New Zealand tracks far below the OECD average when it comes to investing in research and science, and attempts to catch up just haven’t worked, Newsroom reports.

And the Government no longer has a firm target for research and development investment, business journalist Andrew Bevin writes.

The Luxon Government has abandoned Labour’s longstanding, and increasingly unachievable, target.

Mr Bevin notes that in 2018, the Labour-Greens-NZ First coalition Government introduced a target of increasing R&D expenditure to 2 percent of gross domestic product over 10 years.

This was a significant increase from the 1.27 percent New Zealand was sitting on in 2017, but still lower than the OECD average at the time of 2.6 percent.

Statistics released last week showed R&D spending as a proportion of GDP hit a high of 1.54 percent, with total spending up by just over $1 billion between 2022 (the last time complete data was taken) and 2024 to $6.4 billion.

Mr Bevin comments:

On an overall numbers basis this is impressive, but R&D as a proportion of gross domestic product had only lifted by 5 basis points from 1.49 percent to 1.54 percent – far below the rate needed to hit the 2 percent target this decade.

In a statement on the figures, Science, Innovation and Technology Minister Dr Shane Reti said the increase in total expenditure demonstrated growing momentum and reflected the Government’s commitment to supporting science, innovation and technology as core drivers of economic growth.

That statement was recorded by AgScience.

Mr Bevin’s report continues:

When asked about the 2 percent target, Reti told Newsroom it was no more and that the target was a slogan of the previous government.

“The Government does not have an explicit target for R&D spend,” he said.

“However, we want to see more R&D spend in the New Zealand economy and welcome the news today that there was a 21 percent increase in total R&D spend since 2022.”

The 2 percent target is still referred to on the website for the research and development tax credit put in place to lift private sector expenditure.

Dr Reti pointed out that investment was up across the board, with the Crown, universities and private sector all investing more in innovation.

The private sector was by far the biggest spender in 2024, pumping $4.05b into R&D, nearly double the $2.13b it spent in 2018.

Spend from higher education and the government has been more static, with $1.35b and  $1.04b going into R&D respectively. This hasn’t tracked in line with economic growth, with both spending less as a proportion of GDP than they did in 2018.

If you take inflation into account, the government spent slightly more on research in 2018 than it did in 2024.

The full Newsroom report can be read here.

Source: Newsroom