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Diversification through innovation is key to Business Growth

Hon Steven Joyce

Minister of Science and Innovation

6 October 2015

Diversification through innovation is key to Business Growth Agenda

Using innovation and digital transformation to drive diversification of New Zealand’s economy is a major theme for the update of the Building Innovation chapter of the Business Growth Agenda.

Science and Innovation Minister Steven Joyce today outlined the Government’s strategy for developing New Zealand into a hub for high-value and knowledge-intensive businesses that are conducting more research and development (R&D) to lift innovation.

“Increasing innovation through R&D will drive better firm performance and productivity growth, and ultimately lead to a wealthier and healthier community,” says Mr Joyce.

“Over the next year Government will actively enable businesses to increase their investment in innovation by providing firms with access to R&D grants, technical knowledge and product development and commercialisation expertise.

“We will strengthen New Zealand’s innovation infrastructure by investing in broadband connectivity and regional research institutes and supporting the development of innovation hubs and precincts.

“The Government has today announced an ambitious new target of peak broadband speeds of at least 50 Mbps by 2025, with 99 per cent of New Zealanders able to access broadband at that speed, and the remaining 1 per cent able to access to 10 Mbps - up from dial up or non-existent speeds.

“Innovation is one of the key ways in which we can diversify our economy. New products and services enable innovations to occur and open up a broader range of market opportunities, enabling our businesses to be more resilient to economic shocks over the long term.

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“Our ICT and digital sector in particular is embracing this concept and is growing at pace. The sector produces twice as many innovations that are new to the world than the New Zealand average.

“It is also one of our most R&D intensive sectors, with 37 per cent of computer system design firms investing in R&D compared with a New Zealand average of just 8 per cent.”

Encouraging business innovation is one of the seven priorities in the BGA Building Innovation update. The seven priority areas are:

• Encourage business innovation;

• Attract multi-national R&D investment in New Zealand;

• Strengthen New Zealand’s innovation infrastructure;

• Make the most of the digital economy;

• Proactively review market regulations;

• Increase the impact and relevance of publicly funded scientific research; and

• Grow the availability of innovation skills in New Zealand.

The BGA 2015/16 Building Innovation update contains a total of 34 new projects that government agencies will work on over the next year alongside 28 current projects. A total of 33 projects have now been completed in the innovation stream since the BGA began in 2012.

“The Government remains committed to its goal of encouraging New Zealand’s business sector to double its expenditure on R&D to 1 per cent of GDP,” Mr Joyce says. “R&D performed by New Zealand businesses has been growing steadily and grew by 6.4 per cent a year from 2010 to 2014. However, this growth is occurring from a low base and we have not yet closed the gap with other advanced economies.

“Successful innovation improves competiveness, increases our output, drives productivity growth, and creates successful exports by introducing new or improved products, processes, or methods into the economy. Our aim is to create the conditions that allow businesses to be ambitious and innovative,” says Mr Joyce.

The BGA Building Innovation update can be found here


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