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New ATI to get innovation to market faster

Hon Steven Joyce
Minister of Science & Innovation
12 July 2012 Media Statement
New ATI to get innovation to market faster

The Government has today announced the structure for a new Advanced Technology Institute that will become a high-tech HQ for innovative New Zealand businesses.

“The main purpose of the Advanced Technology Institute is to help get our best, most innovative ideas out of the lab and into the marketplace more quickly,” says Science and Innovation Minister Steven Joyce.

“The ATI will have operations in Auckland, the Hutt Valley and Christchurch. It will help high-tech firms become more competitive by better connecting them with innovation expertise and facilities that exist both within the ATI and across New Zealand’s Crown Research Institutes, universities, polytechnics, and other research organisations.

“It will encourage greater mobility of researchers, graduates, and academics between institutions and industry by organising co-appointments and secondments.

“We expect the ATI to focus on industries with significant growth potential such as food and beverage manufacturing, agri-technologies, digital technologies, health technologies and therapeutics manufacturing, and high-value wood products. This will encourage innovation, competition and greater commercialisation in these sectors.

“The ATI will take over some business development functions that currently sit within the Ministry of Business, Innovation and Employment. That will include the administration of some business research and development grants.”

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The ATI was a key recommendation of last year’s Powering Innovation report, which looked at how to boost the growth of firms in the manufacturing and services sector.

As part of Budget 2012, the Government has allocated $166 million over four years for the ATI ($90 million opex and $76.1 million capex).

Industrial Research Limited (IRL) will be an integral part of the ATI but the
ATI’s focus will be broader in scope than the current IRL and will operate as a Crown Agent.

The Government will shortly announce an Establishment Board that will be tasked with having the ATI operational by 1 December. The Board will be responsible for organisational decisions, including staffing requirements and the location of ATI centres in Auckland, the Hutt Valley, and Christchurch.

Because many of the staff and facilities from IRL will transfer to the ATI, the Establishment Board will also work with IRL’s Board to oversee that process, and to ensure IRL’s business commitments remain unaffected.

“Part of the Government’s business growth agenda is ensuring there are better linkages between business, science, engineering and design to make sure great ideas are commercialised and generate income and jobs for New Zealanders,” Mr Joyce says.

“The new ATI will help ensure that innovative Kiwi firms have access to the necessary skills, facilities, infrastructure and new technologies they need to lift their competitiveness and in turn boost New Zealand’s economic growth.”

For more information, including the Cabinet paper, go to:


ATI – Questions & Answers
1. How does the ATI fit within the Government’s innovation plans?
Innovation is a key part of the Government’s business growth agenda. Successful innovation is a major driver of productivity and competitiveness for companies.

Businesses that are competitive and successful on the world stage in turn drive New Zealand's economic success.

The ATI will help drive innovation in key sectors of the economy by bringing science and business closer together.

We need more firms developing and applying new technologies, and more businesses that can exploit those new technologies, in order to take full advantage of our international opportunities. The ATI will help grow those firms.

2. What is the main purpose of the ATI?
The ATI will help firms in the manufacturing and services sectors be more competitive, and grow faster, by connecting them with the scientific and technological support they need to develop and commercialise their ideas.

It will support firms at different stages of development – from start-ups to established R&D performers – to innovate in response to domestic and international market opportunities.

The ATI’s key objectives are to:
• Increase the number of firms carrying out R&D;
• Encourage firms already doing R&D to invest more in it;
• Boost the innovation and commercialisation capability of firms;
• Improve the flow of knowledge, technology and skilled people between businesses and research organisations

3. Why do we need an ATI?
The manufacturing and services sector could be a larger economic powerhouse for New Zealand. It accounts for approximately 29 per cent ($37.5 billion) of GDP, but has the potential to grow further.

While some businesses are very successful innovators, others need to be more R&D-savvy. They need to invest more money into product design and development, and be willing to adopt new, leading-edge technologies.

At the same time, research organisations lack visibility and relevance to manufacturing and services firms, and research capability, though significant, is uncoordinated.

In order to turn good ideas into marketable products, New Zealand firms need to make better connections with the innovation and science expertise that exists within organisations such as Crown Research Institutes (CRIs), private research organisations, universities, research associations, and polytechnics. Currently these organisations are not central to most businesses’ innovation processes, and many firms lack awareness of the capabilities and services they offer.

The ATI’s priority will be servicing the needs of business, and ensuring that firms can access the R&D and innovation help they require, regardless of where that expertise sits. It will be critical that the ATI sees a core part of its role as harnessing existing capability, rather than trying to duplicate it.

International evidence shows that by being business-focused, ATIs help firms expand their own innovation capabilities which enable them to keep growing and add value to the economy.

4. What will the ATI actually do?
The ATI will have two principal roles. The first is to help lift capability within the innovation system (i.e. businesses, government agencies, education institutes, and research organisations) .It will do this by:
• Helping build industry-led innovation consortia that will combine CRIs, universities, polytechnics, economic development agencies, and businesses;
• Acting as a portal through which businesses can access appropriate R&D and technical expertise and facilities both within New Zealand and overseas;
• Being a gateway for firms to access business R&D grants and commercialisation support;
• Fostering the mobility of experts, for example, by sponsoring secondments between universities, the ATI, and businesses;
• Developing links with international research organisations to ensure local firms can connect with worldwide expertise when needed, and keep up with global technology trends.

The ATI’s second role is as a service provider, offering businesses:
• Technology testing (eg. product analysis, process testing, certification);
• Applied R&D work on a contractual basis or in collaboration with others;
• Business development (e.g. technology management and intellectual property management advice);
• Technology and knowledge transfer (e.g. building innovation groupings; brokering access to specialised expertise, and encouraging the mobility of researchers and graduates between firms and institutions).

5. How many staff will the ATI employ, and where will they be based?
It is too early to say exactly how many staff the ATI will employ. The Government plans to appoint an ATI Establishment Board shortly. The Board will be tasked with making rapid decisions around organisational structure – including the number of staff and their location – in order to provide greater certainty for everyone affected by the change.

The ATI will have staff trained in engineering and science; specialists in areas such as manufacturing, digital technologies, industrial design, and biotechnology; and people skilled in knowledge transfer and the non-science services it will offer businesses in support of R&D.
The ATI will operate centres in Auckland, Hutt Valley, and Christchurch. It will seek to locate its operations close to clusters of likely business clients in order to be as accessible as possible, especially to smaller firms. It will also seek to foster relationships by providing access to facilities where researchers and firms can interact, such as open laboratories.

6. The ATI sounds similar to IRL. Why does a new entity need to be created?
Industrial Research Limited (IRL) is primarily a CRI that does high-tech research. IRL is science-focused, and has an excellent track record of science quality and research output, but has not historically been designed to meet the broad business needs of the fragmented and highly diverse manufacturing and services sector.

The ATI will be a business-led organisation; responsive to the commercial imperatives of its clients, and focused on technology transfer and the provision of services. Its operating model – including its accountability, funding, and incentive structures – will be very different from that of IRL, as well as the other CRIs. It was decided a new organisation was the best option.

The ATI’s formation also acknowledges that no single organisation in New Zealand has the array of expertise to cater to the diverse range and needs of our manufacturing and services firms, and that a networked and collaborative approach will provide the best solution.

7. What will happen to IRL and its staff?
There is a good fit between IRL’s scientific and technological capability and the ATI’s proposed areas of capability, which means most scientists and technicians will transfer to the new organisation.

The Government is mindful that decisions relating to the future of IRL staff and assets need to be made as quickly as possible by the Establishment Board.
Until the ATI is operational, IRL will continue as usual, while its board works closely with the ATI Establishment Board and MBIE to ensure a smooth transition of the staff and assets that will be absorbed by the new institute.

8. What does the ATI mean for other CRIs?
Creation of the ATI does not signal wider change to the existing model for the other CRIs. The ATI is a tailor-made solution for the complexity of the manufacturing and services sector, which covers a wide array of companies in terms of scope and size, and in terms of their diverse needs for technical services science and research. CRIs such as Scion, AgResearch and Plant &Food were primarily set up to provide research for a particular sector, and their research is often driven by a natural resource (e.g. forestry, water, crops, etc). There will be some crossover between the work of the ATI and other CRIs in regards to some areas (eg food processing), but it will be expected that each agency will focus on their research strengths and work collaboratively with clients.
There is considerable scope for powerful linkages between CRIs and the ATI. CRIs will remain the authoritative voice when it comes to the science underpinning their sectors, while the ATI will help connect firms with that science and use it to support their innovation and commercialisation.

9. Where does the ATI leave other organisations undertaking R&D?
The ATI, as a business-focused organisation, will be proactive in seeking out firms that are well placed to grow with science and innovation assistance. While it will offer R&D services, its key role is one of leadership and facilitation, and it will not duplicate existing expertise and facilities, nor seek to compete with commercialisation units in universities and CRIs.

For other research organisations, current R&D relevant to manufacturing and services will continue, but there will be more opportunities to apply this capability to support business, either by providing technical services or working collaboratively with other organisations on R&D projects.

10. What impact will the ATI have on other research organisations bidding for science funding?
Contestable science funding is open to researchers from public organisations (e.g. CRIs, universities), and to private organisations when the benefits from the research are for New Zealand, not the organisation.

IRL bids in the current round of contestable science funding will remain in place, and as usual they will be judged on their merits. Any funding awarded to IRL will remain with the relevant unit when its functions either transfer to the ATI or become part of the subsidiary company within the ATI.
The ATI will be able to bid for contestable funds. However, given the ATI’s purpose is to support business innovation and commercialisation, it is not expected to undertake basic scientific research without securing a business partner, co-funding, and an identified commercial pathway. That means it is unlikely to be a major player in the contestable funding process.

11. How does the ATI link to the Food Innovation New Zealand initiative?
The New Zealand Food Innovation Network (NZFIN) was set up to provide a link between key players in the food innovation system, and has clear synergies and some overlap with the ATI. It is therefore intended that the functions of FINZ will transfer into the ATI once the ATI is operational.

The FoodBowl – an open-access food development and commercialisation centre in Auckland – is also likely to be integrated into the ATI, as it would enhance the institute’s ability to work closely with food manufacturers and provide the FoodBowl with a larger support structure that can assist it in working with a wider range of firms around the country. Further consultations on the proposed integration will be held between the ATI Establishment Board, and the current stakeholders ATEED and MBIE.

12. What are the implications for current R&D funding?
One of the ATI’s key functions will be to act as a gateway through which manufacturing and services firms can access business R&D grants, and business support services. This is consistent with the government’s desire that it acts as a one-stop shop, providing seamless business-facing services covering the full range of support and advice that firms need to become more competitive.

To support that objective, MBIE’s business support programmes such as the Global Expert Service and Futureintech will be devolved to the ATI. It is also proposed that, subject to further advice, some R&D funding schemes administered by MBIE be transferred as well, along with the business investment managers who support the schemes.

Access to public R&D funding is important to business and so the ability to administer business R&D funding will make the organisation immediately relevant to business and help it effectively carry out its roles and functions.

However, further advice needs to address which funding schemes should transfer to the ATI; how science and business funding streams can be integrated; the appropriate roles for MBIE and the statutory Innovation Board (which makes funding decisions on the advice of business investment managers) within the new grants administration system, and how to achieve a clear separation between the ATI’s grants administration and its own R&D services to ensure all research providers compete for grants on a level playing field.

13. How does the ATI relate to MBIE, NZTE, and regional economic development agencies?
The ATI will be an important player in the innovation system but there are other agencies that directly support innovation and its commercialisation. The ATI will need to have close connections and partnerships with these agencies, especially MBIE and New Zealand Trade and Enterprise (NZTE) and regional economic development agencies.

MBIE, as the government’s principal adviser on science and innovation policy, will provide advice on ATI’s role and priorities, as well as its funding mechanisms and accountability frameworks.

MBIE currently administers a range of business R & D funding programmes as noted above, and a number of these fit well with the proposed roles and function of the ATI. It is intended therefore to consider transferring a number of these MBIE operational functions into the ATI to provide a one-stop shop for business advice and funding, and research support.

NZTE has a range of business development and technology-related services that also complement those of the ATI. Services that support manufacturing and services firms (such as Better By Design, the Lean Business programme, and the Manufacturing+ programme) may also be considered for transfer into the ATI, subject to further consultation

14. Won't the ATI be just another addition to a crowded sea of research institutions?
No. The Government is very focussed on ensuring that the ATI reduces the complexity of the innovation system for firms, rather than increasing it. That's why the design involves bringing together a range of currently separate functions into one entity. Through the ATI, businesses will have a one-stop shop to access a range of research services, research funding programmes, and research infrastructure that was all previously only available across a number of entities, if at all.

15. How was the ATI structure arrived at?
Officials at MBIE (formerly MSI) conducted a range of studies to inform the development of the ATI. These included undertaking a profile of the HMVS sector within New Zealand, an analysis of the demand for Technology and Innovation Services, an assessment of the current research capabilities for the sector, a stocktake of IRL's current business, and an International Best Practice Review. All these studies were used to develop a structure for the ATI which was presented to Ministers and Cabinet for consideration and approval.

16. How will the ATI be established?
The ATI will be legally formed as a Crown Agent, rather than a Crown Research Institute (CRI). This form of Crown Entity best suits its roles in facilitation, its mix of commercial and non-commercial activities and administration of some business R&D grants.

Legislation to establish the new Crown Entity will go before the Parliament later this year.

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