SCIENCE AND INNOVATION - BRIEFING FOR THE INCOMING MINISTER
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SCIENCE AND INNOVATION
BRIEFING FOR THE INCOMING MINISTER
8 October 2014
Purpose
The purpose of this initial briefing is to give the Incoming Minister sufficient information to meet their
initial requirement. It is not intended to be a detailed analysis of the portfolio or of policy issues.
The briefing is part of a wider process. Ministers will be able to call for a fuller briefing on issues of
interest and importance to them during that process. This allows the initial briefing to be wide ranging,
enabling the Minister to see the breadth of the portfolio, while still being concise.Contents
1. Portfolio overview ......................................................................................................................... 3
A brief introduction to the science and innovation system ..................................................................... 3
The current state of the science and innovation system ......................................................................... 5
2. Portfolio responsibilities ..................................................................................................................... 10
Your responsibilities ................................................................................................................................. 10
Portfolio functions and responsibilities ................................................................................................... 10
Statutory or advisory bodies .................................................................................................................... 12
Vote Science and Innovation ............................................................................................................... 13
A summary of major Vote Science and Innovation initiatives ......................................................... 13
3. Major links with other portfolios ......................................................................................................... 17
4. How MBIE assists you.......................................................................................................................... 19
Key MBIE officials ..................................................................................................................................... 19
The advice and support we provide to you.............................................................................................. 19
5. Focus for the first 100 days.................................................................................................................. 20
Future challenges and opportunities ....................................................................................................... 20
Immediate actions and decisions for the first 100 days ........................................................................... 23
Annex 1: Crown Entities .......................................................................................................................... 30
Annex 2: Vote Science and Innovation (2014/15) .................................................................................... 33
21. Portfolio overview
Science and innovation lift the prosperity and well‐being of New Zealanders
Science is the methodical generation and accumulation of knowledge. Innovation is the use of
knowledge to find new or improved ways of doing something. The benefits of science and
innovation spread widely and make a significant contribution to the prosperity and wellbeing of
New Zealanders.
We do science for a number of reasons, and we benefit from it in a number of ways. It expands
our knowledge base and helps us understand the world. It helps us answer particular questions
and solve specific social, cultural, environmental, and economic challenges. Science and research‐
led teaching are central to education and growing a highly skilled workforce. And science gives us
the evidence to make better decisions as a society. As a key ingredient for innovation, science also
plays an important role in economic growth.
Innovation is about taking knowledge and ideas, and using these to create new or improved
products, processes, and services. Most innovation occurs within businesses as they look for ways
to become more competitive. Innovation is pervasive; even low‐technology businesses are
constantly looking to improve their products or to do things more efficiently.
Businesses typically (but not exclusively) generate and apply science in the context of research and
development (R&D). R&D is a core input into innovation, but they are not the same thing. R&D
allows firms to produce new knowledge and apply existing knowledge in new ways. This
knowledge can be used to create new products, processes, or services. It also allows firms to
absorb ideas developed elsewhere, and is the learning process by which firms can adopt new
technologies and adapt existing ones.
Innovation allows us to do more as a country while using the same, or fewer, resources. As we
improve the way we do things and create products which are more valuable, our economy
becomes more competitive, more productive, and it grows as a result. Through innovation our
environment is managed more effectively, we become more resilient to natural and economic
shocks, and ultimately people’s wellbeing improves.
A brief introduction to the science and innovation system
The Science and Innovation portfolio places a particular focus on the interface between science
and innovation – where science produces knowledge and ideas, and innovation uses these ideas to
create value. We think of the interaction between science and innovation as the ‘science and
innovation system’.
The science and innovation system includes the interactions which occur in the production,
sharing, and use of new knowledge. It includes businesses, researchers, research institutions,
entrepreneurs, the Government, the relationships between these things, and the relationships
with these things in other countries.
3The science and innovation system is much larger than the part that is owned, funded, or regulated
by Government. It is big and hard to define exactly. But most New Zealanders will interact with it
and benefit from it regularly.
Government
Government has six critical roles in the science and innovation system. These are also central to your
role as Minister of Science and Innovation. Government is:
A direction‐setter. Government is heavily involved in the science and innovation system, to
the extent that it has a lot of influence over the direction of the system.
An owner of parts of the system on behalf of New Zealand, most notably Crown Research
Institutes and some agencies.
A funder of science and innovation activities.
A regulator. Government does not directly regulate science and innovation as an activity,
but its regulations have a strong impact on the system. For example, the granting of
intellectual property rights creates a strong incentive to innovate.
A provider of information. A lot of information on science and innovation is hard to collect
and understand. Government has a role in collecting and sharing information to enable
everybody involved in the science and innovation system to make good decisions.
A user of science and innovation. Governments rely on high‐quality evidence provided by
the science and innovation system to make good decisions. New technologies can help
Governments provide better, more efficient services to New Zealanders.
Businesses
Businesses are investors in, producers of and users of science. They undertake 45 per cent of R&D in
New Zealand. Businesses create value by adopting and commercialising knowledge and research.
Government supports businesses to innovate by providing funding and information.
Research institutions
Research institutions undertake R&D and related activities. The main research institutions in New
Zealand are tertiary education organisations, Crown Research Institutes (Government bodies) and
independent research organisations. Most scientists in New Zealand work in these institutions.
Universities also provide science education and training for the science and innovation workforce.
Infrastructure
Research facilities and technologies are needed for people to undertake scientific R&D and innovate
successfully. Government sometimes invests directly in large‐scale, costly scientific equipment. It
also provides support for other key infrastructure items such as high‐speed computing, databases,
and scientific collections such as seed banks.
International relationships and interactions
New Zealand is a small isolated country and will only ever produce a small fraction of the world’s
research and innovation. To overcome this, it is important the science and innovation system is well
connected internationally. International connections bring new ideas, technology, and sources of
funding into New Zealand, and are crucial for the export of innovations generated in New Zealand.
4New Zealand is a member of the Small Advanced Economies group alongside Denmark, Finland,
Israel, Ireland, and Singapore. We learn a lot from these countries, and they are useful markers
when thinking about science and innovation in New Zealand; each places a strong focus on science
and innovation, and each faces the similar challenges of a small economy to grow and globalise their
science and innovation systems.
The New Zealand public
To benefit from the science and innovation system, the New Zealand public needs to be able to
understand and apply the knowledge it generates. Increasing New Zealanders engagement with
science was a key priority for the previous Government through the ‘Science in Society’ project. You
have indicated in your pre‐election commitments that through the ‘Science in Society’ project
government will continue to ensure the prominence of science in New Zealand.
The current state of the science and innovation system
The science and innovation system has seen substantial change in recent years. Recent initiatives
with a significant impact are briefly outlined below:
A 54 per cent increase in funding for Vote Science and Innovation, from $628 million in
2007/8 to $967 million in 2014/15.
The integration of the Ministry of Science and Innovation into the Ministry of Business,
Innovation, and Employment (MBIE) in 2012. MBIE has the primary responsibility for
overseeing and investing in the science and innovation system.
The creation of Callaghan Innovation in 2013. Callaghan Innovation is a new Crown agency
tasked with accelerating the commercialisation of innovation by New Zealand firms.
Callaghan Innovation invests over $140 million per year in business‐led R&D.
The establishment of the National Science Challenges in 2013 with $315.6 million of new
funding over 10 years. The National Science Challenges will investigate solutions to some of
the most fundamental issues New Zealand faces.
While New Zealand’s R&D investment has grown substantially in recent years, it is still
low by international standards
Since 2004 the amount that New Zealand spends on science and innovation has grown substantially.
In 2004 total science and innovation spending was $1.7 billion. In 2012 it exceeded $2.6 billion1. We
currently spend 1.28 per cent of our GDP on science and innovation.
The Government and New Zealand businesses are the primary sources of science funding. In 2012
the Government accounted for 41 per cent of science and innovation spending ($1.1 billion), and
1
Research and Development in New Zealand: 2012, Statistics New Zealand
5New Zealand businesses accounted for 40 per cent ($1.05 billion). The remaining investment came
from the higher education sector (10 per cent or $248 million) and a mixture of overseas and other
sources (9 per cent or $239 million). The Government’s investment in science and innovation is
equal to 0.56 per cent of GDP. You have indicated in your pre‐election commitments a desire to lift
this investment to 0.8 per cent of GDP.
While New Zealand is spending a lot more on science and innovation, our investment is still very
low when compared with the small advanced economies. This is true in both absolute terms (the
total that we spend) and in relative terms (the size of our science and innovation investment relative
to our GDP). The 1.28 per cent of GDP New Zealand spends on science is well below the OECD
average of 2.06 per cent. There are many reasons for our comparatively low science spend, although
a significant portion of the disparity is due to our low investment in the business sector.
Figure 1. Gross expenditure on R&D as a percentage of GDP
5
4.5
4 Israel
3.5 Finland
3 Denmark
2.5 OECD average
2 Singapore
1.5 Ireland
1 New Zealand
0.5
0
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You have indicated a desire to lift business R&D to 1 per cent of GDP
Businesses perform R&D to generate new knowledge, or to apply existing knowledge in new ways.
Business R&D is closely connected with innovation and economic growth. Innovative businesses2
spend more on R&D. These businesses generate more income than non‐innovative firms, are more
profitable, and currently account for 80 per cent of New Zealand’s exports.
Investment in business R&D has been growing steadily in New Zealand. Since 2004, R&D spending in
the business sector has grown by about 7 per cent a year from $677 million to $1.2 billion. Despite
this increase, our business R&D investment is still comparatively small (see figure 2 below). We have
struggled to match the rapid increase in business‐led R&D seen in similar economies. New Zealand
2
Statistics New Zealand defines an ‘innovative business’ as a business which has developed or introduced new
or significantly improved goods, services, processes, or marketing methods in the past two years.
6currently spends 0.58 per cent of GDP on business R&D, and you have indicated a desire to lift this to
1 per cent of GDP.
New Zealand faces some unique challenges to further lift business R&D and innovation. A small
number of firms are currently doing most of the R&D, and most business R&D is done in a small
number of industries (mostly manufacturing and the primary industries). We do not have a strong
share of traditionally innovative industries (for example pharmaceuticals, car manufacturing or
electronics), and we lack the large firms which invest significantly in R&D.
Figure 2. Business expenditure on R&D as a percentage of GDP
4
3.5
Israel
3
Finland
2.5
Denmark
2
OECD ‐ Total
1.5 Singapore
1 Ireland
0.5 New Zealand
0
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There are opportunities to generate more benefit from our strong science base and sound
environment for innovation
New Zealand produces reasonably high quality science for a relatively low cost. The efficiency of our
science and innovation system can be measured by looking at how much science we produce (in this
case academic papers) for the amount of money we spend on science. New Zealand’s science and
innovation system gets more output per dollar than any of the other small advanced economies
(Figure 3).
The quality of our science output also compares relatively well. Quality of science can be measured
by looking at the share of a country’s academic papers which are published in the top quarter of the
world’s academic journals. When this measure is adjusted for size, only Denmark and Israel in the
Small Advanced Economies group produce a greater proportion of high‐quality academic papers.
7Figure 3: Total publications per $PPP million government and higher education R&D expenditure, 20113,4
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9
8
7
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1
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New Zealand Israel Ireland Denmark Finland OECD average Singapore
It appears that New Zealand has all the fundamentals in place needed to stimulate innovation. The
Global Innovation Index (GII) assesses the environment for innovation by comparing the quality of
inputs across countries. These inputs can be thought of as the key ingredients needed to stimulate
innovation – and cover things like the quality of education, the presence of skilled workers, a flexible
regulatory environment and sophisticated businesses. The GII ranks New Zealand 13thout of 143
countries on the quality of our innovation inputs. Levels of innovation are beginning to reflect this –
New Zealand is creating more high‐growth start‐up companies (as shown in the SciTech index5), and
the value of our high‐tech exports has increased from $973 million in 2004 to $1.4 billion in 20126.
But we could be doing much better at utilising the environment for innovation. The GII also
produces an ‘innovation efficiency ratio’ which compares a country’s ability to convert its innovation
inputs into innovation outputs (such as patents, new businesses, and high‐tech exports). On this
measure, New Zealand slips to 66th out of 143 countries ‐ our innovation performance does not
3
Purchasing power parity, or PPP, is a currency conversion method that equalises that purchasing power of
different currencies
4
This measures excludes expenditure in the business sector as it is not a significant producer of academic
papers
5
The SciTech index is a company index on the New Zealand stock exchange. It includes companies with
significant business interests in research, development, and commercialisation of science and new
technologies.
6
High‐technology exports are products developed with a substantial R&D component. They give a measure of
how ‘innovative’ an economy is.
8appear to be as good as it could be. For example, high‐tech exports still account for a relatively small
proportion of the economy (16 per cent of exports) relative to unprocessed primary products (32 per
cent of exports).
Identifying how we can maximise the performance of the science and innovation system is both an
important challenge and a key opportunity for the Government. Further advice on this is provided
in Section 4 of this briefing. We are ready to provide more in‐depth briefings on any of these issues
and to discuss them with you in detail.
92. Portfolio responsibilities
Your responsibilities
As Minister of Science and Innovation you have distinct yet complementary roles.
You have a number of statutory responsibilities as the Minister responsible for the Science and
Innovation portfolio.
You are responsible for several pieces of legislation, oversee the administration of Vote Science and
Innovation, and set the direction for MBIE’s science and innovation investment. As a shareholding
Minister, you are also responsible for managing the Crown’s interests in, and relationships with, a
number of Crown entities.
You also have a leadership role for the science and innovation system.
This role, while less defined, is nevertheless critical. Your unique position allows you to bridge gaps
between individuals and groups in the science and innovation system and provide direction. You do
this not only for those areas in which MBIE is directly involved, but across all parts of the system
where you have influence but not necessarily direct control.
Although these responsibilities are functionally separate, you engage in them in a way that supports
the broader strategic aims for New Zealand’s science and innovation system. Working with other
portfolios which also invest in science and innovation, universities, research organisations,
businesses, central and local government, and others is critical to fostering an efficient and effective
science and innovation system.
Portfolio functions and responsibilities
Legislative responsibilities
As Minister of Science and Innovation, you have certain functions, duties and powers under several
Acts of Parliament. These do not typically require your daily attention and we will brief you on them
as needed. The Acts for which you are responsible are summarised below and your more significant
functions, duties and powers are listed.
Research, Science and Technology Act 2010
The Act establishes the purposes for which the Government’s research, science and technology
funding may be allocated, as well as the processes for doing so.
Under this Act you are responsible for:
Establishing and appointing members of the Science Board. The Science Board is responsible
for making independent funding decisions on research, science, and technology.
Setting criteria for the assessment of applications for funding. The Science Board must make
funding decisions according to these criteria.
Crown Research Institutes Act 1992
Crown Research Institutes (CRIs) are Crown‐owned companies required to undertake scientific
research of value to New Zealand. Annex One contains more information on the Crown Research
Institutes.
10Under this Act the Minister of Finance and the Minister of Science and Innovation are shareholding
Ministers responsible for the Crown Research Institutes. The Minister of Science and Innovation
generally takes the lead shareholder role, particularly as the formal point of contact with the CRI
Boards. Your responsibilities as a shareholding Minister for the CRIs include:
Appointing and dismissing directors
Overseeing the Government’s ownership priorities and objectives
Approving any major transactions
Monitoring Board performance
We will supply you with a separate CRI‐focused briefing that outlines your responsibilities, our
monitoring role, and the key issues and opportunities facing each CRI.
Callaghan Innovation Act 2012
This Act established Callaghan Innovation as a Crown entity with the aim of supporting science and
technology‐based innovation and its commercialisation by New Zealand businesses, in order to
improve their growth and competitiveness. Annex One contains more information on Callaghan
Innovation.
As with the CRIs, the Minister of Finance and the Minister of Science and Innovation are
shareholding Ministers for Callaghan Innovation. Your role as lead shareholding Minister includes
the appointment of the Callaghan Innovation Board and monitoring Callaghan Innovation’s
performance.
Measurement Standards Act 1992
Through this Act, you provide for the use throughout New Zealand of uniform units of measurement
of physical quantities, and for the establishment and maintenance of standards of measurement of
physical quantities. The Measurement Standards Laboratory of New Zealand is part of Callaghan
Innovation, and is funded by its own appropriation to perform the responsibilities outlined in the
Act.
Building Research Levy Act 1969
The Act allows for a levy to be drawn from building and construction work payable to an industry
organisation to fund building and construction research. You are the Minister responsible for
Building Research Association of New Zealand Inc. (BRANZ), which receives the levies prescribed
under this Act.
Heavy Engineering Research Levy Act 1978
This Act allows for a levy to be drawn from producers and importers of steel goods payable to an
industry organisation to fund heavy engineering research. You may prescribe the rate of levy after
consulting the New Zealand Engineers’ Federation. The Heavy Engineering Research Association
(HERA) receives these levies.
Wheat Industry Levies Act 1989
The Act allows for a levy to be drawn from wheat growers, flourmillers, and purchasers of flour to be
supplied to various industry organisations to fund research.
11Crown Entities
In addition to the Crown Research Institutes and Callaghan Innovation, you are also the lead
shareholding Minister for the Research and Education Advanced Network of New Zealand, and have
a monitoring role with the Health Research Council of New Zealand (see Annex One for more
information).
Research and Education Advanced Network New Zealand Ltd (REANNZ)
REANNZ was formed in September 2005 under the Companies Act 1993 and is listed under schedule
4 of the Public Finance Act 1989. REANNZ’s purpose is to establish and operate a high‐speed,
unrestricted broadband network in order to promote education, research and innovation for the
benefit of New Zealand.
As the lead shareholding Minister for REANNZ your responsibilities include:
• Appointing its Board and monitoring Board performance
• Issuing an annual Statement of Intent and letter of expectations which set the Government’s
priorities and objectives for REANNZ
• Approving any major transactions
Health Research Council of New Zealand
The Health Research Council of New Zealand (HRC) is responsible for managing the Government's
investment in health research. While it is responsible to the Minister of Health, it has an output
agreement with the Minister of Science and Innovation for the funding it receives through Vote
Science and Innovation.
Statutory or advisory bodies
You have close relationships with a number of advisory bodies within the science and innovation
system. The major bodies are the Science Board (which you appoint under the Research, Science,
and Technology Act 2010), the Royal Society of New Zealand, and the Marsden Fund Council.
The Science Board
The Science Board is responsible for making independent funding decisions for the purposes of
research, science, or technology. The Science Board typically meets monthly to make decisions on
proposals for funding. You appoint the Board members and set the direction of investment under
the Research, Science, and Technology Act 2010.
The Royal Society of New Zealand
The Royal Society is an independent, non‐government organisation which plays a critical role as New
Zealand’s academy of sciences. Its core purpose is the advancement and promotion of science,
technology and the humanities in New Zealand. The Royal Society’s broader functions include the
provision of expert advice on important public issues to the Government and the community. The
Royal Society also administers the Marsden Fund on behalf of the Minister of Science and
Innovation.
12The Marsden Fund Council
The Minister of Science and Innovation is responsible for the Marsden Fund. The Marsden Fund is
allocated by the Marsden Fund Council, which you appoint. The duties and responsibilities of the
Marsden Fund Council are set in a Terms of Reference by the Minister of Science and Innovation.
The Royal Society of New Zealand provides administrative support to the Marsden Fund Council.
Vote Science and Innovation
You are responsible for appropriations within Vote Science and Innovation totalling $967 million in
2014/15.
Departmental output expenses ($27 million) are MBIE’s internal operating expenses. They enable
MBIE to provide policy advice, monitoring and evaluation, and other services to the science and
innovation sector.
Non‐departmental output expenses ($662 million) are spent by MBIE on behalf of the Minister to
purchase a range of outputs from the science and innovation sector. They represent most of MBIE’s
science and innovation investment, and include MBIE’s direct investment, core funding provided to
the Crown Research Institutes, and funding allocated on behalf of MBIE by the Royal Society of New
Zealand (e.g. the Marsden Fund) and the Health Research Council.
Non‐departmental capital expenditure ($48 million) consisting of a one‐off capital investment to
support the establishment and development of Callaghan Innovation (the ‘Advanced Technology
Institute’ in Budget documents).
Non‐departmental ‘other expenses’ ($43 million) which cannot be classified within other
appropriation types. This includes a number of research infrastructure investments, funding
provided to the Royal Society to support its core functions, and grants to promote international
research relationships.
Multi‐year appropriations ($187 million in 2014/15) are used when spending falls across two or
more years (and no more than five years), but the timing of expenditure is uncertain. Vote Science
and Innovation currently has three multi‐year appropriations for the National Science Challenges,
Research and Development Growth Grants, and Targeted Business Research and Development
Funding.
A summary of major Vote Science and Innovation initiatives
Callaghan Innovation
Callaghan Innovation is a new Crown entity which commenced operations in February 2013. It aims
to accelerate the commercialisation of innovation by New Zealand firms. Funding for Callaghan
Innovation from Vote Science and Innovation can be broken into three categories: R&D grants,
capital expenditure, and operating expenditure.
Callaghan Innovation administers more than $140 million a year in business R&D grants. This
comprises $96.6 million in 2014/15 for R&D Growth Grants, to support investment in firms with a
track record in R&D, and $44.9 million in 2014/15 in Targeted Business R&D Funding to support R&D
investment in less‐established businesses, and to fund internships in R&D‐active firms. Callaghan
13Innovation also administers the $14.1 million Repayable Grants for Start‐ups appropriation, which
supports business incubator and accelerator activities.
There is $48.1 million of capital funding in Vote Science and Innovation set aside to support
Callaghan Innovation’s establishment and ongoing development. Operational funding of $64.5
million is also provided for Callaghan Innovation to run a range of initiatives and deliver scientific
and technical services (for example the running of the Measurement Standards Laboratory).
CRI core funding
Most of the funds provided to CRIs through Vote Science and Innovation are allocated as a set
amount of ‘core funding’ each year. CRI core funding provides a stable funding base to encourage
the CRIs to make longer‐term, strategic investments and to pursue research goals aligned with
sector needs. Currently, $201.6 million of core funding is provided each year across seven CRIs.
National Science Challenges
The National Science Challenges are a set of eleven mission‐led research programmes which aim to
address issues of national significance to New Zealand. The Challenges provide an opportunity to
align and focus New Zealand’s research on large and complex issues by drawing scientists together
from different institutions and disciplines. Up to $633 million over ten years has been allocated to
the Challenges. Many of the Challenges are either still establishing or are in their initial phases.
Marsden Fund
The Marsden Fund is allocated $52 million per annum to provide excellence‐based, investigator‐led
research, and to promote high‐quality research capabilities in New Zealand. The Royal Society
administers Marsden funding according to recommendations made by the Marsden Fund Council.
You appoint the Marsden Fund Council members.
MBIE’s direct investments
MBIE directly invests in a variety of sector‐specific research projects. There is currently $218 million
per year invested across six sector‐specific research funds: Biological Industries ($94 million), High‐
Value Manufacturing and Services ($59 million), Environment($32.4 million), Health and Society
($5.4 million excluding health research administered by the Health Research Council), Energy and
Minerals ($11.6 million) and Hazards and Infrastructure ($15.9 million).
Most of this funding is allocated in an annual contestable investment round. It is your responsibility
to set the strategic direction and investment priorities for MBIE’s direct investment in science. The
Science Board is then responsible for making funding decisions based on your direction.
Advice on the composition and focus of MBIE’s sector‐specific research funds will be provided in late
2014 (see ‘First 100 Days’ table below).
Health Research Council
The Health Research Council receives $77 million per annum through the Health and Society
Research Fund. This comprises most of the Fund. The Minister of Health is responsible for directing
the HRC’s investment, however you are responsible for monitoring for the performance of this
investment.
14MBIE’s infrastructure investments
In 2014/15 MBIE will invest over $31 million in science and innovation infrastructure. Significant
infrastructure investments in 2014/15 include:
$7.7million for the Tangaroa Research Vessel, which enhances New Zealand’s capability in
oceanographic and marine science
$7.2 million for the National eScience Infrastructure, which provides high‐performance
computing capability to the science sector
$3.6 million for New Zealand Genomics Limited to provide access to large‐scale genomics
capability
$4 million in 2014/14 for the Research and Education Advanced Network of New Zealand
(REANNZ) to provide high‐performance data connectivity services between domestic and
international research organisations
Figure 4. Vote Science and Innovation in 2014/15 ($ million)
MBIE's departmental
expenditure, 27 Rest of Vote, 46
National Science
Challenges, 45.1 MBIE's sector specific
Research Infrastructure, research funds, 218.3
31.2
Callaghan Innovation
Business R&D funding,
155.6
The Marsden Fund, 52.4
Callaghan Innovation
operating expenditure,
64.5 CRI core funding, 201.6
Callaghan Innovation
capital investment, 48.1
15
Health Research
Council, 77.2This figure presents a summary of Vote Science and Innovation’s major funding allocations in
2014/15. The ‘rest of Vote’ category covers a number of small investments, for example funding to
support the development of international relationships ($9 million), or fellowships for research
excellence ($11.5 million). A detailed breakdown of the entire Vote is presented in Annex Two.
163. Major links with other portfolios
The Government’s total investment in science and innovation is over $1.4 billion in 2014/15. With
appropriations totalling $967 million in 2014/15, Vote Science and Innovation is the single largest
source of this government funding. Vote Tertiary Education and Vote Primary Industries also make
significant direct investments in science and innovation.
A number of other portfolios and their associated government agencies are also involved in the
science and innovation system. They are responsible for wider inputs such as skills, capability,
infrastructure, and international relationships, which play an important role in the system. The
major links between Science and Innovation and other portfolios are outlined in the table below.
Portfolio Major links with science and innovation
Tertiary Significant investment in science and innovation through the Performance
Education Based Research Fund ($281 million in 2014/15) allocated to tertiary
institutions to encourage and reward research excellence, and the Centres
of Research Excellence ($40.5 million in 2014/15) to encourage high‐quality
tertiary research collaborations.
Tertiary education also plays a major role in the development of the science
workforce (recent initiatives include growing the number of engineering
students and launching ICT graduate schools).
Primary In 2014/15 Vote Primary Industries will invest $90 million in primary sector
Industries led science and innovation. This is mostly through the Primary Growth
Partnership ($77 million in 2014/15) which supports business‐led and
market‐driven innovation programmes in the primary industries.
Other initiatives include the Centre for Agricultural Greenhouse Gas
Research, the Global Research Alliance on Agricultural Greenhouse Gases,
and the establishment of a Food Safety Science and Research Centre.
Health The Health Research Council receives most of its funding through Vote
Science and Innovation, although the Minister of Health is responsible for
the entity itself.
Education The Ministry of Education has been strongly engaged in the development of
the Science in Society initiative, which aims to engage the New Zealand
public with science.
The Economic Development portfolio has a number of close links with Science
and Innovation. For example:
Economic
Development It is responsible for New Zealand Trade and Enterprise, a Crown entity which
engages closely with Callaghan Innovation to assist innovative New Zealand
17Portfolio Major links with science and innovation
businesses
It is responsible for administering venture capital for high‐growth businesses
to the New Zealand Venture Investment Fund and Seed Co‐investment Fund
Foreign Affairs The Ministry of Foreign Affairs and Trade is closely involved with the Small
and Trade Advanced Economies group.
Māori The Vision Mātauranga policy aims to unlock the science and innovation
Development potential of Māori knowledge, people, and resources for the benefit of New
Zealand. It is embedded across all of Vote Science and Innovation’s priority
investment areas.
In 2014/15 a Māori Innovation Fund has been established in Vote Science
and Innovation to better leverage Māori assets. The Minister of Māori
Development is responsible for reporting on the performance of this fund.
184. How MBIE assists you
Key MBIE officials
Responsibility for providing advice on Science and Innovation issues sits within the Ministry’s
Science, Skills and Innovation Group. Key contacts are set out in the table below:
Contact Role Priority Area Contact details
Information withheld consistent with the
David Smol Chief Executive, Ministry All Official Information Act 1982
of Business, Innovation
and Employment
Information withheld consistent with the
Paul Stocks Deputy Chief Executive, All Official Information Act 1982
Science, Skills and
Innovation
Information withheld consistent with the
Peter Crabtree General Manager, People, Science and Official Information Act 1982
Science and Enterprise innovation policy
Policy
Information withheld consistent with the
Prue Williams General Manager, Science Science Official Information Act 1982
Investments Investments
Information withheld consistent with the
Michael Bird General Manger, CRI and Callaghan Official Information Act 1982
Institutions and systems Innovation
performance monitoring
The advice and support we provide to you
MBIE’s Science, Skills and Innovation (SSI) group provides a range of support and advice to you in
your role as the Minister of Science and Innovation. This includes:
Science and innovation policy as well as advice on the leadership and development of the
science and innovation system.
Vote Science and Innovation management, including the planning and prioritisation of
funding.
Crown entity ownership and monitoring including commenting on draft statutory planning
documents, developing and communicating the Government’s ownership priorities and
objectives for CRIs, and monitoring CRI performance.
International science and innovation relationships including advice on investments, the
development of international relationships, and the provision of support for missions and
international meetings.
195. Focus for the first 100 days
On the following pages we have listed the major decisions and actions which you are required to
take in your first 100 days as the Minister of Science and Innovation. These cover the day‐to‐day
operational requirements of your role – Board appointments, funding decisions, significant policy
decisions, and other matters which require your immediate attention.
The longer term, strategic challenges and opportunities within the Science and Innovation portfolio
are outlined below.
6. Beyond the first 100 days
Future challenges and opportunities
New Zealand’s science and innovation system is small. Despite significant growth in recent years,
New Zealand’s investment in both public science and business innovation still lags behind
international comparators.
We need to raise the performance of the science system to generate benefit to New Zealand, and
we need to increase the level of business R&D to grow the economy. Your pre‐election
commitments have indicated a desire to:
Increase the Government’s investment from 0.56 per cent of GDP to 0.8 per cent of GDP as
fiscal conditions allow
Increase expenditure on R&D in the Business sector to 1 per cent of GDP by 2018
Investigate the establishment of up to three regional science institutes around New Zealand
Continue the Science in Society initiative
This section outlines in brief our advice on what is needed to achieve this.
By accelerating the performance of science and innovation in New Zealand, we can benefit more
from our solid science base and business environment which encourages innovation. Building a more
connected and collaborative system will help us overcome our small size through scale, and
facilitate the transfer of value from science to innovation. Most importantly, strong leadership is
required to guide these changes and communicate a clear future direction for New Zealand’s science
and innovation system.
Accelerating performance
New Zealand’s economic growth will largely depend on our ability to generate and capture the
benefits of science and innovation. We need to raise the performance of science in New Zealand to
generate benefit for New Zealand, and we need to increase the level of business R&D to grow the
economy.
Key issues and opportunities relevant to accelerating the performance of the science and innovation
system include:
20 Your pre‐election commitment to lift business‐led R&D in New Zealand. We need to get
more businesses doing R&D in New Zealand, and we can lift levels of R&D in businesses
already carrying out R&D.
Aligning science and innovation strengths with economic priorities. Broadening the economy
into high‐value, high‐productivity sectors will play an important role in future economic
growth. While we have a number of areas of research strength, we could better align these
with current and future economic needs.
Using information to drive the performance of the science and innovation system. More
effective evaluation and better information will allow us to benefit more from science and
innovation by setting smarter incentives and informing policy changes.
Strengthening connections
It is important that New Zealand’s science and innovation system is connected and collaborative.
This creates scale despite New Zealand’s relatively small size, and facilitates the flow of ideas,
investment, and capability. The science and innovation system could be better connected. Different
parts of the system – institutions, funding mechanisms, businesses and researchers – do not
currently appear to align around common objectives, and the transfer of knowledge and technology
between them is weak.
Key issues and opportunities for strengthening connectivity and collaboration in the science and
innovation system include:
Your pre‐election commitments to investigate regional science institutes, and establish four
more Centres of Research Excellence in New Zealand. We will benefit the most from these
initiatives by carefully integrating and connecting them with the science and innovation
system.
Getting more value from science by better linking public research organisations and
businesses. This will help generate scale in the system, and improve the transfer and
capture of value from public science to business innovation.
Building the strong international connectivity of our scientists into deeper relationships
which benefit New Zealand businesses and innovators. While New Zealand’s scientists are
well engaged with international researchers, we can do more to convert these relationships
into lasting collaborations across the science and innovation system.
Providing leadership
There has been significant change to the science and innovation system over the past six years.
Further change is needed to further raise the performance of the system and the benefit it
generates for New Zealand. As relatively little science and innovation happens in places that
Government can control directly, it is all the more important that Government exercises its role as a
leader and direction‐setter in the system to achieve this.
Key issues and opportunities related to your leadership role in the science and innovation system
include:
Your pre‐election commitment to ensure the prominence of science in New Zealand by
continuing to roll out the Science in Society project.
21 Identifying where investments in science and innovation can achieve the greatest benefit for
New Zealand, and ensuring our investments incentivise activity in these areas. Your pre‐
election commitment to finalise the National Statement of Science Investments will be
important in setting this direction.
Communicating a clear future direction to guide science and innovation in New Zealand.
We are ready to provide further advice on any of these areas should you request it. We would
welcome the opportunity for an in‐depth strategic conversation on any of these issues at an early
stage in your term in office.
22Immediate actions and decisions for the first 100 days
Table 1: Decisions required: October to January
Topic Description Decision Required
Policy Issues
National Statement The Government published a Draft National Statement of Science Investment for consultation on Seek approval from
of Science 28 May 2014. Cabinet for public
Investment MBIE has engaged with stakeholders following the publication on the draft Statement, seeking release of the
their views on the future of government’s science investments. The consultation period for the summary of
draft Statement closed on 22 August. MBIE will provide you with a summary of submissions and submissions.
recommendations for a final Statement by early October.
Consider advice on the
publication of a final
National Statement of
Science Investments.
Contestable funding The draft NSSI proposed reforms to the MBIE sector‐specific contestable funds, with the aim of Agree new purpose,
making them more flexible, less complex and more closely focused on research that is of relevance investment principles
to New Zealand. and processes by the
We recommend that you consider the policy framework for the new mechanism, and seek Cabinet end of November.
agreement to a proposed new purpose, and investment principles and processes, by the end of
November. Specific changes to increase financial flexibility would need to be made through the
2015 Estimates.
MBIE sector specific You will be asked to approve the funding amounts and investment priorities for MBIE’s sector‐ Approve funding
funding investment specific research funds. These will be used for MBIE’s annual contestable investment round in amounts and agree to
processes 2015. MBIE’s investment
The purpose of these funds and the mechanisms for making funding decisions are currently being priorities.
reviewed (see contestable funding above) with changes to be effective for the 2016 investment
process.
23Topic Description Decision Required
National Science Following Cabinet approval on 18 August to proceed with implementation of the Building Better Decide whether to
Challenges Homes, Towns and Cities National Science Challenge, you will need to make a decision with the release an RfP for the
Minister of Finance on whether to release a request for proposals (RfP) to undertake the Building Better
Challenge. Homes, Towns and
MBIE is currently engaging with key stakeholders in New Zealand’s building and construction Cities Challenge.
sector to refine the scope and direction of this Challenge. This will inform the development of the
RfP, and we will provide advice on this.
October Baseline Vote baselines are updated in the October Baseline Update. You will need to agree updates made Vote Science and
Update 2015 to Vote Science and Innovation with the Minister of Finance. MBIE will advise you of any updates Innovation
to Vote Science and Innovation, and a list of proposed updates will be submitted for your approval adjustments will be
in October. submitted for your
approval in October.
System Governance
Science Board Professor Warren Tate has been a member of the Science Board since its establishment in Appoint a new
appointment February 2011. His term was extended in June 2014 from 31 July to 2014 to 31 December 2014. member to the
MBIE will provide advice on a recommended candidate to fill this position. Science Board by the
end of December
2014.
24Topic Description Decision Required
Marsden Fund The terms of five members of the Marsden Fund Council expire on 28 February 2015, including the Consider new
Council chair, Professor Juliet Gerrard. All of these members, except one, have indicated they would be appointments to the
willing to be reappointed to their current position. Marsden Fund Council
We will brief you with a recommended process for new Council members or reappointments in by the end of October
October 2014. Usual practice is to make the Chair appointment first. This appointment should be 2014.
made by the end of January 2015 and the remaining appointments made shortly thereafter. Make Council
appointments by the
end of February 2015.
Crown Entity responsibilities
Board appointments Robin Hapi’s, Peter Maire’s, and Dr Michele Allan’s terms expire on 31 January 2015. They were Appoint three
– Callaghan appointed when the Board was established in February 2013. MBIE will provide advice on the members to the
Innovation appointment of new Board members before Christmas. Callaghan Innovation
Board by the end of
January 2015.
Board appointments In the CRI portfolio, 36 of 50 Board directors have terms that expire in 2015, including five Chairs. Agree the
– Crown companies The terms of the Chair and all four directors of REANNZ expire in 2015. appointment process
to be followed before
Although the final decisions do not occur until near June 2015 you will need to agree the the end of 2014.
appointment process to be followed before the end of 2014.
Annual Letters of It is customary for the primary shareholding Minister to send an annual Letter of Expectations Send letters of
Expectations outlining specific expectations to each Crown entity. The letters have previously included such Expectations to
issues as encouraging the Board to achieve and maintain financial viability, improve collaborations, Callaghan Innovation,
and working to develop research hubs. the CRIs and REANNZ
in early 2015.
25Topic Description Decision Required
Four year rolling We consider the performance of each CRI against its Statement of Core Purpose through a process Agree which CRI will
reviews of independent rolling reviews. The Four Year Rolling Review of ESR will commence in October be reviewed in the
2014 and two CRIs will be reviewed in 2015. first half of 2015 in
December 2014.
26Table 2: Important International considerations/events
Topic Description Decision Required
EU‐NZ Joint Science The 4th Meeting of the EU‐NZ Joint Science and Technology Co‐operation Committee will take Agree to participate
and Technology Co‐ place in Wellington on 8‐9 December. The meeting will provide an important opportunity to in relevant elements
operation Committee consider the alignment between New Zealand’s national priorities, including the National of the visit.
Science Challenges, and the Grand Challenges embodied in the European Union’s new
Framework Programme for Research and Innovation, Horizon 2020.
Information withheld Information withheld consistent with the Official Information Act 1982 Information withheld
consistent with the Official consistent with the Official
Information Act 1982 Information Act 1982
Information withheld Information withheld consistent with the Official Information Act 1982 Information withheld
consistent with the Official consistent with the Official
Information Act 1982 Information Act 1982
Information withheld Information withheld consistent with the Official Information Act 1982 Information withheld
consistent with the Official consistent with the Official
Information Act 1982 Information Act 1982
Information withheld Information withheld consistent with the Official Information Act 1982 Information withheld
consistent with the Official consistent with the Official
Information Act 1982 Information Act 1982
27Table 3: Other policy advice which you will need to consider
Topic Description Action Required
Science in Society The Science in Society strategic plan was launched in July 2014. The plan sets out the activities Consider advice on
which MBIE and MoE will implement in the first year. revised membership
of the Reference
MBIE and MoE are engaging with stakeholders and the public on the plan and will review it in Group in late
2015. We plan to review the membership of the Science in Society Reference Group and intend 2014/early 2015.
to brief you on options for the proposed revised membership in late 2014/early 2015.
Pricing of Vote S&I The Minister of Science and Innovation agreed that MBIE should engage an independent Consider advice on
research contracts consultant to undertake a review of policies, practices and approaches for pricing and funding the report’s
the indirect costs of Vote Science and Innovation research contracts. This has now been recommendations.
completed. MBIE will provide advice on the report’s outcomes and recommendations.
International Science MBIE will provide early advice on the development of a new International Science and Consider advice on
and Innovation Innovation Strategy by the end of 2014. The Strategy will establish priority relationships and the development of
Strategy and the actions for engagement with our bilateral and multilateral partnerships. International Science
International The International Relationship Fund is a key tool in supporting MBIE’s role in delivering on our and Innovation
Relationships Fund international science obligations for New Zealand. An independent evaluation of the Fund was Strategy and IRF
conducted in 2013/14. We will provide advice on the evaluation recommendations and evaluation
implementation late 2014/early 2015. implementation late
2014/early 2015.
Review of RV MBIE contributes $7.7 million per year to support the Research Vessel Tangaroa, but tranches Consider advice on
Tangaroa pricing and of this funding expire in 2016/17.MBIE is currently working with KPMG and NIWA on a review options for long‐term
funding which will provide options for the long‐term support of research vessels, including how this Crown funding and
service is priced and funded. support for the RV
Tangaroa.
28Topic Description Action Required
Lincoln Hub The Minister of Science and Innovation announced rebuild funding of $107.5 million for Lincoln Consider the report
reportback (Oct/Nov) University in July 2014. The Lincoln Hub partners’ are required to jointly report back to the back after MBIE has
Minister in October/November 2014 on a long‐term site plan for the Lincoln Hub. MBIE will received reports in
provide advice on the partners’ progress report. October/November
2014.
Economic Strategy Building Innovation was a key input in the previous Government’s Business Growth Agenda. Consider how science
You will need to consider how science and innovation is incorporated into the current and innovation will
Government’s broader economic strategy. be incorporated in
the Government’s
economic growth
strategy.
29Annex 1: Crown Entities
30Crown Research Institutes
Crown Research Institutes (CRIs) are Crown‐owned companies that undertake scientific research for
the benefit of New Zealand. Each of the seven CRIs is aligned with a productive sector of the
economy or a grouping of natural resources.
CRIs are also partner investors in science and innovation alongside MBIE, and they are some of New
Zealand's most significant producers of science and technology. The seven CRIs are:
AgResearch Limited (AgResearch) – AgResearch’s purpose is to enhance the value, productivity, and
profitability of New Zealand’s pastoral, agri‐food, and agri‐technology sectors.
The Institute of Environmental Science and Research Limited (ESR) ‐ ESR’s purpose is to deliver
enhanced scientific and research services to the public health, food safety, security and justice
systems, and the environment sector.
The Institute of Geological and Nuclear Sciences Limited (GNS Science) – GNS Science’s purpose is
to undertake research that drives innovation and economic growth in New Zealand’s geologically
based energy and minerals industries.
Manaaki Whenua Landcare Research New Zealand Ltd (Landcare Research) – Landcare Research’s
purpose is to drive innovation New Zealand’s management of terrestrial biodiversity and land
resources, in order to both protect and enhance the terrestrial environment.
The National Institute of Water and Atmospheric Research (NIWA) – NIWA’s purpose is to enhance
the economic value and sustainable management of New Zealand’s aquatic resources and
environments.
The New Zealand Institute for Plant and Food Research Limited (Plant and Food Research) – Plant
and Food Research’s purpose is to enhance the value and productivity of New Zealand’s
horticultural, arable, seafood, and food and beverage industries.
The New Zealand Forest Research Institute Limited (Scion) – Scion’s purpose is to drive innovation
and growth from New Zealand’s forestry, wood products, wood‐derived materials, and other
biomaterials.
Callaghan Innovation
Callaghan Innovation is a new Crown entity established on 1 February 2013. Callaghan Innovation’s
purpose is to accelerate the commercialisation of innovation by New Zealand businesses. It is a
business‐facing organisation which carries out a new role in New Zealand’s science and innovation
system.
Callaghan Innovation works across the science and innovation system to help translate scientific
knowledge into economic value. It provides a number of services to businesses:
It provides research and technical services to support near‐to‐market innovation by firms
and acts as an intermediary to help link firms to the commercialisation services and funding.
It administers and awards R&D Grant to firms.
It manages the business incubator and business accelerator programmes.
It supports and coordinates the National Technology Networks.
It helps firms to acquire the skills and expertise needed to successfully take ideas to market.
The Health Research Council of New Zealand
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