Number of Businesses Planning to Increase R&D Spending Doubles
The New Zealand government is welcoming the move by numerous firms to ramp up their investment in research and development over the next year. However, it is not yet clear as to whether the increase in R&D activities is due to the impending R&D tax policy or due to the stiffening labour market in the country.
Megan Wood, the Minister of Research, Science and Innovation in the country believes the increase is due to the R&D tax credit program, which will be available from April 2019. On the other hand, Grant Thornton Partner Paul Kane is of the opinion that the stiffening labour market in the country is attributable to the firms’ investment in R&D.
Research from Grant Thornton highlighted that the number of firms seeking to boost their investment in R&D over the next 12 months fluctuated from 26 percent in the first quarter of the financial year to 50 percent in the second. Kane attributes this fluctuation to the fact that firms are investing in technology to improve productivity since it is becoming harder to find workers.
Reports show that the unemployment rate in New Zealand is at 4.4 percent and is expected to fall to 4 percent, according to the Government and Reserve Bank. It is therefore expected to be harder to find workers and hence firms are engaging in research and development to cater for these changes.
Whatever the reason for the increased investment in R&D, Megan Wood welcomes the numbers. She states that New Zealand government seeks to support the move by setting aside $1 billion in the 2018 Budget to lift R&D expenditure to 2 percent of GDP by 2028.