Young Jonathan: Estimates Debate — In CommitteeText is incorporated into the Bound VolumeYoung Jonathan: Estimates Debate — In Committee[Sitting date: 01 July 2014. Volume:700;Page:19073. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (Chairperson of the Commerce Committee):As we look at the economic development estimates for this Government I think we can be very encouraged to see a very proactive plan that is going to make a huge difference for this country and in particular the regions. We know as the Minister for Economic Development has reported today that the regions have led New Zealand out of the global financial crisis and into a very strong recovery. We want to see that continue. We want to see a sustainable growth path for New Zealand’s economies and our regions.The Ministry of Business Innovation and Employment is tasked with that sort of work. Since its formation in July 2012 it has according to its statement of intent for 2013 to 2016 “consolidated related business-facing functions and created new opportunities for delivering policies and services to advance New Zealand’s prosperity and wellbeing.” I believe that it is doing a great job on that and I believe that this Budget is investing not only money but the right sort of thinking into enhancing New Zealand’s success not only domestically but globally.We all understand that we live in a global environment that is highly competitive where innovation is absolutely essential. This Government has been building the innovative base the work base of this country very very significantly. It is critical to our country’s competitiveness in a global economy that is crowded with goods and services. If we are going to enjoy the First World lifestyle that we have been used to in decades past and that we feel is our right as New Zealanders then it is very obvious that we have to continue to earn that First World income. That does not come about by just doing the same thing year after year after year. We have to keep that edge. We have to keep innovating. We have to develop businesses that are looking all the time at how we can improve our productivity how we can improve the products that we do sell internationally and how we can improve our market place and space.Callaghan Innovation gives businesses a single front door to the innovation system. It works in partnership with New Zealand Trade and Enterprise economic development agencies business incubators universities polytechnics Crown research institutes the venture capital community and of course industry associations right throughout this country. Callaghan Innovation named after one of our leading scientific innovators is critical in the success of this nation and it is something that I know that the Minister has spent a huge amount of thinking time and work on in terms of developing. It connects businesses with research organisations across the innovation system. It manages more than $140 million a year in Government funding and grants to support this innovation and capability-building.Innovation is a central driver of economic growth and development. Firms rely on innovation and related investments to improve their competitive edge in a globalising world with shorter product life cycles. Innovation has the potential to mitigate some of the emerging problems related to health energy and the environment that are faced by both richer and poorer countries. We have got to see that innovation is critical to the modern way of life and that through it we can not only improve the health and lifestyle of people and bring people out of poverty and into production and employment but we can receive premium prices for the products we sell on the international stage. It is all of these things that I believe are very very important to our country.The previous Government seemed to think that a research and development tax credit was going to do it all—that that was all that was needed and that it was going to be the biggest driver for innovation in the New Zealand economy. What we were concerned about with that sort of thinking was that that tax credit could have been paid out on standard operating expenditure that was recharacterised as research and development - related expenditure—essentially being a cost to the Government for a research and development purpose without any significant added research or development actually occurring. So we would just be treading water without anything being achieved with the Government giving a benefit to companies that was essentially a handout.Our approach has not been that. We have ensured that especially in this Budget we are freeing up cash flow for innovation in a far more effective manner. Our goal is to see research and development spend or investment be 1 percent of our GDP.