Webb DuncanDr DUNCAN WEBB (Labour—Christchurch Central): Thank you Madam Assistant Speaker. This Taxation (Research and Development Tax Credits) Bill is a really important piece of legislation. I think as Mr Alastair Scott asked the right question is: why should we have these tax credits? I think we need to be very careful when we think about that. It's not simply because we want to encourage research per se; it's because research has value which goes well beyond the company or individual who generates that research. And we're talking about hard research; we're not talking about market research.Hard research—research which creates technological advances—adds to the net sum of human knowledge and human wealth. In terms of wellness it gives us greater choices and it gives us greater prosperity and that's what we need to do. But the difficulty for a researcher for someone who's at the cutting edge of some technological improvement is that once they make that improvement it's very hard to hold on to it all for themselves. Notwithstanding the law of patents and copyrights and what have you the fact of the matter is that once we get an advance of one kind or another others jump on the coat-tails. That's no bad thing because what it means is that New Zealand as a whole the industry as a whole and in fact quite probably the world as a whole benefits in some way. In economic terms that's one of those rare things: a positive externality—a side benefit if you like conferred as an effect of the main thing.So by providing this tax credit what we are doing is recognising the fact that the benefits of this go beyond the researcher themselves and we are in a sense giving back a little bit of that capture. So research isn't just good for some vague reason; it's good because it enhances productivity it enhances prosperity it enhances knowledge and also it has that filtering effect where it spreads beyond the person who may have generated it in the first instance. This in a sense offsets those losses because the worker who developed it might have gone to another competitor or something along those lines. It is important to recognise here what research" is under this legislation. It isn't some loose market research some non-systematic furthering of knowledge in a loose way; it is scientific research. It has to be systematic and importantly it must create new knowledge. We discussed not long ago a patents bill and talked about the need for genuine innovation. That's what we want to fund here: genuine innovation which makes an actual step forward. It's interesting to see what it's not. It's not some advance that is deductible from publicly available information. So in that sense we need to make sure that it is a genuine scientific improvement.Now it's also worth noting that the rate here is generous—15 percent is a generous tax deduction—and also there's a low threshold. The $50000 threshold which is proposed I absolutely endorse because there are many small companies whether they be IT companies or medical companies who may actually be one guy or one woman working away and they may only spend $50000 or $100000 in a year but that also is deductible so that's a great idea. It also captures—we mentioned Fonterra before—large companies with up to $120 million of expenditure.So what this is doing is really encouraging something which has wider benefits. It's a great innovation. I sit on the Finance and Expenditure Committee with Dr Russell and many others and I look forward to engaging in a robust discussion—Kiritapu Allan: And Fletch.Dr DUNCAN WEBB: —on how to make—oh and Mr Tabuteau—Kiritapu Allan: And me.Dr DUNCAN WEBB: —when he's not overseas. Oh and Ms Allan when she's not far too busy doing something else. For that reason I absolutely commend this bill to the House."