Multi-pronged boost for R&D

October 2012


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The new Advanced Technology Institute. The hefty 2012 Technology Development Grant. The 70 postgraduate internships. The business incubator grants to young technology companies. All government initiatives launched in an effort to boost R&D in New Zealand.

Education Review looks at whether the money being ploughed into R&D is money well spent.

The outcry over certain budgetary decisions pertaining to education and research perhaps shadowed some of the more commendable aspects of Budget 2012. Amid the furore over student allowances and teacher cuts, lurked some large figures to be invested in research and development.

Was the $158.9 million over four years to invest in engineering, science, and research-led learning in New Zealand’s tertiary institutions given its due applause? Was the $250 million of new operating funding and $76.1 million in capital funding over four years for science, innovation, and research met with appreciation?

Advanced Technology Institute

The breakdown of these figures revealed money set aside for the recently launched Advanced Technology Institute, which is likely to be named after the late Sir Paul Callaghan.

The establishment board for the Institute, led by NZQA Chair Sue Suckling and including members from Industrial Research Ltd, Plant and Food Research, and Auckland Transport, has been tasked with having the institute up and running by the end of the year. Members are reportedly excited about the Institute’s potential to link business and research.

“New Zealand has businesses with great ideas and research organisations with outstanding scientific and engineering talent. The ATI’s role in helping to bring these two strands closer together has the potential to reap significant long-term economic benefits for the country,” says Suckling.

“To successfully deliver on its mandate, the ATI will need to be highly collaborative and responsive. With that in mind, in coming months, the board will run an inclusive process, including engaging with key stakeholders, to understand where the ATI can make a real difference to the innovation system.”

The Institute is an initiative welcomed by many. At the time of the budget announcements, New Zealand Association of Scientists President, Professor Shaun Hendy, said, “The contestable funding system had largely eliminated the type of research and development that gave us companies like Fisher and Paykel Healthcare. The Advanced Technology Institute should help rebuild this capability in New Zealand.”

Postgrads as interns

In another government initiative, 70 postgraduate students from around

New Zealand will have the opportunity to work as interns in some of New Zealand’s most innovative businesses, thanks to funding decisions recently announced by Minister Steven Joyce.

Funding of $2.1 million from Vote Science and Innovation will allow 70 businesses to employ graduate students for a minimum of six months to undertake innovative research and development (R&D) work. Each company receives funding that covers the cost of hiring a postgraduate student for the first six months, up to a maximum of $30,000.

“The Government’s postgraduate intern programme is highly effective for the students. They get valuable work experience in a commercial environment that will help them find suitable employment after their studies. This fits in with other work the Government is doing to improve the career opportunities of young people with an academic degree in New Zealand,” Joyce says.

“Businesses tell me they greatly appreciate this support. The programme is also highly effective for companies as it helps speed up the R&D work due to the contribution of a bright, young mind with the latest knowledge and a fresh outlook.”

Taranaki-based MetOcean Solutions Ltd is certainly one business in favour of the scheme. “MSI are to be commended for this great initiative,” says MetOcean’s Dr Peter McComb.

“We are developing a new way to measure ocean waves, and the intern will be working on the data signal processing routines and undertaking a variety of function and operational testing of the prototype. Having an intern on the team will certainly accelerate the development phase of this project for us,” says McComb.

Last year, 50 businesses were approved for funding. The programme has been altered this year in response to the skills and experience businesses are looking for to grow through R&D.

“On top of science, technology, and engineering students, we now also fund students with design or marketing degrees or commercialisation experience,” says Joyce.

Technology Development Grant

Additionally, Joyce recently announced the Government’s 2012 Technology Development Grant. Through the grant, around $45 million over three years is available for innovative high-tech businesses to help speed up the development of innovative products and services and get them to market faster.

Up to now, 42 businesses have received a Technology Development Grant, with a total worth of $148 million. The grants are valued at 20 per cent of the R&D spend of each business, up to a maximum of $2.4 million per year for three years.

TechNZ is a brand used by Ministry of Business, Innovation and Employment (MBIE) for programmes to support businesses doing R&D. TechNZ consists of various funding schemes, including the Technology Development Grant, TechNZ Projects, TechNZ Capabilities, and the Technology Transfer Voucher, and totals $115 million per year.

Smart Ideas

The MBIE’s first round of science investment for 2012 will support 47 research projects in the biological industries, energy and minerals, the environment, hazards and infrastructure, and health and society funding categories.

This year, there is an increased focus on encouraging promising new ideas that can deliver commercial results, with 11 applicants receiving funding through the Smart Ideas category.

Smart Ideas has two phases. The first phase allows researchers to develop their novel idea; then they will have to apply for further funding aimed at commercialising the work.

One of these projects is to develop a novel clean-energy storage technology designed to overcome problems with integrating renewable wind energy into the national grid.

“Ideas like this energy storage system can have significant commercial potential in New Zealand and globally, but they have to get to the point of being commercially viable,” says Joyce.

“The Smart Ideas approach will help make this happen while strengthening relationships between science and businesses and developing the entrepreneurial culture among New Zealand researchers.”

All successful proposals, including the Smart Ideas ones, were selected by MBIE’s Science Board after their proposals were reviewed by independent experts.

“The successful proposals so far range from research into combating the Psa bacterial disease in kiwifruit to enhancing the resilience of underground infrastructure in Christchurch,” Joyce says.

“Science is both a driver of economic

growth and a strong platform for evidence-based decision making across society. These projects have been selected on the basis of

their high-quality science and the difference they can make.”

Business incubator grants

Government grants of $50,000 to young technology companies via business incubators has also been met with enthusiasm.

Steve Corbett, chairman of Incubators

New Zealand and head of Massey University’s ecentre, says the Government’s initiative is recognition of the way the incubator industry has developed.

Corbett says the next decade has the potential to be one of the best decades for New Zealand technology companies to succeed internationally and New Zealand’s incubators are well placed to support them.

He says the incubators have developed a significant role in the technology start-up development phases, with direct links to research providers, universities and Crown Research Institutes, to ensure the funding is targeted appropriately.

“The incubators’ structures and systems and investor networks will ensure the research grants can be leveraged to further assist the tech start-ups to achieve product and market validation earlier and get to market that much sooner.”

Experts agree that there is hope for New Zealand’s start-up scene. Following a conference held last year by Auckland-based incubator IceHouse, Nicholas Carlson outlined his thoughts on New Zealand’s potential in this area in Business Insider. Overall, he thought New Zealand had scope to become an excellent hub for start-up ventures, but he felt some major changes needed to happen in New Zealand first, including better access to broadband Internet and more consumer web products.

“Kiwis over-estimate their own foreignness. Auckland is no different from middle America than Cambridge is,” says Carlson.

People are certainly starting to take note of New Zealand’s potential, with individuals like Peter Thiel, a director of Facebook, investing around $6 million in New Zealand companies and projects. It is clear that New Zealand needs to maintain momentum in the investment of research and development in order to keep investors like Thiel interested.

Fortunately, the Government agrees. “The reality is, if we want faster economic growth for our country then we must invest in areas that will help grow the economy. To retain our competiveness internationally, we need increased investment in engineering, science, and research,” says Minister Steven Joyce.

Is the ‘super ministry’ enough?

While the Government certainly appears to be taking significant steps to boost R&D, some critics believe the creation of the ‘super ministry’ to oversee business innovation and employment is not addressing the key issues around R&D in New Zealand.

Earlier this year, EverEdge IP chief executive Paul Adams expressed his concerns that despite the significant annual R&D spend, too little research and development ends up being commercialised and access to knowledge gained from government-funded projects is often restricted.

“The issues in R&D and innovation in New Zealand have little to do with ministry organisation structures; the problem is that we’re burning too much money on R&D that generates no financial return for our economy,” says Adams.

He believes stopping unfair tax treatment of patents, rationalising incentive systems around public R&D, being clearer about expectations, and increasing government support for private sector commercialisation are four steps that could help New Zealand become an ideas economy.

It isn’t surprising that Labour leader

David Shearer is also critical of the Government’s decision to scrap R&D tax credits. However, reinstating the tax credits would cost around $800 million over five years, with funds coming from the agricultural sector – a proposal that has its own critics.

In a speech delivered in April this year to the Association of Scientists, Shearer said, “I believe in the power of ideas, knowledge, and research to improve the lives and wellbeing of New Zealanders.”

Few would dispute this ideal, but achieving it is the real challenge.