Advanced Technology Institute Bill

This is a debate on clauses 6 to 20 and the schedule. I call the Hon Steven Joyce.

Mr Chair—

💬 Chris Hipkins: He didn’t call.

I just did. [Interruption] Quietly.

💬 Hon Trevor Mallard: Getting up and hanging the tummy over the desk isn’t good enough.

Ah, I hear the quacking of a duck.

I am very pleased to take a call on this bill, the Advanced Technology Institute Bill, and I would like to make a couple of comments at this point if I could. One is that I want to thank the Education and Science Committee for its sterling work in relation to this bill. It has dealt with it very promptly, which is great, because I think this is a crucially important initiative for New Zealand, and getting it under way as quickly as possible is something that we as a House should be proud to do. Therefore, for those who have been supportive, I appreciate that support.

The main purpose of the bill, of course, is to establish this new Crown entity, and this is the meat of the bill in terms of the clauses that take us through the structure of the Crown entity and what it does. I suppose more formally what it does is a very simple thing, which is to help get New Zealand’s best ideas out of the lab and into the market place more quickly, and to get New Zealand firms and New Zealand science and innovation working much more closely together than has been achieved in this country to date.

I would say that we have some marvellous examples of innovation in this country, and it is a privilege for me to get the opportunity to see so many of those wonderful examples of innovation around the country. There are plenty of companies that are doing very well, but there are plenty of companies that would do better if they had a better understanding of how they could work with what is a very complicated innovation sector, which this country has built up over many, many years, and had that opportunity to work more easily with it. That is the role of Callaghan Innovation—a high-tech HQ to support our innovative businesses, primarily in the manufacturing and services sectors, and particularly the high-value manufacturing services.

I must say that I am a bit confused as to why the Greens are opposing the bill. It seems strange. They talk about high-value manufacturing. They talk about cleantech. Then here we have this magnificent initiative, which is reasonably broadly supported around the Parliament, yet suddenly they have pulled out, yet again, and said: “Oh no, that is not for us.” So one has to wonder. It is a little bit like The Hobbit. We know that The Hobbit is a weightless export, and one has to wonder why they opposed that, as well.

There have been a couple of questions raised in the debate on a previous part about the management of appropriations and how the appropriations will be set. The reality is, of course, that the appropriations are set by the executive once the bill is passed and, of course, are reviewed by this House at the select committee in the opportunities that are presented by the financial reviews. So that is the opportunity that comes in that regard.

But there is some interest—and I acknowledge the member from New Zealand First Tracey Martin—in terms of exactly where Callaghan Innovation lands in terms of the “make or buy” argument. That is going to be very carefully, and it is being very carefully, worked through, and everybody is very cognisant of the issues. On the one hand you have research organisations slightly nervous about how it might impinge upon their particular area of expertise, and then on the other hand you also have people who, I think quite rightly, point out that it has to do significant things itself in order to have skin in the game in terms of its involvement in the research and science sector. So it is going to be a reasonably fine line to draw, and I suspect that it will evolve over a series of years, rather than being a case of on day one, here is the final, for ever allocation of what this organisation does itself and what it purchases—or, more important, how it directs firms and other providers. But it is definitely the purpose of the exercise not to unnecessarily duplicate what already occurs. I think that is a very important aspect of it.

I see it as, for example, somebody whose company comes in and says: “Look, we really do need some specialist with applied mathematics expertise.” I would see Callaghan Innovation very quickly directing that person and wanting to see them build that relationship wherever that person works in the innovation system in New Zealand. That can help that business and it will be successful.

It has, of course, evolved across a range of industries in that high-value space: the food and beverage manufacturing area, agricultural technologies, digital technologies, health technologies, therapeutics, and also the high-value wood products. It is going to have to have very good relationships. Take high-value wood, for example, with Scion, as well. These are the important things that Callaghan Innovation will be doing.

I also want to acknowledge, before I stop, the family of Sir Paul Callaghan for their support for the use of his name. We take that very seriously, and there is a lot of discussion going on about how best to embody Sir Paul’s approach to science and innovation in the organisation. That is very much front and centre.

It is a pleasure to take my first call on this Advanced Technology Institute Bill, which establishes, as we have just heard from the Minister of Science and Innovation, Callaghan Innovation. The sad thing about Part 2 of this bill particularly is that it mirrors the Minister who has just sat down in the chair, the Minister of Science and Innovation: it promises a lot and delivers very little. Although on this side of the Chamber we are encouraged by the idea of a more strategic approach to the way that we develop research, science, and technology, especially in the manufacturing area, this part of the bill indicates to me that the Government’s thinking is somewhat muddled and confused as to exactly what it is expecting Callaghan Innovation to do. Therefore, I think it is a very bad start for what should be a leading part of the way research and science develop in New Zealand.

The first point I want to make in that regard actually picks up something that Tracey Martin just said. I did not serve on the Education and Science Committee for this bill, so it was interesting to hear from Tracey Martin the comment about 80 percent of the work being about relationships. I think that is very important because one of the things that this bill, in my view, fails to do, in this part particularly, is understand that research is actually undertaken by people. Research is actually done by people, and those people in New Zealand particularly—

💬 Dr Megan Woods: Scientists.

Yes, scientists. Those people in particular tend to emerge out of tertiary education and move into research and development. It is that connection that I believe is crucially missing from the functions that are listed in clause 13 of this bill. I know that Government members of the Committee have previously said that it is mentioned, it is referenced—it is there by talking about research, science, and technology providers. But actually that is not good enough. In a bill like this, which is establishing an important part of our research framework, we need to be much more specific. We actually need to be absolutely clear that we want this institute to work closely with tertiary education providers. We could clearly and specifically say that in clause 13. Supplementary Order Paper 154 in Megan Woods’ name goes towards that.

In New Zealand the development of innovation comes about often by the association of tertiary institutions, the private sector, and other research providers, including Crown research institutes—Government research providers. Indeed, one of Sir Paul Callaghan’s great legacies to New Zealand was the development of the MacDiarmid Institute, which was exactly that: a collaboration between several tertiary institutions, Crown research institutes, and private sector players. That then spun off Magritek. Magritek continues to this day to do exactly the thing that submitters who came and talked on this bill asked for, which is to work as a pipeline—it is not really a pipeline, actually; it is a virtuous circle of people moving through tertiary institutions, Crown research institutions, and private sector research and development organisations.

My submission is that this bill is lacking—in clause 13 in particular; in the functions—in being able to say it is clearly a function of Callaghan Innovation to be part of that virtuous loop of people who are moving through research and science in New Zealand. There is nothing in the functions that makes that absolutely clear to me. If we want to leverage more out of our tertiary institutions in terms of the value of research, which I think we should do, then we need to be explicit about how that happens. The university researchers in New Zealand can be very pleased. There was a study done in 2010 that said that $802 million worth of research is being developed in tertiary institutions in New Zealand. That is terrific. Let us leverage off that and use things like Callaghan Innovation to be the chance that takes that into the billions of dollars.

Before I became a member of Parliament, my job immediately before coming in here was working for a university in New Zealand to do exactly that work, to develop research proposals in a university setting that could be developed in the private sector, with a Government agency, or with a Crown research institute. It was hard work because there were a lot of barriers in the way of actually making sure that our tertiary institutions, our Crown research institutes, and private sector providers can work together. They want to, but there are barriers in the way. This has the opportunity to be the institution that breaks those barriers down, but I just do not think at the moment that in the functions in clause 13, or indeed in other parts of the bill in terms of the stakeholder advisory group—the way that is put together—we are doing enough to say this is a collaboration. We are a small country. We are a country that needs to make the absolute best of what is a small but highly talented pool of researchers. That is not happening sufficiently clearly to me under this bill.

We are proposing in Supplementary Order Paper 154 a number of amendments that attempt to make clear that there is a role in terms of drawing tertiary education together with this kind of proposal. I would urge the Government to support those, because our researchers do need to be able to have all the incentives in the right place to work together.

There are other Crown research institutes outside of this where we need to keep working on this. The National Institute of Water and Atmospheric Research Ltd has good collaboration with a number of our universities, but could do more. It is the same with the Institute of Environmental Science and Research Ltd. It should be clearer and it should be more established that that is one of the roles.

I have a genuine question for the Minister around one of the functions, and I know he alluded in part to this before—

💬 Michael Woodhouse: Are the other ones not genuine?

No, I have not asked a question yet, Todd—keep up. This is about clause 13(1)(f) around allocating and administering research, science, and technology funding. My question—

💬 Hon Trevor Mallard: The Minister’s texting from the chair.

He is probably just trying to get an answer to my question, so that is all right. What I am trying to uncover here is the extent of the allocation and administering of funding, because it will provide a muddled mandate for this institute if it is involved heavily in the allocation and administering of research, science, and technology funding. I can see that causing problems as it works as both a provider and a funder in a sector where money is so contestable. This is a question for the Minister in the chair to explain the extent of the allocation and administering of research, science, and technology funding that will be done. Of course, the Minister may just choose to be texting to see whether the rest of his costume is finished for his moment on the Hobbit red carpet, or he could choose to pay attention to the debate. It is really up to him. Clearly he is preferring the former at the moment, which may well reflect his commitment to research, science, and technology generally.

The other point that I just wanted to make in this particular call is again around the question of whether we have the relationships right in this bill. I am looking here at clause 10, “Stakeholder advisory group”, and again in Megan Woods’ Supplementary Order Paper 154 there are some amendments that I think the Government should take seriously. The first of those relates to clause 10(1), which says: “The Minister may establish a stakeholder advisory group …”. Of course the Minister needs to establish an advisory group on this. It is vitally important to build those relationships that Tracey Martin was talking about earlier, so that word should be changed to “must”. It must happen because otherwise we run the risk that Callaghan Innovation may lose some of the relationships that it should have.

The other part of this is the question of who should be on this advisory group. There are comments about it being broadly representative. Well, again that is not good enough for a piece of legislation that is establishing an important part of our research, science, and technology infrastructure. There needs to be a much more direct understanding that this Parliament wants the advisory group. It wants Callaghan Innovation generally to be linked in with the rest of the sector. We need to be clear that we want tertiary education involved, and to be clear that we want the scientists, the employees, to be involved in the advisory group. These are fairly basic parts, I would have thought, of establishing something as significant as this.

Again, this bill flatters to deceive. It has got good general ideas. It is going in the right direction, but what we see here is a lack of commitment to the people who do this work and to the relationships that are important in ensuring that science and innovation flourish in New Zealand.

There are a number of amendments to Part 2 that I believe the Government should take up so that we actually know that the body that is being established here is properly connected into the tertiary education sector, and takes real note of the fact that research does not just happen; it happens as a result of scientists who are trained in our tertiary institutions. We want to create a virtuous circle of people moving through tertiary education, into research, out to the private sector, and back in again so that we know that New Zealand is getting the best out of this kind of science funding.

I am very pleased to speak on the Advanced Technology Institute Bill. As has already been acknowledged by the Minister of Science and Innovation, obviously we acknowledge the late Sir Paul Callaghan and the fact that we are calling it Callaghan Innovation. Can I make just a couple of points. Firstly, I want to say it is pleasing that many parties across this House support this bill, and it is disappointing that the Green Party are not supporting the bill. But I want to say that through the Education and Science Committee there was some constructive engagement, and I know that it was under tight time frames, but we did a range of things to rectify that.

I just want to address three or four points that Grant Robertson has made. The first point that Mr Robertson made with regard to Part 2 was around research, science, and technology providers. I want to point Mr Robertson to a couple of key clauses in the bill. One is around the interpretation clause. In my view, and we express this in the commentary, it clearly does cover the tertiary sector. We did not feel we needed to be more prescriptive. It is not only set out in the interpretation clause but also covered off in our commentary. So any questions that this does not cover the tertiary sector, in my view, clearly do not look at the key clauses in the bill that address this.

The second point that Mr Robertson made was that there needs to be greater collaboration. Do you know what? We actually agreed with that during the select committee process. One of the key changes that we made, as a result of some very powerful submissions from organisations like Kiwinet, was that we inserted an additional reference in clause 14 to be clear that we understand the point, which the Minister has made as well, that it is really important that we are not unnecessarily replicating the good work that is happening out there in the sector, and that is right across business and also the research organisations. So a key part of the four significant changes that we made at the select committee was to recognise and put a duty on Callaghan Innovation that there was going to be collaboration.

The other key point that I want to address, which has not been discussed yet but is, in my view, part of this discussion about the objectives and the purpose of Callaghan Innovation, is to say, as Mr Robertson mentioned, that there is a transfer of people and there is a supporting aspect in terms of bringing key people together, as part of our innovation sector. But there is also an overall discussion that the select committee had about the question of what was originally in the bill, “net benefit for New Zealand”, which we ended up, I think, reverting back to “benefit of New Zealand”. I want to touch on that just briefly, because we had what was quite a long discussion. I think it is important in the context of the other objectives, because there were a lot of questions that were raised around the research capability. We were very clear again, as the Minister has mentioned, that the establishment board has quite a lot of work to do, and I think he has said to Tracey Martin today that it is important to make sure that that line falls in the right place. But there was this discussion about net benefit, and we actually decided to remove that term “net” from the clause because in our view we believed that the benefit test encapsulated a wide range of benefits for New Zealand, but also it aligns the Advanced Technology Institute with other entities such as Crown research institutes.

The other point that Mr Robertson made was around the funding issue. I think that in clauses 12, 13, and 14 the fact is actually very clearly set out that there is a wide discretion there in terms of Callaghan Innovation, which gives the ability via the establishment board to have that flexibility, because, as I have said previously in debates, technology is changing rapidly and relationships will change in the future—we know that from the inquiry into digital literacy that we have had before our Education and Science Committee. But I just want to touch on that issue of funding, because I do believe that our Government has a very good record in terms of the issue of science funding. In Budget 2012 we delivered $250 million of new operating funding, and I think towards the Advanced Technology Institute, Callaghan Innovation, there is $166 million. It reflects our belief that I think we are now spending $1.24 billion, which is a 17 percent increase. That is incredibly important in very difficult fiscal times. I think that is important, when we discuss that issue of the allocation of funding, because that was something that did come to our select committee. That is why we decided to issue a very lengthy commentary on issues that were not necessarily legislative but were around operational issues. I would refer anyone who is listening to the clause that we added around internal research capability and research funding, where we actually outlined the issues that came to the select committee. In my view we did not have to do that, but we did that because we wanted to send a message that the select committee understood the issues out there around funding.

So in my view the issues that Mr Robertson has raised were all very thoroughly canvassed during the select committee. Research, science, and technology providers clearly include the tertiary sector. The issue of collaboration was strengthened in the bill. In terms of the issue of the overall benefit to New Zealand, again the purpose must be taken into account in terms of the overall benefit to New Zealand, but also on the issue that Tracey Martin has raised we went to extreme lengths during the select committee process to canvass these issues at least in the commentary. I think this is going to be a very important bill for New Zealand.

Kia ora. I am very pleased to take a call on this bill, the Advanced Technology Institute Bill, not least of all because the Minister of Science and Innovation has inquired as to why the Greens might see fit to oppose this legislation. I am very pleased to list some of the reasons why we are doing so, recalling of course that we initially supported this piece of legislation at its first reading because we entirely agree with the underpinning logic of establishing some sort of high-order entity that can link business and the community of research to make that series of connections that will deliver us the high-value exports and the positive improvements. We know that our economy can no longer rely on selling more logs and milk powder over the wharf. That is the past; that is not the future. However, the nature, both the process and, more important, the final structure, of the legislation is something that we simply cannot support. I will work through the bill and highlight some of the reasons for that.

We have mentioned the process. The bill was tabled and had its first reading 2 or 3 days later. Within 6 weeks we had the report back from the Education and Science Committee, and at no point have we been given clear information as to the need for that urgency. I would love to hear from the Minister why this had to be done in such extraordinary haste, because it did reduce the quality of the submissions—and we know this because the submitters told us so. It reduced the number of submissions. It penalised the officials, who did a very good job under very difficult conditions to come back in time with high-quality work, which they are accustomed and committed to providing the committees with. All in all it was a very unsatisfactory process and, not unusually, it has delivered an unsatisfactory piece of legislation.

The Advanced Technology Institute will be a Crown entity—a Crown agent. It will have very little autonomy, and clearly that is carefully designed as such. We know that the Minister will appoint the board. They will be people selected by the Minister. Clearly this organisation will very much be at the beck and call of the Minister, and that is not particularly helpful, given that its prime cause is to build lasting relationships with business. We have all heard the line about the guy who walks into a business and says: “I’m from the Government. I’m here to help you.” An organisation that is clearly so closely managed and at the Minister’s beck and call is not one that is immediately going to win the hearts and minds of business people, clearly.

Equally, there is the appointment of the chief executive of the ministry as a special adviser to the board. It is wonderful language. Clause 9(2) says that the task of the chief executive officer in that context will be “to assist the board to align its strategies and activities with government policy.” In a rough translation—call me cynical, if you will—I see that as saying that this is the fellow or the person who will give the board its marching orders. It will be told very clearly what it ought to be doing at any given time, what its approach should be, and, indeed, where it ought to be directing its funding. That is a key issue I will come to later.

The name of this organisation is to be Callaghan Innovation. We did not oppose that, clearly, although we have considerable misgivings about it, not least of all because this is exactly the sort of approach embedded in this bill that the late Sir Paul Callaghan actually warned us against. Sir Paul said that picking winners is not a strategy that has worked well for us in the past. The way this organisation is set up, it is clearly intended to do that—to pick winners, to fund them, and to support them. Sir Paul said: “We will be good at what we’re good at.” He said that the next big thing in the future will take us by surprise in the same way that things like LanzaTech took us to some extent by surprise. He said that we need to target niche markets. The wonderful line that he came up with, which we have all used and believe in, is that we want to make New Zealand a place where talent wants to live.

The way this organisation is set up is contrary to the advice that was left to us by Sir Paul. In clause 12 of the bill, the main objective talks about support and innovation for commercialisation, linking the extraordinary science and research talent we have here with the innovative capability and capacity of business to turn good ideas into earners for the country. We certainly need and want those, and there is a considerable proposition there. What this bill rather overlooks, though, is that neither sector, neither the business nor the research sector, has been sitting idly on its hands waiting for something or somebody to come along to create a bridge between the two.

There are a whole host of very, very successful enterprises, organisations, such as, UniServices, WaikatoLink, Lincoln Ventures, and the various economic development agencies around the country that have invested considerably, and they have developed very successful and positive relationships with business and with development bodies. It is rather interesting to ask the question of what will become of these relationships. It is a very obvious question to ask. How will the Advanced Technology Institute interact with these existing sets of relationships and organisations. The Education and Science Committee quite sensibly and obviously asked the question. The answer we got back is, and I quote from the Ministry of Business, Innovation and Employment: “No decision has been made about how ATI will interact, though it is recognised this is an important aspect of how ATI carries out its function.”

This is one of the themes that run through this legislation. We have been asked to sign off on something and to support a bill not knowing a great deal of the content of how this organisation will work. There is a great deal we simply do not know. There are simply too many unanswered key questions for us to offer support to this legislation. In a little bit more time, maybe we would have been persuaded. Maybe the work could have been done. We understand there will be a report back to Cabinet at the end of this month, by which time in all likelihood this bill will be done and dusted—rather too late, really, for us to be informed when we are making decisions, which, after all, is our task in this House.

Clause 13(1)(c) allows for a degree of reciprocity between business and the research sector—the tertiary and other research organisations. That is a change we effected in the select committee, and I think it is a good one. The original drafting anticipated a one-way flow from the research sector into business, and, clearly, that is not how the world works and it is not how we want it to work. So that clause does allow for a degree of reciprocity and acknowledges that the work, the research, the ideas, and the innovation can cut across a two-way path. That is a useful improvement we did manage to make to the bill.

I guess the major clause that is the deal-breaker for the Greens is 13(1)(f), which simply says that the Advanced Technology Institute will “allocate and administer RS&T funding:”—full stop. Again, the very obvious question that was asked by the select committee was: what funding? Which of the various funding streams will be handed over to the Advanced Technology Institute to administer and to allocate? Will there be new money? Frankly, we think in the present financial environment that is unlikely, and legitimately so, you might say. Again, the answer to the select committee from the Ministry of Business, Innovation and Employment was, I quote: “No decisions have been made regarding which funding the ATI will administer because MBIE is currently reviewing the schemes. A Cabinet report back is due by 30 November this year.”

Once again, we have been asked to take this on trust, and this is one of the issues that are of major concern to the various research organisations, the Crown research institutes, and the universities. We know this because we have talked to them personally and individually. They are seriously worried about what this means for their future, frankly—for their ability to continue with existing research work, to pick up new contracts, and to go into the future. Why has this not been made more clear before the legislation is passed? It seems an extraordinarily wide and open-ended provision, and the concern is clearly that most, if not all, of the contestable funding will be channelled through this new Advanced Technology Institute—through Callaghan Innovation—and that will be a completely undesirable sort of set-up. It is not, again reflecting on Sir Paul’s caution that backing winners has not worked for us.

We need a considerably more diverse range of funding streams and decision-making points than a single entity handing out most or all of the contestable funding would allow for us. It is something that came through in a fairly subdued way, I have to confess, in the submissions, but certainly individual academics, researchers, and scientists have been rather more pointed one-to-one in the information they have given to us informally. Clearly, they realise that they do not want to rock the boat. They understand that the relationship they have with the Minister is an important one, and there is a degree of concern that making too much noise about this bill might have undesirable consequences into the future. Again, it is very unfortunate that that lack of trust is coming through to us from very well-respected and successful academics and scientists.

Kia ora. I would like to pick up on just a couple of comments from my Green colleague David Clendon. First of all, the Education and Science Committee worked really well together—or up to this point it has; we have the Education Amendment Bill, it could change from here. It works very well together and it was a process where we did discuss, particularly at the front of the bill, trying to get as clear a picture as we could under the restraints that we had. So under the time constraints, I take on board the comments by David Clendon that we are asked to take these things on trust. I believe that there is a very fine line between governance and management, and that this bill is one of those situations where there is a level of trust one is going to have to take.

Remember that New Zealand First was the only party to vote against this bill, the Advanced Technology Institute Bill, at first reading. Then we listened to the submitters and we listened to those people who came to us, and although there may not have been many—and that may be a reflection of the tight time frame, which, again, we protested against, as we would prefer to see the process take its course—they were very clear that they needed an institution like this. Because that is part of what New Zealand First believes is its job—which is to listen to the people with the expertise inside the industry, actually out there doing the job—we have changed our position. We have placed on record and, again, voiced this in the select committee process to make it as clear as possible in the commentary on the bill our understanding of the level of trust that is being placed in the Minister and in the Government going forward about what they have said this bill is intended to do.

I do, however, want to address a couple of things, particularly while we have the Minister in the chair, the Minister of Science and Innovation, because he is a particularly busy Minister and it is not often that I can get to speak to him directly. First of all, I want to recognise that there are two things that are not addressed in this bill. The first is that there is still a gap. There is still a gap in regard to research funding for aquaculture. That is the other thing that I think I need to pick up on from David Clendon’s comments—

💬 Colin King: Is that agriculture or aquaculture?

Aquaculture. I never got the impression that this was the only research funding institute that was going to exist. It is not my understanding that this is the only entity that is going to exist. My understanding is—

💬 Colin King: PGP!

Yes, Mr King. My understanding is that there are selected areas that it is going to be in. But aquaculture is not there, so to have the research to take it from one research point to a commercialisation or a farming point in aquaculture is not addressed, and I would welcome any opportunity that the Minister may give me outside of the House to assist me to find where the funding may come from.

The other thing is that there has been no compensation situation addressed to the ratepayers of Auckland for the absorption of The FoodBowl. The FoodBowl was in part paid for by the city of Manukau prior to its absorption into Auckland City. And considering that yesterday there was an intense conversation from the Government around the rates of rates, I would have thought that compensation there might be appropriate.

I have Supplementary Order Paper 149, a Supplementary Order Paper with regard to a single word, “identify”, being inserted into clause 14(1)(b), and that word came from the Kiwinet submission. I take on board that the officers advising us said that they felt that it was not necessary to insert that word, because they believed it was appropriate to assume that if the Advanced Technology Institute, Callaghan Innovation, was engaging, it would have identified—and I think we all know what “assume” does when you and I deal with it. I do not believe it is appropriate to assume that just because Callaghan Innovation will be engaging with some people inside the research area, or inside business, they will know of all, and without the word “identify”, without making it a specific requirement of the institute to identify who is doing what, I believe there is a door open there for them to—either unintentionally or intentionally, and give themselves a way out—compete. So I am asking for the Government benches to support my Supplementary Order Paper. It is about a single word. I believe it adds value to the bill or I would not have put it in there. I also just want to make a statement that New Zealand First will be supporting Supplementary Order Paper 154. We see more good—

It is my pleasure to take a call at this stage of this Advanced Technology Institute Bill. I want to talk specifically to my Supplementary Order Paper 154 and the range of amendments to this bill that we are putting up, and to urge the Government and the Minister in the chair, the Minister of Science and Innovation, to listen to some of the reasons why we have put these amendments forward, and the improvements that we genuinely believe that these amendments could make to Callaghan Innovation and what it can achieve. I think it is fair to say that the piece of empowering legislation that we have before us, in terms of its ability to establish Callaghan Innovation, is pretty much motherhood and apple pie. I think there is no aim in there that any member of this Committee disagrees with. Certainly, it is absolutely central to Labour’s vision for New Zealand, and that is why we are really concerned at the opportunity lost that is contained within this legislation. We have $166 million going into a new institute and we do not have enough of the framework established to ensure that it is going to achieve what the objectives set out it does. We have put forward amendments that we think will strengthen its ability to bring about those transformations and to ensure that the success we all want will take place.

So we were very much aware of a problem, in terms of the submissions that we heard at the Education and Science Committee. Although we have heard from Government members of the committee opposite about how all but one submitter came before the committee and were in favour of the institute—and it is fair to say that—the other thing that we have to have an honest discussion about is that even those submissions we heard that were in favour of the establishment and the general purpose of the institute suggested changes, because they did not think what the Government had put up in the initial framework in the initial establishment legislation was going to achieve what it needed to. They pointed us as committee members to a number of flaws that they had serious reservations about. In many ways the amendments that we have put forward have picked up on those reservations and those fears that were put forward to us at the select committee.

Our amendments really fall under four broad headings. The first of these is around the purpose of the Advanced Technology Institute. The chair of the Education and Science Committee, Nikki Kaye, has talked about how there was a lot of debate in our committee about whether we were going to have a benefit to New Zealand or a net benefit to New Zealand. For Labour members of that committee the most important bit to us, and what we put up as an amendment, is that the benefit to New Zealand should be a key objective—not an operating principle, but an objective of the enabling legislation—because this is incredibly permissive legislation. For us the symbolism of making it an absolute mainstay that this is about the benefit to New Zealand, and not just having that listed as one of many operating principles, is something that we take seriously—although I can see from the face the Minister is making at me from the chair that he thinks that that is not the case.

One of the things that we have also put up a number of amendments around is the ability of this organisation to collaborate within the existing science system that we have in New Zealand. We had submitter after submitter, whether they be from universities or they be from other research organisations, come before our committee and say: “Look, this is a really good idea. We think there are some really positive things and we would like to see it happen, but frankly we have got some concerns around how it is we are all going to work together, how it is that we can all work together to provide the best for us from a research perspective, how we can be producing the academically best research we can in New Zealand, and how it is that we can provide the best research and development to industry.” We listened to those concerns and we put up a number of amendments around those.

My colleague Grant Robertson has talked about the need for the link—and the very explicit link—with the tertiary education system. But I think there was, by many Government members on the committee, a false dichotomy drawn between fundamental research and applied research. One does not exist without the other, and this is something that Labour members were very much aware of. We know that someone does not move in and out of basic research on a daily basis in the way that Government members think that people move out of poverty on a daily basis. Actually, what we have is a strong interconnection that needs to be acknowledged. For this reason we have put up an amendment to clause 15 that asks that Industrial Research Ltd retain its existing governance structure, even while it is a subsidiary of the Advanced Technology Institute, or Callaghan Innovation, because what we want to see is that research focus remain within Industrial Research Ltd. There is some very good research that is carried out, and some very good research that needs to be continued to be carried out, within that organisation.

But perhaps the largest concern that was voiced to us on that committee about the potential for collaborations and for the partners to all be working together in a way they have to if we are going to succeed at this—and David Clendon has spoken of the problem that many people had with this—was the fudging between funder and provider. This is something that, I think, is going to be a deal-breaker for the success of this institute. I hope that it is not. I hope that we are wrong. But we are asking that this institute be given every fighting chance, because, if it is going to succeed, it needs to collaborate with the other research providers that are there. It needs to work very closely with our universities, with our Crown research institutes, and with our other research providers. But I can tell you that every research provider is going to be looking at this organisation with a great deal of suspicion, not only because the organisation is the new entrant in providing research, or the new kid on the block, but also because the organisation is going to be dishing out the money. This is something that we think is really a do or die for the organisation, and we would like to see that cleared up.

We also think that the stakeholder advisory group is incredibly important. We think that this group is one of the fundamental success blocks to the institute succeeding. We think that there needs to be a range of voices within the stakeholder advisory group. We have asked that we do have tertiary institutions having a place secured within that group. We have asked that the industry have some autonomy to appoint someone to that group. We know that in order for this to succeed the industry does need to have a say, and we have to acknowledge that this is not the only part of our economy that will achieve economic transformation, and those views do need to be there. This is the 21st century and we need to think about what the world post the global financial crisis looks like. We need to look at actually empowering everybody involved in this. It is a nonsense that we would not want the scientists and the people who work in innovation to have a voice within that advisory group. These are the people with real skin in the game. These are the people who know what is happening on an everyday basis, so we have asked for employee representation.

Something else that we are asking for is that we have a diversity of geographical representation on this advisory group as well. We need to have the various areas of New Zealand where the economic development opportunities exist represented and their views heard. I am sure there are many members opposite, some of whom are members of the select committee—Colin King—who represent rural electorates and do not want to see this captured just by urban manufacturing. That is an important voice, but we also have to ensure that we have a range of regional economic development views heard within this, as well.

Labour has put forward a range of amendments around who is going to be feeding into what is happening in the Advanced Technology Institute. We have talked about the way in which it needs to collaborate and be part of an interconnected infrastructure of science, innovation, economic development, and commercialisation in New Zealand. We really hope that this can succeed, but what we see in the legislation that this Government is putting before us makes us fearful that it will not. We want to see that change. We want to see it strengthened. For Labour’s vision, for David Shearer’s vision, of a smart, green economy to occur, we know we have to have this level of science and innovation within our economy.

We are supporting this legislation. It was actually a line call with us, because we can see so many holes in it. We are hoping it will work, but we are urging Government members to vote in favour of our amendments, because we believe that they actually give the institute more of a chance of success. It is a shame that, although we had a very short period for consultation, we did not have more time to discuss this. David Clendon talked about the fact that if we actually had more time to work through some of these issues, the Greens may have been able to come to supporting this legislation. It is a shame that such an important initiative in New Zealand’s economic future has been rushed through in such haste. As David talked about, we really did not have an adequate answer given to us at the select committee about the need for this very undue and unseemly haste, it has to be said. So I urge—

I rise following Dr Megan Woods’ excellent speech to confirm some of the same points, because I think she has drawn attention to the rushed process. I will say a little more about that, but firstly I really want to remind us why we are here and what this legislation, the Advanced Technology Institute Bill, is about.

This bill before us would establish a new Crown agent, the Advanced Technology Institute—now being referred to as Callaghan Innovation; an excellent amendment—to support science and technology - based innovation and its commercialisation by business. We are told the Advanced Technology Institute would act as an intermediary, connecting businesses in certain industries with researchers, and promoting the commercial application of research discoveries.

These are lofty goals, and Labour supports this kind of economic development that would achieve these goals, but we are a little bit sceptical about some of the ways in which this Government is going about making this change. We know that this bill alone will not be successful in transforming New Zealand to a high-value manufacturing economy. Transformation requires bigger issues to be addressed. We need macro-prudential tools to address exchange rate issues. We need to get away from the simple interest rate - based policy that has governed the Reserve Bank in its decision making, and look at wider things like jobs and the economy.

We need things like a capital gains tax, pro-growth tax policy, and research and development policies. We need these pro-growth policies that will make sure that our economy grows and transforms and that the investment signal is toward the productive sector, because we have seen a decline in manufacturing under this Government. We have seen jobs lost again in Dunedin in recent days, and that points, again, to this declining economy, which this Government seems happy to oversee.

We need proper savings policies that make sure there is capital to invest in businesses for economic development. We need procurement policies that recognise the benefit of training New Zealanders, rather than spending taxpayer money on employing people overseas to build up skills in the manufacturing sector, as we have perhaps seen in the Hillside situation, again in Dunedin. We need to recognise that these kinds of policies would go a long way further than this bill toward addressing the dearth of support for economic development and for manufacturing in New Zealand.

This Government seems content to oversee the worst unemployment record in 13 years. We have growing unemployment. Actually, we have a Government with the worst economic record overall of any Government in the last 50 years, and it is little wonder when we see rushed processes. It is like with the asset sales legislation. We saw that rushed through Parliament because the Government did not want to hear from the submitters. It did not want to hear that its policy was not supported by New Zealanders because it would cost us $100 million a year, Treasury tells us.

Here we have another example, with the Advanced Technology Institute Bill, of a select committee process that was truncated to just 6 weeks, placing an unreasonable deadline on submitters. Many chose, as we know, not to submit as a consequence. It is not unusual for a select committee’s process to take 4 to 6 months. That is what is allowed for that process, and it would not have hurt the Government to actually listen to those affected.

Let us think about who might have contributed, and who might have submitted further to the Education and Science Committee. We might have seen more submissions from industry, we might have seen more submissions from the scientific community, from those with an interest in economic development, and more from the general public. Then we might have had more time for reflection on those submissions, for the members of the select committee to help shape this policy, so that it had a wider economic development impact, rather than the narrow economic impact it is likely to have as a consequence of the rushed process. Of course, Opposition members on the select committee did signal their dissatisfaction with the truncated time frame, but an extension in time was voted down by the Government members on that select committee. I think that is to be their shame.

One industry submission in particular raised an issue about really fundamental concerns about the probable success of the Advanced Technology Institute. The real shame is that the points that were raised in that submission were not able to be fully examined in the time frame, and neither were the points raised by those who put in supporting submissions. Their refining recommendations were not able to be considered by the select committee because of the time frame.

A clear statement of purpose should have been included in the Advanced Technology Institute’s main objective, set out in clause 12 of the legislation. It could have said something like “The Advanced Technology Institute is established to achieve a stronger and larger export-focused manufacturing sector, which provides well-paid and skilled jobs.” We could have been really clear in this legislation that that was the aim of the legislation, and that we were trying to get to a position where we had skilled and well-paid jobs in the New Zealand economy. It speaks to the lack of ambition of the current Government that it did not have a clear statement of purpose in the legislation.

So the economic development goals expressed in clause 12 are inadequate, and we need to realise that as they are expressed they are not an end in themselves. We need to be focused on the bigger prize, on those things that real economic development policies could achieve—joined-up thinking—and that could include a dropping unemployment rate, rather than one that is rising. This Government could do that, and, potentially, if it had that ambition and if it wanted to, state clearly in the purpose of the bill why it is doing this, rather than finding weasel words and taking a tepid approach that sees very little new money, and what new money is in there is a very small contribution.

There are other points that have not been picked up in the debate, which I think is a shame. The Government has chosen not to address the fact that there is no explicit subclause to ensure there is not unnecessary duplication and competition within existing research provision by the Advanced Technology Institute. Dr Megan Woods raised that earlier in her speech, but we have heard nothing from the Government on that.

We have heard nothing about a way through the conflicts presented by the funder/provider roles. That is another point that my colleague Dr Megan Woods raised that has not been addressed. Submitters did raise these concerns about the conflict, and we have seen nothing from the Government in response.

We in the Labour Party would like to see a stronger industry representation on the stakeholder advisory group. We think there need to be strong links between the Advanced Technology Institute and the education sector. We recognise that on its own this bill cannot successfully transform the economy. The Government seems blind to this; it is carrying on. We are watching the manufacturing sector decline, a decline since 2008 of 9.5 percent in the elaborately transformed manufacturing sector.

When we divide out the primary sector from the actual manufacturing sector that the public have in their minds, we see a nearly 10 percent drop under this Government in the manufacturing sector. That is a disgrace. This is a Government that seems content to oversee the demise in our economy, and it is a shame. We will be supporting this bill, but as a tepid first step towards a proper economic development policy. Thank you.

The question was put that the amendments set out on Supplementary Order Paper 151 in the name of the Hon Steven Joyce to Part 2 be agreed to.

Amendments agreed to.

The question was put that the amendments set out on Supplementary Order Paper 154 in the name of Dr Megan Woods to clause 10 be agreed to.

We have a further amendment set out on Supplementary Order Paper 161 in the name of David Clendon to clause 13(1)(f). This is out of order as it is inconsistent with an earlier decision of the Committee.

The question was put that the amendment set out on Supplementary Order Paper 149 in the name of Tracey Martin to clause 14 be agreed to.

We have Dr Megan Woods’ amendment to clause 15 as set out on Supplementary Order Paper 154. This is out of order as it is inconsistent with an earlier decision of the Committee.