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Budget 2018: Science and research - Expert Reaction

17 May 2018

The Labour Government's first Budget includes funding for the R&D tax credit announced last month, a new Green Investment Fund to transition to help the transition to a low-carbon economy and funding towards healthier homes.

Finance Minister Grant Robertson's first budget included:
• over $1 billion in an R&D tax incentive to encourage businesses to innovate
$10 million for improving the performance and transparency of New Zealand’s science investments through a National Research Information System
$100 million for the Green Investment Fund, designed to encourage private-sector investment in high-value, low-carbon industries, clean tech and new jobs
$45 million for promoting energy efficiency, including just under $13 million for a grant scheme for warm, dry homes
The SMC collected the following commentary from key players in the science and innovation sector. Please feel free to use these comments in your reporting. More comments to follow.
Professor Giselle Byrnes, Assistant Vice-Chancellor, Research, Academic & Enterprise, Massey University, comments:

"Notwithstanding the huge focus of this year’s budget on health and non-tertiary education, the boost in research and development tax credits is welcome. Together with the focus on driving innovation in the regions, industry has good incentives to partner with universities, as the powerhouses of applied research, to address real-world problems.

"While it is disappointing that the tertiary sector as a whole is largely overlooked in this budget (the government at has spent heavily on rolling out the free fees policy from this year), and applied research is clearly valued by industry and researchers alike, there is still a need to support discovery and blue sky research, such as that supported by NZ’s Marsden Fund."
No conflict of interest.
Professor Shaun Hendy, Director of Te Pūnaha Matatini, comments:

"This budget contains few surprises for science and innovation. Labour campaigned on the re-introduction of tax credits, and the Labour-led government made it clear months ago that this would be a priority for this budget. There has been considerable doubt about whether the previous government's direct R&D grants to business administered by Callaghan Innovation were working so a change in approach was probably needed, but I don't think the R&D tax credit alone will be enough to lift our woeful business R&D investment.

"A potential disadvantage of the tax credit to the government is that the better it works, the more it will cost them, and this may mean we are in for fairly conservative series of science and innovation budgets until the effects of the tax credit on the government's coffers are better understood. Nonetheless, the government will need to keep thinking creatively about its science and innovation policies if it is to meet its goal of lifting our R&D investment to 2% of GDP.

"One issue that desperately needs further attention is post-doctoral fellowships. Currently, the government subsidises PhD students but not post-doctoral fellows, and this creates an imbalance in our research workforce. Furthermore, after receiving incorrect advice from officials, the previous government axed a scheme that supported around 90 fellowships across the country. It then refused to engage further on the issue, with the word 'post-doctoral' completely disappearing the final version of the National Statement of Science Investment. Labour campaigned on reintroducing the scheme, so it is disappointing to not see it addressed in this government's first budget, but I would hope we will see an initiative in this area as soon as possible.

"However, I am very happy to see continued support of the National Research Information System. Remarkably we currently have very little evidence about what policies or funding mechanisms work best in our research system, and this is partly because of poor data collection practises across the sector. The previous government agreed to support a national science and innovation data system to track the progress of research and researchers across the sector and I am very pleased to see that it will continue to be developed under this government."

No conflict of interest.
Associate Professor Nicola Gaston, co-director, The MacDiarmid Institute for Advanced Materials and Nanotechnology, comments:

"This year’s budget reminds me of nothing else so much as Sir Paul Callaghan, seven or eight years ago, standing up in a room full of scientists and asking us to calculate how many hip replacement operations could be funded by the sums of public money invested in our research. It’s a sobering calculation for any of us, but a reason to respect other calls on the public purse rather than to undermine the case for research funding.

"Science and research are not direct winners in this budget: the targeted increase to 2% of GDP in science funding has been previously signalled. There are however elements, such as the increased conservation spend at DOC and the Green Investment Fund, that will impact on environmental science and related technologies. The R&D tax credit is one of the biggest changes; however the impact of it will likely be muted in the first instance, as it replaces the previous Callaghan Growth Grants: it is one of the elements of this budget that will most bear watching.

"One positive sign is the specific direction of capital expenditure towards revitalisation of the Measurement Standards Laboratory: in a sense this is business as usual, but underinvestment in infrastructure is one of the ways in which our science system first loses its international competitiveness. And on the infrastructure side, another thing to note is the investment in the National Research Information System: we have seen the administrative cost of our research organisations expand in recent years, due to the establishment of the National Science Challenges, the continuing low success rates in contestable funding applications such as the Marsden Fund, and increased emphasis from funders on the reporting of ‘impact’, which is not a simple thing.

"While it is a positive move to be scientific about analysing the relative effect of different funding mechanisms, there is a real concern that this eats up a large part of baseline funding if the onus is put on researchers to spend significant amounts of time on reporting. It is, therefore, to be hoped that this investment is part of the solution in terms of streamlining reporting requirements on researchers."

Conflict of interest statement: Co-Director of the MacDiarmid Institute for Advanced Materials and Nanotechnology which is funded by the New Zealand Government through TEC, as a NZ Centre of Research Excellence.
Anthony Scott, chief executive, Science New Zealand, comments:

"The investment in science research announced today will help protect the environment, grow New Zealand’s national and regional prosperity, and enhance New Zealand’s contribution to global issues such as climate change, food security and digital science.

The R&D Tax Credit, at 12.5% relief for companies’ spending over $100,000 on R&D per annum, will amplify investment of science-based innovation in both existing and new sectors. It signals that innovation can happen anywhere and produce benefits beyond any single company.

The Green Investment Fund will complement this by accelerating private sector investment into new strands in the economic matrix. These are just as likely to emerge from existing areas of economic strength as CRI science research opens new opportunities for innovators. The Provincial Growth Fund also recognises that great ideas can be developed locally and add to the national wealth by building regional prosperity and wellbeing.

The additional funding for environmental protection, pest control, biosecurity, and the primary sector is essential to protecting and growing the economic base throughout the country. These areas are deeply personal to New Zealanders, and part of our national identity. Each area is producing science-based solutions and innovations that are being translated into global opportunities for New Zealand firms. CRIs partner with firms around New Zealand and know the potential is unlimited.

The science cooperation agreement with Singapore highlights that New Zealand is a highly-valued niche player. We must leverage benefit from that expertise and our global connectedness. Data-based science is key to the future of science, and the future foods work promotes the skill and track record of New Zealand in food innovation.

The National Research Information System, receiving $10.1 million over four years, is a significant initiative. We are working with the Ministry of Business, Innovation and Employment (MBIE) on this project. It should improve information on New Zealand’s capabilities, streamline reporting and lower compliance costs so that more of the research dollar is spent on research that makes a difference for New Zealand.
Dr Martin Atkins, Senior Research Fellow, Energy Research Group, University of Waikato, comments:

“Until the exact design and criteria for the Green Investment Fund is known it is unclear exactly how much impact it will have on the economic transition to a low-carbon economy. There is already a big shift to green investment in the private sector so it remains to be seen if the government through the Green Investment Fund can pick winners and generate the emissions reductions and new jobs promised.”

No conflict of interest.
Dr. Anna L. Berka, Research Fellow, Energy Centre

"While the budget does set aside funding for all the items set out in the campaign, including an independent Climate Change Commission, ETS reform and a Zero Carbon Act, I'm afraid that a $100m public loan facility will not cut the mustard: it will simply not cover the cost of the raft of measures required around R&D and pre-commercial support for areas of focus: transport, heat, farming, land use and the bioeconomy (as for instance signalled in the Low Emissions Economy report). It remains to be seen as to whether some of the budget set out in provincial growth fund (1b$!) and for biodiversity and forestry can serve towards these purposes.
"The provincial growth fund above all is disappointing in scope; an enormous pot of money for a tree planting programme and a rail project. It seems they have put little thought in how to build and scale existing regional capacity, or how to create synergies between regional development, climate change and conservation objectives."
Prof Arthur Grimes, Professor of Wellbeing & Public Policy (Victoria University of Wellington); & Senior Fellow, Motu Research, comments:

"It is reassuring to see that more houses will be insulated under this new insulation programme. The published research shows considerable health benefits of insulation from past insulation programmes such as the previous government's Warm Up New Zealand: Heat Smart programme.

"It is also reassuring to see that the programme is initially prioritising house insulation over heating programmes. While both aspects are important, the evidence supports this prioritisation choice."

Conflict of interest statement: My son (Alex Tarrant) is Grant Robertson's press officer.


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