The Green Party has revealed plans to build a "smarter, more innovative economy" which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business.
"Innovation lies at the heart of a smart, green economy. Economies that innovate do better over the long term, creating good jobs that pay well," claims Russel Norman, co-leader, Green Party.
"Our economy is on the wrong track. We invest roughly only half what most other developed countries do on research and development.
"National plans to make this bad situation worse by cutting research investment in real terms by 10.2 percent over the next three years and by 21.0 percent out to 2023/24.
"We need a massive investment in research and development, not more cuts.
The key policy points in the Green Party's plan for an innovative economy are:
1. $1 billion of new government funding over three years for research and development
2. Government to take a collaborative partnership approach to innovation with the private sector, which will include R&D funding made up of tax credits and grants, a requirement for firms that go into overseas ownership to repay their grants and a new voluntary option for large grants, where companies that receive significant taxpayer funds agree to the Government taking an equity stake in their business.
3. Enhanced incentives to study and teach engineering, mathematics, computer and the physical sciences. The Green Party will fund an additional 1,000 places at tertiary institutions for students of engineering, mathematics, computer science, and the physical sciences, costing $50 million per year.
"The Government's own 2011 review of the innovation sector recommended 'progressive increases in Government investment in R&D…to at least match the OECD average', but Steven Joyce's funding plan will take our economy in the opposite direction," Norman adds.
"Steven Joyce has strapped innovation in a straitjacket. By putting himself at the centre of a complex web of R&D funding, the Minister is denying businesses the freedom to innovate on their own terms."
According to Norman, the Green Party will reform Steven Joyce's "web of opaque grants" and create a better system of R&D funding that mixes tax breaks for all companies.
"The Green Party will set up an expert working group to advise on the best mechanism to deliver the additional funding we will inject into the R&D system, removing the current level of ministerial interference," he adds.
"We are committed to working with experts to design the exact distribution system. Unlike Steven Joyce, we don't think politicians should have their fingers in everyone's pie. That just delivers bad results.
"We want to provide business with the freedom to innovate. A tax credit creates a level playing field and means businesses can get government support for R&D without all the paperwork and bureaucracy inherent in the current system.
"We want business to get on with innovating. A tax credit is the simplest and quickest way to spur R&D activity.
"There is still room for direct government grants in our R&D system. We will establish new grant criteria to ensure greater investment is made in promising new paths in the ICT, renewable energy, and manufacturing sectors.
"A hybrid model of tax breaks and direct grants, underpinned by much higher levels of government funding, will mean more businesses invest in R&D transforming the way our economy produces wealth."