Higher Education Forum Address

I thank the organisers of the Higher Education Summit and Expo 2010 for inviting me to address this summit.

Before I begin, I especially want to acknowledge tomorrow's speakers on commercialisation: the Chief Executive of AUT Enterprises, Kevin Pryor; Colin Dawson, Chief Executive of Otago Innovation; Peter Lee, Chief Executive of Auckland Uniservices Ltd, and the Chief Executive at Waikato Link, Dr Mark Stewart.  They each lead an organisation that focuses on transferring technology developed in a University to firms.

Technology transfer will be vital to achieving this Government's ambition for New Zealand.  Our focus is on bringing together researchers and firms to create world- class education and research capabilities that support New Zealand businesses.

Today I will talk about:

• what we achieved over the past year


• current science priorities


• next steps.

This Government has had the responsibility of managing our way through the global economic recession. This continues to have a profound impact on the Crown accounts. We are still borrowing over $200 million each week.

What we have achieved

Our first priority was to keep our election promises. Last year, we boosted the Marsden Fund by $9 million. We also increased Health Research Council funding by $8 million and added $10 million to the CRI Capability Fund.

We also appointed Professor Sir Peter Gluckman to be the Prime Minister's Chief Science Advisor.  His role is to stimulate the science system, advise the Government, and improve the public understanding of the role science plays. He has already made a significant impact.

This Government has set an ambitious goal around closing the productivity gap with Australia. To do this, we are going to need to lift our productivity and our revenue. Science and technology are essential to this task.

Current priorities

Last year's Budget concentrated on fundamental science. Our next challenge is better linking science and the economy.

I have consulted widely on how this might be done. There is a general view that there is too much bureaucracy, and conflicting signals from Government agencies. What we need is a clear science strategy that is linked to the Government's wider economic growth agenda.

We have already started simplifying the applications processes. This will mean less form-filling, and allow scientists to get on with science. Compliance costs will be reduced.

The next stage is to simplify the whole system. This will make it easier to access. Scientists and businesses will know which part of the system they fit into and how they should go about getting support.

With our limited resources, we cannot do everything. In the economic development space, we need to concentrate our efforts on what New Zealand is best at.

Sectors such as high-value manufacturing and services, biological industries, energy and minerals, hazards and infrastructure, the environment, and health and social well-being are where New Zealand has a competitive advantage.

The CRI Taskforce has been an important initiative. Over the years, the CRIs have become less co-operative. They need to engage better with their sectors. The current funding system encourages short term thinking, and wastes time through overly complicated processes.  

For instance, we need, as a developed, agricultural country, to collect hydrological data. In reality, this expertise is held by science teams within a key CRI. The contestable funding system is an inefficient way of making sure that we retain this expertise and get continuity of data.

Chairman Neville Jordan and the other members of the taskforce have provided comprehensive recommendations focused on improving the performance of the CRIs. The Government will announce its response to the taskforce's recommendations shortly.

These measures I have mentioned will significantly simplify the funding and direction of science in New Zealand.

Next steps

In 2010, the focus will be on measures that will directly drive growth. This was the emphasis of the Prime Minister's Statement to Parliament earlier this year.

In science, we want to see our best and brightest encouraged to work with business and be able to establish careers at home in New Zealand.  Having scientists and engineers able to help firms innovate is important for the future economy.

To do this, we need to support our excellent researchers, especially at the early and mid-career stages. We need to provide them with better opportunities to establish their careers in New Zealand.

The new Prime Minister's Science Prizes are part of this. The inaugural Prime Minister's MacDiarmid Emerging Scientist Prize was awarded by the Prime Minister last week.

The winner, John Watt, from Victoria University, has discovered a way to grow nano-particle sized palladium crystals, for use in exhaust mitigation. This research is not only recognised as ground-breaking science, but has real commercial potential.

Keeping someone like John in New Zealand creates opportunity for him to build a research team, or a commercial operation, that is founded on the best science. Such people attract other high-quality individuals. Eventually this creates a centre of excellence where science and business combine to create new products, exports and jobs.

We are also looking at other fellowship schemes that will help New Zealand compete with other countries, and keep our best achievers here to create a core of future research excellence.

Technology transfer is another of our key themes for this year.

We need to see publicly funded research being used by New Zealand firms to generate the economic gains that will fuel further investment.  We need researchers working with firms to help them develop world-class products.

I understand that it is not always easy for researchers and firms to work together.  For industry, science is a means to an end. By contrast, for many scientists, the science is the objective. Scientists, CRIs and universities also have to weigh up whether they keep their intellectual property or make it available for others to use.

Institutions have done a lot of work to improve commercialisation. In the South Island universities, this has led to the Partnering for Innovation initiative.  This joint venture, supported by a Tertiary Education Commission grant, aims to help change the culture of the universities to one where academics also consider the commercial potential of their research.

Many publicly funded research organisations, including CRIs and universities, have already set up agencies to foster the use of research they have  generated.  A good example is Auckland University's UniServices which has been particularly successful in putting commercially-focused resources alongside researchers. WaikatoLink are building a track record as innovative hubs.

The Crown Research Institute IRL took a very novel approach to this. Their "What's your problem,  New Zealand?" contest attracted interest from hundreds of firms, lured by $1 million worth of research and development. Resene was the winner, but IRL essentially engaged with all contestants about their research needs, and how IRL could potentially meet those needs.

The Government wants to improve the ability to take the science developed in publicly-funded research organisations through to realise commercial opportunities.  Science and venture capital need to get closer together.  This needs to happen across all areas of research, from incremental improvement to disruptive technology.

That is why the Government will soon begin work with universities and other publicly-funded research organisations to develop centres of excellence for technology transfer.  The goal is to better connect science and business wherever the combination can make a difference.

It is the productivity of New Zealand firms that fuels our economy and results in the funding to be invested in research.  The combination of researchers with ideas, and businesses with needs, is the breeding ground for innovation.

Higher education providers have a role in aiding development of networks between students and business. The courses in bioscience enterprise run by the University of Auckland are an example of education and business working together.

The Government gives direct support to R&D-intensive businesses. The TechNZ scheme is the major programme that supports business R&D.  Last year, we funded TechNZ with around $47 million.  This money directly funds companies to undertake their own innovative research. It is invariably matched at least one-to-one.

The TIN100 list prepared by the Technology Innovation Network describes most of New Zealand's leading innovation companies. Virtually all the companies in that list have received TechNZ funding.

The Foundation for Research, Science and Technology has carefully analysed the success of the TechNZ grants currently available to New Zealand firms. It is clear that without TechNZ, the rate of growth of most of the recipient firms would have been lower.  In some cases the firms would not have deviated to a new technology level. This was the case with Tait Electronics. It needed support, through TechNZ, to transition from analogue to digital technology. That transformation has kept Tait at the forefront of their sector.

Supporting our leading companies not only ensures they remain competitive, but also justifies supporting others within the same sector. The key is to pick sectors with both proven performance and strong growth potential. Rather than "picking winners", we want to support those sectors that have already succeeded and have strong growth potential in front of them.  You could call this "growing winners".

The Prime Minister's Statement to Parliament referred to some of New Zealand's leading companies, such as Weta, Zespri, Fonterra and Icebreaker. These are a few examples. The list of our hi-tech industries is obviously much more extensive.

The TIN100 list shows the sectors where New Zealand companies have demonstrated their strength in 2009. The strong growth sectors, in a year where global export growth has been a challenge, have been IT services and support, energy solutions, and healthcare. These three sectors grew by over 20%.

These are the type of companies that will build the New Zealand economy. They will provide the exciting job opportunities that will keep our brightest people here, and technology in our country, because they will be able to build their future here.

The Prime Minister's Statement to Parliament made it clear - this year, a Budget priority is to increase support for business R&D.  If we want more companies to create real value for the economy, we must increase their ability to innovate. The Government is going to support that vision.

2010 is going to be a year where everything comes together. We will make funding system priorities clear and funding processes easier. We will change the way CRIs fulfil their role in supporting New Zealand business. We will increase support for emerging research leaders and business research and development through the Budget. We will increasingly focus on technology transfer, so that our economy can benefit from the research generated through public funding.

We want business to drive growth in the economy, to create higher incomes and greater productivity. Higher education is essential to support transfer of technology and skills to businesses.

Thank you.