Patterson MarkMARK PATTERSON (NZ First): It's an absolute pleasure to get up on behalf of New Zealand First in support of this R & D tax policy. This is a key policy plank in the coalition agreement. It has been a longstanding New Zealand First policy to drive our R & D to GDP ratio to 2 percent. Why is this important? It's because there's almost an exact correlation in the OECD between investment in R & D and GDP. Those countries that are at the top of that scale have all got one thing in common: they invest much much more in R & D than we do. Our aims are high at 2 percent but if you look at the average in the OECD it's only 2.5 percent. If you look at economies like Denmark they're up at about 4 percent. So we've got a way to go but we are making a start and we've already started obviously with this kicking in already.We need to grow the pie. That's the key here. We're going to be here in a few weeks listening to the Budget and there is so much call on the Government's resources but that can only be done if we are generating income through taxation and through businesses growing and investing. That's why we need to back our businesses to increase their R & D spend. We talk about it all the time: we have to transform to value from volume. I keep going back to those logs that sit on the wharf outside as I look out my office in Bowen House. That is a 20th century business model that will not support a 21st century expectation of the services and the economy that we would want to have in New Zealand. We need to diversify our economy. I go back to an example actually. Mr McAnulty and I had the privilege of going on a trip to Taiwan. We were taken out to a business park that through one of these schemes was incentivised. It was 500 hectares. The income generated from the businesses in that park was US$50 billion. Now I'm proud of our primary industries and we're seeing a great increase at the moment in our export revenues—up 11 percent I believe in the last 12 months—but we through all that through seven million - odd hectares managed to generate about NZ$46 billion. So in 500 hectares they were generating more than what we were generating off seven and a half million. So it shows you how important innovation is in the transition to a 21st century economy. We know we're at about 1.37 percent. That has grown under our watch—up by $750 million already and encouragingly business is leading the way in that. When you go back to those OECD averages actually Government expenditure on R & D is not too far away from the average; where it's been lagging is business investment. So we do need to put some incentives in the way and this piece of legislation does just that. A little bit of history: of course we did have this as Mr Nash pointed out in his contribution. The last Labour Government brought this in just before they left office and it was taken out by the National Party. Now I'm a little perplexed by this—this is the National Party. I'm a recovering Nat so I kind of know a little bit about how they work. The only real philosophy they've got is tax cuts. We know that they'll have a range of policies at the next election but the only one that anyone will show any interest in is the size of the tax cut they are going to offer the electorate. It's all they really have. So imagine my surprise when I'm hearing from the other side of the Chamber that this which is essentially a tax cut for business is being railed against by the National Party. The National Party are in this House tonight railing against a tax cut. I feel like when I was a child and I learnt that Santa wasn't real.So what they're arguing of course on that side is that we should have as they did in the Callaghan initiative—which is a successful initiative and we do support it and we will carry on because we are a Government that can walk and chew gum. But they are saying that we need to have a targeted—where the Government and bureaucracy decide which businesses get the tax incentives or the Government support and which don't. That is socialism. I am hearing socialism from the National Party tonight. I'm sitting here in a Labour - New Zealand First coalition talking about a tax cut and tax incentive for business and I'm proud to be here doing that and I think the National Party needs to reassess their philosophy because their only one real principle has been flushed down the toilet tonight. This of course is a wider strategy and a wider package that we're bringing. Of course the Provincial Growth Fund that we're so proud of in New Zealand First and on this side of the House—that too is investing. I had the pleasure the other day to stand—DEPUTY SPEAKER: Does that have anything to do with the bill?MARK PATTERSON: Yes it does. In terms of R & D Madam Deputy Speaker—DEPUTY SPEAKER: Good. Bring it in.MARK PATTERSON: —and the ways in which this R & D tax credit complements the other initiatives that we're making like the Provincial Growth Fund and the investment we made the other day in the Cawthron Institute in Nelson—algae development—of $6 million. It was absolutely fascinating to go through that facility and look at what they're doing. I'm under secrecy as to what the value of that stuff was but we are talking eye-watering amounts per gram for the output that is coming out of that institute compared to the tonnes and tonnes of unprocessed logs that we're relying on to run our economy at the moment and the frozen legs of lamb—still not a business model that far removed from when the Dunedin sailed out of Port Chalmers in 1887. So this is a transitional move for our economy. These R & D tax credits will incentivise R & D spending by our businesses. We have had a number eight wire mentality in this country. We are innovative and we are going to back Kiwi businesses to make their own decisions about R & D. We're not going to make them fill out forms and go through a bureaucracy like the National Party wanted; we are going to back them. They know what's best they know where the opportunities are and we are going to incentivise them to do it. So I will commend Minister Woods on bringing this through. I will commend the people involved in the coalition negotiations that put this at such a high priority because we know how important it is to get R & D spending up if we are going to rise up those OECD rankings and have an economy that's able to deliver the services that we need it to do. I would commend the Finance and Expenditure Committee. I do understand that they did shape the bill. There were some issues—it can have some complexity—and they did help with that and the officials obviously helped in that as well. So I take absolute pleasure—this is a key fundamental building block in building a 21st century economy for New Zealand and New Zealand First absolutely supports this measure and commends it to the House. Thank you.