Labour tempts startups with policy sweeteners

Labour tempts startups with policy sweeteners

Labour's digital policy includes backing for new entrepreneurs and an 'x-prize' scheme to encourage innovation breakthroughs.

It says new 'garage grants' will help entrepreneurs start developing their ideas into successful businesses. They'll give training, mentoring and support, along with up to $10,000 to start the business and build its first product.

“To boost innovation we will work with industry and public science bodies to develop new products and technologies. We will also back startups with garage grants which will enable entrepreneurs who want to transform their clever ideas into something big," says Labour leader David Cunliffe.

The party says many of the biggest tech companies in the world, including Apple, Microsoft and Facebook, were born in garages, basements and student dormitories.

The grants fund will be managed by the Ministry of Business, Innovation and Employment and through existing accelerators. If elected, Labour would also appoint a chief technology officer, who would work with the chief science advisor to develop the New Zealand equivalent of the X Prize scheme, which encourages tech breakthroughs that could benefit humankind.

X Prizes are designed by the X Prize Foundation, a US non-profit. This would $3 million to develop over 10 years, Labour says.

The party also says it will introduce an R&D tax credit at a 12.5 percent rate. "International evidence shows that well-designed R&D tax credits increase productivity and growth. The rate of return to society from R&D activities is typically in the order of 90-100%, well above the private return of 20-30%," the party says in its policy document.

Labour says the cost would be accounted for within its R&D policy.

National axed R&D tax credits in 2008, when the rate was 15 percent. The current scheme offers R&D growth grants to hi-tech companies, with 20% public co-funding on eligible R&D expenditure.