John Key

By Maggie Tait of NZPA

Wellington, May 11 NZPA - Science and business are getting a big boost this budget to focus on work to make New Zealand richer -- and they are also getting a lot of freedom on how they spend the money.

However, $96 million of the $321m in funding for new initiatives announced by Prime Minister John Key this morning will come at the expense of social and environmental research.

Sectors to benefit would include food and food production and a range of manufacturers from software to boat building.

Labour said the announcements go nowhere near replacing its tax credits and research fund that National canned on coming into office.

Mr Key said the new initiatives were targeted and would mean better spending of the tax dollar.

"We're trying to send a really strong message to New Zealand businesses that we want them to invest in their future and invest in science and R&D (research and development)," Mr Key told reporters.

"And we think the fastest way to make sure they are both well positioned in the world, can get a top quality price and therefore pay their workers more is to be at the cutting edge of the knowledge economy and to do that we are giving them that incentive."

Initiatives included:

* $189.5m for technology development grants to support R&D in businesses. Grants would be targeted at medium to large research-intensive firms that could show their work benefited the country.

* $20m to trial technology transfer vouchers to be targeted at firms which did not have strong in-house capability but would benefit from working with a public research organisation like a university. Vouchers would be worth between $100,000 and $200,000 -- which they could use to complete a project. Projects would have to have wider benefits than just to the firm.

There were also measures to help move technology from research organisations into business, funding to attract scientists here and help those here to study and $44.3m over four years in contingency funding for proposed large-scale science infrastructure.

Mr Key said the funding was significant.

"It's the third largest spending area behind health and education. This is a budget where there's not a lot of money to go around but we are saying science and lifting the knowledge of the New Zealand economy is crucial if we want to earn higher wages and have better jobs."

Labour MP David Shearer said the funding announcement was less than half of what the Labour Government had put into research and development through the R&D tax credit and Fast Forward Fund.

"One of National's first actions in Government was to scrap these initiatives."

Mr Shearer said the grant and voucher systems were tax credits in drag.

"In 2008, John Key promised $315 million in new spending over three years for R&D. The Prime Minister has delivered $225 million over four years," he said.

Mr Key said the tax credits were open to rorting and the grants would ensure good quality spending.

John Morgan, chairman of Science New Zealand and chief executive of Niwa, said the announcement showed an acceptance that knowledge bred prosperity.

"I think we haven't had a government talk about that for some time."

He was pleased with the approach and said it was less prescriptive and more trusting of the judgement of researchers and business.

Mr Key's science advisor Sir Peter Gluckman said the changes, along with reform of Crown Research Institutes, created an environment where business and researchers could work together.

"The Government's created an empowering framework here... governments can only provide the environment, the parties have to play."

Science Minister Wayne Mapp said the reprioritised funding would come from across the sector.

"And most of it is back-end, towards the latter part of the four years. There's some of it out of the social funding, some out of environment."

Meanwhile today Environmental Science and Research (ESR) said it was looking at cutting jobs from its environmental health group services.

Business NZ welcomed the announcement, saying it endorsed the focus on commercial science and technology.

"New Zealand's only sustainable source of competitive advantage is innovation," said Business NZ chief executive Phil O'Reilly.

"Innovation involves turning new ideas into commercial returns -- something New Zealanders don't do well at, despite our creativity."

However, the Manufacturers and Exporters Association (NZMEA) described it as a pale shadow of the previous R&D tax credit scheme.

"This package will help a few and miss the rest," said NZMEA chief executive John Whalley.

"The initiatives announced by John Key only just scratch the surface."

The Green Party said it was a step in the right direction but priority should be given to finding new ways to reduce New Zealand's environmental footprint.

"It's about picking winners in the areas we know there will be huge future growth -- renewable energy, sustainable agriculture, green tech manufacturing and energy efficiency," said co-leader Russel Norman.