Debate on Crown Entities, Public Organisations, and State Enterprises — National Institute of Water and Atmospheric Research Ltd

I believe the next subject of interest is the Education and Science Committee’s report on the National Institute of Water and Atmospheric Research Ltd. The question is that the report be noted.

I am ready and waiting, Mr Chairman, to do your bidding.

💬 The CHAIRPERSON: Thank you.

As you are aware, the Education and Science Committee did do a financial review of the National Institute of Water and Atmospheric Research (NIWA). I have to say that the results were outstandingly good. This is from the auditors: the management control environment was noted as “Very good. No improvements are necessary.”, and financial information systems and controls for the year 2011-12 were noted as “Very good. No improvements are necessary.” The comment was made: “Based on the areas we reviewed during 2011 and 2012, we found that appropriate policies, systems, and controls were in place and appeared to be operating effectively.” I was just speaking to a colleague on the committee, and we have the pleasure tomorrow of visiting Greta Point, seeing NIWA in action, and visiting the Tangaroa. It is unfortunate, perhaps, that we are not making these speeches after that visit.

But, just to recap, NIWA is a Crown research institute. Its purpose is to enhance the economic value and sustainable management of New Zealand’s aquatic resources and environments, to provide understanding of climate and the atmosphere, and to increase resilience to weather and climate hazards. In 2011-12 NIWA earned $121.4 million in revenue for research and applied science. It made a profit after tax of some $5.5 million, which was up $1.3 million from the previous year. It received a lot of its revenue—51 percent, in fact—from the Ministry of Science and Innovation, as it then was, 17 percent from the Ministry for Primary Industries, and the remaining 32 percent from work for governmental organisations and the private sector. Since July 2012 the science, skills and innovation group of the Ministry of Business, Innovation and Employment has been the primary modelling department for NIWA, and the Treasury Crown Ownership Monitoring Unit has taken a secondary role in relation to the financial performance thereof.

The gain in total revenue between 2010-11, which is noted in the report, is largely due to the gain in applied science revenue. In the previous year the Tangaroa was out of the water for 6 months, so that explains to those interested the difference in the revenue of about $4 million that we noted. The key policy areas in which NIWA worked in 2011, taking into account its core purpose outcome—which, of course, is to increase economic growth through the sustainable management of use of aquatic resources—were natural resources and environmental science services; the sustainable use of aquatic resources; renewable aquatic and atmospheric energy; resilience to weather and climate hazards and tsunamis; climate vulnerability and change; and stewardship of freshwater and marine ecosystems.

With that being the core purpose, as we have noted, it is not surprising that there are a number of vessels that are owned by NIWA, and, as I said, the committee has the opportunity to visit the Tangaroa tomorrow. NIWA owns and operates three purpose-built research vessels: the Tangaroa, the Kaharoa, and the Ikatere, which provide the principal platforms for marine-based research and surveying in New Zealand. There are a number of small vessels as well. The book value of these NIWA vessels as of 30 June last year was almost $27 million. Revenue to support the vessels is received from the Ministry for Primary Industries, the Ministry of Business, Innovation and Employment, Land Information New Zealand—so there is cross-sector support of the vessels—and the private sector. NIWA made the comment to us that all these sources of revenue are needed to maintain the validity of the vessels’ operations.

As many of you may know, Tangaroa is a deep-water research vessel with an ice-strengthened hull. It was built in 1991 and is the only ice-strengthened research vessel in New Zealand. It undertakes work in four main areas: oceans research, fisheries research, hydrographic work, and other commercial contracts such as for mineral exploration. It is a key source of revenue for NIWA, and NIWA aims to have it at sea for at least 300 days of the year. It looks like it is all on track to exceed that expectation for the year ended 2012. NIWA invested $26 million recently in the installation of a dynamic positioning system and upgrade of Tangaroa between 2009 and 2011 to broaden the vessel’s capability and extend its useful life by another 20 years.

Report noted.

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