SCIENCE AND INNOVATION BRIEFING FOR THE INCOMING MINISTER

Transcription

1 This document has been proactively released. Redactions made to the document have been made consistent with provisions of the Official Information Act 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.

2 Contents 1. Portfolio overview... 3 A brief introduction to the science and innovation system... 3 The current state of the science and innovation system Portfolio responsibilities Your responsibilities Portfolio functions and responsibilities Statutory or advisory bodies Vote Science and Innovation A summary of major Vote Science and Innovation initiatives Major links with other portfolios How MBIE assists you Key MBIE officials The advice and support we provide to you Focus for the first 100 days Future challenges and opportunities Immediate actions and decisions for the first 100 days Annex 1: Crown Entities Annex 2: Vote Science and Innovation (2014/15)

3 1. 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 researchled 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. 3

4 The 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. 4

5 New 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 MBIE has the primary responsibility for overseeing and investing in the science and innovation system. The creation of Callaghan Innovation in 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 billion 1. 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 5

6 New 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 Israel Finland Denmark OECD average Singapore Ireland New Zealand 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 businesses 2 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. 6

7 currently 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 Israel Finland Denmark OECD Total Singapore Ireland New Zealand 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. 7

8 Figure 3: Total publications per $PPP million government and higher education R&D expenditure, , 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 13 th out 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 index 5 ), and the value of our high tech exports has increased from $973 million in 2004 to $1.4 billion in 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 66 th 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. 8

9 appear 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. 9

10 2. 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. 10

11 Under 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. 11

12 Crown 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 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 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. 12

13 The 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 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 13

14 Innovation 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. 14

15 MBIE 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 Research Infrastructure, 31.2 MBIE's sector specific research funds, Callaghan Innovation Business R&D funding, The Marsden Fund, 52.4 Callaghan Innovation operating expenditure, 64.5 CRI core funding, Callaghan Innovation capital investment, 48.1 Health Research Council,

16 This 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. 16

17 3. 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 Tertiary Education Major links with science and innovation Significant investment in science and innovation through the Performance 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 Industries In 2014/15 Vote Primary Industries will invest $90 million in primary sector 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 Education Economic Development 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. 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: It is responsible for New Zealand Trade and Enterprise, a Crown entity which engages closely with Callaghan Innovation to assist innovative New Zealand 17

18 Portfolio 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 and Trade Māori Development The Ministry of Foreign Affairs and Trade is closely involved with the Small Advanced Economies group. The Vision Mātauranga policy aims to unlock the science and innovation 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. 18

19 4. 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 David Smol Chief Executive, Ministry of Business, Innovation and Employment All Information withheld consistent with the Official Information Act 1982 Paul Stocks Deputy Chief Executive, Science, Skills and Innovation All Information withheld consistent with the Official Information Act 1982 Peter Crabtree General Manager, People, Science and Enterprise Policy Science and innovation policy Information withheld consistent with the Official Information Act 1982 Prue Williams General Manager, Science Investments Science Investments Information withheld consistent with the Official Information Act 1982 Michael Bird General Manger, Institutions and systems performance CRI and Callaghan Innovation monitoring Information withheld consistent with the Official Information Act 1982 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. 19

20 5. 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

21 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

22 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 preelection 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. 22

23 Immediate actions and decisions for the first 100 days Table 1: Decisions required: October to January Topic Description Decision Required Policy Issues National Statement of Science Investment Contestable funding MBIE sector specific funding investment processes The Government published a Draft National Statement of Science Investment for consultation on 28 May MBIE has engaged with stakeholders following the publication on the draft Statement, seeking their views on the future of government s science investments. The consultation period for the draft Statement closed on 22 August. MBIE will provide you with a summary of submissions and recommendations for a final Statement by early October. The draft NSSI proposed reforms to the MBIE sector specific contestable funds, with the aim of making them more flexible, less complex and more closely focused on research that is of relevance to New Zealand. We recommend that you consider the policy framework for the new mechanism, and seek Cabinet 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. You will be asked to approve the funding amounts and investment priorities for MBIE s sectorspecific research funds. These will be used for MBIE s annual contestable investment round in The purpose of these funds and the mechanisms for making funding decisions are currently being reviewed (see contestable funding above) with changes to be effective for the 2016 investment process. Seek approval from Cabinet for public release of the summary of submissions. Consider advice on the publication of a final National Statement of Science Investments. Agree new purpose, investment principles and processes by the end of November. Approve funding amounts and agree to MBIE s investment priorities. 23

24 Topic Description Decision Required National Science Challenges Following Cabinet approval on 18 August to proceed with implementation of the Building Better Homes, Towns and Cities National Science Challenge, you will need to make a decision with the Minister of Finance on whether to release a request for proposals (RfP) to undertake the Challenge. MBIE is currently engaging with key stakeholders in New Zealand s building and construction 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. Decide whether to release an RfP for the Building Better Homes, Towns and Cities Challenge. October Baseline Update 2015 Science Board appointment Vote baselines are updated in the October Baseline Update. You will need to agree updates made to Vote Science and Innovation with the Minister of Finance. MBIE will advise you of any updates to Vote Science and Innovation, and a list of proposed updates will be submitted for your approval in October. System Governance Professor Warren Tate has been a member of the Science Board since its establishment in February His term was extended in June 2014 from 31 July to 2014 to 31 December MBIE will provide advice on a recommended candidate to fill this position. Vote Science and Innovation adjustments will be submitted for your approval in October. Appoint a new member to the Science Board by the end of December

25 Topic Description Decision Required Marsden Fund Council The terms of five members of the Marsden Fund Council expire on 28 February 2015, including the chair, Professor Juliet Gerrard. All of these members, except one, have indicated they would be willing to be reappointed to their current position. We will brief you with a recommended process for new Council members or reappointments in October Usual practice is to make the Chair appointment first. This appointment should be made by the end of January 2015 and the remaining appointments made shortly thereafter. Consider new appointments to the Marsden Fund Council by the end of October Make Council appointments by the end of February Board appointments Callaghan Innovation Board appointments Crown companies Annual Letters of Expectations Crown Entity responsibilities Robin Hapi s, Peter Maire s, and Dr Michele Allan s terms expire on 31 January They were appointed when the Board was established in February MBIE will provide advice on the appointment of new Board members before Christmas. In the CRI portfolio, 36 of 50 Board directors have terms that expire in 2015, including five Chairs. The terms of the Chair and all four directors of REANNZ expire in Although the final decisions do not occur until near June 2015 you will need to agree the appointment process to be followed before the end of It is customary for the primary shareholding Minister to send an annual Letter of Expectations outlining specific expectations to each Crown entity. The letters have previously included such issues as encouraging the Board to achieve and maintain financial viability, improve collaborations, and working to develop research hubs. Appoint three members to the Callaghan Innovation Board by the end of January Agree the appointment process to be followed before the end of Send letters of Expectations to Callaghan Innovation, the CRIs and REANNZ in early

26 Topic Description Decision Required Four year rolling reviews We consider the performance of each CRI against its Statement of Core Purpose through a process of independent rolling reviews. The Four Year Rolling Review of ESR will commence in October 2014 and two CRIs will be reviewed in Agree which CRI will be reviewed in the first half of 2015 in December

27 Table 2: Important International considerations/events Topic Description Decision Required EU NZ Joint Science and Technology Cooperation Committee Information withheld consistent with the Official Information Act 1982 The 4th Meeting of the EU NZ Joint Science and Technology Co operation Committee will take place in Wellington on 8 9 December. The meeting will provide an important opportunity to consider the alignment between New Zealand s national priorities, including the National Science Challenges, and the Grand Challenges embodied in the European Union s new Framework Programme for Research and Innovation, Horizon Information withheld consistent with the Official Information Act 1982 Agree to participate in relevant elements of the visit. Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act 1982 Information withheld consistent with the Official Information Act