Why Labour's bright idea is doomed to fail

Sometimes it takes a surly rude prick to pop someones balloon. Labour is waxing lyrical that their re-heated R&D policy will be the saviour of our society and even better the dirty, greedy farmers are the bastards who will fund it. They are dead wrong and Bruce Simpson from Aardvark tells them and us why:

But seriously — are we kidding ourselves when we dream of the days when NZ’s hi-tech sector will be the one that drags us up the economic performance rankings within the nations of the OECD? Based on last week’s budget, I suspect we are.

The present government has shown that it won’t even pay lip-service to the issue of supporting NZ’s endeavours to lift its game in the areas of science and technology.

Even the leader of the opposition (who takes his title far to literally) has proven how bereft of sensible policy ideas his party is. Labour’s suggestion that they’ll offer a 12% tax concession for R&D misses the point completely.

The sorry truth is that, without external help and investment, NZ really doesn’t stand a snowball’s chance in hell of becoming anything more than a consumer in the crucial world of hi-tech and the knowledge economy.

Gone are the days when a farmer tinkering away in his shed can come up with a device like the jetboat that changes the world and generates jobs in the local economy plus massive overseas earnings.

These days, even the most incredibly good idea, no matter how practical, requires very, very large fists-full of cash to develop, manufacture and market. Here in NZ, thanks to 19th century perspectives on the part of government, our investors are too busy planning a new commercial building or scanning the property pages for another rental to add to their property portfolio.

And even where the going is easier, such as in the online world, there has been no Kiwi-conceived equivalent of Facebook, Google, Twitter, Linked-In, Groupon, eBay or the like.

Those few lines simply put Labour’s great idea to kickstart the economy at the expense of dirty, filthy farmers in a box where it belongs. But there is a kicker to taxing the crap out of farmers:

Even when some bright Kiwi comes up with a fantastic “million dollar idea” they find themselves faced with a total lack of interest from the local investor community.

“Too risky”, “I don’t understand it”, “no thanks, property prices are rising”, “we’ll need your house as security”… that’s what Kiwi entrepreneurs hear all too often when pitching for funding to develop a really good hi-tech idea.

As a result, most of our really good ideas get exported for a pittance, long before they’re actually realising their full potential.

Either the “ideas guy” packs up and heads for a country more receptive to the concepts of investing in hi-tech or he muddles along long enough that his idea catches the eyes of a real venture capitalist from a far-off land.

That VC then says — come here and we’ll fund you — at which point the “ideas guy” leaves NZ, taking his business and his profits with him.

While other countries continue to raise their game, improving their productivity, switching to hi-tech industries and fully embracing the knowledge wave — NZ seems to be drifting backwards and is now so heavily reliant on its dairy sector that something as simple as an outbreak of foot and mouth or other disease could see us all facing a massive drop in our incomes.

Uh huh….so Labour’s policy is predicated on long term farm profits that could all be taken away by a sudden drop in milk prices or a bio-hazard scare. Nice planning there Labour. About the only person licking his lips with glee about Labour’s R&D policy is Alan Gibbs who will be ecstatic that he has found another way to build another lake out at The Farm.


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  • reid

    The sorry truth is that, with­out exter­nal help and invest­ment, NZ really doesn’t stand a snowball’s chance in hell of becom­ing any­thing more than a con­sumer in the cru­cial world of hi-tech and the knowl­edge economy.

    Navman, MailMarshall, Xero and TradeMe are all examples of NZ companies doing the tech thing and succeeding internationally. There are many others.

    The area where R&D really is vital however is in the various fields of plant and animal genetics. If we don’t maintain if not leadership at the very least become leaders in those fields, we risk losing the only thing that makes us competitive. Given Liarbore seem to really hate genes, I wonder if they agree that’s where the investment should go.

    I’m frankly amazed the Nats agreed to get rid of it, it should have been expanded, not dumped. I thought at least a few people in National understood business, even if English doesn’t.

    • andyscrase

      I’d also add GlobalBrain (search engine from 1998-2001, SLI Systems, and all of Rod Drury’s creations to the pot.

      On the topic of farmers being hit up on the ETS, I have a few issues here:
      – How does an emissions trading system subsidise R&D?
      – Why is NZ the only country pursuing a tax on ruminant methane?
      – Does anyone know why methane levels have globally flattened off in recent years? (i.e we are solving a non-problem – leaving aside the bigger issues around “climate change” which must surely come to pass.

      • And how many of those got government grants to develop their smart shit…not many, if any.

        If something is smart then you just do it, not wait for a government subsidy.

        • andyscrase

          If some­thing is smart then you just do it, not wait for a gov­ern­ment subsidy.

          Exactly. My point was that there are quite a few successful Kiwi entrepreneurs out there, many under the radar.

  • bunswalla

    Cameron – ongoing problems with the website. Using IE7, access is very intermittent and often has to be reloaded using F5 half a dozen times. Safari works much better for general access and I’ve (clearly) been able to log in to leave a comment. However the Contact button doesn’t work, else I’d have emailed you rather than leave the comment here. IE7 still brings up the Stack overflow message but Safari doesn’t. Hope this helps.

  • gaskranken

    New Zealand’s economic policy is exactly the same as the Big Mans marketing policy at Mitre 10 Mega – Need more of this shit at this PRICE now!!!