NZ govt could beef up 'timid' innovation spend to support growth, IMF says

Tuesday 7th March 2017

The New Zealand government's efforts to support more spending on research and science are heading in the right direction, but could use a bit more heft to boost stoke economic growth, the International Monetary Authority says.

Providing support for innovation is one of the IMF's four pillars to support what's already strong economy growth, with the global body of 189 member nations sees as able to go beyond existing increases in funding for science and research and development grants. IMF mission chief Thomas Helbling told a briefing in Wellington that the government's innovation policy is already doing the right thing, but could benefit by increasing the budget.

"It's less (about) change and doing new things, but perhaps a bit more in the sense the amounts seem a bit on the timid side," Helbling said. "The point is more about the direction of R&D and also with the spending opportunities for the growing economy in a sense that as you have a larger population, workforce, making sure that opportunities and scale are there to accommodate these needs."

Last year, then Innovation Minister Steven Joyce flagged an extra $410.5 million to fund science projects over the following four years as part of his drive to grow business investment in R&D to more than 1 percent of the economy.

Helbling said average spending on R&D among developed economies was closer to 2 percent, and while New Zealand's agricultural sector may support that investment, tourism wouldn't attract as much R&D. If the existing research programme is seen as successful, the government should consider extending it beyond the four-year timeframe, he said.

Innovation was seen as one of the ways to lift New Zealand's productivity levels, which has been more difficult to achieve given the nation's relatively small economy and distance from other markets.

The IMF mission didn't consider any specific prescriptions for the changing nature of the labour market as more automation is introduced into what's traditionally been white-collar work.

"The very generic answer is making sure education and training opportunities remain - in the end, that's what enables what the workforce and the country to deal with these changes," Helbling said.

BusinessDesk.co.nz

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