2010: The Year of Science - Speech at the NZBIO Conference

Science is taking centre stage under this Government.

In his opening speech to Parliament in February, the Prime Minister emphasised the role of science in the economy. Science and innovation are one of the six main policy planks that will be at the heart of lifting New Zealand's economic performance.

The Prime Minister said that our future growth depended to a large extent on generating and using new ideas. He clearly stated our science objectives. The first is a high-performing public science system which supports economic growth. The second is a wider innovation system that encourages firms to increase their investment in research and development.

Tonight I want to bring you up to date with what we are doing to fulfil the Prime Minister's commitment. I will talk about what we have done and what we are currently doing. I also want to give you a foretaste of what will unfold over the course of the year.

We are improving the system in three phases.

First, we are supporting fundamental science.

Second, we are developing priorities and improving the Government's science system.

Third, we are ramping up support for economic growth.

Fundamental science

Last year, our focus was on the first phase. We met our election promises, and we put more money into pure science.

The Marsden Fund got an additional $9 million. The Health Research Council got an additional $8 million. The CRI Capability Fund, which gives CRIs the discretion about how they most effectively use the money, was increased by $10 million. This package was all the more remarkable given the overall economic conditions we faced last year.

These were not the only measures. Sir Peter Gluckman was appointed Chief Science Advisor to the Prime Minister. He has already made a remarkable contribution both to the development of our science policies and to the overall level of public discussion around science.

This has been a major advance. A number of people have commented to me that there is dramatically more coverage of science in the media. The media realise that we are serious.

Last week the Prime Minister presented the first round of Prime Minister's Science Prizes. These were widely reported. I believe that young people in particular were impressed by the fact that substantial monetary prizes were going to people in the science arena.

It was also interesting that a number of the prizes went to scientists who were working in fields that have direct economic application. The work of Drs Jeff Tallon and Bob Buckley on high-temperature superconductors is well known. It has been a long haul, but having made a series of scientific breakthroughs, they are on the cusp of a commercial breakthrough.

The winner of the Prime Minister's MacDiarmid Emerging Scientist Prize was a young PhD candidate at Victoria University, John Watt. John is doing research on growing palladium nanoparticles to reduce toxic exhaust emissions. He is already working with VicLink to commercialise his technology and pursue international collaborations. He is also embarking on a course of business studies to help him better leverage his science.   

Improving the science system

The second task has been to reform the science system. Behind the scenes, a large amount of work went in to prepare for the substantial changes this year.

Last August, I set out my major priorities in the Research Science and Technology area. These will simplify the system. They will improve the way we invest in public good science. This will ensure that science moves from the laboratory to the market. This will boost economic growth through more market-driven research.

The just-released 2008 Survey of New Zealand Scientists and Technologists sets out the problems. Dr Jack Sommer, the author of the report, will be addressing you tomorrow, but I hope he will forgive me for highlighting a couple of key findings.

The report found that two-thirds of our scientists spent 20% or more of their time on administration and compliance, as opposed to research. One quarter of them spent more than 40% of their time on non-science tasks. This represents a huge amount of unproductive scientific time.

Even more telling was that two-thirds of scientists felt they did not understand the bidding systems and processes - including nearly half of those who had actually got FoRST funding.

As Dr Sommer concluded, "the data may suggest that the serial reformulation of goals and objectives under different rubrics, such as ‘roadmaps' and shifting sets of priorities has been more confusing than illuminating".

This slide illustrates part of the problem. This was the system in 2009. And these balloons only represent the tip of the iceberg - a system that was granulated through several tiers. To those it was designed to help, it is daunting and confusing.

This is where we are heading. It is a very simple strategic map. There will of course be more detail, but this will be through clear priorities and missions.

The Foundation has already been simplifying its processes for application and audit. Dr Sommer's survey gives us an excellent benchmark to measure progress.

The next area of action is the Crown Research Institutes (CRIs).

The CRIs are a big part of our overall science capability. Eighty-five percent of our vital agricultural and soil science capacity is in CRIs. Fifty percent of our biological science and 50% of our environmental and natural resources science capacity is in CRIs.

Last November I established a CRI Taskforce under the chairmanship of Neville Jordan. The taskforce has comprehensively examined the current state of CRIs.

The taskforce found that we need a more strategic approach to get the best out of CRIs. They need to have a clearer sense of their mission and purpose, and be better connected with their sectors. The Government also needs to make its own strategic objectives more clearly known to the CRIs.

The taskforce also found that the current highly contestable funding system meant there is little strategic focus. For instance, ryegrass research has been undertaken in an ad hoc way depending on its success in contestable funding rounds. For a country built on pastoral success that seems extraordinary.  

There is too much competition and not enough co-operation. Scientists have to spend their energy making numerous funding applications.

The report contains 27 recommendations - around purpose, governance, technology transfer, funding and evaluation. Overall the report has been well received, including by the CRIs themselves.

Supporting economic growth

Our third goal is connecting science with business in order to drive growth.

Current business support is complex, with a myriad of schemes. It is not always obvious what is available, how you apply, and what results are expected.

The first challenge is to get better linkages between the scientists and businesses. There are many good ideas developed in our universities and CRIs, but all too often businesses simply don't know where to find them. Support for commercialisation needs to be lifted.

The second challenge is support for businesses that have their own R&D capability. When there is limited funding, we need to make sure that it goes to the research that has the best prospects for success.

This means supporting things that are achievable. Frankly, in New Zealand, neither the Government nor private investors can afford to back innovations that cost hundreds of millions of dollars and take decades before they begin to show any return.

We need to focus on companies that go to market and are revenue-positive, with an investment of say up to $10 million or so - enough for the next level of commercial investment to take place.

We also need to make sure that we support innovations that are actually wanted. There is no point developing products that do not have a market that is willing to pay for them. To help with this, we have to better align R&D support and the market research capabilities of New Zealand Trade and Enterprise.

These factors are being considered in the redesign of TechNZ, which will become a simpler and more effective tool supporting business innovation.

You will be aware of the TIN100 report. This analyses the performance of some of New Zealand's leading technology industries.

What is interesting is how some sectors have performed well in spite of the global recession.  IT services and support revenue lifted 33% last year. The revenue for companies in the healthcare sector went up by 22%, and in the energy solutions sector by 23%. Primary sector technologies, electronics and digital media all recorded double digit increases as well.

The biological industries are another good performer. For example, the TIN100 report notes that top 10 company Douglas Pharmaceuticals increased its revenue last year by 15%. It has also placed the company on its "Companies to Watch" list. New Zealand Pharmaceuticals was another company that showed positive growth, and lifted its place in the overall list.

Smaller companies are also making an impact. A good example is Dr William Rolleston's South Pacific Sera. Last year he was the winner of the Ross Clark Award for Distinguished Biotechnologist of the Year. We have appointed him to the Foundation board. He has provided crucial input, and also provided very good input into the development of our science priorities.

Your sector is a natural for New Zealand. We have people, expertise and infrastructure. New Zealand is a major and advanced user of biological expertise.

Last year, NZBIO noted that there were over 250 active biotech and bio-science organisations - double the number from four years earlier. Export revenue from biologically-based bio-tech products was $167 million.  In addition, there is the dramatic performance of the medical devices sector. F&P Healthcare alone had $500 million revenue last year.

Conclusion

Tonight I have talked about the Government's plan for science. Obviously, there is more to come. We will have to wait for the Budget for the next stage of the plan, but the directions we are taking are already set.

What is our ambition? What will constitute success?

Success would be double the number of $100 million-plus companies in the hi-tech sector. Success would be if the TIN100 was the TIN300.

Success would be even greater growth in medical devices.

Success would be expanding that biologically based bio-tech export revenue to $500 million of exports in the next few years, with a strong upwards trajectory.

This sort of success is possible:  half of the companies in the TIN100 did not exist in 1990.

What will that success do for us? It will provide more jobs for our best and brightest. It will encourage the best and brightest from elsewhere to look at what New Zealand can offer. It will attract more capital for further growth and investment. Success begets success.

In 1940, Winston Churchill told America "Give us the tools, and we will finish the job". Our commitment as a Government is to giving you the tools to do the job - a growth-focused strategy with simpler systems and better funding.

I know that you will get on with the job of using those tools and delivering the growth we need. At the end of the day it is you - the scientists, entrepreneurs, innovators and business people - who will forge New Zealand's future. Tonight, I am pleased to be here as part of a celebration with you, who actually make it happen.