Crown Research Institute merger calls

By Grant Jacobs 14/04/2011 43

The Crown Research Institutes (CRIs) are a major employer of scientists in New Zealand. Currently there are eight CRIs. (There were nine: Crop and Food and HortResearch merged to form Plant and Food Research in 2008.)

Reports in the media have suggested the government is considering investigating mergers of the Crown Research Institutes (CRIs). Some sources suggest that the extreme action would be to create just three CRIs from the current eight; one report names three sections based around primary industries, the resource sector and the natural environment.

It has been remarked that mergers would run counter to the recommendations of last year’s review of the CRIs.

I wrote this last night and waited thinking that a statement might emerge that would give further clarity: there has been no further news thus far. My own impression is that some CRI heads have pressed their views to MPs, who have forwarded them to cabinet, where they have been at least noted.

As you would expect, there is commentary on-line and in the media. Below I’ve listed some that may shed light–or at least food for thought–on the subject:

Merger of research institutes on the cards (Vernon Small, Dominion Post)

CRI mergers ‘could send scientist overseas’ (Vernon Small, The Press)

Government Mistakes Motion for Movement (David Shearer, Labour Party press release. [For those from overseas: the opposition to the current government.]) David Shearer has asked The Minister of Science and Innovation, Wayne Mapp, ’What steps, if any, has he taken for the merger of CRIs since the CRI Task Force?’ with a reply due 18th April.

Minister needs to come clean on merger plans for CRIs – the Public Service Association

Scientists worried about talk of CRI mergers (Radio New Zealand News)

A New DSIR? – Terry Porritt pokes fun at that these institutions were formed by splitting the DSIR (Department of Scientific and Industrial Research), along with the MAF research division, and that mergers would in effect re-create a DSIR-scale institution (albeit one run on different lines).

I know too little about the higher-level management of CRIs to say much beyond generalised thoughts. I’m an independent consultant, not a (past) senior manager within the CRIs. But perhaps there’s a place for stating the seemingly obvious, or  discussing what those within the ranks or wider community think? Mergers may look to longer-term efficiencies, but would cause (major) short-term disruption: would they be warranted on balance – that sort of thing.

Rather than comment, then, I open the comments below to those who wish to share their thoughts and want a place to speak out. It’s your space: go for it.

43 Responses to “Crown Research Institute merger calls”

  • Two points to make.

    First: No amount of restructuring can substitute for the gross underfunding of science by New Zealand governments over the last decade, both Labour and National led governments. Pretending we can fund science at less than half the level that is funded in the rest of the OECD and still expect innovation is laughable.
    Any discussion of restructuring is pointless without doubling science funding first, except of course as a distraction from the basic funding problem.
    Second: Managing scientific research institutes requires significant managerial talent and skill. Really good managers of research institutes are few and far between, that includes senior management, boards of directors and middle management. Expecting New Zealand to be able to come up with nine competent, let alone talented, management teams is demonstrably unreasonable. Within the nine CRIs we probably have the makings of two or maybe three decent management teams. For that reason alone we really need to merge the CRIs.
    But as I said doing that without doubling science funding is pointless

  • There seems to be some myth that incorporating smaller institutions into one large one brings greater efficiencies. While this may be true in getting better deals on stationary and paper clips, it also has a tendency to slow down decision making, and distance the decision makers from the facts that they need to take into account.
    When I did management courses a few years ago there were some great examples of where large institutions actually divided themselves up into smaller, autonomous units to increase efficency. So long as there was clear communication between the different units and staff were motivated and valued efficiency, output and creativity was enhanced.
    I think a merger is going in the wrong direction.
    And I completely agree with Bart, more funding is what is needed not a simple reshuffling of a well used deck.

  • Thanks, Ross. I had a inkling of that, but I decided I didn’t want to be (potentially, anyway) pushing the barrow of just one CRI, given that my impression was that there was more than just the one involved in this. That said, it seems clear that they are at least one player involved. (Maybe the only? It’s all a bit murky…!)

  • The posting by Ross refers to a proposal put by IRL to the Government’s high-value manufacturing review and argues for an expanded role for IRL. The presentation to the review panel was made on the basis of our assessment of the particular needs of our sector. It does not include any suggestion that the number of CRIs be reduced (in fact, it assumes no change). It does include a greater emphasis on working with industry which was the focus of the later presentation to the Metals industry. The issue of numbers of CRIs is a seperate question that has arisen elsewhere, and on which I will refrain from comment. I, however, will continue to advocate to lift crown investment in R&D to 1% (presently about 0.52) of GDP and industry to 1.5% (presently about 0.5).

  • Shaun,

    Many thanks for the clarification – I appreciate your taking the time to do this.

    I’d like to apologise – my previous comment is obviously misplaced. I took my lead from media reports that linked—at least by implication—the proposal for an expanded role for IRL to the calls for mergers of the CRIs.

    I think it’s worth pointing out IRL’s High Value Manufacturing Review proposal that Shaun refers to is available on-line for those that would like to read the original.

  • I believe that the recent catastrophic events have caused the government to press the panic button. They spent money on a review not too long ago (just a few months) which concluded that the number of CRIs was basically correct. At that point in time there was no mention of a “phase two” which magically appeared as the fiscal situation took a nose dive due to an unpredictable natural disaster in the middle of a protracted recession. The government is now trying to save a few millions here and a few millions there and does not appear to have a clear strategy apart from making as many small savings as possible. What worries me is that the science engine has the potential to pull NZ out of the recession. Drastic restructures at the macro level are likely to stuff up the engine for a couple of years. This is quite possibly NOT what we need to get us out of the recession. Furthermore, there is no industry to absorb moderate to large numbers of “backroom staff” without a job (and if the numbers are small, why bother with this exercise). Their option is either to sit on benefits or to emigrate. Neither of these are likely to be of much help with getting the country back on its feet.

  • SAB (and others!),

    Following from part of your thinking, there is an argument I’ve seen elsewhere that recessions are a time to invest into R&D. I’m not an economist, so I’m not well-placed to judge the sense of this argument, but I’ve seen it around enough to think that there must be at least some meat to it.

    If so, would a better case be pressing for greater output (returns, etc.) in response to increased investment into R&D, rather than calls for “trimming” or other “shuffles”? Perhaps someone with a suitable background could comment on this?

    To put “yet another” spin on it, or rather to ask a question (as I’m not within the CRIs I don’t really know the answer to this): is there a ground-up demand for mergers? If there were science and/or business reasons encouraging mergers, wouldn’t this already be doing the rounds of the CRIs workforce & management and hence appear in the review you mention?

    A related bother I have here is that the media reports I’ve read have the minister indicating that he is reviewing calls from the CRIs, not the other way around. Quoting Vernon Small: “Science and Innovation Minister Wayne Mapp confirmed this week that he was considering calls from some CRI chiefs to restructure the sector.” (Let’s hope this is more accurate than linking IRL’s case for expansion to these merger calls.)

  • I am a scientist at a CRI, PFR actually which recently merged HortResearch and Crop and Food research.

    Yes there are ground up reasons to merge. Particularly in the biological sciences where techniques and equipment overlap considerably between organisms. Not everything crosses over but yes there are synergies of materials and synergies of thought. To some degree scientists work around barriers between institutes anyway.

    There is a strong pressure from management of CRIs to avoid merger. In it’s simplest form it’s managers seeing one job where previously there were 2 or 3 jobs. But it’s more complex than that. Our experience is that administration does not decrease after the merger but at the top level indeed there are fewer senior positions. If, as for the review, you get senior managers to present a case for and against a merger it would take a strong character to propose a merger where their own job disappears.

  • Bart,

    There’s more behind what I was asking. Techniques and equipment might overlap for particular projects, but that doesn’t itself demand a merger, which is a whole-business thing. That might involve some type of sharing agreement, for example, or an out-sourcing or contract arrangement, which might give the positive benefits without much action (or disruption) at a larger scale. (I should probably add here that I work on a contract basis similar to this.)

    Another perhaps related aspect is that large single institutions can suffer from poor sharing between sectors within them. (I have some first-hand experience of this!) Pooling into one business/institute doesn’t necessarily solve this.

    There’s more to this, and I’m probably not saying this well, probably because my mind is elsewhere (on work, that is!) With that in mind, I let it at this for the time being.

    (I do have some idea of what science might overlap, etc., myself by the way – I do work in this sphere…! I was more asking if there was genuine on-going drive for it, as opposed to hypothetical ‘what ifs’, as it’s (too) easy to dream those up.)

  • SAB,

    I believe that’s the same story Ross pointed to and to which Shaun (IRL Chief Executive) commented on earlier. One of Vernon Small’s articles (the second in my list, I think) contained a paraphrased comment that GNS were concerned such an expansion would come at their expense.

  • Hi Grant

    It isn’t about particular projects, although even there the business arms of the institutes have an almost complete inability to come up with sharing agreements even when the scientists are already sharing. the synergies I was referring to come from scientists within a larger institute discovering that other groups have overlapping or complementary interests that were not visible or obvious prior to the merger. This can and does happen and has happened with our merger.

    Yes single, large overly bureaucratic institutes such as CRIs do suffer from poor sharing. But that’s mostly due to bad managers protecting turf. Underneath the managers the scientists tend cut through most of that bullshit.

    I didn’t comment on business reasons for mergers because IMO the CRIs are not functional businesses despite what their various CEOs might pretend. One advantage of merging is that large industry players would have less of an influence, at the moment some industry players feel they can dictate what research should be done. To be fair they have an important role in setting strategic goals but they are not usually good at planning detailed science and that’s where they sit at the moment for many CRIs.

    My opinion is that most of the benefits and risks balance, both business and scientific, apart from the dire shortage of quality management in New Zealand. I simply do not believe we have sufficient management skills (specifically science management) to get the best out of nine CRIs. We might have enough talent to get the best out of three.

    Note all of this musing is my opinion and not in any way meant to be representative of my employer at all (of course).

  • Bart,

    the synergies I was referring to come from scientists within a larger institute discovering that other groups have overlapping or complementary interests that were not visible or obvious prior to the merger.

    I hear what you saying, and I’m not disagreeing with what you’re saying either, but this isn’t quite what I was after. I was asking after existing (and on-going) things that might then drive a merger, not things that might be discovered afterwards.

    (There’s more to this, but I don’t want to overburden the point.)

    Yes single, large overly bureaucratic institutes such as CRIs do suffer from poor sharing. But that’s mostly due to bad managers protecting turf.

    Personally, I think it’s too easy to point the finger at managers; they’re almost the stereotypical scapegoat in these things. My own feelings / suspicions are that the structure of a business/institute matters terribly. Problems sharing between sections within a business, for example, have me thinking about the business structure rather than (just) the individuals at the section head level.

    I didn’t comment on business reasons for mergers

    By ‘business’ I simply meant the larger entity as opposed to the projects, as in my phrase “a whole-business thing”. Call it an institution if it helps.

    To be fair they have an important role in setting strategic goals but they are not usually good at planning detailed science and that’s where they sit at the moment for many CRIs.

    Just a thought: managers might usefully sit between the external player and the internal scientists to broker this sort of thing, shielding the science teams from burdensome demands, etc.

    the dire shortage of quality management in New Zealand

    Perhaps better offers and means for management training? – again just a thought. Perhaps that’s another way to better efficiency? (Grants-in-aid to train, external experience opportunities, etc. come to mind.) Scientists who move up to management may lack specific management training and all the rest that goes with that, etc., etc.

    (Also, it occurs to me that mergers don’t in themselves alter the ratio of managers to workers, but perhaps this ought to be left as a side issue.)

    I’m going to step aside, as I’d like to encourage others to join – everyone is welcome. Do join if you feel you have something to contribute.

  • I came from overseas to work at a CRI. I’ve been doing it for a couple of years, really love my job, and feel that my CRI has been a very good employer. I don’t think there’s a happier scientist in all of New Zealand. A couple of months ago, I got an offer to go back overseas. I didn’t think I’d take it, but in light of current events, I have decided to. My CRI spends a bundle finding and relocating a replacement, my department takes a huge hit in productivity when I leave, which continues for at least the first six months of my replacement’s work. My community loses someone who makes a decent salary and strongly believes in supporting local business. I have no doubt this is coming to pass all over New Zealand right now. We’re not in science because we expect to get rich, but stability is really important.

  • Sorry for the length, I’m waiting for an HPLC baseline to settle…

    There were originally 10 CRIs, not 9. The first ( Social Sciences ) collapsed in the first year or two because the amount of management was disproportionate to number of actual workers. My perception is that we need larger providers in some form because funders don’t take responsibility for ensuring taxpayers’ money is spent wisely.

    IRL’s path has been rocky, and they have received significant government funding injections over the last decade or so to help them realign to what IRL management perceived the funders expected, and to recover from earlier forays in business. I’m sure management of other CRIs will explain that revenue per person comparisons can be a misleading metric for science in NZ. IRL traditionally claimed their FTE cost in foundation bids should be much higher because of the high tech nature of their business.

    IRL has some unique strengths, eg in chemistry:- Carbohydrate Chemistry, globally recognised and attracting significant funding from offshore; Innovative Biological Technologies, including innovative supercritical and lipid expertise – mainly used by NZ companies – which is great and should be enhanced; Inorganic Chemistry looking at catalysts and ceramics to introduce hydrogen and other energy sources – an obvious future NZ direction which continuously struggles for funding and direction. I’m not familiar with other areas of IRL’s skill, such as superconductivity, but their spin-off company has a recent investment change of ownership structure to include Scott Technology, so that should develop further.

    IRL’s ” What’s your problem NZ”. I have doubts that projects helping one company make environmentally-friendly paints, now expanded with additional government funding, is likely to build a unique, strong technology infrastructure for NZ in surface coating technologies. IRL presumably selected the winner on the basis of how IRL’s existing skill sets could add value and solve the perceived problem. I assume IRL has directed other applicants to other local or overseas research providers that possibly could help, but if they didn’t….

    The winner was also in the Hutt valley. IRL’s HQ is now in Lower Hutt, but originally it was in Auckland – which has been downsized and the building sold, as has their Christchurch operation, and their Palmerston North biotechnogy section was closed early on because of inadequate funding.

    As a contract research provider, IRL is still hostage to the limited vision of funders and business partners, but also has excellent innovations that NZ could expand. IRL’s supercritical and lipid expertise has been extensively used by NZ companies, and offers great opportunities for adding value and innovation to NZ food and possibly bio-energy industries.

    IRL and other CRIs have many exceptional, skilled, and resourceful scientists who, if confronted with clearly defined strategic objectives and given appropriate partners and resources, will find unique and viable solutions. They could add value to agricultural and our under-utilised marine resources producing innovative products, but collaborations need strong, well-directed, oversight accompanying any funding, and that has been lacking.

    This highlights the consistent problem of research and innovation provision in NZ over the past two decades. Many company management consider research a distress purchase, to be purchased when a problem arises. Because of the increasing complexity of equipment and industrial processes, NZ companies will often purchase required skills from a globally-recognised specialist. It’s much easier to fly in a skilled troubleshooter than spend time and money upskilling a local research provider. NZ companies will use a CRI’s skills if they align with corporate asperations, but they also ensure that resulting valuable IP is transferred to the partner.

    Can NZ even build and sustain a high technology industry from crown investments?. F&P and Gallegher are probably NZ’s most diverse and durable technology-based businesses, with clear commitments to innovation, along with the clear business focus required for durable business success.
    I suspect there are several possible strategies for future high technology businesses in NZ. some could be…
    – develop high tech IP and utilise cheap resources elsewhere when expanding ( eg Rakon, starting in 1967, and had a facility in Singapore by 1972, opening and closing facilities as required by markets ).
    – fill a global niche using local resources and facilities, ( eg Scott Technology, started in 1913, from traditional appliance manufacturer to manufacturer of automation systems worldwide).
    – build from a single product to global provision of refinements of that product, then expand into related areas ( eg Gallegher Group, started in 1930s, now globally producing animal management systems ).

    Where would a high technology CRI research provider fit in the above, especially when you consider lead times and persistent capital investment required from concept to success?. It’s worth noting that software is one popular area of innovative business that venture capitalists fund in NZ, but smaller, capital intensive, longer term, innovators struggle to obtain sufficient funds in Nz and often look offshore.

    One problem is that government research funders have abrogated any strategic responsibility for utilisation of tax payers’ funds for research and innovation. They ask for submissions in broad categories, and allow specialist panels to select recipients. That approach hasn’t produced much for taxpayers from the several billion dollars invested.

    Because of single desk competitive bidding for research funds, NZ has minimal research duplication, but fragmentation of the providers has created minimal blending of the complementary skills of research activities. Perhaps now is the time for strong funder leadership to define goals, and fund providers to accumulate the necessary resources and skills. If that’s the case, then perhaps university innovation departments and CRIs should be sujected to arranged marriages, rather than incestuous CRI relationships.

  • Just quickly nipping back in…

    Thanks for the essay-length comment Bruce. Just how long do HPLC columns take to settle?! :-)

    Thanks for pointing out the ‘missing’ CRI. I’m feel a bit annoyed about the error: it seems you can’t trust anything in the media, even basic facts. Twice now in one post, too, so I feel embarrassed.

  • Wayne Mapp is supposed to give a reply to David Shearer’s question (“What steps, if any, has he taken for the merger of CRIs since the CRI Task Force?”) in parliament today. I’ll try get this to you when it’s available.

  • The working day has come and gone and Wayne Mapp’s replies, due today apparently, haven’t appeared on the NZ Parliament website. Neither has a reply due April 15th. I have no idea what, if any, delay occurs between the replies actually being issued and them being published on the NZ Parliament website – perhaps they’re stuck in the works?

    Either way, we get to wait…

  • I got out of DSIR in 1985. Mainly because I needed a change and it was the time when it was becoming more commercial. I spent the next 6 or 7 years in the science equipment servicing industry, a few years as a house husband and came back into the CRI in 1999. I came back because I thought I might be useful. During the period out of the system and while servicing lots of industry and labs, I became convinced that there was an awful lack of knowledge out there of basic physics, simple statisitical analysis of processes and lack of knowledge of and uptake of new technology. What annoyed me when I did come back was the inability for the science system to allow me, and for that matter anyone else in the system, to go out and offer some of this “simple advice”. It had to have an outcome. It had to be signed up. It had to be paid for. The IP had to be protected. etc. It was a pain in the rear. So nothing much happened. The idea of improving NZ Inc was out, making money for the CRI was in.

    IRL’s presentation to the High Technology committee revealed the unstartling fact that the rest of the world subsidises industry in vast amounts of science support and dollars. It was a consistent factor that emerged from the study of those countries and organisations mentioned in the presentation.

    The standout country was NZ. It’s lack of the same kind of support, the lack of the same kind of assistance and lack of the same kind of opportunity for scientists and technologists to go out and do what the rest of the world is doing and what I thought should have been happening 15 to 20 years ago without the associated bullshit is not happening.

    It is time we woke up to the fact that trying to achieve a nivana of free market supported R&D must be happening on another planet. It sure ain’t happening here on Earth.

    It should be obvious that IRL wants to get in on the act and assist NZ Inc to catch up with the rest of the world. “What’s you Problem New Zealand” revealed an awful lot ideas, processes and the need for “simple advice” out there in “NZ Inc” that lack the resources to dive into.

    Lets hope it gets some traction.

  • I think we can go one step further than Ross has implied – the competitive funding system administered by FRST was the most corrosive and destructive funding system that any free-market policy wonk could possibly have dreamed up.

    Let me explain … (my comments are of course strictly personal and based on experience in one CRI)

    How to alienate NZ industry:
    For all practical purposes, 100% of all CRIs best resources are contracted fulltime, either to FRST for periods up to 6 years or more, or 100% private commercial contracts, most of which are for consultancy and engineering and not R&D (still valuable of course). This means it is difficult for a CRI to respond positively to approaches from a potential commercial partner for an R&D project. Often, the only practical options are for the client to pay 100% of cost or wait the outcome of a FRST bid.

    Unfortunately FRST bids take no less than 18 months elapsed time to prepare, submit, and be judged, with typically less than 30% chance of success (see below, and best staff are contracted elsewhere) – that means there is almost zero chance of a useful research result inside the 2-year budget horizon of many commercial firms.

    When FRST bids are successful, the contract is with FRST, not the industrial partner. FRST always claimed that they were a proxy for the industry partner – so once the partner was signed up why did FRST continue to be involved? On occasions FRST would drive projects in directions the clients did not wish to go.

    How to stifle planning:
    For the same reasons as above, CRIs do not have any spare cash to implement strategic plans.

    In practice a CRI’s direction is almost completely determined by the success or failure of FRST bids. Typically, about 30% of a CRI’s bids to FRST are successful. While there is good correlation between the FRST scores and scores from internal referee panels, typically only the success of the top and bottom 10-20% of bids can be predicted with any confidence (but never certainty), most bids are essentially tickets in a lottery.

    MSI is apparently concerned that the CRI areas of expertise now have significant overlaps – given the random component of the distribution of 15 years funding, they should not be surprised.

    How to kill a CRI:
    One of the major inequities in the competitive system lies in the admittance of the universities and private science providers to the funding pool in the mid 1990s. Superficially, the idea seems perfectly reasonable; surely one should fund the best projects on offer. Certainly, this is a very defensible position for FRST.

    Exposing research teams to a lottery funding system means that on occasions they will not be funded. At that point, the team may be let go – a CRI does not have the spare cash (core funding) to support every team with failed bids. And so the science capability evaporates. Universities and private suppliers on the other hand have alternative sources of revenue, so their teams can survive another year or four (maybe on tight rations, but they do survive) and get to bid again and perhaps start a new project. The system may seem equitable from the perspective of the winners, but very simple game theory (see Weir, NZ Science Review, 63,1, 2006) shows that any inequity in alternative funding sources combined with randomness in the funding, will drive the provider with the least diversified funding out of existence – what’s more, the outcome is independent of the quality of the bids! The consequences have been that the total FRST funding to CRIs fell from 90% of the pool to about 50% over 15 years (and the pool shrank wrt GDP and costs), despite the CRIs having the highest bid success rates and biding for every possible project they could muster.

    The cost of the ‘game’ has been a massive loss in CRI capabilities. In some cases, the capabilities have simply moved to other providers, including CRIs, who submitted the ‘better’ bid, but some of the capabilities that have evaporated have been in applied disciplines that have low scientific status ( = poor FRST grade), but often of most relevance to NZ industry.

    How to kill a career
    In most science disciplines it takes a minimum of 5 years from Ph.D to train or mentor an expert. Until recently, the duration of FRST contracts ranged between 2 and 6 years. At best enough to mentor a future expert, but not enough to guarantee a career. Our experience is that it is all but impossible to retain the best of the recent graduates and students that pass through our labs.

    Even well-published experts have problems sustaining a career given the lottery component to the FRST funding.

    Here’s hoping for something better! Certainly NZ deserve a place where science capabilities of interest to NZ are maintained for the long haul. I’m a well-seasoned cynic, and the track record of this government is mostly smoke and mirrors. I predict a huge shuffle with plenty of public profile, little or no change to actual funding, and little in the way of benefits for NZ science or NZ Inc.

  • RodW makes some good points about the destructive management and funding of the CRIs. FRST wasn’t always bad though. Everywhere in the world it is the competitive funding streams that produce the most innovation, so inherently competitive funding isn’t the problem. The problem was FRST itself, which for several years was the fastest growing entity in NZ science. FRST grew to become a massive bureaucracy and at the same time gave up on using peer review to test the quality of proposals instead relying on industry advice and strategic plans to make decisions and that’s where it became corrosive in it’s effect on the science community.

    But there was another major problem with FRST funding and that was that it paid for the salaries of the scientists as well. That was unique to NZ and was an idea that failed.

    There is a competitive funding system in NZ that is highly successful by any measure and that is the Marsden fund. The only problem is that it is about 10 fold too small and so many many good projects don’t get funded (those that miss out often feel rightly that they were simply unlucky in a lottery). Marsden has an amazing record for funding quality science that also produces value for NZ in terms of IP, Patents and new business opportunities. But again Marsden money pays for salaries as well as the science.

    One really simple fix for many of the problems RodW describes would be to give RSNZ 10 fold more money to hand out through the peer reviewed Marsden fund.

    If you combined that with core funding in the CRIs which was ringfenced to science and support staff salaries (and not manager’s pet projects) you’d have the basis for a really good science and innovation sector.

  • RSNZ surely exists to address fundamental science issues, and thus has a huge university bias.

    If I read the table correctly, of the 110+ grants in 2010, just one went to IRL, CRIs received 12 in total, Universities received 92, Te Papa received 1, and NZ industries received 0.

    I’m not sure that taxpayers would each like to contribute $100+ a year of their taxes to fundamental research that would have minimal chance of enhancing national growth.

    Just because there were a 1000 applicants for fundamental research funds doesn’t mean that additional funds would facilitate a solution for a completely different problem, but it obviously would make a lot of Universities even happier.

  • Hi Bruce. There are a couple of parts to this, first CRIs don’t get many Marsdens because they don’t do much really innovative new science any more, most of their focus is applied late stage developmental work now, pretty much dictated by industry. So no they don’t get many Marsdens but that isn’t because of any “university bias”. Marsdens fund the best quality science and CRIs aren’t as good at that as they used to be.

    The second part is much more important. You say you are
    “not sure that taxpayers would each like to contribute $100+ a year of their taxes to fundamental research ”
    But the key thing here is fundamental research does much more for the economy than people are aware. It is where the truly new discoveries are made that result in transformations and big changes in the economies. But even more important having vibrant fundamental science community enhances the developmental work that provides the incremental changes.

    But please don’t simply believe me, have a look at research spending in really successful economies. It becomes very obvious that spending on fundamental research drives improvements in the economy. Even more important have a look at the projects Marsden has funded over the years and see how many of those led to much more than “simply good papers”.

    I don’t argue that Marsden should get more money simply from some ideology, I argue that it is the most successful funding system we’ve had in NZ based on it’s results. It’s been much better than any other funding tool by almost every measure, since it works why don’t we use it more?

  • Universities have been obtaining research funds for decades, so the successes at transforming our economy are?… Certainly the DSIR could claim some obvious ones…

    I’m not disputing your perception, but most of the current and recently successful economies ( eg BRIC, Korea, Japan ), achieved that position initially by mixing cloned/appropriated offshore technologies with local advantages – such as reduced labour costs and large national market/imperative to build on.

    I’d be surprised if there was much indigenous IP involved, that came later as an essential part maintaining/increasing market share globally. Their governments encouraged their industries to import IP and then build on it as they achieved market share, with support from government-funded entities to efficiently focus efforts, eg MITI. The original IP owners had to match the new players or find a new market – many couldn’t, because the new players had strong government support.

    War, or the threat of, seem to be good catalysts for fundamental research, but I can’t see NZ being dominant in that market.

    NZ is different, we struggle against economies of scale and absence of skilled support infrastructure when we try to build technology businesses. I haven’t seen much recently about how NZ should learn how to build industries from Ireland, Spain, Finland etc.

  • Wayne Mapp’s replies have still not been published. Sigh. Later today I will try find out how to ask to get these myself.

    (I have to admit the slow publication has me wondering if there anything actually enforcing the due date of these replies, or is it ‘that would be nice if you could do it by this date’?!)

  • @Bart. Please note that Marsden Fund fellowships are awarded to researchers, not to institutions. Because CRIs do a lot of commercial work, there is less scope for their brilliant researchers to get a lot of publications, so an important measure of research excellence could be regarded as discriminating against CRI researchers. Grant Carnaby has spoken on this issue ( ). I would disagree that CRIs don’t do innovative new science. For example, IRL made major developments in high temperature superconducting.

    Although Marsden research does provide outcomes such as IP, publications, etc, you need to remember that the focus of the Marsden Fund is excellent research, not comercialisable outputs. Excellent Marsden research could just as easily emerge from social science or humanities research as from engineering or chemistry.

  • Hey Possum, I work at one of the largest CRIs, I am well aware that we have some very talented scientists in the CRIs. Fewer than we used to have and fewer than we should have. I also know Marsden’s are given to researchers which can cause difficulties in CRIs.

    Yes there are issues with CRI researchers publishing commercial work but the Marsden panels are well aware of that and take it into account. What is more of a problem is that because CRIs get so little funding assessed on quality the scientists get out of practice writing that kind of grant. But also it should be acknowledged, as unpleasant as the idea may be, that our CRI scientists are simply not doing the best quality science as much as they should be. We like to pretend that we are all wonderful but sometimes we have to accept the data which says we aren’t as good as we think we are.

    It is really worth noting that despite Marsden focus being excellence in science they outperform FRST and internal funding even in commercialisable outputs, dollar for dollar, the AK Uni tech transfer office did the analysis a couple of years ago. That is the most important point, despite FRST and targeted funding tools claiming to promote commercial goals they actually don’t do a better job at that than Marsden. Which for anyone who has looked at overseas data and the history of science should be no surprise, science assessed on peer reviewed quality has always outperformed any targeted funding.

    Yes there is a role for targeted funding and industry linked funding but I believe in New Zealand we have the balance very wrong. Simply increasing Marsden would change that balance without any need for expensive mergers or restructuring and I believe would increase our economic benefits from science, even from social science and humanities which you seem to dismiss.

  • Bart

    I disagree with your comments re the historical value of the Marsden fund. Currently, it is mostly a waste of money, at times in the past it has been a criminal waste of money.

    When the fund first started it was oversubscribed by about 25 times. I reckon, as a rule of thumb, the costs of bidding are about 5% of the contract value. At this rate, the cost of preparing bids outweighs the funding returned to the science community. There is also the additional cost of the refereeing and administration.

    I treat the Marsden fund as a way of rewarding our most highly regarded scientists with the opportunity to do research they would not otherwise have, either because of its purely curiosity or cultural value, or because of the long gestation period between the research and any possible commercial return. That’s fine if that’s what you want, but the high cost means it should not really be treated as a significant source of funding for the community.

    Currently, with oversubscription rates of about 10 times, and a more streamlined bidding process, the Marsden fund does provide net $$ to the science community, but I’m guessing it still wastes 50% or so of the value of the fund in bidding and administration costs. This level of waste is similar to that for the worst of the FRST short-term contracts, which had a similar oversubscription rate for 2 year contracts.

    I do agree however that a properly funded Marsden-like peer-reviewed system would be the best way to operate a competitive component of the funding system. Note that during the first few years of operation, FRST functioned in exactly this way.

    But a science-value based competitive system is not the complete solution. There is a place for the more applied, less academic, perhaps more technologically inclined science that is not normally found in academia, yet is of high intrinsic value to New Zealand. I believe it is the purpose of the CRIs to be the repository for such expertise. The work done by GNS is probably the easiest sell at the moment given the chaos in Christchurch. Much of their knowledge is specific to New Zealand, and the benefits of such knowledge are only too clear.

    I also have in mind, as an example, aspects of road safety my old boss researched – almost as skunkwork – it was not his main job. He was the NZ expert in the field, never published a archival scientific paper on the topic, did numerous reports for both commercial clients and government and regulatory bodies, appeared before select committees, all with the approval of the management because they could see the value of the work. After he died I was told by one of his clients that his worked saved dozens of lives. The nature of the research was definitely scientific, but there is not a hope in hell of it being funded in any competitive system that judged it on science quality.

    Note too that I’m not suggesting that such work be funded without oversight. DSIR suffered badly in the finish because of the lack of processes to independently assess the collective value of what it was doing. And as some suggested above, there is also the classic risk of directors pet project.

  • I guess we are just going to disagree then Rod. I’d really suggest you do some research on the outcomes of Marsden funded project, you will be surprised by the commercial outputs.

    I do agree there is a role for applied science and CRIs are the logical place for some but not all of that work. That work also need different funding. A lot of really important science is done in CRIs that is never a candidate for Marsdens and still should be funded.

    But the dominant paradigm in NZ science funding for the last 20 years has been path-to-market commercial outcomes that benefit NZ. That funding regime has resulted in an appalling decline in science quality (publication rates are scary) and most importantly has failed to achieve the commercial goals it claimed.

    I was called naive 20 years ago when I challenged the wisdom of abandoning science quality as a measure in FRST and told in no uncertain terms that the powers-that-be would show me how right they were. The result is where we are now with a stagnant science community that can’t deliver the economic benefits NZ needs now let alone in the 20 year future. “Better science cheaper” was one slogan that turned out to mean “less science cheaper”.

    You claim Marsden funds are a waste of money, well I’d say a much stronger claim to wasting money can be directed at FRST and all the targeted funding tools that claimed to be smart investment strategies.

    The only funding tool that has been proven worldwide to be successful over a long term is peer reviewed quality based science funding. Go ahead look at the rest of the world, compare NSF and the USDA. Then tell me NZ is different and we can do it better with a targeted strategy that supports industry linked science led by business imperatives, the echoes of the last 20 years will give me amusement along with sadness.

    I’m not saying we should have no industry led targeted science, just that in NZ we have put all our eggs in that basket for 20 years and it failed to deliver the economic transformation it promised. Now we talk about mergers and restructuring when what is needed is simply more money and most of that money needs to be peer reviewed quality based funding.

  • While the debates of funding bodies rages — :-) — let me tell you a little of bureaucracy I’m dealing with on readers’ behalf. I’m after Wayne Mapp’s replies to David Shearer’s written questions 2269 (2011) and 2270 (2011), posed on April 8th, due April 18th.

    The kind people behind the NZ Parliament twitter service have told me:

    @BioinfoTools Replies to written questions are published 3 working days after the day the reply is lodged. See Standing Order 373 (3) c (ii)

    Looking at the Standing Orders confirms this):

    373 Lodging and publication of written questions and replies

    (1) Subject to paragraph (2), during a session of Parliament notices of questions for written answer may be lodged no later than 10.30 am on any working day.

    (2) Notices of questions for written answer may not be lodged after the last day on which the House sits in any calendar year or before the first day on which the House sits in the following year.

    (3) Notices of questions for written answer, and replies to them (including both interim and final replies, if applicable),—

    (a) may be lodged with the Clerk only in electronic form, and

    (b) must be signed by way of an electronic signature by a
    member of Parliament or by another member on the
    member’s behalf, and

    (c) are published electronically,—

    (i) in the case of questions, on the day they are accepted:

    (ii) in the case of replies, on the third working day following the day on which they are lodged.

    (4) The reply to a question for written answer must be lodged no later than the sixth working day following the day on which the question is published.

    (5) The Speaker may, in exceptional circumstances arising from the operation of the electronic system for questions for written answer, authorise the lodging or publication of questions or replies in a form or within a time other than that specified in this Standing Order.

    So… if I am correct:

    – questions are published immediately, but replies are withheld/delayed for 3 working days. (I’d be interested to learn more of the rationale behind the delay; it feels like a publication embargo of sorts – ?)

    – replies to questions 2269 (2011) and 2270 (2011)—the ones I am awaiting—should be published sometime during today (or perhaps tomorrow?)

    – the reply to question 2263 (2011) is now late. (I’m not especially interested in the answer to this question, but I’m curious over it being late!)

  • Bart,

    Again, please provide some specific examples of Marsden-funded research that have produced major economic outcomes for the taxpayer investors.

    I also dispute that “we have put all our eggs in that basket” for industry-led science. In my limited experience, most industry does
    not want to lead, and it’s the “business development” sections of research organisations that twist corporate arms with the promise of low-cost IP and cheap access to scientists.

    The well known historical difficulties of IRL were due, in part, to an unwillingness of NZ industry to participate. Most of the research applications are research entity-led, and IRL looked overseas for commercial revenue because they couldn’t find enough in NZ.
    Industry research associations suffered just as much as CRIs, as FoRST would argue that the industry benefitted most, so should fund the research.

    The reason most projects fail to provide financial benefits that exceed investment is because the senior technical management of many NZ companies don’t like the risk associated with strategic investments, they wait until there is an obvious distress, so spending is easier to justify, along with greater probability of a positive outcome.

    There obviously are some NZ companies that value strategic research but, in my limited experience, not many. I suspect some of the disdain for research is due to the clearly-defined annual financial performance goals for each corporate manager.

    Some corporates requiring contract research refused to even contemplate funding from FoRST because of concerns about IP security, and would pay for 100% of the research just to control the IP, after haggling down various inflated overheads.

    The FoRST funding process was never industry-friendly for anything other than a few thousand dollars. Only the desparate came back for more.

    The only really successful projects I’ve experienced had extremely well-motivated and strong champions within the corporate partner, and the CRO pretty much had to surrender all IP to make funds available for the investment required.

    The problem is that the government funder has neither the wit nor skill to identify and specify strategic research, and NZ companies continue to live by annual balance sheet as the defining measure of performance.

    As an aside, the DSIR died mainly because two major government clients were offended that their contract costs were spiralling out of control with little accountability, as DSIR was the only approved supplier. Those departments wanted more control, and DSIR head office wasn’t prepared to facilitate it, so the shotgun was brought to bear. No credit to any of the players, so I doubt any history will delve too deep.

  • Bart

    First let me say that I do not disagree with all your comments 

    It probably also time I made some positive comments…

    Firstly, while competition does eliminate some of the problems with the ‘old DSIR style’ bulk funding models, I’m not convinced it’s the best solution – it’s similar to management by objection – no one learns much from the process. I am more inclined to a bulk funding model with a collaborative panel review system where the bidder sits in on the discussions. The panel should include representative stakeholders (I hate that term – sounds like a swarm of vampire killers) – people who can judge the merits from different perspectives, and including always as many of those representatives as practical from outside the organisation. In this way there are no threats, both the bidder and the outsiders get to understand the different perspectives and value systems, and learning takes place for all. One of the most important features is that the system must encourage and accommodate opportunism. It must also support a balanced portfolio of research from long term blue skies stuff through to short term applied science and engineering.

    I agree with Bruce, we do have a problem with NZ industry. NZ culture for the most part is not tolerant of winners or losers, so we strongly discourage risk takers, other than on the sports field. Against a background of poor representation of technically literate people on boards and management, accounting straightjackets, and alienation by FRST practices over the last 2 decades, that means most NZ business do not understand R&D or its value. It seems to be seen as a cost and not an essential investment. There is also a myth that NZ is innovative – bollocks! Every country I’ve visited has some form of the same myth; it’s just that they use something different from No. 8 wire and bailing twine. Research these days takes real intellectual horsepower and most NZ companies cannot afford their own R&D staff.

    I think the fantastic response to IRLs ‘what’s your problem NZ’ and the screaming from businesses when the Gov. canned the R&D tax credit are both very telling. Especially considering the number of decades before that industry had said they don’t want an R&D credit. It suggests that when industry thinks they might get R&D for nothing, and look into it, they do realise it has value after all. There is also a MSI report published a few months ago citing examples where industry was dragged into R&D projects by science providers, and by the end completely changed their perspective on R&D (sorry its lost on my desk somewhere and I cant remember the title – probably pdf on MSI website) and most now budget for R&D. Industry do need more encouragement, and a piddling 10% tax break seems to be enough to change the way they think.

    I presume you’ve seem Paul Callaghan’s video on another thread – sure you can pull at a few loose threads around the edge of the presentation, but the message is correct and clear. Along with NZ industry we need to convince NZ politicians and probably most of the public, that R&D investment is not just sensible, its a no brainer. On the remote chance that someone might be listening let me cite two recent IRL examples.

    Hitman is a simple hand-held device that measures the fibre content in logs, cost ~$1M to develop (less maybe), made no $$ for IRL, very little for the company that commercialised it, and yet it returns to NZ Inc about the same annual return as the total crown investment in IRL (about $35 M p.a.- I’m not 100% sure of the figures, but its about that). Let’s say approx. 3500% p.a. return. This example is exceptional but there is no shortage of other successes.

    In my own area we spent over 10 years and about $3M in FRST contracts on understanding infra-red reflections in large furnaces – it causes errors in radiation thermometry measurements. The improved measurement techniques we developed now add ~$3M annually to NZ Inc – more than three times the annual cost of my team and an annual rate of return to NZ Inc. in excess of 100%. That project would probably not be funded these days because of the conservative nature of the sector we worked with; we could only get in-kind effort for the first few years.

    IRL cites a number of other examples of recent successful projects on its website – unfortunately without numbers (may be commercial confidences?).

  • Hon. Dr Mapp still has not replied to the question 2269 and 2270 (never mind 2263)… I’ve now been suggested to ring his office. I’ve contacted his office via the on-line form in the meantime. If the brevity of replies to other questions are a useful judge I’m not expecting much, but it’s the principle of the thing, eh?

  • Dr Mapp has replied to questions 2269 (2011) and 2270 (2011), which relate to considering mergers of CRIs – sort of:

    “I am not yet able to provide a response to this question. I will provide the Member with a response in the near future.”

    ‘the Member’ refers to David Shearer, who asked these questions.

  • Guess we can presume that some sort of activity/discussion is going on, seeing as they haven’t issued a flat ‘no’ (nor did Mapp’s earlier comments to media) – ?

    Have to admit I’m surprised by the quiet response to this. Perhaps many in the CRIs feel they can’t speak out, or that whatever they would say wouldn’t have any impact – ?

  • I would guess that most CRIs would be lobbying the minister, local MPs, and relevant government policy units directly. The other CRIs have either been slow starters or have lobbied quietly behind the scenes.

    It’s pretty clear that IRL wants to be dominant in one of the three (assuming rumour of future number of CRIs is correct ) without being subsumed. However, it’s gradual concentration in Lower Hutt over the past couple of decades may count against it.

    The High Technology review was also reviewing agribusinesses and biotech ( an area where IRL may no longer be the leader ), and may choose to not comment directly on possible merging, but perhaps could be asked for an opinion during briefings.

    I wonder whether the High Tech review would see the increasing investment by Universities in downstream high tech as the future direction. We will just have to wait and see, as the Minister may just decide to impose any changes he wishes, ignoring all review recommendations.

  • Rumour Control: The discussion on the amalgamation of the 8 to 3 …….has been “closed off”. It appears it “won’t happen”.

  • Ross,

    Care to elaborate, sources, etc.? You reply is so brief I’m not quite sure which way to read it! Are you saying it is your opinion that this is what is happening (i.e. you are speculating), or that you have seen a statement somewhere saying that is what has happened?

  • I’ve no idea if by ‘rumour control’ Ross means here, or by the government, but…

    Either way—speaking for myself—surely better ‘rumour control’ by them would have been to knock it whatever the issue is on the head by promptly offering clarity with a formal written statement clearly saying what the story is?

    (I say a written statement as this way people can get it from the original source rather than via a media report, which avoids the uncertainty as to if it’s been reported accurately, etc. It’s now well past ‘promptly’, of course.)

  • Just for the record, it’s now May 9th and ‘those’ written questions still haven’t been answered. Clearly the Standing Orders don’t mean a lot with respect to questions in parliament! But whatever…

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