Foster-Bell Paul: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeFoster-Bell Paul: Oral Questions — Questions to Ministers[Sitting date: 07 April 2016. Volume:712;Page:10317. Text is incorporated into the Bound Volume.]7.PAUL FOSTER-BELL (National) to the Minister of Science and Innovation: What recent reports has he received about increased investment by businesses in research and development?Hon STEVEN JOYCE (Minister of Science and Innovation): Yesterday Statistics New Zealand released its 2015 Business Operations Survey which showed that more New Zealand companies are investing in research and development. Business spending on research and development grew by more than 15 percent in 1 year from $1.25 billion in 2014 to $1.44 billion last year. Business spending on research and development is now 71 percent higher than it was in 2008. We have also seen an increase in the broader innovation rate with those aiming to come up with better goods and services up from 46 percent in 2013 to 49 percent of companies last year. New Zealand has historically had low levels of research and development conducted by businesses compared with most OECD countries but these numbers confirm that that is now changing and that we are creating a stronger and more diversified economy.Paul Foster-Bell: How is the Government encouraging more business investment in research and development and what feedback has he received?Hon STEVEN JOYCE: The numbers released by Statistics New Zealand are very encouraging. They show the positive effect that we are having with our work through Callaghan Innovation which is the new high-tech innovation hub headquartered here in Wellington. The grants programme is encouraging more investment in research and development including by businesses—the member will be interested—here in Wellington: Tekron specialising in providing high-precision GPS; Wipster a video review and approval platform; and goodnature which I visited this morning which is a world leader in resettable pest traps. Importantly when we came to Government we recognised that the previous policy of research and development tax credits was not working. Rather than conducting true research and development in many cases businesses were simply reclassifying existing expenditure as research and development. The Government’s new approach is delivering real tangible increases in research and development activity.Paul Foster-Bell: Why are more businesses investing in research and development?Hon STEVEN JOYCE: If businesses want to compete internationally it is important that they continue to innovate by developing high-quality goods and services. We are playing our part through a suite of services including an attractive research and development grants programme which offers co-investment of up to 20 cents in the dollar on qualifying research and development expenditure. But fundamentally it comes down to businesses having confidence to invest in their growth. That is why it was pleasing to see the MYOB Business Monitor research report on Tuesday which saw confidence in the economy strongly improving among small and medium-sized enterprises. That is consistent with the statistics data yesterday which showed that the fastest growth in research and development expenditure—19 percent in 1 year—was in medium-sized businesses employing 20 to 99 employees.