Bayly AndrewANDREW BAYLY (National—Hunua): Thank you very much. I'm trying to get to my feet with things in my way. This bill is an attempt to try and drive innovation in New Zealand. Obviously if you go back through history there have been many different arrangements. In fact we've been here before. We moved to a new system with Callaghan and of course under this new arrangement we're going to revert back basically to a scheme that previously existed.There are some issues with this bill. Whilst obviously as the Opposition we support all attempts to try and drive innovation in New Zealand the question really revolves around the mechanism that's best to achieve that and that's obviously where the debate has been round this bill. The first issue I want to just ask the Minister who's in the chair Megan Woods—which is good to see—is the issue around the quantum. I know there have been various projections around what this scheme will cost and how many entities it's likely to benefit and broadly there's been an estimate of around a billion dollars and originally it was 3000 businesses and then over time that seems to have diminished somewhat to I think the latest estimate of around 1500. But the issue I'd love to hear from the Minister on is around the issue of how the monetary quantum of this R & D scheme is going to be managed and to ensure that what is paid out goes to the highest-value proposition.Now I think we're all aware that in Australia when they introduced a similar scheme to this the original projection for the Australian Government for the scheme was A$1.8 billion but that blew out to roughly double—$3 billion. I think it's very important and incumbent on this Minister that she provides some clarity around how that's going to happen and as I say how it's going to be targeted.That's one of the things around the existing system with the Callaghan scheme because that was an attempt by using independent third-party professional people to try and identify those companies with the highest potential to deliver the greatest value to the New Zealand economy. There is always going to be an element of prioritisation. It doesn't matter whether you've got a billion dollars or three billion dollars. But this scheme will because of a monetary cap have to prioritise. Whether that's on a first come first served" basis or whether that is by a prioritisation of some other arrangement I would like to hear from the Minister because I would suggest that if the prioritisation is merely on a "first come first served" basis those companies that are the most well-resourced and the quickest out of the block are going to benefit and that may be to the detriment of New Zealand because those companies that have very good propositions in time don't benefit. Conversely what that means is the billion dollars that's projected at the moment is going to blow out to a much greater figure. That issue is of vital importance if we are to ensure that we end up with a scheme that we can put a line in a budget and actually know it's going to take place. I think the prioritisation of it—and this is one of the issues in the schedules. If you look at the schedules there are 24 activities that are excluded and there are 11 activities or areas around supporting R & D that have been excluded in the schedules to the bill. Again this is a form of prioritisation and I think one of the issues relating to this—and I'd like to return to this issue if I may—is around how we promote certainly ICT companies and those companies that are not of the traditional public-good types of activities that are in R & D but that are actually focused on commercial outcomes. I think this is one of the most important aspects about R & D: what is the type of R & D that we want to take place in New Zealand and what should the New Zealand Government be best putting its money into to ensure that we can drive the New Zealand economy forward? This is a crucial part of the conversation that I haven't heard expressed by the Minister. It's very well-intentioned to be able to say "We're going to spend a lot of money on R & D and by the way we're going to change back to an existing system that was in place a few years ago." but the prioritisation—and one of the discussions we had during the select committee process was around the area of what type of research is best undertaken. There was quite a lot of discussion around public good research which of itself does create value but one of the things I'd also like to hear from the Minister is a cogent description of the specific types of economic activity she would like to see following a billion-dollar investment that this Government's going to make over time because I think it would be unfortunate if the Minister only talks about public good. What are the commercial outcomes that she would like to see and that we would be able to look back in maybe five years' time and say that we've achieved from spending a billion dollars of New Zealand taxpayers' money? I think that's the bit I haven't heard clarity around and it's certainly not clear in the bill in the way that the intent of the bill and the direction of the spending is narrated in the bill. So that's the second issue I would really like to hear from the Minister on: what are the benefits and what are the economic drivers that she would like to see in place or would like to see occur as a result of this investment? The other thing is around pre-profit of businesses. This is probably the most contentious part because I think there's an assumption in the way that the bill is written and the intent of it and who it's directed to and I've heard my colleague Dr Parmjeet Parmar talk about the issue of small companies getting a minimum of $50000 and the costs associated with that. That is a very salient point—a very salient point—because the cost to comply with this is substantial and what we do need to make sure is that it's not only the big companies in New Zealand that are very good at driving research and development. In many cases it's very small start-up businesses and in some ways they are the most dynamic. Many of those now use ICT as a driver of that business activity and what worries me most about the intent of this bill is that we have ended up with a proposition that really deals with medium-sized and large-scale entities. They have the resources to be able to fill in forms and bear the cost as part of a longer-term research and development activity and to be able to go to the Government and comply with all those requirements that are over time quite strenuous and I know that from personal experience. So the issue is—and it always has been—the missing element of how we support those pre-profit companies in New Zealand and there are many many thousands of those in New Zealand. We've got 530000 businesses in New Zealand. Many of those are pre-profit and are there creating value and often taking a concept and driving it through the different stages of research and then development and then through what people term the "death valley" where it goes through to the commercialisation stage before it becomes a fully marketable proposition. How we support how the Government intends to support—and this bill doesn't actually deal with it in my view but I'd like to hear the Minister's view on it. How do you support those pre-profit businesses as they evolve through those first three stages before they get to the stage that means that they're in profit and they have the scale to be able to do the R & D that we're talking about and be able to access the fund of this nature? So that's the other aspect I wanted to hear from the Minister on if she'd care to address it. What is the proposition around supporting those very innovative creative young businesses that haven't reached pre-profit and who are in a situation where they are helping to drive and create many jobs and that ultimately will become very large companies over time? So on that note I'm looking forward to hearing from the Minister."