No direct funding but startups likely to benefit from Budget 2022 indirectly
20 May 2022
The Wellbeing Budget 2022 didn’t deliver any immediate access to funds or new initiatives for New Zealand startups aside from a new $100m small business growth fund, which is not yet operational and will be consulted on publicly with the Reserve Bank of New Zealand.
There were also some other key initiatives announced aimed at supporting business growth. While they don’t provide any direct access to funding, they will likely benefit startups indirectly.
Business Growth Fund
The Government has proposed capital funding of $100m to a Business Growth Fund, partnering with New Zealand’s major banks to grow the scale and reach of the fund. It will help address small and medium-sized enterprises’ (SME) ability to access the finance they need to be able to grow.
The fund will enable SME owners to retain majority control of their businesses while allowing them to grow and increase their contributions to New Zealand’s wider economic and regional development. The next step is for the Reserve Bank of New Zealand to consult on the proposed model publicly.
Industry Transformation Plans
This year’s Budget includes targeted investment through Industry Transformation Plans to support certain industries to innovate and position themselves for long-term growth. These include:
Forestry and wood processing.
Food and beverage.
For example, $20m will be contributed to the digital technologies sector to support the growth of the Software-as-a-Service (SaaS) community and promote New Zealand’s digital tech sector internationally through upskilling domestic talent and attracting overseas skilled labour through fast-tracking residence pathways.
Centre for Climate Action on Agricultural Emissions
$338m has been allocated to accelerate research and development on high impact technologies and practices to reduce agricultural greenhouse gas emissions as part of the Government’s Climate Emergency Response Fund.
The allocated $338m will be largely used to establish the new Centre for Climate Action on Agricultural Emissions which is tasked to partner with private sector businesses (potentially opportunities for startups in the agritech sector) to apply research that commercialises practical tools to help reduce emissions.
Currently, the Government is engaging with private sector businesses to establish how they can contribute their expertise and resources.
Research and Development Tax Incentive
Increased funding for both Callaghan Innovation and Inland Revenue has been targeted in this year’s Budget to help increase their resourcing to administer the Research and Development Tax Incentive (RDTI) scheme.
Funding of $35m has been allocated to help deliver the RDTI scheme, which was introduced in 2020 and is the flagship Government initiative that aims to increase business investment in R&D.
It is pleasing to see the increased investment in the RDTI scheme administration as it means that there will likely be a greater push for businesses (especially startups) to access the RDTI scheme, as evidenced with Callaghan Innovation reaching out to potential eligible businesses over the last few months on the RDTI scheme.
Check out the full coverage from Budget 2022, which will continue to develop throughout the day as new insights and video content are published.