Published on the 27/05/2016 | Written by Clare Coulson

It takes some reading between the lines to conclude that there is an underlying tech & innovation theme…

The National Party’s budget for 2016 is most commonly being described as “boring” by political commentators – not surprising really given that National will want to save any big moves up for election year. It also seems to have mastered the art of the ‘marketing package’ bundling initiates into neatly branded bundles. And as for technology, there is no specific major announcement surrounding it, but within each package there are changes that will undoubtedly impact the sector. A $284 million savings estimate in the funding announcement for IRD’s new tax system, for example. NZTech chief executive Graeme Muller has taken a positive stance stating that “Budget 2016 is an encouraging boost for technology”.

“Budget 2016 is an encouraging boost for technology.”

Technology, or the impact of technology is, in fact, laced throughout the budget. Inland Revenue will receive $857 million to deliver its modern tax system – $503 million of new operating funding and $354 million of capital funding for its new tax administration system, according to Revenue Minister Michael Woodhouse. That is in addition to the $187 million SME-friendly tax package announced at a Business New Zealand event in April. And somewhere in all of that, the Government expects the IRD project to make $284 million of savings. Where is that coming from? An educated guess would say a more automated and streamlined tax system is likely to see data collecting, processing and input jobs fall by the wayside. It may also mean less requirement for manual audits as compliance moves to automated analytics platforms. IRD also anticipates that it will gather $280 million in additional tax revenue thanks to “greater compliance”.

The Government expects the IRD project to make $284 million of savings.

The IRD project is part of a wider $2.1 billion Infrastructure Package (which also covers education, transport and tourism) designed to “build a stronger, more productive economy”.  That information systems are categorised as infrastructure is a signal that they are becoming better understood.

Muller said: “The $2.1 billion public infrastructure package focusing on transport, schools and a fresh tax system will need significant digital input which will help grow the tech industry, which is contributing $16.2 billion to the annual gross domestic product.

“This public package will deliver better public services and we know government agencies accounts for 29 percent of ICT purchasing.”

Government is also investing $761 million in what it is calling the Innovative New Zealand package: 25 initiatives across the science, skills, tertiary education and regional development sectors. $410 million of the package will go directly towards boosting science and innovation, a move described as “heartening” by Muller.

“We [NZTech] can see technology playing increasingly important roles in science and innovation and it is great to see the Budget allocating $410.5 million in these areas producing the 21st century skills New Zealand needs to grow our digital nation,” he added.

Minister Steven Joyce announced the package in his capacity as Minister of Economic Development. In a statement he highlighted New Zealand’s “major growth in new and emerging hi-tech sectors like the software services sector,” adding that we need to “continue that momentum”.

It’s amazing how many people outside the industry would be surprised to learn that technology is now New Zealand’s third largest export (after dairy and tourism), or that ICT is the country’s fastest growing export sector, predicted to surpass $15 billion by 2025. But looking at those numbers, continued support should be a no-brainer for this Government. Minister Joyce seems to get it, noting that our software industry, for example, is growing at nine percent a year, with exports growing at 14 percent annually. He said: “The New Zealand economy is rapidly becoming more diverse and more focused on hi-tech innovation. This very significant investment shows how committed this Government is to science-led innovation to strengthen and future-proof the New Zealand economy.”

The New Zealand economy is rapidly becoming more diverse and more focused on hi-tech innovation.

That said, only $15 of the $410.5 million for science and innovation will go specifically to two schemes (the Pre-Seed Accelerator Fund and an extension of Callaghan Innovation’s pilot Accelerators Programme) designed to speed up the commercialisation of “new, clever technologies” developed by Kiwi scientists and entrepreneurs. The vast majority is allocated to the broader umbrella of science, maths and engineering.