The secret of our success will be….?
24/09/2007
In an article for The Dominion Post, Anthony Scott, executive director, Association of Crown Research Institutes asks what will take New Zealand back to the top half of the OECD ranks, if not RS&T?
The R&D Tax Credit for businesses announced in May.s Budget may well kick-start an R&D culture in New Zealand.
And, on the evidence of the just released Research & Development in New Zealand survey from Statistics New Zealand and the Ministry of Research, Science & Technology, it is not a moment too soon.
New Zealand.s RS&T investment is about half that of the OECD average, and in the lower third of OECD economies when measured against GDP.
That surely begs the question: what is it that New Zealand is doing so well . and so differently from others - that will enable us to regain a top-half OECD ranking (GDP per head) any time soon?
Most OECD economies, and others, are heavily backing RS&T investment. Voters, shareholders and investors have decided that it is through significant, sustained investment into RS&T that they will retain or gain the standard of wealth and welfare this country took for granted.
Countries such as Sweden, Finland and Denmark have dedicated 2.5 to 3.7 per cent of GDP to R&D, compared to our gross expenditure of 1.17 per cent.
Singapore not so long ago received financial and science aid from New Zealand . its science investment is now double that of ours as a proportion of GDP, and its GDP per capita is 20 per cent higher. Taiwan shifted from rice paddies to electronics leadership in a generation.
How ebullient . not to say smug - will we feel when we regain the top ranks of the OECD and do so without squandering such vast sums on R&D as have these other economies!
But please, do tell me how we will make that transformational shift.
I am not arguing that simply because the rest of the world is doing something, we should follow suit. We have a different polity, society and economy and the solutions adopted by others are not necessarily best suited to us here.
Sadly, we have sometimes adopted wholesale ideas from offshore with greater intensity than anyone else. The recently released and very polite OECD Report on Innovation in New Zealand refers to `the detriment of some pragmatism. in our `excessive reliance upon a few policy principles..
But it should give us pause for thought that other commodity-rich economies such as Australia and Norway have higher rates of R&D investment, and are raising them.
The highly-taxed Scandanavians choose to support their high levels of R&D investment as a means of generating future wealth to underpin social cohesion and re-distribution.
When we have stripped away all the red tape of central and local government, increased the numbers entering our tertiary institutes and the quality of those leaving, and sucked every possible worker into the workforce, New Zealand will still have a yawning gap around wealth creation in the 21st century.
The OECD Report notes: `the most important economic challenge is to raise income per capita sustainably by boosting productivity growth.. More people working harder and longer is barely keeping us still.
So wealth creation for New Zealand . and the social wealth linked to that . is inherently an RS&T challenge.
What does that mean?
It is about more than money, although money is rather important. The oft-cited folksy aphorism of Lord Rutherford that `Gentlemen, we have no money. We shall have to think. deserves to be consigned to the tip.
The aphorism is deceptive in its flattery. It blames our nation.s scientists for not achieving more with less resource than others. It hides the fact that we have consistently chosen, in our businesses and government, to give greater priority elsewhere.
The gross expenditure on R&D, by all players in the economy, has been edging upwards, from 1.10 per cent of GDP in 1998 to 1.17 per cent in 2006. As it has been a boom economy through much of that time, the dollar amount has risen substantially.
The business sector in particular has increased its share of R&D funding. The R&D tax credits, of possibly $630 million in its first four years, should stimulate even more.
While R&D expenditure has edged up, other areas of government expenditure and sales of baches and ‘beamers have soared. They illustrate the choices we are making, whether as taxpayers or as business owners.
So the culture has also to change. Science, business and political leaders have to encourage expectations that RS&T is a fundamental building block of economic, environmental and social wealth; and that it requires substantial, sustained investment.
The alternative is that our grandchildren could be asking us: `What did you think you were doing so well, so differently from others, that you thought you could afford even the OECD levies?.
