Shearer David: Taxation (Budget Measures) Bill — In Committee 
Text is incorporated into the Bound Volume 
Shearer David: Taxation (Budget Measures) Bill — In Committee 
[Sitting date: 20 May 2010. Volume:663;Page:11138. Text is incorporated into the Bound Volume.] 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I want to touch on a point that was brought up by Michael Woodhouse about the differential between Australia and New Zealand: the fact that our taxes have gone down will somehow attract back here in floods people from Australia. The reality is I say to Mr Woodhouse that in Australia GST is at 10 percent not at 15 percent and if he thinks that people will come running back for the 3 or 4 or 5 dollars they have got as a result of this Budget he should think again. Inflation is at 6 percent and the Government has not factored in accident compensation levies going up the tobacco tax the power price rises and—for people unfortunate enough to live in Auckland—the funding of the debacle that is the super-city. Nobody will be killed in the rush of people coming through Auckland Airport back from Australia. They will come back for better wages when we lift our productivity but this Budget does not do anything to lift our productivity. 
The way we lift productivity is to encourage companies to invest and to be innovative. Look at what Australia has done in innovation in the past year. It has increased its research and development spend by 25 percent. It upped its tax credits for innovative companies by giving a tax credit of 40 percent. What did the Government here do for innovation in this Budget? I am really pleased the Minister of Research Science and Technology is here in the Chamber to hear this. This part of the Budget was announced early because of its importance according to the Prime Minister. It increased our Budget in research and development by $56 million a year. Most of that goes into grants and vouchers to business. 
So what do businesses have to do? They have to get on their hands and knees and go to the Government to say: “Please give me a grant for R and D.” And a bureaucrat sits there and says yes to this person and no to that person. Who benefits? Not the small innovative companies that are out there. I happen to believe—[ 
Interruption 
]—I say to Mr Mapp that those people who put their butts on the line who mortgage their houses and who borrow from their friends and their family in order to get a good idea out there to market deserve a break. That is what the Labour Government did in its term of office. It gave them a 15 percent tax credit. Under this Government businesses have to go on their knees to a bureaucrat who will assess their case and then possibly give them a grant at that point. Imagine the bureaucracy the transaction costs and the sheer frustration of small companies having to go through that ordeal. Our business research and development is one-third of the OECD average. What does this Government do to lift that? It is zip zero. It increases the State contribution to research and development by 3 percent but it does not do anything to our business research and development shift. 
Hon Dr Wayne Mapp 
: Yes it will. 
DAVID SHEARER 
: If the tax credit is put back I say to Mr Mapp if the Government acknowledges that that is the best way to do things we would have doubled the research and development in business that businesses are doing. This is the biggest scam for businesses and it really upsets me. John Walley said that this Budget’s contribution to research and development is a pale shadow of what the former Government put in place. It is not only that it is half of what the Labour Government had in place and it is also half of what that Government promised in 2008. So after all the “good news” around announcing this early it is ultimately only half of what it promised in 2008 it was going to contribute. It is another broken promise I say to Mr Mapp. He must sit there and feel dreadfully uncomfortable about the fact that he has given only half of what he promised.