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Research consortia investment hits $250 million

9 May 2005 Media Statement

Research consortia investment hits $250 million

Public and private investment in the government's Research Consortia programme has reached a quarter of a billion dollars, Research, Science and Technology Minister, Steve Maharey said.

The programme was set up in 2002 to improve the competitiveness of New Zealand enterprises by matching private investment in research and development.

"This is a great result which demonstrates the value of collaboration between government and industry on key areas of innovation," Steve Maharey said.

"The programme has been successful both in boosting private sector investment in science, and in increasing collaboration between researchers and investors.

"The emerging research will support innovation across a broad range of industries including forestry, housing, pastoral and sheep genomics, bioactives, pipfruit and seafood."

Steve Maharey said the commitment from industry had been "hugely encouraging" with the government's investment of $125 million up to 2011 consistently matched or exceeded by industry investment across the 10 consortia established to date.

Case studies and further information on Research Consortia are attached.

Research Consortia - Case studies

Radiata Pine Breeding Company
Many of the consortia have a diverse range of partners. The Radiata Pine Breeding Company (RPBC) Ltd, the latest consortium to be contracted has 17 shareholding companies, ranging from forest owners, seed producers and technology innovation companies, with a strong Australian contribution and participation. The Forest Research/CSIRO joint venture company Ensis is the key research provider, with the School of Forestry at the University of Canterbury also strategically aligned with the consortium.

Dr Mike Carson, acting CEO for RPBC Ltd, says the grouping brings together a diverse range of skills, capabilities and networks that provide critical capability for delivering the consortium’s objectives.

RPBC aims to both develop superior varieties of radiata pine and to better predict their future performance, hence improving the economics of tree improvement. The improved varieties will exhibit greater forest health, volume growth and product value.

Economic benefits to the nation and industry resulting from the consortium's research programme are expected to be at least $300M p.a. from 2010, initially from increased growth and timber stiffness, and later from improvements in timber dimensional stability, and appearance.

Seafood Innovations
Seafood Innovations Ltd is a consortium officially launched this year with $1.3M p.a. investment from the Foundation matched by industry. It is 80 per cent owned by SeaFIC (the Seafood Industry Council Ltd) and 20 per cent by Crop & Food Research.

Mark Loeffen, acting CEO, says bringing the seafood companies together with research organisations is immensely beneficial, allowing “both market pull and technology push” to operate. The collaboration allows the resulting research to be focussed on real commercial opportunities for adding value and helps the seafood companies be open to new ideas and technology. “Seafood companies are gaining a greater understanding of what research organisations can do for them and research organisations can better target their research.”
With many seafood companies facing quota restrictions, the only way their business can grow is by adding value to the raw material that they are currently able to harvest, which is why the research consortia are important to industry.

Wood Quality Initiative
WQI (Wood Quality Initiative) Ltd was formed in 2002 and Chief Executive Keith Mackie says within the first two years of operation the company has delivered an estimated $10-15M for shareholders by way of new technology and knowledge which shareholders can use in their businesses.

Research has uncovered new and "desperately needed" technology in assessing wood quality. "Although considerable research expertise existed before, I doubt this technology would have been uncovered or brought to this level of development had WQI not been formed.”

This consortium has shareholders representing a substantial proportion of the tree growers and processors in New Zealand and has built a very strong relationship between the sector shareholders and with R&D organisations throughout Australasia.

Background on Consortia

1. What are Research Consortia?
Research consortia are industry-led, collaborative ventures established to fund and manage research. They always involve at least two users of research, e.g. businesses, and at least one research provider, e.g. Crown Research Institutes and universities. They may also include overseas entities. The research consortium participants must provide at least 50% of the cash requirements of the projected research programmes. They may operate for up to five to seven years.

2. Why have they been introduced into New Zealand?
Governments in New Zealand have supported research for many decades. However, research funding is typically on the basis of contracts with one or two organisations. In the case of research consortia, there is greater critical mass, and strong commitment from industry representatives. This increases the likelihood of research being commercialised successfully, and reduces the adverse impact of occasional turnover of key research personnel. Australia has operated similar Co-operative Research Centres successfully for several years, and the Foundation has drawn upon Australia's experience where appropriate.

3. How does the Foundation decide which research consortia to fund?
The Foundation manages investment processes to select research projects that will benefit New Zealand and proposals are sought from potential research consortia. Reference Groups of selected independent, knowledgeable and experienced people consider proposals from research consortia. Successful proposals are subject to due diligence to ensure the business case and legal documentation are consistent with the Foundation's policies and with good business practice. The due diligence reports are then approved by the Foundation's board. The research consortium and the Foundation then enter into a funding contract.

4. What control over research consortia does the Foundation exercise?
The Foundation determines a series of review points for all research consortia over their life. There is always a review after the first year. These reviews will allow the Foundation to determine that the research consortium is operating according to sound business principles, and is meeting its milestones. The Foundation, in turn, will be able to provide advice to assist the research consortium. All research consortia will have their financial statements audited.

5. Will the Foundation fund further research consortia?
The Foundation has allocated its 2002/03 budget for research consortia, either to specific research consortia already announced, or to the meat biologics consortium, which is in the final stages of due diligence, or to the information and communications industry, where research consortium applicants are currently under investigation. The level of funding for research consortia in future years has yet to be determined by the government. However, the Foundation has been pleased to note the considerable enthusiasm already expressed by the government for this industry consortium approach to research funding.

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