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May 24, 2010 | by  | in Opinion | [ssba]

Politics with Paul

While I would like nothing more than to use this week’s column to critique the government’s 2010 Budget, unfortunately due to the fact you are reading this in the future, and I am writing well in the past in line with deadlines et cetera, I would like to instead share some thoughts arising out of the pre-Budget Research & Development (R&D) funding boost, as announced by John Key back on 11 May.

To give credit where credit is due, the catalyst for this interest in R&D was actually kicked off by an inspiring talk given by David Shearer at the fantastic New Generation Politics in Aotearoa New Zealand seminar series currently being held at Victoria University’s Stout Research Centre. Shearer is the Labour MP for Mt Albert, and the party’s spokesperson for Research, Science and Technology. In his talk he raised the notion that perhaps New Zealand could benefit by aiming to align itself more with a country like Finland, rather than trying to ‘bridge the gap’ with Australia, as advocated by the current government, led by Dr Brash’s 2025 Taskforce.

Finland is a country that, despite being on the opposite side of the world from Godzone, shares a number of characteristics with New Zealand in terms of geographical size and population. It has, however, experienced significantly higher rates of growth in GDP since its recovery from a banking crisis in the early 1990s, over the same time period compared to New Zealand.

While it is important to keep in mind Finland’s proximity to European markets and its place in the European Union, Finland’s high rates of growth can be at least partially explained by the country’s high spending on R&D.

According to Statistics New Zealand’s Research and Development in New Zealand Report released in 2008, New Zealand spent only 1.16 per cent of GDP on R&D in that year, well below the OECD (Organisation for Economic Co-operation and Development) average of 2.26 per cent. In comparison, in the same year Finland spent a whopping 3.45 per cent of their GDP on R&D, in line with increased spending trends in the country since the 1990s. This has undoubtedly contributed to Finland’s 84 per cent rise in GDP since 1995, exemplified by the meteoric success of Finnish communications giant Nokia.

A 2006 report from New Zealand’s Ministry of Research, Science & Technology commented that despite the fact “the ratio of R&D to GDP has increased from 0.95 per cent to 1.05 per cent over the 1994 to 2004 period… even at this level, New Zealand is well below the OECD average and would need to double its R&D performance to reach the OECD average”. Furthermore, the report acknowledged that New Zealand is “well below its reference group countries” in this regard.

While it can be conceded that much of New Zealand’s R&D is based around primary production, which costs far less than aerospace, defence or automotive R&D, perhaps this country could benefit from increased spending and increased scope around R&D across the business, government and higher education sectors alike.

In light of all this, the recently announced $321 million funding package is a welcome boost for the science community. However, a number of concerns have already been raised, especially concerning the amount allocated which doesn’t come close to matching the previous Labour Government’s $630 million package. Shearer has been quick to point out that the National Government “has neglected R&D since it came to power”, and after scrapping “Labour’s R&D tax credits and $700 million Fast Forward Fund, [the government] is now playing catch up”.

Furthermore, John Key has announced that the government will cut $96 million from the science sector to fund the government’s new grants and voucher systems included as a part of the package, both of which support business R&D. This underscores what is an incredibly pro-business package, although that isn’t exactly surprising considering the government in power.

An encounter between the government’s Chief Science Advisor Peter Gluckman and Radio New Zealand’s Sean Plunket, where Gluckman commented that “our private sector spends between 25 and 30 per cent of what other comparable private sectors spend [on R&D]”, provoking Plunket to ask, “Why should the government subsidise a private sector that isn’t pulling its own weight?” This led Scoop columnist Gordon Campbell to complain that this “brand of corporate welfare is really indefensible”. Campbell further speculated that under this “misdirection of funds”, science is actually likely to suffer from the profit-enhancing, short-term nature of business-focused R&D funding.

Taking these concerns into account, while any increase in funding for R&D is a positive step, unfortunately the National Party has shown an ineptitude in realising the potential in significant and wide-ranging funding across the board, and instead of thinking progressively, New Zealand will instead be relegated to continuing to endure Dr Brash’s flogging of the 2025 horse.

As an aside, there are two more seminars being held in the aforementioned New Generation Politics in Aotearoa New Zealand series at the Stout Research Centre, and considering the quality of the seminars so far, they are really not to be missed. For more information, visit


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