Innovation, Enterprise & Economic Renewal
Building an innovation ecosystem that is inclusive, mission-oriented and democratically governed
The Problem
New Zealand’s business expenditure on R&D has remained persistently below the OECD average for decades, at approximately 0.6% of GDP compared with an OECD mean of 1.7% and leaders such as Israel (3.5%) and South Korea (3.4%). The OECD identifies structural causes: a small domestic market dominated by SMEs, geographic isolation, limited investment funding, weak university-industry linkages, and an economy built on commodity exports.
Recent research on New Zealand’s green innovation finance market confirms these weaknesses: increasingly negative attitudes among NZ angels toward green technology, a lack of follow-on and exit funding, rising early-stage failure rates, and a growing preference for AI and software investments over the hardware-intensive green technologies that offer the largest long-term environmental returns.
The 2024 restructuring of the science system — merging seven Crown Research Institutes into four, disestablishing Callaghan Innovation, and establishing Research Funding NZ — occurred with limited public deliberation and risks concentrating decision-making in ways that reduce democratic accountability for publicly funded research.
What We Propose
Democratic governance of the science system: Parliamentary oversight of Research Funding NZ including annual reporting on mission alignment and public-interest outcomes. A Science and Innovation Select Committee with dedicated resourcing.
Mission-oriented innovation: Research missions explicitly targeting democratic infrastructure — secure digital voting, open-source deliberation platforms, AI-assisted policy analysis tools with democratic oversight, and civic technology for participatory budgeting.
R&D investment pathway: A credible, cross-partisan pathway toward raising total R&D expenditure to the OECD average (~2.7% of GDP) within 15 years, including enhanced R&D tax incentives targeted at SMEs and co-investment with venture capital.
Green innovation finance: A NZ Enterprise Investment Scheme modelled on the UK’s tax relief for early-stage investors, university-linked Innovation Knowledge Centres, government co-investment funds, and stronger connections between Māori investors — whose long-horizon, intergenerational investment philosophy aligns with patient capital needs — and the broader angel ecosystem.
Open science: Mandate open access to all publicly funded research outputs and data, enabling both researchers and citizens to access the evidence base for policy decisions.
Evidence & International Practice
Acemoglu and Robinson demonstrate that inclusive political institutions are prerequisites for sustained innovation — countries whose governments concentrate power consistently fall behind in technological development. Mazzucato’s mission economy framework shows that publicly funded innovation requires democratic legitimacy to set directions and distribute benefits.
The UK’s ‘green finance escalator’ provides a structured pathway from seed grants through angel networks to venture capital. The Imperial College SynbiCITE centre has assisted over 80 companies with combined valuations exceeding £1 billion. The UK Enterprise Investment Scheme (30% income tax relief for early-stage investments) has been identified as a critical enabler — New Zealand lacks any comparable incentive.
Owen’s University of Waikato research finds that Māori Land Trust investors operate with a distinctive philosophy: investment horizons should be intergenerational, and environmental impact capabilities matter more than short-term financial metrics. This offers a model that could inform broader NZ innovation policy.
Expected Outcomes
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An innovation ecosystem where democratic reform and innovation policy are mutually reinforcing: inclusive institutions drive sustained innovation, and mission-oriented innovation requires democratic legitimacy. A credible pathway to OECD-average R&D investment, with public research money directed by democratic processes rather than captured by established interests. A green innovation finance ecosystem that harnesses Māori intergenerational investment philosophy alongside mainstream capital markets.
All policy positions are drawn from the Democracy Reform NZ Blueprint v8.2, supported by over 150 referenced sources.