4 Mar 2010
The taskforce set up by the government to determine how New Zealand can get the greatest benefit from its Crown Research Institutes has presented its report to shareholding ministers. It has recommended that the CRI system be reformed so that CRIs are more accountable for undertaking research that is relevant to New Zealand and less accountable for making a return on investment.
The taskforce was asked to examine how CRIs can best deliver on the government’s economic priorities and respond to the needs of research users, particularly industry and business. It was chaired by Neville Jordan, executive chairman of Endeavour Capital.
The Taskforce says in its report that the government must be more explicit about what it wants each CRI to achieve and must fund the CRIs accordingly, so that they can deliver more for the national benefit. CRIs can do this if the government encourages them to plan and operate for the long term, cooperate with complementary components of the New Zealand, as well as the global, research and innovation system, and use diverse and creative approaches to transfer knowledge to those in New Zealand best able to use it.
This means having talented people in top leadership and management positions, giving them the authority they need to take strategic decisions and then holding them to account for the performance of their CRI. The measure of a CRI’s success should be the positive impact it has on New Zealand – be that economic, social or environmental – not the commercial return a CRI has been able to achieve.
“We do not believe changing the number of CRIs, their ownership status, or their employment arrangements will significantly improve their contribution to New Zealand. The question is not how many CRIs New Zealand should have, but what structures will best provide research services that address the problems and opportunities New Zealand faces. It is our opinion that the main factors impeding CRI performance relate to their funding, ownership and governance arrangements,” says the task force report.
Key points:
- CRIs were set up to address enduring challenges and opportunities that New Zealand faces. CRIs are still needed to do this, but the Government needs to clarify in a Statement of Core Purpose the exact role each CRI should play in delivering benefits to New Zealand. The Statement of Core Purpose should recognise the distinctive role of each CRI relative to other research organisations, including universities.
- The Government should fund CRIs to achieve their core purpose. A significant proportion of CRI funding (much greater than at present) should be allocated directly, on a long-term basis, to support the delivery of the core purpose activities of each CRI. The current level of contestable and ‘at risk’ funding renders CRIs vulnerable as businesses, creates uncertainty and undermines their ability to act strategically.
- CRIs face unnecessary compliance from an excessive number of contracts. Core purpose funding should be consolidated into a single contract, as soon as practicable. The core purpose funding should be negotiated against a rolling five year research strategy that is developed in consultation with relevant stakeholders and agreed with the Government through the CRI’s Statement of Corporate Intent.
- A greater degree of certainty will enable CRIs to retain and develop capability, manage risk, and operate within a longer time frame to deliver excellent and relevant research.
- Contestable, open access funding should remain an important element – albeit on a smaller scale – of Vote Research, Science and Technology (RS&T) funding. This is vital to generate competing ideas and new entrants. However, we believe the system should put less emphasis on contestable processes as a way to drive better performance. Instead, more emphasis needs to be placed on holding organisations accountable to deliver benefits as defined in their Statement of Core Purpose, rather than allocating funding against promises of activity. Reducing the proportion of contestable funding is consistent with the findings of the 2007 OECD review of our innovation system, which found it to be too competitive and fragmented.
- A portion of Vote RS&T funding should be set aside for major national collaborative challenges, akin to the funding available to the Centres of Research Excellence. This would provide incentives for collaboration in new multi-disciplinary areas of research
- In return for moving to reduce the proportion of contestable funding, CRIs need to be more accountable for delivering value to New Zealand. CRIs should have public Annual General Meetings and annually monitor and evaluate performance against the core purpose and Statement of Corporate Intent
- Primary responsibility for monitoring all aspects of CRI performance should rest with one entity. Performance indicators should explicitly include:
technology transfer as a core and measurable responsibility for all CRIs, so that the benefit of their ideas contributes to the wealth and well–being of New Zealand and not just the CRIs’ balance sheets
measures that ensure CRIs remain financially viable and accountable for all government funding. There is a current perception, not reflected in practice, that CRIs are always expected to meet a nine percent return on equity target
tailoring the approach to setting financial targets to reflect a need to be financially viable, as opposed to financially profitable
expectations and targets around collaboration with international and national components of the research and innovation system.
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To address the currently diffuse governance, investment and monitoring arrangements facing CRIs, the government should combine its long-term CRI investment, ownership and policy responsibilities into one entity. The entity should also be responsible for managing contestable funds and funding infrastructure.
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CRIs are just one part of the research and science system, alongside private research organisations and universities. The Taskforce concluded that for some issues a wider view of the system is needed. We recommend a national research infrastructure strategy to rationalise and ensure open access to major research infrastructure, where it is clear that national economies of scale apply.
In making its recommendations, the taskforce says it intends to make better use of the funds available through Vote RS&T and not to advantage and/or disadvantage any particular parties. An underlying theme of our recommendations is to strengthen and improve the effectiveness of the linkages between CRIs and all their stakeholders. These linkages are critical for deriving economic and other benefits from CRI research.
Making these changes will give CRI boards greater clarity and control over their funding. The changes will give them a stronger mandate to set strategic priorities and give them the authority to respond flexibly and quickly to the complex environments they operate in. We believe our recommendations will give CRIs greater certainty of purpose and provide the right settings for them to deliver greater benefit to New Zealand from the Government’s investment in RS&T.
Implementing the recommendations will provide enhanced confidence and attractiveness for increased operational and equity funding from government.
The Taskforce notes that many of the recommendations it has reached are consistent with the views held by the Prime Minister’s chief science advisor.