Mapp Wayne: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Mapp Wayne: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Volume:673;Page:19339] 
Hon Dr WAYNE MAPP (Minister of Science and Innovation) 
: 
 Funnily enough I heard Mr Stuart Nash say in relation to that last speech by David Shearer “Good speech!”. I was a bit surprised to hear that. The Opposition had one of New Zealand’s foremost scientists and indeed entrepreneurs to speak at its conference. Labour made the person its keynote speaker. It was Sir Paul Callaghan. So I was anticipating that Labour was obviously planning something very significant as a way to project its commitment—the commitment I just heard Mr Shearer talk about. It is very hard to accommodate. So what was Labour’s big idea? What was the thing that was central to their conference that would take New Zealand to a bold new era? It was in fact a rehash of its tax credit policy. It may have been a little bit more targeted because the limit went up to only $200 million which was an increase of about $100 million. However there was a hook in that increase. If we look at the New Zealand economy in the broad we see that we have three core sectors. There is the primary sector with over half of our exports. Indeed part and parcel of why the current account deficit is reduced is because that sector is doing so well at the moment. There is tourism with 10 percent of the total economy. It is a huge foreign exchange earner. I guess we would say there is manufacturing particularly high value manufacturing and advanced services particularly in tertiary education and information and communications technology. 
So Labour’s big idea was to push up the extra spending in the high-tech sector and take that money directly from another sector—the farming sector. I thought that was actually a zero-sum gain. That was no change at all. And that was Labour’s big idea. That is why I was surprised to hear Mr Nash say that Mr Shearer’s speech was a good speech. I say to the Opposition members that if that is as good as it gets I suspect they will spend a little bit more time sitting on those benches than one might think. They said to New Zealand’s largest export sector the primary sector that they were going to take $160 million off it directly as at zero-sum gain. So our most profitable part of the sector at the moment the export sector was going to be a sop. It is hardly an innovative policy I say to Mr Shearer. 
I return to the facts of the situation. In 2008 Labour’s last Budget appropriated $689 million for research and development. That was during a time of relative economic success for New Zealand in line with much of the rest of the world. This year we appropriated $773 million which is a gain of 12 percent. The difference is that we had to do that in a time of relative economic difficulty and in particular when faced with the cost of reconstruction after the Christchurch earthquakes. 
David Shearer 
: Oh yeah. No commitment—that’s the problem. 
Hon Dr WAYNE MAPP 
: Did members hear that member say “Oh yeah.” as if it is of no significance whatsoever that New Zealand taxpayers will spend $6 billion to reconstruct Christchurch? The Opposition as reflected by Mr Shearer just says “Oh yeah.” Is that what the Opposition really means about Christchurch? I might actually give a little bit of credit and say that maybe I misheard that. There is just an absence of reality in—how can I put it—Labour members’ rhetoric and their delivery. 
So there was $689 million appropriated in 2008 and $773 million appropriated in 2011 which is a 12 percent gain. Next year there will be further gains as a result of Budget 2010. Budgets are effectively 4-year Budgets and each year has an increase. The technology development grant started off at $22 million. It will grow a bit more this year by $60 million next year and a bit more the following year. That is a progressive increase that flows through into each Budget. 
David Shearer 
: How many companies didn’t get it? 
Hon Dr WAYNE MAPP 
: I want to make clear the distinction between a research and development tax credit and a technology grant. The problem with Labour’s plan is that it just showers the money out like confetti to get it through to the accountants and it essentially says that if they can rort the account system using highly paid accountants or lawyers then that will do. We looked at that and asked whether Labour had actually increased the level of research and development as a result of that undirected tax credit system. The answer was no. 
We have taken a smarter approach. We have analysed it by New Zealand’s most research and development-intensive companies and Mr Shearer knows which they are. They are set out in a publication called the  
TIN100 Report 
 which sets out the top 100 research and development-intensive companies. We will progressively work through those companies with the intent that each and every one of them will receive a technology development grant. That is the intention because we know that research and development-intensive companies will invest the grant directly into increased research. That is the fundamental difference from just simply sending the money through the tax system. 
David Shearer 
: They’re offsetting their other expenditure. That’s what they tell me. 
Hon Dr WAYNE MAPP 
: We hear from the Opposition members their fundamental misunderstanding. They say that companies will just offset it. I ask them how a tax credit targeted through accountants leads to behaviour change. How does it do that? 
Paul Quinn 
: It doesn’t. 
Hon Dr WAYNE MAPP 
: The answer is as Mr Quinn said that it does not. We need to focus on the companies that have the culture of research and development then invest in them. 
I acknowledge that in 2011 we had a difficult Budget. At least on this side of the Chamber we acknowledge that. On the other side they just advocate reckless spending and have a long list of promises completely oblivious to the fact that we are actually running an 8 percent deficit as it is which is one of the larger ones in the developed world. I guess that if it was 12 or 14 percent it would be a matter of real indifference to them. Maybe Greece is the kind of a country they would like to emulate. I went to Greece recently and I saw what happens when a deficit is left to get completely out of control. In the current environment we have to make realistic and sensible choices about dealing with debt dealing with growth putting the country back on track and setting an agenda that is predictable that is sustainable that people can believe in and that gets us back on a pathway towards growth. 
I say to members in the Chamber that every week the Hon Paula Bennett provides her colleagues with details of the situation of unemployment for both youth and the regions. I can say to members that in virtually every region in New Zealand unemployment is less this year—in fact it is significantly less than it was last year. The lines are heading in the right direction. There is a sense of some level of recovery reflected in part by that increase in exports from the primary sector. 
I close on this point. Labour’s plan in essence is to kick out the feet from under our most productive sector. New Zealand needs to understand that Labour’s big plan is to take money from New Zealand’s most productive export sector and say that is a plan that will grow New Zealand. I say to New Zealand that that is a bankrupt policy and it will fail and it will be seen as such by New Zealanders. They are looking for sustainable realistic predictable and sensible plans that take New Zealand into the future. Those plans rest with National; they do not rest with Labour.