk the setup costs, abolishing the credit now is extremely wasteful and confusing."

“These businesses represent the real economy. They are the most likely to create new products, new job, and new exports. But National wants them to pay pay additional tax of $1.1 billion over the next five years instead of investing that money in their research and development, “ Pete Hodgson said.


ENDS

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