If National wins ...

[fungus pudding]

FP: I've just been delivering parts to a customer's warehouse. From there, 20-30 staff are completing hi-tech equipment, some of it also developed in Auckland, for export all around the world. 7 years ago the cornerstone shareholder was dealing with us for R&D in between his jobs -in a very basic service industry. He looked a doubtful proposition.

He has used T&E funding, govt grants, R&D tax credits, and a listing on the ASX to get this impressive venture up and running. It was a 7 year slog. I'm sure if you asked him, he'd say the little bit of extra funding he received from Labour's policies was extremely important at crucial times. (Others like me helped by extending credit, not always voluntarily).

You're right though, the people who do make it, spend time overseas, getting their sales channels sorted, and making important connections. But you still have to get to the first stage, and I know you're wrong when you say R&D tax credits or something similar, is a waste of time and money. This customer created something out of nothing, gave his business an edge that others wanted, and along the way he needed to use the services of many other NZ businesses, each with their own expertise. Follow the money around, tax is being paid on it, everywhere it goes.

Giving credits to one company means another company is paying that tax. Far better to abandon such schemes and a few other things and lower all company taxes. Make NZ more business friendly. Or play around with redistibuting their profits which is what you are suggesting. Your friend is not alone. It's not just research companies that need a break if they are ever to expand. We need all sorts of businesses. Of course R+D isn't easy. But Microsoft, Google, Facebook, Apple which among them constitute a huge percentage of the world market all started from someone's bedroom or garage. And it's not juust the computer world. I'll bet my bottom dollar the next biggie to hit the weorld will come from similar beginnings. Back to your friend. No doubt the R+D helped a bit, but so would lower taxes. I'll wager that it was the ASX listing that made the real difference.

[elZorro]

Giving credits to one company means another company is paying that tax. Far better to abandon such schemes and a few other things and lower all company taxes. Make NZ more business friendly. Or play around with redistibuting their profits which is what you are suggesting. Your friend is not alone. It's not just research companies that need a break if they are ever to expand. We need all sorts of businesses. Of course R+D isn't easy. But Microsoft, Google, Facebook, Apple which among them constitute a huge percentage of the world market all started from someone's bedroom or garage. And it's not juust the computer world. I'll bet my bottom dollar the next biggie to hit the weorld will come from similar beginnings. Back to your friend. No doubt the R+D helped a bit, but so would lower taxes. I'll wager that it was the ASX listing that made the real difference.

That's a funny way of looking at it (R&D credits). How about the approx $100,000 they claimed in credits (they spent a lot more) was spread amongst 2 million taxpayers, so 5c each. The bigger cashflow that came out of company equity went through a merry-go-round paying back taxes as it went.

How could a company that started from a home business sideline, list on the stock exchange, without gaining the attention of powerful investors? To do that you have to present something special to the right people. R&D, patents, profits are the way to get their attention.

Lower taxes would have been of no use to this particular entrepreneur. Although it has great potential and is employing many, the enterprise has yet to turn a profit on the books. The R&D credits were claimed by an allied R&D firm.

As Percy pointed out, Opus claimed over a million for theirs.

[fungus pudding]

That's a funny way of looking at it (R&D credits). How about the approx $100,000 they claimed in credits (they spent a lot more) was spread amongst 2 million taxpayers, so 5c each. The bigger cashflow that came out of company equity went through a merry-go-round paying back taxes as it went.

How could a company that started from a home business sideline, list on the stock exchange, without gaining the attention of powerful investors? To do that you have to present something special to the right people. R&D, patents, profits are the way to get their attention.

Lower taxes would have been of no use to this particular entrepreneur. Although it has great potential and is employing many, the enterprise has yet to turn a profit on the books. The R&D credits were claimed by an allied R&D firm.

As Percy pointed out, Opus claimed over a million for theirs.

Break any govt. cost down and it looks small. I know nothing about your friend, except that he has drive, initiative and a good idea. He would have found an angel invstor, or a partner or something. There's more than one road.

[elZorro]

Break any govt. cost down and it looks small. I know nothing about your friend, except that he has drive, initiative and a good idea. He would have found an angel investor, or a partner or something. There's more than one road.

My point is, we should never begrudge a few million of taxes spent here or there if the outcome is good, and when spent in a business, lots of it comes back, perhaps indirectly. Govt receives over $60,000mill each year in taxes etc. Not much of it being income tax.

My friend did find a few angel investors, but first he had to have something to sell. R&D put that together, that's the first step (after deciding what the market wants). A small public amount up first, the private sector fronted up with a lot more later. Early stage part funding from govt was critical in this case, of that I am certain.

You alluded (back in the thread) to young persons playing games on computers.. unfortunately being unemployed is not the problem, perhaps we're lucky game computers weren't invented when we were starting out. How gaming prepares someone for the real world is beyond me, but many school leavers seem wedded to cellphones and other portable equipment, unable to concentrate on doing one simple job so well that they can be moved onto more interesting tasks with better pay. Employers don't like paying people to keep their facebook page current.

FP: The problem with socialist policies is they tend to think that a collection of politicos of the day know better. Well - they don't.

I don't think the Labour party is as hard left as you make out. In any case, I still think most people need a hefty push in the right sort of directions. Would we go back to smoke-filled bars and workplaces? Are business owners mostly too lazy to think about exports? And other very important outcomes that a government and public service should benevolently consider on our behalf.

[fungus pudding]

Would we go back to smoke-filled bars?

In a heartbeat. They were the days!

[fungus pudding]

I still think most people need a hefty push in the right sort of directions.

That's standard socialist thinking. No push is needed provided barriers are removed such as punitive taxes, restrictive regulations,etc. The pull comes from the market, from customers, from the demand. Profit is the incentive. It's not for some govt. expert to make these decisions.

[elZorro]

That's standard socialist thinking. No push is needed provided barriers are removed such as punitive taxes, restrictive regulations,etc. The pull comes from the market, from customers, from the demand. Profit is the incentive. It's not for some govt. expert to make these decisions.

FP, I note you've not admitted to, at any stage, trying to manufacture anything. So you didn't get a push in that direction. What if you had a million dollar idea, like everyone has, and went to see someone about getting it made. In 95% of cases, it turns out that the business with the million-dollar idea only has a few thousand dollars to throw at it. Not enough. At that point, a 50% grant from govt for half of the quoted costs to a first stage starts to make a lot of sense. To get a grant like that, the firm has to get in quotes and do some paperwork, quantify a market, possibly. So this is certainly a push in the right direction. If the firm chooses not to jump through these hoops, they are not deserving of a grant, and most times the project dies a natural death, or the firm didn't need a grant. I've seen both cases.

R&D tax credits are a different story, encouraging businesses to morph sideways into more profitable areas using non-core technology advances (not business as usual). The govt experts don't make the decisions on which way the private sector goes, they just help it in the general direction with a very small carrot. The small carrot is paid back in spades. I don't care what you call it, it's smart business.

[fungus pudding]

FP, I note you've not admitted to, at any stage, trying to manufacture anything. So you didn't get a push in that direction. What if you had a million dollar idea, like everyone has, and went to see someone about getting it made. In 95% of cases, it turns out that the business with the million-dollar idea only has a few thousand dollars to throw at it. Not enough. At that point, a 50% grant from govt for half of the quoted costs to a first stage starts to make a lot of sense. To get a grant like that, the firm has to get in quotes and do some paperwork, quantify a market, possibly. So this is certainly a push in the right direction. If the firm chooses not to jump through these hoops, they are not deserving of a grant, and most times the project dies a natural death, or the firm didn't need a grant. I've seen both cases.

R&D tax credits are a different story, encouraging businesses to morph sideways into more profitable areas using non-core technology advances (not business as usual). The govt experts don't make the decisions on which way the private sector goes, they just help it in the general direction with a very small carrot. The small carrot is paid back in spades. I don't care what you call it, it's smart business.

I am not a manufacturer, and never wanted to be - not my sort of thing. I have several friends and acquaintances who are designers. inventors, manufactureres, you name it. Half their ideas are hare-brained, and of the other half, most are unprofitable. In spite of all that, most have survived and/or flourished, all without govt. handouts or credits or any other schemes. Precisely as it should be. There's a hell of a lot more to commerce than r+d, evcen though it seems to be your thing. Watch Stephen Joyce on the Nation replay on Sunday morning at 8 a.m. on TV3. I saw it this morning. Nothing startling, but it does cover a far wider range of opportunities for the future than the R+D that you think should be singled out for govt. money. I repeat, it is not for the govt. to decide to provide a hefty push in the right direction, as you claim. It is not even for the govt. to decide which direction that happens to be. The market is more than capable of doing that, and the govt. should simply clear the way. The end.

[elZorro]

FP: I've got a few mates who own commercial buildings, I've leased two and I own one outright. Funnily enough, I don't feel qualified to tell you all about how to manage your interface with government on a commercial building portfolio. I suspect there should be no interface at all, in your perfect world.

I assume that being of the "right" persuasion, there is absolutely no doubt in your mind that none of those hare-brained schemes you witnessed could have made it commercially.

Newsflash for FP: I've seen a lot of ideas go past, and the ones I think have no chance, often make it, and some of the very best ones fail, because of a lack of commitment and ready sales channels.

[fungus pudding]

FP: I've got a few mates who own commercial buildings, I've leased two and I own one outright. Funnily enough, I don't feel qualified to tell you all about how to manage your interface with government on a commercial building portfolio. I suspect there should be no interface at all, in your perfect world.

I assume that being of the "right" persuasion, there is absolutely no doubt in your mind that none of those hare-brained schemes you witnessed could have made it commercially.

My world isn't perfect, and I've never claimed it was. I don't know why you would even want to tell me how to run my business activities, any more than I would want to tell you how to run yours. My 'interface with govt.' is as minimal as I can possibly make it. If you want to 'interface with govt.' go for your life. I only hope your 'interfacing with govt.' doesn't amount to lobbying for hand-outs, subsidies or tax credits, or whatever you want to call them.
If you're stuck for 'interfacing' suggestions, have a crack at them to lower company taxes. That would help a vast number of businesses to expand, not just a narrow band. (disclaimer - I am a sole trader - not a company)
I don't quite know what you mean by saying I am of the 'right' persuasion, and it is not me who rejected anything as hare-brained. But the world at large (read market) did.
Best wishes elZ, but I really must go and do something constructive now.