Key's Speech - Anything New For Science And Innovation?

John Key's speech today has disappointed many for the timidity with which the Prime Minister approached much-needed tax reform.

But what did he have to say about science and innovation? One of the first acts of this government was to scrap the R&D tax credit. And up to today it has shown little urgency in helping to support our science and innovation sector. Last year's budget announcements provided for some modest increases in funding for the sciences, but when the loss of the R&D tax credit is taken into account, it did not really amount to a net improvement.

What Key said

So is anything about to change? Maybe. Key has identified support for science and innovation as one of the "six main policy drivers". Here's the portion of his speech dealing with science and innovation:

New Zealand's future economic performance depends to a large extent on generating and using new ideas.

We are home to some of the brightest and most innovative people, scientists and inventors in the world. Despite our small size, and distance from foreign markets, New Zealand companies have time and again proven themselves capable of producing world-beating products and services.

From Weta Digital and Icebreaker through to Zespri and Fonterra, New Zealand's leading exporters have harnessed science and innovation to develop new products and improve the way they do business.

The challenge for New Zealand is to get more of our firms using science, research and technology to deliver more valuable products and services, which in turn allows them to succeed in competitive export markets and to create new and better-paid jobs for New Zealanders.

Science and innovation are therefore key elements of the Government's economic agenda, both this year and into the future.

Our objective is a high-performing public science system which supports economic growth, and a wider innovation system that encourages firms to increase their investment in, take-up, and application of research.

This year the Primary Growth Partnership gets fully up and running, with the Government investing up to $40 million, alongside industry, in research and innovation to boost New Zealand's primary, forestry and food sectors. This investment rises to $70 million in future years.

We are also investing significantly this year in the Domestic Centre for Agricultural Greenhouse Gas Research, and in the Global Research Alliance, to drive much-needed research on agricultural greenhouse gas emissions.

This year the Government will fund a network of open access food development and commercialisation facilities across New Zealand.  This network will provide the infrastructure that food and beverage firms need to develop new ingredients and consumer products.

The Government therefore remains committed to high quality innovation in New Zealand's traditional resource-based sectors. However, we also want to boost our support for innovation in newer, knowledge-intensive activities like high-tech manufacturing. Growing a substantial portfolio of these businesses, beyond our core resource-based strengths, will be important for New Zealand's future economic growth.

In 2010 the Government will be making changes in the way we invest in Crown Research Institutes (CRIs).  The Government believes CRIs can be more powerful engines of growth and we plan to introduce changes to deliver greater benefits for New Zealand. We will also introduce measures to get more research and knowledge out of CRIs and into firms.

As I indicated earlier, the fiscal situation means that future new spending allowances can only be very modest, and most agencies will miss out on funding increases altogether.

Nevertheless, science and innovation, and how they can underpin business opportunities, are so important for this Government that we have made this area a priority for new spending in this year's Budget, with a focus on boosting business research and science capability.

Key's speech utilises lots of feel-good language about the importance of innovation, and he throws in a few examples of successful innovative companies as if to prove that, yes, we really can do it.

Analysing what Key said

But what about the specifics?

• The Government is investing up to $40 million into the Primary Growth Partnership this year. This investment rises to $70 million in future years. This funding was committed in the last budget, so there is nothing new in this announcement. Verdict: old news.
• The government will also invest significantly this year in the Domestic Centre for Agricultural Greenhouse Gas Research, and in the Global Research Alliance, to drive much-needed research on agricultural greenhouse gas emissions. The Government has already committed to funding the Centre for Agricultural Greenhouse Gas Research, so it's not clear whether funding is to be increased, or whether this is just a rehash of news they've already released. As for the Global Research Alliance, the Government had already committed $45 million over four years. So the jury is out on whether Key is proposing any real funding increase here. Given his subsequent comments on fiscal constraints, probably not. Verdict: probably little new here.
• The Government will fund a network of open access food development and commercialisation facilities across New Zealand. This is a pretty vague promise lacking in detail. It's not clear whether this funding will be provided within the existing funding regimes, or represents a new commitment. Verdict: unclear whether anything new.
• The Government will make changes in the way it invests in CRIs.  It will introduce measures to get more research and knowledge out of CRIs and into firms. This suggests there could be a shakeup of the CRI sector. For a relatively small country we do have a large number of CRIs, and they compete with each other for the same small pool of funding. It's not clear whether the funding of CRIs will change, or whether there will be a more fundamental reform of the CRI sector. The promise to get knowledge out of CRIs and into firms is a bit woolly. All CRIs are commercialisation-focused, even if their successes have to date been mostly patchy. So without any clear detail this just sounds like more  feel-good language. Verdict: potentially promising, but lacking detail.
• The fiscal situation means that future new spending allowances can only be very modest, and most agencies will miss out on funding increases altogether. Self explanatory. Verdict: discouraging.

Summary

So a few vague promises, combined with a talking up of things that have already happened or funding that had already been committed.

The only hint of something significant is the possibility we will see some reform of the CRI sector. But even that's not clear.

If this is one of the six main policy drivers of this Government, forgive me if I admit to feeling underwhelmed.