31 OCTOBER 2013 NEW ZEALAND GAZETTE, No. 146 3991

Criteria Specific to the Business-led R&D Tool

OVERALL POLICY OBJECTIVE

The objective of this tool is to increase New Zealand businesses’ investment in research and development to support long-term economic growth.

INITIATIVES

Three initiatives sit within the business-led R&D tool:

1. Research and Development Growth Grants.
2. Research and Development Project Grants.
3. Research and Development Student Grants.

BUSINESS ELIGIBILITY CRITERIA

To be eligible for funding under this tool, the following criteria must be satisfied together with the eligibility criteria relevant to the specific initiative:

• Only businesses are eligible to receive funding via this tool. A business or group of businesses may nominate a representative to receive funding.
• A business must have at least one director who is resident in New Zealand and at least one of the following must be true:
  • The business is incorporated in New Zealand;
  • the business has a centre of management in New Zealand; or
  • the business has a head office in New Zealand.
• Businesses may not be an entity established under or governed by the Education Act 1989, Crown Research Institutes Act 1992, Local Government Act 2002, Local Government (Auckland Council) Act 2009, the New Zealand Public Health and Disability Act 2000 or the Crown Entities Act 2004; or an entity that is 50 per cent or more owned by one or more of those types of entities.

CLAWBACK PROVISIONS

Businesses may be expected to return some or all grant funding, during or following a grant agreement, to Callaghan Innovation, if:

• the business breaches any grant agreement, misappropriates funding, provides incorrect information to Callaghan Innovation, or claims ineligible expenditure;
• the business enters into a contract or arrangement (including change of ownership) that materially reduces the current or future planned research and development activity in New Zealand; or
• the grant fund is unspent and for which contractual liabilities have not yet been incurred.

Criteria relating to each initiative are set out in the following sections.

1. Research and Development (R&D) Growth Grants

POLICY OBJECTIVE

The objective of this initiative, in addition to the overall policy objective of the business-led R&D tool, is to provide a rule-based, market-led incentive for increasing R&D investment in businesses that are experienced in investing in R&D.

ELIGIBILITY CRITERIA

In addition to the BUSINESS ELIGIBILITY CRITERIA stated earlier, to be eligible to receive funding a business must:

• have had at least $300,000.00 in eligible R&D expenditure (stated below) sourced from non-government funds in each of the two most recent years;
• have had eligible R&D expenditure of at least 1.5 per cent of revenues in each of the two most recent years;
• meet financial and management due diligence requirements sufficient to justify three years of funding; and
• provide Callaghan Innovation with a R&D plan including an estimate of R&D expenditures over the next three years.

Businesses must compile the R&D plan to a level of detail and clarity sufficient to assess progress in the businesses’ R&D programme over time.

Alternatively, a business that has not previously received a R&D Growth Grant may be eligible under the transitional eligibility criteria (stated below).

For R&D projects that were partially funded by government grants, the funding for the project that came from non-government sources is considered eligible R&D expenditure for the purpose of determining business eligibility.

While eligibility requires that applicants submit a R&D plan, the merits of the R&D programme described in the plan will not influence eligibility.

Entities that conduct or commission R&D activities mainly for other persons or businesses are likely to be ineligible due to insufficient eligible R&D expenditures.

ELIGIBILITY CRITERIA (TRANSITIONAL)

Transitional eligibility criteria will only apply for a business that has not previously received a R&D Growth Grant. No funding is payable by Callaghan Innovation unless the business actually reaches both the intended spend levels of at least $300,000.00 per year on eligible R&D expenditure and at least 1.5 per cent of revenues per year on eligible R&D expenditure within the first year of the grant.

Notwithstanding the above ELIGIBILITY CRITERIA for R&D Growth Grants, and in addition to the BUSINESS ELIGIBILITY CRITERIA stated earlier, a business may be eligible to receive funding if the business:

• intends to spend at least $300,000.00 per year on eligible R&D expenditure (stated below);
• has the necessary finance to spend at least $300,000.00 per year on eligible R&D expenditure;