Engineering: issues, challenges and opportunities for development ...

ENGINEERING: ISSUES CHALLENGES AND OPPORTUNITIES FOR DEVELOPMENT© M. Austin Research and developmentin engineering is the maindriver of innovation.provide a dividend to government, as did the SOEs, but it wasdecided that financial viability and a high social rate of returnshould be the goals.Ten CRIs were proposed: AgResearch, HortResearch, Crop &Food Research and Forest Research (based on primary industrysectors), Industrial Research (based on the manufacturingsector), Environmental Science & Research and Social Research(for the services sector), and Landcare Research, Geological &Nuclear Sciences, and Water & Atmospheric Research (servingthese three resource sectors). CRIs would be responsible forthe intellectual property (IP) they created with public funding,but this IP should be exploited by the private sector, with NewZealand’s private companies being given first right of refusalto take up that IP before it was offered to overseas companies.The CRI Act (1992) structured the CRIs as companieswith Boards appointed by Cabinet and accountable to theMinisters of RS&T and Finance, who together held the sharesof each CRI ex officio. Each Board was responsible for appointinga Chief Executive and supplying an annual statement ofcorporate intent (SCI) to the shareholding Ministers. Boardmembers were not to be representative of sectoral interestsbut were to contribute a range of skills in management andapplication of research while understanding and promotinglinkages between the CRIs and the private sector. Responsibilityfor providing science input to government policy wasalready the responsibility of MoRST. By the 1992–93 year, 75per cent of FRST’s allocations were made through 3 to 5-yearcontracts and, in addition, an allocation of ‘Non-specific OutputFunding’ (NSOF) equal to 10 per cent of the public goodscience funds, won contestably by a CRI in the previous financialyear, was made. NSOF was to be used by CRI Boards tofund science programmes that were not explicitly directed byexternal priorities.The ten CRIs were established on 1 July 1992. The CRI Boardshaving set out their direction in their SCIs found that theirresearch income through FRST’s public good contestablesources was inadequate to retain all of the staff, and a numberof redundancies resulted. The smallest CRI, Social Research,was closed in 1995 because it did not establish commercialviability, suggesting that there was in fact a minimum practicalsize for a CRI. The last element relating to the formation ofthe CRIs was put in place in 1993 when the Crown CompanyMonitoring and Advisory Unit (CCMAU) was established tomonitor the performance and advise and report to the shareholdingMinisters of government-owned companies, includingCRIs.At the same time as the CRIs were being established, a Science& Technology Expert Panel (STEP) was appointed to advisethe Minister of RS&T on longer term priorities. New ZealandRS&T had 24 areas of activity and STEP recommended howthe investments in each area ought to change over time,based on the potential socio-economic importance to NewZealand, the ability to capture benefits, the R&D potentialand capacity and the appropriateness of government fundingfor each area. STEP recommended a focus on adding valueto production, increased competitiveness, diversificationand nurturing of selected core competencies. These recommendationsreceived bipartisan political support and led to agovernment statement. As a result, some areas of traditionalresearch such as animal production, horticulture and forageplant production, and geological structures found their fundingreduced. Setting these priorities involved difficult decisionsand were described soon afterwards as showing ‘thepolitical will to set zero-sum priorities’ – a situation whichdrew comment internationally. In an effort to relieve some ofthe overall funding constraints, the 1993 Budget set a targetof increasing investment in R&D from 0.6 per cent to 0.8 percent of GDP by 2005–06.In late 1992 the universities agreed to transfer NZ$10.66 millionfrom their NZ$100 million research funding into the publicgood science fund, which by then totalled NZ$260 million,in exchange for being allowed to bid into that fund on anequal basis with other research organizations. The universitiesretained exclusive access to the remainder of their researchfunds, which were seen as being related to their teaching function.By the 2005–06 financial year, 68 per cent of governmentR&D funding was allocated through the RS&T budget, wherealmost all of it was available to any organization on a contestablebasis and subject to national science priorities, whileanother 26 per cent was allocated through the educationbudget where it was available only to educational institutionsand not prioritized.By 1994 both the investment and delivery of publicly-fundedRS&T in New Zealand had been thoroughly restructured.The government saw that allocating all of its funds basedon strategic priorities left no provision to fund untargetedbasic research. In response, the Marsden Fund was establishedwith funds to be allocated on scientific excellence,as assessed by peer-review, and open to all public or privateorganizations and individuals. The 1995–96 budget allocatedNZ$4 million, and by 2007–08 the Marsden Fund had grownto NZ$35.5 million, or about 5.5 per cent of the government’sRS&T budget.The transformation has had some negative outcomes. Thehigh level of contestability encouraged intense competitionbetween research organizations. Lack of collaborationacross organizations and changes in investment priority overrelatively short 4 to 6-year periods resulted in uncertainty forresearchers and research organizations, and loss of staff. Survivalmeant that senior researchers had to spend increasingamounts of time engaged in writing bids to secure funds forthemselves and their colleagues.180