6. Budget 2018—Research and Development FundingTAMATI COFFEY (Labour—Waiariki) to the Minister of Research Science and InnovationBudget 2018—Research and Development Funding6. TAMATI COFFEY (Labour—Waiariki) to the Minister of Research Science and Innovation: What initiatives in Budget 2018 will help drive more research and development and why is it important that we lift our investment into R & D?Hon Dr MEGAN WOODS (Minister of Research Science and Innovation): Budget 2018 includes the largest ever appropriation for research science and innovation. This Government understands that innovation is the driving force behind economic development. That's why we invested $1.1 billion of new funding over four years to support a more innovative economy and help raise R & D spending to 2 percent of GDP over 10 years. The Government's most significant investment is in the R & D tax incentive $1.02 billion over four years which will incentivise faster growth in business R & D. This package which includes three other initiatives lays the foundations for an inclusive adaptive and resilient economy underpinned by science and innovation.Tamati Coffey: Why is R & D as a percentage of GDP important and how does this Budget support the Government's aim of achieving 2 percent over 10 years?Hon Dr MEGAN WOODS: Lifting New Zealand's R & D expenditure to 2 percent of GDP will drive the diversification of the economy by encouraging new industries and companies new jobs and new ways of doing business. Based on our current modelling Budget 2018 puts us on track to achieve 2 percent of GDP on R & D over the decade but further public investment in the future will be needed if we are going to use research science and innovation to transform the economy and solve our critical social and environmental challenges.Tamati Coffey: What are the details of the R & D tax incentive that she announced funding for?Hon Dr MEGAN WOODS: The details of the tax incentive are still out for consultation. The Government has proposed a rate of 12.5 percent for businesses spending over $100000 per year. Consultation closes on Friday 1 June and I encourage stakeholders from across the spectrum of research institutions businesses and science to have their say on the design of the tax credit including the rate; at what point it kicks in; and exactly how it is that we assist companies in the pre-profit stage. We're aware that—SPEAKER: Order! Order! That's enough.Dr Parmjeet Parmar: What growth in R & D spending as a percentage of GDP is expected to be seen through the R & D tax credit policy by 2020?Hon Dr MEGAN WOODS: We are on track to grow our expenditure over a decade to 2 percent of GDP on R & D. Currently before the Budget we sat at 1.3 percent expenditure. This Budget has lifted that to 1.5 percent which puts us on track over the decade to reach the 2 percent target something the previous Government did not do.Dr Parmjeet Parmar: I raise a point of order Mr Speaker. My question was about reaching—to 2020 not in 10 years. So what is the percentage growth of R & D spending by 2020—not in 10 years?SPEAKER: My view is that the question was certainly addressed.Dr Parmjeet Parmar: How can the sector have confidence in her policy if she's unable to give any such forecast for 2020?Hon Dr MEGAN WOODS: The sector can have confidence because they've just received an over-a-billion-dollar tax incentive to further incentivise spending on R & D. I did answer the member. The forecast is a lift to 1.5 percent expenditure of GDP over that period of time something the previous Government failed to address.