Professor Joerg Kistler (leader of the Institute for Innovation in Biotechnology and also Director of the University of Auckland School of Biological Sciences), Professor Stuart McCutcheon, members of the Institute and guests:

This speech comes at a timely point after my appointment as Minister of Research, Science and Technology. It is now one year since the new Government was elected. We have been busy. In the RS&T portfolio, after a lot of thought, I have instituted a major review of the system.

The intent of the Review is to identify how we can better prioritise our RS&T investment, so that we reap further benefits from New Zealand's science expertise. The biotechnology sector stands out as a foundation of the New Zealand economy.

This year has been one of economic consolidation. As soon as the Government came into office, we had to confront major economic problems caused by the global recession. This has required us to look carefully at how much we spend, and what we spend it on.

It looks as though the steps we took this year have allowed New Zealand to weather the recession better than many other countries. We now have to turn our attention to how we can grow our economy in the medium and long term. We have to close the gap, especially with Australia.

2010 is shaping up to be the year of growth. We will be setting an agenda that puts New Zealand on a path of expanding our economy in both size and diversity.

This is where the RS&T Review fits in. It is one component of the economic growth agenda. It sits alongside a review of CRIs and work on how we can encourage businesses to invest more in research. There are also parallel initiatives around business support, infrastructure, education, tax and the regulatory framework.

The Review was released a couple of weeks ago. The deadline for responses is 18 November. I have been pleased by the very positive initial responses to the Review document. In fact, the Vice-Chancellors Committee were the first sector group to express their support.

It has been widely recognised that the Review is timely and in fact overdue. It allows us to take a critical look at our RS&T system, and understand what it does. In Opposition, many people had told me that the system was too complicated, and it was difficult to tell what we actually spent our money on.  When I became Minister, I found that these concerns were well-founded. The challenge was working out the way forward.

The reality is that, given our limited resources, we have to prioritise. This includes both current and future money. We cannot "prioritise by addition". This means we will have to make some tough choices.

The Review document also sets out how we might fund the science system on a more strategic basis. I have said in the past that there is no point in having contestable processes when the expertise is actually held within a known team. Contestability in these circumstances creates unnecessary competition.

The solution is to fund the mission, rather than the institution. This approach is very similar to the CoRES in universities. It allows for science teams drawn from across institutions. It also means we can fund activity over longer periods of time. This continuity is important, especially when longer-term science is required.

We will need to ensure that this strategic funding is used efficiently, and that there is scope for "new science" to enter the system. We will also have to ensure that the strategic missions stay relevant to the science and the sector. Strategic long-term funding cannot be allowed to lead to complacency.

The Review provides some suggestions as to where the strategic funding might be focused. I expect there will be robust debate about the priorities, and the strategic platforms. The Government will then make its decisions, and they will feed into next year's Budget.

Simplification is also covered by the Review. The Foundation has already undertaken work on how application and audit processes can be simplified. We don't want to have scientists bogged down by administrative processes when they could be advancing their research.

The larger simplification task is around the overall system. There are too many different funds and it can be hard to know which one is relevant. The combination of priorities and a simplified overall structure will mean that all scientists and research institutions will have a very clear sense of what areas will be the focus for the future.

Alongside the RS&T Review we have also established a taskforce to look at CRIs. The purpose of this taskforce is to examine whether CRIs are best structured to meet our requirements.

The taskforce will be looking at funding, governance and the business aspects of CRIs. It will pay particular attention to the linkages and relationships between CRIs, and the sectors they support. It will report early next year.

This is part of a wider concern about how we can best integrate science and the economy. We want to push research out so that businesses and sectors can get the benefits. We also want to ensure that business has an appetite for research, and knows where and how to fund it and find it. Science that has a commercial application needs to better fulfil its promise.

The bio-science area is one where this has worked well in the past. New Zealand has a long history of bio-science, and a good rapport between research and the sector has been established. This shows itself in science that runs the full gamut from meeting immediate requirements through to speculative research that can lead to market transformation.

I noted earlier in my speech that the economy needs to diversify. This is not an "either-or" situation between bio and other industries. The "cultures" (agriculture, horticulture, aquaculture etc) have plenty of scope for expansion and diversification. We would be foolish to turn our backs on this potential. Across many generations, developments in the "cultures" have led to them being just as important to our overall export performance in the current century as they were in the two before.

But we also cannot ignore potential elsewhere in our economy. It is significant that over the past 10 years mineral and fuel exports have become major export earners. This has been underpinned by significant research that has indicated where natural resources might be found, and increasingly how we can manage them in an environmentally sustainable manner.

Another industry that has expanded greatly over the past 15 years is film and digital media. Earnings from this industry are comparable to those from the very successful wine industry. The lessons we have learnt include the need for scale, and a business environment that allows real entrepreneurship to flourish.

Business R&D support is the third stream of the wider science review, alongside the priorities and the CRI taskforce. We recognise that we need to provide encouragement to businesses so that they will make the longer-term investment in the research that will allow them to compete and expand. There needs to be scope for significant investment around ambitious objectives. There also needs to be room for the smaller businesses that can develop and exploit niche technologies.

There are some who would say that every business in New Zealand is small by global standards. It is true that we do not have the scale of some countries. Even Fonterra, whilst a big player in global milk exports, is a medium-sized company by multi-national standards. But our relative size should not blunt our ambition to grow. There are areas of expertise where we lead the world. We must leverage this talent and the opportunities it creates.

One of the exciting opportunities that is emerging is what is known as "big science". For New Zealand, this includes the Square Kilometre Array bid with Australia, and the Global Alliance on Agricultural Emissions, where we are taking the lead. If successful, these initiatives will stimulate significant research activity in this country. They will also attract considerable offshore investment. The Global Alliance in particular plays to our strengths in research and helps future-proof our major industries.

What is my expectation of all this Review work?

It will be completed by early next year, and the 2010 Budget will reflect the priorities. There will be an overall emphasis on economic growth through the effective development and application of science.

It has been popular to benchmark New Zealand's recent economic performance against countries like Finland and Singapore. These are interesting comparisons, but there are as many differences as there are similarities. I prefer to compare us with somewhere a bit closer to our circumstances, like Queensland. They have a similar population, similar infrastructure, and a similar weighting between the major city and the rest of the region.

The uncomfortable fact is that over the past 20 years, Queensland's economy has grown about 30% more than New Zealand's. My objective for these reviews is that these outcomes will help us in closing that gap. This will act as a stimulus for New Zealanders to stay, and for expats to return home. It will encourage globally inclined people and businesses to look at New Zealand as a base.

Success will be complete when discerning people choose Queensland for the sun, and New Zealand for the economic opportunity. Here at the bio-incubator you are acting as a catalyst for some of the brains and business that can help us achieve this. My intention is that the RS&T Review will be a step change in the expectations we have of science, the way we fund it, and the results we achieve from it.