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June 2, 2009 | by  | in Features | [ssba]

R&D: More than rolling the dice

Budget ‘09 has left a bittersweet taste in the mouths of those involved with science, research and technology in New Zealand. The canning of Labour’s Research and Development (R&D) tax break while Australia made theirs more generous has been a sticking point for many.

Moana Mackey, Labour’s spokesperson on Science and Technology, and Research and Development, said that with the R&D tax break the former government was “genuinely trying to break new ground in the way we fund science.
“Private sector investment in science in NZ is appallingly low and the R&D tax credit was a way of not only funding science, but technology, and trying to get more value out of the products we provide.”

Mackey says the R&D tax credit was aimed at the private sector, which makes National’s move to axe it even more sur-
prising. Their policy on the removal of the credit sates “The tax credit subsidises a great deal of R&D that would have happened anyway, whether or not there was a tax credit. Therefore, much of the money paid out as a tax credit will affect no change in the level of R&D whatsoever.”

The second point is that the tax break made it unclear how much novel R&D companies were undertaking, and also the possibility of companies classifying their expenditure just to get the tax break.

Dr Jim Salinger, the former head of the National Institute of Water and Atmospheric Research (NIWA) and part-winner of a Nobel Peace prize, thinks that the removal of the R&D tax break isn’t a positive move: “If you want to encourage more research you need to give some incentives. New Zealand companies—not all of them—aren’t particularly good in investing in science.

“Spending the OECD (Organisation for Economic Co-operation and Development survey’s) average on R&D is a good idea. We’re quite below what other countries spend. Certainly in the private sector, unless it is the diary industry.”
Earlier this year The New Zealand Press Association reported that while our R&D spending was up in 2008 from the previous two years, it was still only about 1.2 percent of gross domestic product. This is almost half of the OECD average of 2.26 percent of GDP.

Minister for Research, Science and Technology, Dr Wayne Mapp says, “We have a different set of priorities to Labour…
“Budget 2009 rewards leading and emerging scientists and supports excellence in research,” Mapp said last Thursday after the budget had been announced. Instead of the blanket tax break to all companies engaging in work that could be classified as R&D, Mapp’s initiatives channel money into specific areas.

The Crown Research Institute Capability Fund is being boosted with an extra $40 million over four years, with another $36 million to the Marsden fund. Two areas in particular—health and broadband—have been given a tacit nod as the spearhead projects for the National government, with $32 million being spent on health research over the next four years and $16 million being spent on the Kiwi Advanced Research and Education Network. There is also an additional $4 million over four years in Prime Minister’s Science Prizes.

Victoria University of Wellington Professors Paul Callaghan and Alan MacDiarmid said that this is an extremely disappointing budget for New Zealand science and technology.

They went on to say Budget ’09 “leaves New Zealand’s per capita GDP investment in R&D unchanged at around 0.52 percent, way below that of Australia, the OECD average, and small economies like Finland, Singapore and Denmark, all of whom have built prosperity from innovation.

“What we need are significant new investments to build our innovation system. The 2009/10 budget has not addressed that issue.”

The President of the Royal Society of New Zealand, Neville Jordan gave quiet approval to the initiatives, saying that they are a big step in the right direction. Optimistically saying the “on-going investment will be crucial to promoting productivity, growth and innovation to drive New Zealand forward.”

Free speech and the scientific method

Public scientists have often been at odds with the regime of the day. Galileo Galilei committed heresy for suggesting that the earth revolved around the sun. Unsurprisingly he was closer to the truth than the bible. The scientific method has won over the entire western way of thinking and, as shown by the amount of funding put into science, we value the input of scientists not only into policy, but we want and need the knowledge of public scientists to seep through society and into the public’s imagination and thought processes.

When asked about the role of public scientists in New Zealand, Mapp said “CRIs talk to the public through publications and connecting to the media and providing background.” However he was quick to point out that the issue with Dr Jim Salinger is not under his jurisdiction. “It is an employment dispute being handled strictly by the Chief Executive and board [of NIWA] that’s their particular role… this was not about the government having a different view on climate change,” Mapp said.

Labour’s Science spokesperson Moana Mackey elaborated further on what public scientists should be doing, saying “To do public-good research and to be an independent voice to provide the government with the information that they need to make decisions, [they] need to be seen to be independent, different from public servants. Their area of research might be guided by the government. The government might put more money into a certain area, but they certainly shouldn’t have any role in the outcome of the research. It is independent, it is quality.”

She then went on to say “My concern with Dr Salinger was that the minister wasn’t prepared to stand up and clarify public scientists were still entitled to and encouraged to speak out on issues within their areas of expertise.”
What does Salinger—the man of the moment—think about public scientists? When Salient spoke to Dr Salinger he said “Because they’re funded by the public purse they should talk about the work they’re doing and its relevance to society. If it is research with relevance to New Zealand then clearly there is a role there.

“If it is just plain science—what they’re doing and what they’ve found—I can see no issues at all. As long is it’s not the policy of the organisation or they’re talking politics. If it is simply about their science and facts then I can see no issues.”

Science is science. If you meet the scientific method, if you have evidence for your hypothesis, if you are willing to listen to criticism, then no government scientist should ever be told not to talk to media or be rebuked for doing so.
National have themselves just employed a very public scientist in the newly created role of Science Advisor to the Prime Minister. Dr Mapp explains professor Gluckman’s role and its attachment directly to the Prime Minister’s office as “an indication of the seriousness of the role.

“The science advisor is tasked to take a higher level view than the Ministry and is much more focused,” Mapp said.
Salinger is optimistic about the Prime Minister’s Science Advisor role, saying: “I think it provides a focus. You have one person that is recognised and gives advice directly to the Prime Minister. It’s good because science is technical and you need technical explanations for the politicians. It has elevated the role [of science].”

Dr Jeff Tallon from the MacDairmid institute also expressed excitement about the role, saying “I think the most important initiative from this government is not in this budget. That is the appointment of a Chief Science Advisor to the PM. This lifts the profile of science in government and sets in place a process for change. We desperately need change of cultural attitudes to research and science—in politics and business.”

The Royal Society also sees the appointment of a Science Advisor as a positive step. Jordan said that “such an appointment clearly demonstrates the Government’s commitment to science and its importance to our society.”

Rutherfords of tommorow

So where to from here? Salinger, whose part of a Nobel prize must be inspiration for many budding climatologists, says that New Zealand needs to provide strong career paths for the next generation of scientists. “Scientists become very specialised, it is not as though you do a medical degree and you have lots of choices. People tend to become very specialised. So career paths are important.”

As we head into a time when the government’s books don’t look like they’ll be back in the black for at least ten years, investment into science and R&D seems almost essential. We need to not only boost the standing of science through public scientists and promoting excellence in a few outstanding efforts, but to also implement policies that encourage wholesale innovation. Number eight fibre optic wires can only get us so far.

Mackey sums it up well: “We have a really great history in New Zealand of inventing fabulous things and then letting someone else make all the money off it.”

What is science anyway?

Daniel J. Miles
Science is questioning. Science is about asking why. Science is about coming up with a theory, and then doing your darndest to prove it wrong. Science is about never taking something for granted until the evidence is strongly in its favour—and even then, science is about always being able to admit you were wrong if newer, better evidence comes to light.

A scientist knows you can never prove a negative, so a true scientist knows that whenever they say “you’re wrong”, or “you’re right”, that’s really just shorthand for “on the weight of evidence, you’re probably wrong”, or “on the weight of evidence, I’d say you are right”.

A scientist accepts that scientific facts have been proven wrong many times, replaced by a new scientific fact which may one day fall victim to the same process. But they also know that this isn’t a fault in the process—rather, this is the beauty of the process. It is a system in which our knowledge can constantly be refined and improved.
A scientist sees no knowledge as sacred. Just because Einstein wrote it does not make it true. The Einstein of last century could be proved wrong by the undergrad student of today. Or maybe proved right.

And while a scientist might be in it for the glory or the money, inside every good scientist is a yearning curiosity about why things are the way they are. And it is that curiosity which has driven the renaissance. The technical revolution. The silicon age. It is that curiosity we have to thank for the way of life we enjoy today.

Look after the scientists—we owe them.
(Note: this was not written by a scientist)


About the Author ()

The editor of this fine rag for 2009.

Comments (4)

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  1. Jeeves says:

    You are right that we need to look after scientists; wrong that the R and D tax credit was the way to do this. Like all tax credits, it was complex and easily taken advantage of. That’s probably why everyone who is opposed to the removal of the credit tells us why R and D is good, not why the tax credit was going to have such a positive impact on R and D. Because it wasn’t.

  2. Jackson Wood says:

    I think that the R & D tax credit was a good start, and that if National had tidied it up it could have benefited everyone, not just a select few. A few simple additions would have helped this: 1) actually having a monitoring agency to see how much new R&D was being done, 2) cleaning up the definition of R&D would mean people couldn’t take advantage of it.

    I guess in theory the tax break for R&D is good because it promotes an R&D industry as a whole. Not just CRIs, not just key sectors the government is interested in. As to why people couldn’t just say that: who knows.

  3. Stephen Whittington says:

    The R&D tax credit is a bad idea.

    In tax accounting there is a concept called “tax expenditure.” Tax expenditure essentially measures the loss of tax revenue that occurs by virtue of introducing deductions for things like R@D, or charitable donations.

    But tax expenditure is very hard to measure, because it is revenue lost.

    If you want to subsidise something, there are two ways you can do it. One is through tax credits, one is through direct cash subsidies. If it is going to be done, the latter is preferable. That way, the public can measure the cost of the proposal because the cost is seen.

    The real reason why business and charities want tax credits and deductibles is to hide the true cost of the programs. Imagine if every dollar given to a charity wasa matched by a 45 cent Government top up (which works out at a tax of about 30%). The public would be outraged, because they could see the actual cost of the scheme.

    The other thing about schemes like this is that they are a form of corporate welfare that it takes a crisis to get rid of. They complicate the tax system, reduce compliance, and increase compliance costs.

    Also, this article lacked any concept of opportunity cost. Would you rather the loss of revenue, or more money in other areas of Government spending?

  4. marie says:


    We have just added your latest post “R&D: More than rolling the dice” to our Directory of Science . You can check the inclusion of the post here . We are delighted to invite you to submit all your future posts to the directory and get a huge base of visitors to your website.

    Warm Regards Team

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