As New Zealand grapples with a sluggish recovery and shifting global winds, the 2025 Budget has emerged as a battleground for the nation’s future. In a landscape where the “Going for Growth” strategy promises a more competitive economy, the scientific community is raising a collective alarm. Despite the government’s rhetoric on innovation, New Zealand’s investment in research and development (R&D) remains stubbornly low, hovering at approximately 1.5% of GDP—barely half of the OECD average. For a country that aspires to the productivity levels of Denmark or Singapore, the math simply doesn’t add up. As the 2025 fiscal plans prioritize structural reform and commercial outcomes, experts warn that without a significant increase in the proportion of GDP dedicated to science, New Zealand risks falling permanently behind its peers in the race for a high-tech, high-wage future.
The OECD Lag: A Comparative Crisis
The primary grievance of New Zealand’s science sector is the yawning gap between domestic investment and the global standard. While the average OECD nation now spends roughly 2.7% of its GDP on R&D, New Zealand has “languished in the bottom half” of the rankings for decades. Budget 2025, which saw an overall delegation for Science, Innovation, and Technology of approximately $1.17 billion, actually represented a reduction of about $45 million compared to the previous year.
Critics argue that this “flatlining” of core and contestable funding is incompatible with the government’s stated goal of doubling GDP growth. By failing to match the investment levels of other small, advanced economies, New Zealand is effectively choosing a path of lower productivity. The 2025 Taskforce reports have historically suggested that closing the income gap with Australia requires a radical shift in how the state fuels innovation, yet the current budget trajectory appears to maintain a “Turkey and Greece” level of investment rather than the “Finland and Singapore” ideal.
Structural Reform vs. Fundamental Discovery
A hallmark of the 2025 science landscape is a massive structural overhaul. The government has moved to consolidate decision-making into a single body, Research Funding New Zealand, and is transforming Crown Research Institutes into three new public research organizations focused on the bio-economy, earth sciences, and forensic sciences. While the Minister for Science, Innovation and Technology, Dr. Shane Reti, claims these reforms will “reduce bureaucracy” and “focus on impact,” the transition has come at a high cost to actual research.
Existing funds—including portions of the Marsden and Endeavour grants—have been “reprioritized” to pay for the restructuring and the establishment of a new gene technology regulator. This shift toward “science for profit” has left many fundamental researchers in the cold. Geoscientists and social scientists, in particular, warn that stripping away support for basic research undermines the very foundation that commercial innovation is built upon. In their view, Budget 2025 treats science as a revenue stream rather than a public good.
The “Investment Boost” and Private Sector R&D
To counter the stagnation in public spending, the 2025 Budget introduced the Investment Boost, a tax incentive allowing businesses to immediately deduct 20% of the cost of new assets. The hope is that this will stimulate private sector R&D, which has historically been the weak link in New Zealand’s innovation chain. Government forecasts suggest this could lift GDP by 1% over twenty years, but scientists are skeptical that tax breaks alone can replace the role of a robust public research ecosystem.
The challenge in 2025 remains the “brain drain” of successful tech start-ups. Without a supportive local ecosystem that includes strong public-private collaboration, many of New Zealand’s most promising innovations migrate to markets like the UK or the US, where the venture capital and public support sectors are more integrated. The budget’s focus on Invest New Zealand as a “one-stop-shop” for foreign direct investment is seen as a positive step, but it does little to address the underlying lack of domestic capital for early-stage, high-risk science.
The Risks of a “Science for Profit” Model
The narrowing of science funding to focus almost exclusively on commercial enterprise carries significant risks for New Zealand’s long-term resilience. By reducing funding for Catalyst (international collaboration) and Vision Mātauranga (Māori-led research), the 2025 Budget may be marginalizing the very diversity of thought that leads to breakthroughs. Environmental scientists note that in a country prone to natural hazards, cutting “non-commercial” geoscience is a gamble with public safety.
As New Zealand looks toward the 2026 funding rounds, the stability of the sector remains in question. With core funding for tertiary institutes under pressure and a reduction in international collaboration funds, the ability to retain top-tier scientific talent is under threat. If science investment continues to be a declining share of a growing GDP, the “Innovation Powerhouse” that politicians describe will remain a theoretical construct, rather than a tangible reality for Aotearoa.
