Debate on Crown Entities, Public Organisations, and State Enterprises — AgResearch

AgResearch is mismanaging public funds, and at the same time it is losing some of our top scientific talent. It is proceeding with a $100 million restructure despite evidence that shows that it is a waste of taxpayer funds. The sheepmeat industry has fallen victim to an ideologically driven board, a plan that is off the rails, and a lame duck Minister of Science and Innovation, who has seen the evidence but proven completely unable or unwilling to hold the board to account.

Let us have a look at the history. In October 2012 Mr Joyce received the AgResearch business case. It sat on his desk for 5 months—for 5 months it sat on Mr Joyce’s desk while he considered whether or not this document was worthy for him to sign off. We know he then signed it off, and subsequently out came the statement of corporate intent, which Mr English also signed off. On 30 July 2013 the proposal was put to staff. Submissions closed in August, and subsequently an internal report reviewed the restructure plan and advised on the way forward. That restructure plan said that many of AgResearch’s changes were indeed good ideas but that one part made no sense. That was the part that was about disbanding the Invermay Agricultural Centre, about pulling apart a successful hub, a successful commercial model that has generated productivity gains that amount to pretty much the doubling of sheepmeat productivity in the last 30 years, in order to start from scratch—ditching all the commercial partners, shifting cities, losing all the scientists, and starting from scratch. That is the case. The internal review, which received no less than 245 submissions, found that the case for shifting Invermay did not stack up if AgResearch wished to achieve its goals of improving science, improving productivity, and improving on-farm returns.

Then we have a number of intervention points that have arisen since then. The Minister, Steven Joyce, has been aware of all of these. There was a Public Service Association (PSA) survey that found that most members would not shift; that top talent would leave the organisation and would return overseas from whence they came or would go to other institutions in New Zealand. There was a financial review that was held where the senior management was unable to answer questions and was deceitful in its responses about the business case. Subsequently, a full business case was released, but that was not the impression given early on in the process. There has also been a vote of no confidence from one of the most significant breeding bodies in the industry, the Texel breeders of New Zealand. PSA staff at Invermay have unanimously passed a vote of no confidence in the board and senior management. And then we have the industry—92 percent of the top ram breeders in New Zealand have opposed this shift and have said that this makes absolutely no sense at all, and 6 percent abstained. The industry knows that this is not good for productivity in New Zealand.

But Mr Joyce, in all of that time, has failed. He has failed to intervene on behalf of farmers, he has failed to intervene on behalf of science in New Zealand, and he has failed in his duty to the taxpayer as he sees hundreds of millions of dollars thrown up in the air for a case that promised only marginal returns. It promised only marginal returns on its original optimistic assumptions, but those assumptions, as we know, have gone by the by. We know that the assumptions were that staff would shift in greater numbers than is currently likely. We know the assumptions were that farms would be sold off; now the timetable has been pushed back by a year. This is a no-hope case, and the Minister has failed to intervene on a board that has failed to manage the key risk identified in its own business case, which is managing the risk of staff loss of those key scientific staff who are important for productivity improvements of 1 percent per year ongoing into the future.

Labour has said that we will save Invermay. It is an easy decision to make. It costs nothing, and it improves New Zealand’s on-farm productivity. It improves exports for New Zealand.

💬 Hon Michael Woodhouse: I didn’t hear Iain Lees-Galloway say that. You go to Palmerston North and say that.

Mr Woodhouse opposite is, of course, interjecting. He has toed the party line. He has abandoned the case. He has abandoned logic. He has let the economic pace—

I think the member opposite, David Clark, first raised the issue of lame ducks, and on that note I would first like to say happy birthday to Trevor Mallard. I understand it is a big birthday today. Secondly, speaking of lame ducks, I see his leader is certainly struggling along in a way that could be described only as a lame duck’s. The member is often guilty of over-egging the story and, unfortunately, he therefore ends up pretending a case that is not so—in fact, he went on this huge conspiracy chat for the last 5 minutes about how it was all some sort of ideological conspiracy, which, of course, it is not. Fundamentally—

💬 Dr David Clark: What about staff retention, Minister?

Oh, be quiet, parrot. Fundamentally—[Interruption] Well, Mr Chair, I cannot—[Interruption]

The CHAIRPERSON (Eric Roy): Order! It is sort of an equal-handed kind of set of events here. The member was perhaps interjecting rather too much, and the Minister on his feet should have used appropriate terminology in addressing people. The Minister will continue, and let us just keep some decorum.

I apologise for the avian references, Mr Chair. The situation is simply this: as with many of our Crown research institutes, we have organisations that have historically had large numbers of assets, many of which are old, many of which were built around the 1940s or 1950s or inherited from other purposes—

💬 Dr David Clark: Invermay are the newest ones; the Minister knows it.

Shh! You will learn something. Many of them have large amounts of land, but they also need to modernise their facilities to attract new staff, and that is true of AgResearch, it is true of Plant and Food Research, it is true of Landcare Research, and so on. And so they are all dealing with the challenge of modernising their assets to attract not just the existing generation of scientists but the new generation of scientists that they need to bring into those organisations.

So AgResearch has embarked on this process, and has proposed $100 million worth of investment in its organisation to bring its facilities up to speed and to be modern facilities. As part of that, it has proposed some changes in the configuration of their institutes. It never proposed to close Invermay; it has proposed to move some staff groups. It has been through a long and rigorous process in terms of how it would finalise those particular proposals. It has landed in a space that I think many critics have found to be a significant improvement in terms of what it originally proposed, and that is an important part of the process—that you consider and you put forward proposals and you then respond to the feedback on those.

AgResearch has proposed at this time to retain the Invermay farms and the Ballantrae Hill Country Research farms. It is going to retain the existing farm systems deer researchers at Invermay, which I think makes a lot of sense. It is strengthening the deer team at Invermay. It is retaining the herd, obviously, at Invermay. It is transferring the sheep flock from Woodlands to Invermay. It is also combining more with Otago University staff, which, of course, was the original promise of the Christie Building—that there would be some Otago University staff located in Invermay. That is now going to happen. AgResearch has invited some of the regional players that have significant science teams of their own in the area of environmental science to co-locate at Invermay as well to build up that. I am hoping that the Southland Regional Council and the Otago Regional Council take AgResearch up on that opportunity, because I actually think that would save money for the ratepayers of both regions, as well as building a real centre of excellence in this environmental science area. So I think AgResearch has landed positively.

I appreciate that Mr Clark will never be happy. Interestingly, though, we have not had a call from Mr Lees-Galloway, who is more than happy about the shifts that advantage the Palmerston North area. That is one of those things where one end of the Labour Party speaks out of one side of its mouth and the other end speaks out of the other side. In fact, I think the leader of the Labour Party was in Palmerston North, committing to the investment in the Palmerston North campus at the same time as his little friend Mr Clark was down in Dunedin condemning the change. So I think the challenge of all of that is that the Labour Party members are basically saying, depending on which part of the country they are in, that there will either be no change or lots of change, but they do not need any more money. I think that is another circle they are going to struggle to square.

The other thing I just note in passing is that this Government is making very big investments in the science sector in Dunedin. There have been two very positive front-page articles in the Otago Daily Times in the last couple of weeks. Two new centres of research excellence are being picked up at Otago University and there is also the doubling—the doubling—of health research that the university has picked up in the current year. These are things that, interestingly, have not been greeted with great public relations—

Report noted.

Callaghan Innovation