The ‘New Economy’ could well be the big winner of yesterday’s budget.
Finance Minister Michael Cullen announced a raft of initiatives to help foster innovation and technology.
While big business was not so enthusiastic, ITANZ chief executive Jim O’Neill generally was.
For IT, the centrepiece of the budget was a $100 million New Zealand Venture Investment Fund which will work with the private sector in boosting venture capital funding of New Zealand firms (see Cullen buys $100m Israeli Venture Fund). The move was praised by all business and government sectors.
ITANZ chief executive Jim O’Neill says if it is just a fiftieth as successful as the Israeli scheme it is largely modelled on, New Zealand will do “really well” in attracting new high-tech enterprises.
An extra million dollars of funding went to support business incubators, boosting a scheme just two months old (see Government incubates another $1m of support)
Small Business Minister Pete Hodgson says trebling funding from $0.6 million to $1.8 million should foster innovation and create new jobs.
However, there was criticism from all sides in Corporation Tax remaining at 33%, while Australia has just reduced its rate to 30% (see Tax keeps NZ "uncompetitive")
ITANZ and others say this will hinder New Zealand's efforts to attract and develop new businesses.
O’Neill says he is “very encouraged” by new government initiatives as a recognition of what is needed for New Zealand to capitalise on the internet and the knowledge economy.
“It is certainly the IT industry’s view that these areas need to accelerate. We will be keen on finding ways of matching what government has offered [in the venture capital fund] through private sector participation,” he says.
O’Neill also liked support for IT capital projects in the regions and community development schemes starting around New Zealand.
Other programmes to boost technology, innovation, exports and the nation’s skills were also announced yesterday.
More than $4 million was allocated for “Building the Business Base”- initiatives designed to identify businesses with good ideas at the very early stage and support them to grow. This includes support for the commercialisation of intellectual property.
More than $1 million in 2001-2002 and following years was allocated to increase the number of Technology in Industry Fellowships (TIFs).
An extra $3 million went to expand the Enterprise Awards scheme, which helps innovative small firms develop early stage business concepts and projects. Launched as an interim project last year, 141 awards have been awarded since September.
Almost $5 million extra over five years goes to helping businesses with high growth potential, with $845,000 awarded for 2001—02 and $1.231 million in following years.
The Business Growth Service, launched last October, helps firms with excellent growth potential, aiming to build them into strong, internationally competitive firms that can grow into future large enterprises.Its funding expands from $3.375 million in 2000-01 to $6.75 million for 2001-02; with an extra $625,000, increasing to $831,000 to improve its operations.
The Major Investment Service will have its funding doubled. Here, Trade New Zealand works on major investment projects. Successes this year include Ericsson/Synergy and Sovereign Yachts.
The Major Investment Fund increases from $1.688 million last year to $3.375 million for 2001-02.Its operating budget increases from $220,000 this year to $400,000 a year afterwards.
In “Smart Government”, the Economic Development Under-Secretary John Wright will expand the Industrial Supplies Office, giving businesses more chances to sell to the governments of Australia and New Zealand.
A World Class New Zealanders programme receives $2 million to help develop networks using business connections to access international markets and promote New Zealand.
More than $1.5 million went to Support Promising Individuals in science and innovation.
Some $100,000 also went to the Far North and Southland to improve their level of information and computer technology services.