News

Government Withdraws Funding for Innovative Businesses

25 May 2006

The Government will no longer provide assistance to New Zealand businesses for intellectual property protection and prototype development costs after 1 July 2006.

The surprise announcement came from the Ministry of Economic Development last week following a review of industry funding programmes administered by New Zealand Trade and Enterprise.

Previously, $20,000 per year was available to early stage innovative businesses under the product development category of the Enterprise Development Grant (EDG). The product development category which covered intellectual property protection and prototype development costs was the most popular funding category, accounting for 35% of the funds dispersed under the EDG.
 
“The withdrawal of this funding is inconsistent with the Government’s insistence that it is committed to promoting innovation” says Logan O’Callahan, a partner of intellectual property specialist firm, A J Park. “This funding has been an important contributor to the success of many of our smaller clients in particular” he says.

The review found that although there is significant value in providing grants for product development to New Zealand businesses, providing assistance in obtaining intellectual property protection and prototype construction does not improve management capability.

“The review ignores the benefit of funding product development for small to medium enterprises” says O’Callahan. “These businesses will now have to spend unproductive time seeking alternative funding”.

“In light of the ongoing review of business assistance programmes expected to be completed in September 2006, and the finding that product development is of significant value, it is surprising that the MED recommends eliminating the product development funding category immediately” says O’Callahan.