A Labour-led government would continue to invest in innovation through Fast Forward and a 15% tax credit for research and development, Research, Science and Technology Minister Pete Hodgson said yesterday.
Opening the Endace research and development facility in Ellerslie, Mr Hodgson said the fast-growing communication and information technology company was contemplating shifting its research and development to Sydney if National won the election because it would be cheaper.
"Our nation needs more rapidly growing spin-out companies like yours. If we are to lift our productivity, create jobs for skilled New Zealanders and increase our exports, then we need more Endaces starting up and no Endaces clearing off to Australia," he said.
Companies like Endace were the most likely to plough profits back and would grow much faster if research and development efforts were rewarded by reduced taxes, he said.
"Across New Zealand people are astounded at National's short-term and short-sighted policies, which would take away support for fast-growing research-driven companies and industries.
"One of New Zealand's inconvenient truths is that private sector expenditure on research and development is almost exactly one-third of the western world average."
New Zealanders were innovative , but NZ companies were painfully bad at investing in research and development and commercialising resulting successes, he said.
The lack of a tax incentive until April 1 was the reason why, Mr Hodgson said.
When the tax credit was introduced, IRD officials had to work out how much tax would be foregone.
IRD modelling calculated that the full effect would be $332 million a year, enough to drive reported private sector research and development from one-third of the western world average to about two-thirds.
"Ask how much extra money would go to individuals if National were to cancel the tax credit and give all of us the proceeds.
"My calculations are that each person would be better off by $1.60 a week. A smart future or a dumb future plus $1.60 a week? I say that cancelling the tax credit would be a very stupid thing to do."
