What does the Budget do for commercialising R&D?

With an $80-million injection into Callaghan Innovation, the 2015 Budget is being promoted as a confidence boost against the R&D naysayers. But is that really the case?

Forbes has ranked Xero as number 1 on a list of the world’s most innovative growth companies. VMob recently won a trio of awards at the I-COM big data conference in Spain, as well as signing an agreement with Microsoft for additional funding and resources. Rocket Lab has created a rocket that will make it possible to push stuff into low-earth orbit at a fraction of the present price.

A few Kiwi companies are taking the world by storm with innovative ventures and technology. But ever since the Knowledge Wave conference in 2001, we’ve been tackling a persistent itchy problem – why aren’t we commercialising more of our innovation.

Callaghan Innovation was set up in 2012 to fix New Zealand’s arguably woeful record for commercialising R&D, and this week’s Budget saw the organisation receive an injection of $80 million. The additional money brings the total funding available to Callaghan to give out in R&D growth grants to $640-million over four years – or $160m a year.

Science and Innovation Minister Steven Joyce says the additional money isn’t an admission that Callaghan isn’t working (Idealog might beg to differ); rather it will give the organisation more clout.

Joyce says the new funds will support innovative Kiwi businesses carrying out R&D by contributing to around 20% of their programme costs. This is a “very significant contribution from Callaghan”, he says.

MYOB New Zealand executive director Scott Gardiner says the injection is a positive for SMEs, as the Government appears to be targeting areas that will underpin increased productivity.

“The SME community wants to see the Government devote more funding to innovation and the development of the workforce – both of which have the potential to transform the economy,” he says.

At the same time, there is a lack of other incentives and boosts, especially when compared to the Australian Budget earlier this month, Gardiner says.

“Their budget had a raft of stimulus packages that were wholly focused on SMEs – from tax reduction to credits on small capital investments.

“While New Zealand SMEs can be satisfied they are currently in a better place than their Australian counterparts, they could be forgiven for looking across the ditch and wondering whether more of that approach could be provided here.”

Earlier this month, Callaghan came under fire from Opposition MPs, who criticised its funding criteria as being too broad, lacking in focus, and not able to answer the most important question – whether R&D actually benefits New Zealand.

Joyce doesn’t agree.

“It’s opposition heat,” says Joyce, “and you have to expect that kind of political pressure.”

The three biggest sectors to benefit from Callaghan funding will be in ICT, high-tech manufacturing, and the health technology industries, he says.

A further $25m has been allocated to establish regional research institutes for scientific research outside of the main Auckland, Wellington, and Christchurch hubs that see the majority of existing investment, he says.

The purpose of the $25m is to maximise business, technology, and economic growth opportunities in remote regions, Joyce says. Funded from a mix of public and private sources, he hopes the funding will allow the creation of up to three new institutes over the next four to five years, he says.