Estimates Debate — Vote Research, Science and Technology

One thing that both Labour and National agree on is that research, science, and technology is a key driver of our economy. It was with some excitement, I suppose—not “excitement”, perhaps; I did not get too excited about the Budget—but it was certainly with some anticipation that I heard that a special announcement on science, research, and technology would be made in the Budget. That was announced a week before the main Budget. I thought it would be the announcement of a key driver to really get behind the economy, to be the plan, and to be the strategy for the future. Well, what an insipid, ad hoc arrangement we saw.

I will speak on two things. The first is that there was an increase in the Budget. I acknowledge that there was an increase in the Budget this year of $56 million. What was it to do? It was to be spent on grants and vouchers administered by the Government and given to companies. That was this Government’s answer to increasing and driving private sector research and development. We have one of the worst research and development spends in the private sector in the OECD, and what do we do? We give money to the Government to sit there and ask for applications from companies to be given money.

The research and development tax credit of 15 percent meant a change in culture in the private sector. I have been to a lot of companies around New Zealand in the last few weeks and asked all of them the same question, which was what they thought about the grants scheme in the last Budget. The answer was always the same—well, actually, not quite the same. The big companies said that they will get $2 million or $3 million and that is fine by them. It means that they will be able to push some of the stuff that they were already going to do in research and development and buy some things that they were not necessarily going to spend our money on. But the small companies said that they are not affected because they probably will not get anything out of the new funding of $56 million. They will get nothing. Unanimously, small and large companies said that they would have preferred the 15 percent tax credit, because they would have taken the extra bit of risk in the knowledge that the 15 percent would be met by the Government.

That is what the Australian Government has done. The Australian Government has just bumped up its research and development tax credit to 15 percent, at the same time that we have eliminated ours. We have increased our research and development spending by about 5 or 6 percent, which is just about enough to keep pace with inflation. What has Australia done? It has increased its research and development spending by 25 percent. Australia has a 15 percent tax credit and a 25 percent increase in its research and development spending, and we sit in this House and hear about this Government’s plan to catch up with Australia. I ask how we can possibly catch up with Australia when one of our key drivers, research and development, science, and technology, has just fallen yet further behind where the Australians are on that. What a ridiculous, insipid, de facto, “plan-less”—if there is such a word—Government we have before us.

The second thing is that instead of having a real plan and a real strategy, we have the merging of two departments. The Ministry of Research, Science and Technology and the Foundation for Research, Science and Technology will be merged together. This is shuffling the deckchairs on the Titanic; it is nothing more than that. We will spend $6 million on this exercise. It will not even return a benefit in the first 5 years.

There is no plan. There is no strategy. If I can applaud the Government for something, it is the new name that they have given this merged entity: the Ministry of Science and Innovation. To some degree, I agree with that, but one would think that the Government would put somebody in place to head it. One would think that this Government would undertake a really good search for the best person, the best brains in the world, to head it, but it did not do that.

In the very first statement that Mr Shearer made—I know he has an interest in research, science, and technology—he accused the Government of being ad hoc. I think it is evident by that statement alone that he was not here for the previous 9 years of the Labour Government. I say that because Labour members were totally and completely beset by adhockery. I think the biggest single judgment made by the sector about the Labour Government was the failed Catching the Knowledge Wave conference. The previous Prime Minister, Helen Clark, basically poured cold water on the sector, and that sent a profound signal right across the science and innovation sector that in succeeding years New Zealanders could not look to Labour for a step change in this sector at all.

That is one of the reasons why in recent times, in the latter period of the previous Government, there was an insipid growth rate. New Zealand went into recession ahead of the rest of the world. I will tell the House what the previous Government delivered to New Zealand. It delivered a $9 billion deficit. We have had to deal with that, and we have had to build out of that.

I want to cover a couple of points. The first point is that in the context of a significant deficit the National Government has significantly increased expenditure in this sector for this year and for the next 3 years. In fact, this is the largest amount of new money going into a sector, behind education and health, so that is a significant change.

It is not, however, just money; it is the major changes that are being done within the sector. One priority is Crown research institute reform. I know that the member and other colleagues sitting beside him know the importance of that, because I am certain that they are receiving information from across the Crown research institutes as to how profound those changes will be in respect of their future performance. An OECD report stated that New Zealand had the most contestable system in the entire OECD. What did the previous Government do about that? It did absolutely nothing. It just shelved the report. This Government actioned it and established a task force, and we are implementing that right now. It is to be rolled out in the latter half of this year. That is one of the fundamental differences between the previous Government and the current Government. It talked, and we do.

The second issue that I want to draw people’s attention to is the merger of the Ministry of Research, Science and Technology, and the Foundation for Research, Science and Technology, which is not, dare I say it, a minor move. There are two aspects to it. It is a much simpler system, and it is something that the sector has absolutely been crying out for, but it was falling on the deaf ears of the previous Government. We changed that by making these changes.

The other aspect was changing the name of the ministry. This is a very significant issue because it shows the change of intent. The words “research, science, and technology” show a lack of connection between our research system and innovation and growth. In contrast, “science and innovation” is intended to show the connections, and that is why there is specific funding in the Budget of $23 million that is designed to connect directly the science and innovation system within universities and the Crown research institutes with discovery and innovation.

The previous speaker must be going around with an approach that the cup is half empty. Well, I guess, to be fair, that is a function of the Opposition. That is its view of life generally. I have been there; I know that.

💬 Hon Darren Hughes: For 9 years.

That member will be there for the same time. I guess I look at these things fundamentally positively. The sector is excited by these changes. The sector sees the changes as transformational and as setting up the conditions for a much improved connection between the sector and business and, thus, economic growth.

I know that members across the House will be excited when they see, and indeed have seen already, the innovations within various companies. This Government is out there to make that more effective—not by a tax accountant reward system, but by having effective programmes that will make a real difference.

Tēnā koe e te Mana Whakawā, tēnā tātou e te Whare. Koinei te Wiki o te Reo Māori, te whakanui i a tātou.

[Greetings to you, Mr Chairman, and to us, the House. This is Māori Language Week, which we celebrate.]

This is a John Key - led Government that is committed to growing our economy. A key part of our plan for growth and jobs is better business innovation. Today I will speak about science and innovation. I will talk about our science investment, significant as it is, and the Primary Growth Partnership, and I will also use a local Taupō example to show exactly how science and innovation create jobs and lead to economic growth.

Science and innovation are at the heart of this Government’s economic growth programme. One of the six is part of this economic plan. The Government has boosted economic growth—

💬 Hon Darren Hughes: I raise a point of order, Mr Speaker. The vote Minister responsible for this vote is meant to be sitting in the chair while the vote is being considered. Mr Joyce has sweeping powers—I respect that—but forcing the vote Minister out of the chair is not one of those powers.

The CHAIRPERSON (Lindsay Tisch): The member is exactly right. The Minister is present and his vote is being discussed. I thank the member for that.

The Government has boosted economic growth through a major increase in support for research, science, and technology, with a budget providing an additional $321 million over 4 years for new initiatives. The key part of this, the centrepiece, is the $234 million for boosting business research and development. We are also reforming the Crown research institutes to better enable economic growth. Members will hear a repetitive theme through this—economic growth. The Ministry of Research, Science and Technology will be amalgamated with the Foundation for Research, Science and Technology to form a new Ministry of Science and Innovation, where science refers to basic research, and innovation refers to applied research and commercialisation. As a country we have a proud tradition in science; the economic opportunity lies, though, in the commercialisation. That is the opportunity this country needs to seize, and this Government is doing something about it.

Research funding has to be transparent and fair. This system provides a balance that will ensure that the investment goes to the areas of Government priority—and I will talk to one of those in a minute. The central element of Budget 2010 is support for business research and development. New initiatives include $225 million over 4 years for technology grants to research and development - intensive companies, technology transfer vouchers, and specific project grants. As the Minister spoke about, there is the $24 million for support for commercialisation for university research and Crown research institute research. This commercialisation is critical.

I will also speak briefly about the Primary Growth Partnership, which is vital to electorates that are rural, like my own, Taupō, where a significant element of our economy is forestry. There is to be a $140 million a year investment in Government industry partnerships. The first three partnerships have been announced, and forestry is one of those three. That is great news for the Taupō electorate.

I will bring it local, for a minute, and look at a specific example of how science leads to the creation of jobs. That is what this Government is about—creating jobs, creating wealth, and growing our economy, not just for now but for decades to come. GNS Science is a Crown research institute, and its purpose is: “to understand earth systems and technologies, and to transform this knowledge into economic, environmental and social benefits for New Zealand.” This company is the expert on offshore and onshore energy and mineral resources. Why is that important? Well, the work that GNS Science has done in the geothermal fields of Taupō has led to the creation of jobs, which has been a significant factor in sheltering Taupō from the harsh recession that has been felt across the country. Taupō has been sheltered because both Mighty River Power and Contact Energy have recently opened significant geothermal power stations, and they are consenting at the moment for further developments. This is exactly how the use of science leads to jobs in growing our geothermal development, which is a significant part of our economy. We are a world leader in that, and it is something that we can develop further to specifically create jobs, create employment, and buoy a local economy—not just the local economy in Taupō but local economies across New Zealand.

There is a whole list of things that I could speak about, in terms of the things that this Government is doing in science and in promoting science, such as the Prime Minister’s Chief Science Adviser, the science prizes, the initiation of the Global Research Alliance on Agricultural Greenhouse Gases—goodness, I have not even started on that one, but that could have taken my entire speaking time. This Government has a plan for jobs and growth, and science is a vital part of that plan. Kia ora kia mutu.

Vote agreed to.

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