Clark David: Advanced Technology Institute Bill — Second Reading 
Text is incorporated into the Bound Volume 
Clark David: Advanced Technology Institute Bill — Second Reading 
[Sitting date: 08 November 2012. Volume:685;Page:6485. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 There has been under-investment by National in research and development—less than 1 percent of GDP compared with Denmark and Finland with about 3 to 4 percent of GDP. We know the OECD average is around 2.5 percent. This woeful under-investment in research and development is something this Government is doing nothing to address. National chose of course to cut the research and development tax credits that Labour put in place and it has also slashed budgets in other areas. It goes to show that those members just do not get it. You know they just do not get it. There are some issues they just do not get. There is also a woeful under-investment in private sector research and development which is linked to the public sector research and development investment as is shown across the OECD. The bureaucratic subsidy approach that National favours does not even fit with its language of having a business-friendly business-led approach. It is unfortunate; that is all you can say about it—a whole lot of red tape a slow way of doing business and it does not really encourage those who are the innovators in our society who want to take it forward and who want to make sure that there are high-paying high-skilled high-tech manufacturing jobs for the future ahead of us. 
We saw with the emissions trading legislation that we debated just before this Advanced Technology Institute Bill that instead the Government is preoccupying itself with taking the country backwards by extending subsidies for the businesses that are not in the high-tech space. That paints a picture of a Government that has its eye off the ball that does not have a plan for this country— 
Michael Woodhouse 
: Are they sunset industries too? 
Dr DAVID CLARK 
: —for taking our industries forward. Mr Woodhouse the member opposite is talking about sunset industries. No doubt he is including in there Hillside in Dunedin. Fisher and Paykel probably which shut down its manufacturing would be a sunset industry to Mr Woodhouse I suspect. He does not care that the jobs are going in Dunedin. He does not care that Tamahine Apparel Solutions shut down. He does not care that the jobs went at Delta Utility Services. He does not care that the Inland Revenue Department is shutting down its local services or that the taxpayer money that goes into Dunedin is being taken out so that there is an increase in unemployment locally. These are foolish things to argue Mr Woodhouse. The local situation in Dunedin is dire and the unemployment levels are rising and it is because of policies like this one we see before us which really is not favourable to businesses that want to innovate but instead makes it more complicated. 
It would be a good thing as part of a wider package and it is a timid step in the right direction. So ultimately although it is a slightly bitter pill Labour will be supporting this legislation because we think this kind of thing can be built on—if we did have decent research and development credits if we had some joined-up policy if we had decent procurement policies if we took care of the bigger picture if we looked at the kind of macro-prudential tools that the Reserve Bank might need to ensure that we actually had jobs and a thriving economy and an exchange rate that was favourable to our manufacturing export sector if we had pro-growth tax policy if we had the likes of a capital gains tax that would see money flowing from the speculative sector toward the productive sector and if we had procurement policies that actually looked at the whole economy. 
When the Hillside trains were to be built if we had looked at the wider economic benefit it might have been a very different equation. If we had looked at the tax paid by those people who were doing the manufacturing who had the jobs and if we looked at the money going to those industries that provide work into Hillside and the other engineering firms and if we looked at the wider benefits to our country of having a capable manufacturing sector we might have had a different outcome. So the research and development tax policies of course are critical in this context but those other things cannot be ignored because they are about ensuring that we do have economic development in New Zealand. 
To come back to that point John Key did promise 170000 new jobs and today just today we have the highest jobless rate in 13 years. It is the highest jobless rate in 13 years. There are 175000 people looking for work. It has not been this bad since Bill English was last finance Minister in the 1990s. Things have not been this bad. The only common element I guess we can see there very plainly. This timid approach to innovation which sees this under-investment is part of a bigger picture and it is also in some ways explained by the way this bill has been put through. We in the Labour Party believe that if you want to get good policy that supports industry that supports commercialisation that supports the scientific community and that actually builds our economy you need proper input from industry. You actually have to be willing to listen to the businesses that are doing this stuff not ramming it through at high speed not putting it through a “blink and you miss it” select committee process. 
You need to be looking at that bigger picture of course—the overvalued currency and the tools that would address that—and the other things that are going on in the New Zealand sector that are leading to the job losses that this Government has overseen the current decline in the economy and the drop in real wages. Recently announced was the median wage drop of 3 percent. Those things all need to be taken into account when you are setting the policy. But this process has not helped. Speeding this through the select committee does not give industry the scientific community economic development communities and members of the public the opportunity to make the contributions they can make that would actually make sure that we had proper decent policy in this area. Even if the Government does not have a vision for it that select committee process is an opportunity to get input from those that do. 
The high-tech manufacturing sector job skills and so on should also be given an explicit focus in this bill. This is what one of the submitters—one of the few submitters who was allowed to come along in the time frame or was able to—pointed to and we support this. Those objectives of having a high-tech manufacturing sector for increasing jobs and increasing skills should be given an explicit focus in the bill. Why not make it clear that that is what we are trying to achieve with this? Then questions can be asked if it is not being achieved so that we can actually have accountability measures and a clear focus. Likewise in the purpose statement it would be great—it would be crucial—that there not be unnecessary duplication and competition with pre-existing research provision by the Advanced Technology Institute. Why not make that explicit in the legislation? Again there were some submitters who were able to make the tightened time frame who made that point and Labour agrees with that. There are sensible and serious things that could have been included to improve the economic prospects associated with this initiative that were not taken into account. 
 Another aspect another conflict that sits in this bill is the funder/provider split. This is something that fits into basic public sector management principles. The funder/provider split is something you can ask Treasury about. It will wax lyrical about the importance of making sure that there is not a conflict between those who are bidding into the process and those who have got the funding. So that exists with the active functions of the Advanced Technology Institute: the research and development the knowledge and technology transfer functions and the enabling functions—the funding to third parties. We also note that there were very few submissions from industry and businesses directly engaged in high-value manufacturing and that has got to be a concern. 
Hon Trevor Mallard 
: They hardly had time to do it. 
Dr DAVID CLARK 
: Well they did not have time to do it as my colleague the Hon Trevor Mallard points out. That means that we are likely to get flawed legislation and that we are not going to get legislation that could be achieving to the extent that is possible if the proper processes of this Parliament are observed along with the habits of good parliamentary conduct. Labour also thinks that the education sector could be quite directly tied in so that again the advice and so on that is coming in takes account of that wider context. These are all things that were overlooked. 
On its own the Advanced Technology Institute cannot successfully transform our economy. It could be better but overall it fits within a wider context where the Government has its eye off the ball does not have a plan and is not taking care of those bigger-picture issues such as the exchange rate which makes it very difficult for the manufacturing sector. That is why we are seeing those engaged in the manufacturing sector drop off—the lowest numbers since statistics began we learnt yesterday. That is why if you do not pay attention to those things if you do not have pro-growth tax policies that support industries if you do not have simplified business practices if you are not actually looking out and listening to what is going on more broadly and if you are not willing to make the big changes to get our economy back on track it will not happen. This Government does not have a plan. It is overseeing the worst economic record of any Government in 50 years. It potters along. It is not making a difference and I look forward to hearing what Mr Woodhouse has to say about how this is going to be turned round because there is no evidence it is in the current settings.