National has begun announcing what it will use its spending allowance in future Budgets on, with Prime Minister John Key today announcing an investment of up to NZ$150 million over five years in the high-tech manufacturing and services sector.
This morning in Auckland Key announced the government would turn Industrial Research Limited into an "advanced technology institute, which will function as the new 'high-tech HQ' for New Zealand".
That NZ$150 million investment over five years would be paid for from the governmen't self-imposed NZ$800 million spending allowance in each of the next five budgets, An additional NZ$80 million for buildings and equipment will come from the newly created Future Investment Fund, set up to handle the proceeds from the proposed mixed-ownership model SOE sell-downs.
New Zealand’s performance in the primary sectors had been driven by good science, much of which was publicly-funded, Key said in a release.
“The Government’s number one priority, as recommended in the Powering Innovation report released today, is to transform and grow IRL by focusing it on supporting industry development. The high-tech manufacturing and services sectors have great potential to achieve the same cutting-edge reputation – but they need the support and expertise of technology-focused research to grow, to increase exports and ramp up productivity," he said.
“High-tech sectors could contribute substantially more to the economy than they currently do. We already have successful companies in this sector, particularly in areas like ICT, biotechnology and medical technology, but we need more of them and we need them to be bigger. Over the next five years, we will effectively double the size and capability of IRL, transforming it into an advanced technology institute with up to 700 staff and with a far greater reach than at present.”
The institute would have a strong business-focused culture, have a nation-wide remit and be close to where the country’s high-tech businesses were located. The institute would have facilities in Auckland and Christchurch, and retain the existing Gracefield facility in Lower Hutt.
“The advanced technology institute will work in close partnership with industry. It will be a natural conduit for engineering and applied sciences graduates, meaning many of our best and brightest engineers and scientists will stay here in New Zealand,” Key said.
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The advanced technology institute would be developed over five years.
“Establishing the advanced technology institute doesn’t add to any of the funding tracks in the Pre-Election Update. We won’t have to take on extra debt to fund this, and our surplus and deficit forecasts remain the same,” Key said.
Estimates showed the establishment of the advanced technology institute would cost in the region of NZ$120-NZ$150 million over five years, in addition to IRL’s current funding.
“This is an average of NZ$24 to $30 million a year of additional funding, which the Government will pay for out of the new operating allowance in next year’s Budget," Key said.
The government has allowed itself NZ$800 million in new spending allowances in each of the next five budgets.
“We will earmark up to NZ$80 million from the Future Investment Fund for capital spending in areas like new buildings and equipment,” Key said.
The future investment fund was established over the weekend to hoard the expected NZ$5-7 billion in proceeds from the pending sell down of minority stakes in four energy companies and Air New Zealand. The government has already committed NZ$1 billion of that for school upgrades.
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