R&D tax credit will stimulate economic growth

The announcement today of the creation of the 12.5% tax credit for additional research and development marks an important step for the New Zealand economy, says Labour's Economic Development Spokesperson David Parker.

“It will stimulate approximately $1.5 billion p.a. of additional research and development spending by industry. This will assist the growth of our export sector and bring new jobs and export earnings for New Zealand.

“Today's announcement is further evidence of the improvements Labour will make to our export economy. It helps the economy move from old technologies towards new, to innovative high-value products, and from dirty to clean. This will make New Zealand wealthier.

“Labour has said growing the breadth and value of our export sector will be at the heart of our economy policy in the coming election. We've already announced changes to monetary policy and the ring-fencing of losses from speculative investments, which redirects investment into the productive export sector.

“The R&D tax credit is another substantial policy. The tax credit is being paid for by beginning to charge the farming sector for their agricultural greenhouse gas emissions. These are increasing and are currently being paid for by taxpayers and other sectors of the community.

“All New Zealanders already pay for their transport emissions and most of the electricity-related emissions. The cost of increasing agricultural emissions is currently borne by other New Zealanders. This is unfair and it distorts the economy.

“From 1 July 2013, farmers will be charged for about 10% of their agricultural emissions. This policy will stimulate innovative changes in the wider export economy as well as encourage innovation and productivity increases in the agricultural sector.

“These changes to the New Zealand economy are necessary. The Government's forecasts in its latest Budget shows New Zealand's net international investment position (i.e New Zealand's total indebtedness to overseas less what we own overseas) is continuing to deteriorate.

“In 2010 and every year thereafter, according to the Budget, New Zealand's position gets worse. According to Budget forecasts, by 2015 this will total -85.3% of GSP (see page 70 of Budget 2011). So by 2015, National will have been in Government for 6 years, yet the country will still be going backwards.

“New Zealand needs to increase its exports and grow the economy. Today's announcement by Labour will help,” said David Parker.