Woods MeganHon Dr MEGAN WOODS (Minister of Research Science and Innovation): I think we're seeing a number of contributions starting to reiterate the same themes and the same questions are coming through some of which I've already addressed. I'll just start for the benefit of Andrew Bayly the member who's just taken his seat who asked a question around pre-profits. I have addressed that question in an earlier contribution but the point of this is actually all about those pre-profits. I'd like to reassure that member that this is the first time that we are actually having a comprehensive policy that is going to look at how it is that we can support some of our most innovative companies in New Zealand. So this has a 2019-20 provision for the tax year of 2019-20 and it sets out in post-2020 how indeed those companies will be supported. Obviously there's the cash-out tax credit but I know that the sector and those in pre-profit in the sector are heavily engaged with us at the moment and are a part of designing what that post-2020 support will look like and I know that they are hugely appreciative of the fact that they get to be part of that design. There have been questions—which I have addressed also—around small businesses. I'd like to reassure those members who are signalling very valid concerns around this that this is something that as a Government we listened to. That's why we have reduced the threshold of expenditure from the current $300000 in the growth grant scheme to $50000 under the tax incentive scheme. This is a scheme that is more directed to small businesses than the scheme it is replacing and that's something I have dwelt on in previous contributions so I won't dwell on that. The member asked about prioritisation and public good. What I would like to point out to that member is that this is not an investment about public-good science. This is an investment around innovation in commercialisation. This Government values public-good science. We invest in that and we invest in that through our strategic science funds. But this is about backing Kiwi businesses to commercialise that science and to take those ideas into economic reality. So this isn't about investment back at that level. The fiscal risk is something that has been raised by a number of members and this is something where they've asked how it is that we get to the estimate. I'd just like to clarify that there are between 2000 and 3000 businesses that we estimate will be able to have support from the Government under this scheme as opposed to the 300-odd that got support under the previous Government's growth grant scheme. So we're having a tenfold increase and I can assure you that we've done some rigorous modelling around that. The figures on which we've based that modelling are from the 2016 Research and Development Survey and we've looked at how the definition would apply across that how many it would apply to and what the quantum would be which I think a member asked a question around. So that's something that we have done work around. We certainly have made sure that we've built headroom into the funding that is available for this so that we know that we will be able to support all businesses and that we won't have to prioritise and tell some businesses that they're out because this is not like the previous Government's growth grant scheme. This is not about the Government picking winners. This is about leaving innovative businesses to do what they do well and that's innovate without Government making decisions about whether that is best.One of the members pointed to a schedule of excluded activities that are covered by provisions in this Part 1; absolutely right and this is international best practice. So I think an Opposition member asked a question to give an example around oil and gas exploration activities—what that would look like. Well actually that's in the schedule of excluded activities and that is what happens across the world. So there are a number of industries that are in that schedule of excluded activity.The definitions are something that members have asked some questions around and how it aligns between different pieces of legislation. What we have to realise is that actually there are different purposes and different functions of definitions within different pieces of legislation. The purpose of the definition in this piece of legislation is to ensure that we are capturing and measuring the research and development that leads to economic outcome. Statistics New Zealand have to capture a broader range of metrics around that for very good reason: there is no inconsistency or incompatibility of using some different measures. What the most important thing is is actually we've looked at international best practice. By and large this is based on Frascati definitions of R & D and this is what is common within all of our science system. In fact we would look at that right across how it is that we fund science.We did listen through the submission process and we moved away from strict application of the scientific method but have had to put some rules around that. But I think the most important thing for me as Minister is that we were having a scheme that lined up internationally. Compliance is something that has been raised as well and one of the things that I would like to point out is—and I have given this reassurance in an earlier contribution—that there are a number of integrity measures built into this bill.Someone brought up the issue of Australia and the cost blowouts and the lack of compliance there. Officials from New Zealand spent a lot of time talking to their Australian counterparts who were incredibly giving of their expertise and their experience. Some of it was on what not to do and we really valued that input and it is a number of the measures that are being questioned by members of the Opposition now. We actually took good advice about how it is that we could put in place the most robust scheme and that we could ensure one that allowed businesses to get on to transform our economy to innovate—not to sit around filling in forms for grants because that is feedback we were getting very strongly from businesses. They didn't want Government picking winners. They wanted to be able to get on and do in their business what they did well and they wanted a rules-based system where they could be treated with the respect within the rules-based system as they are within the tax system more generally. So I am confident that we have the right suite of integrity measures contained within this legislation.Finally the one new question that has come up has been about outcomes. We have been very clear of what the outcome of this piece of policy is around and this measure is about: it is about being more ambitious for New Zealand than we currently are in terms of our R & D spend. We languish amongst the OECD in how much we spend on R & D. We spend only around 1.53 percent—I think 1.53 is our latest estimate of what we spend—as a proportion of our GDP. We aim to get to 2 percent within a 10-year period and this requires that we do things differently. Doing what was previously happening was not putting us on a track so that we could be internationally competitive.We don't look to some of the countries that I think we like to measure ourselves against in the OECD; they're currently in 2 and 3 percent and have ambition way above that. We have to fundamentally change things to even get ourselves to the 2 percent and this Government is committed to this. We can't keep doing the same thing and expect we'll get there and this is why we're putting in place a transformational programme that backs New Zealand businesses to spend more on R & D.