A culture of innovation is needed to boost New Zealand's economic performance, says Business New Zealand following the release of a government report on Business Innovation.



The Government wants businesses to double the amount they spend on research and development as part of its new push to grow the economy.



Prime Minister John Key this morning launched a report with more than 50 initiatives the Government hopes will improve innovation and competition through the commercialisation of smart ideas and research into new products.



BusinessNZ chief executive Phil O'Reilly said there was support from the business community for the government's systematic approach to building innovation and it was now ''up to business to innovate and grow and take up the Government's invitation to keep the lines of communication open''.



Currently business spends the equivalent of 0.54 per cent of GDP on R&D compared to the Organisation for Economic Cooperation and Development (OECD) average of 1.62 per cent.



"One of the targets included in the report is to almost double the amount businesses spend on research and development - from 0.54 per cent of GDP to more than 1 per cent of GDP,'' Key said.



In this year's Budget the Government allocated $166 million over four years to create a new Advanced Technology Institute to develop better links between scientists and businesses.



O'Reilly said the institute, due to be operational by year's end, will help connect business, science and research here and overseas.



Key announced today the institute would be named after the late scientist Sir Paul Callaghan.



''Sir Paul championed the idea that science could make New Zealand a better place. He believed science was not only about great ideas, but about getting value from those ideas through innovation and commercialisation,'' Key said.



Today's report is the second in a series of six progress reports under the Government's new Business Growth Agenda.



It covers areas such as public science, research institutions, the innovation workforce and infrastructure, intellectual property law and international links.



Chief science advisor Professor Sir Peter Gluckman said the report reflected a changed mindset about the role of science and science-based innovation in New Zealand's future.



It sets a goal of reaching 0.8 per cent of GDP expenditure on public science as fiscal conditions allow and sets a credible goal of reaching one per cent private sector investment in R&D, he said.



While the report was focused on the innovation agenda, the commitment to invest in science was clear, Sir Peter said.



But the Greens have criticised the report for ignoring the critical role green innovation plays in transforming our economy onto a more sustainable footing.



Green Party co-leader Russel Norman said the report identified key problems but simply repackaged old ideas.



"National had ignored the advice from private sector entrepreneurs like Pure Advantage and ignored the advice from its own Green Growth Advisory Group which both support

incentivising cleantech innovation that will drive the creation of a smart green economy.''



Science and Innovation Minister Steven Joyce said the report would give the business sector and other stakeholders a clear picture of what the Government was doing and enable them to give feedback to improve it further.



There were also programmes to help raise Government research and development, including the National Science Challenges and an increase in the size of the Performance-Based Research Fund.



"To get higher economic growth and greater prosperity, New Zealand as a whole will have to keep investing more in innovation - it's as simple as that.



''We want to make New Zealand a more innovative, internationally competitive nation. More investment in R&D will allow our businesses to grow bigger and faster.''