Speech to Medtech Forum Conference Dinner

I thank the Medical Technology Association of New Zealand for inviting me to address the MedTech Forum. Before I begin, I would like to acknowledge Professor Jonathan Sackier from the University of Virginia, and Dr David Chilvers, CEO of NHS Innovations.

I also particularly want to acknowledge Diane Foreman, CEO of the Emerald Group, a director of MercyAscot Hospital, and Ernst and Young Entrepreneur of the Year for 2009. Her companies have interests in around 30 countries, employing over 4000 people in food, healthcare, and hospitality.

As an Aucklander, I know the work that MercyAscot has done. It has been widely recognised for its cutting-edge technology, from digital operating theatres through to robotic surgery. Diane herself has been particularly devoted to improving New Zealanders' access to private radiography. Her interest and drive have directly improved the lives of thousands of New Zealanders.  

Tonight I want to talk about how science and technology is a central part of this Government's ambition for New Zealand.

Last year we had the responsibility of managing our way through the global economic recession. We also set about keeping our election promises. In the Research, Science and Technology area, this included boosting Health Research Council funding by $8 million, along with an additional $9 million to the Marsden Fund.

We also appointed the Prime Minister's Chief Science Advisor, Professor Sir Peter Gluckman. His presence has shaken up the system, and indeed, the Cabinet. However, he has also improved the appreciation of what science can do for government, and what it can do for the economy.

After the 2009 Budget, the Government moved into a different mode. We had heard from many different sectors about the concerns and difficulties they faced. Scientists are an outspoken constituency, so I heard plenty of different ways that the science system could be changed.

What I heard was that there was too much bureaucracy, conflicting signals from government agencies, and a lack of a clear plan for science in New Zealand. Over the past six months, I have been working on how to address this seemingly failing system.

I ran two processes together, setting out New Zealand's research, science and technology priorities, and taking a deep look at the Government's research companies through the CRI Taskforce. These processes have produced complementary recommendations. They will significantly simplify the funding and direction of science in New Zealand. The CRIs will be stabilised and better able to deliver benefits to the New Zealand economy.

There is now a very clear expectation that the Government will explain how we expect the economy to change, and how the Government will enable this to occur.

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

We have set an ambitious goal around closing the productivity gap with Australia. Just setting this goal has generated much discussion around what was possible from the New Zealand economy.

So how do we see the connection between science, innovation and business?

Your own industry is leading the way as to how this can be done.

New Zealand exports of medical technology currently total around half a billion dollars. What also makes medical technology appealing is the high productivity per employee. The average revenue per employee across all sectors in New Zealand is $62,000. Medical technology brings in around $200,000 per employee.

Let's look at Fisher and Paykel Healthcare. It has come a long way from the first respiratory humidifier of 1971. Last year, exports were around $450 million, up $100 million from the year before. That is the sort of growth that New Zealand needs.

Keeping up with medical technology requires a major R&D effort. F&P Healthcare employs over 250 researchers and technicians. The Government has helped as well. Over the past five years we have contributed over $3 million in research support through the Foundation for Research, Science and Technology

Howard Wright Limited is another excellent example of how Government is helping. A $100,000 TechNZ grant meant Howard Wright Limited could recruit an industrial designer, and transform its hospital bed business to a design-led approach. Since the grant, Howard Wright has projected revenue growth of 50%. Its CEO, Bruce Moller, has said that "without the investment, we may still be wondering what we were doing wrong, might be an also-ran or may possibly not be in business".

Staying with health, Living Cell Technologies has been granted just over $4 million to bring their Diabecell treatment to market. The treatment is encapsulated live pig cells, which can be implanted into Type 1 diabetes patients to normalise blood glucose levels. This technology is leading-edge.

These three examples from your own field encapsulate the direction we are taking. The goal is to better connect science and business wherever the combination can make a difference.

The TIN150 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 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.

At my request, the Foundation for Research, Science and Technology has carefully analysed the success of TechNZ. It is clear that without these grants, the rate of growth of most of those firms would have been lower, or in some cases would not have deviated to a new technology level.

This was the case with Tait Electronics. It needed support to transition from analogue to digital technology. That transformation has kept Tait at the forefront of their sector.

Other companies are emerging, such as Rex Bionics with their robotic mobility aids, and Pacific Edge Biotechnology. Their success has yet to be proven, but they are pushing technology boundaries in pursuit of future growth.

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 some examples. The list of our hi-tech industries is obviously much more extensive.

The TIN 150 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 over 20%.

Because IT and healthcare are much larger sectors, their performance is even more noteworthy. Their aggregate income growth was $350 million in the year. Other sectors showing significant growth included digital media, software and primary sector technologies,

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.

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 growth potential. Rather than "picking winners", we want to support those that have already succeeded but have strong growth potential in front of them.

The Prime Minister's Statement made it clear - this year, the Budget will 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 fund that vision, beginning this year.

For science in New Zealand, 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 business research and development through the Budget.

We want business to drive growth in the economy, to create higher incomes and greater productivity. Medical devices and technology is already one of our star performers in the New Zealand economy.

The changes the Government is about to make to science funding will support your sector. Good luck for the rest of your conference, and I look forward to the growth of the medical technology industry in New Zealand.