Briefings to incoming ministers have developed a reputation in recent years for being bland and cautious, pandering to the political inclinations of the minister settling into the role.
But the Ministry for Business, Innovation and Employment's (MBIE) briefing to Judith Collins, the new minister of science, innovation and technology, gives a clear-eyed summary of the gap that has grown between us and other small advanced nations and of the gap
The briefing (Bim) released last week is a slightly infuriating read. It may well have been infuriating to write, too, cataloguing as it does epic missed opportunities, deferred investments and fence-sitting that has characterised the approach to innovation, science and technology in this country.
We knew all along what we needed to do – transform the economy based on the production and export of higher-value, sustainable goods and services.
But as MBIE’s policy wonks point out, successive governments spent decades deferring structural reform of our research sector, focusing on propping up crown research institutes (CRIs) and investing heavily in areas of traditional strength – agricultural and environmental science.
The next 25 years
In doing so, they failed to account for the accelerating forces moulding the world – “climate change, ageing populations, rapidly evolving technology, and increased geopolitical competition”.
“MBIE's view is that the New Zealand economy needs to transform over the next 25 years to deliver sustainable prosperity for current and future generations,” the policy advisers write. “To meet the multiple challenges it faces, New Zealand needs to export a more diverse set of products and services to a wider range of countries, producing them with lower emissions and higher rates of productivity. This cannot be achieved without much more science, leading to increased innovation and advanced technology than we are currently undertaking.”
“Advanced technology” is pretty much what you’d expect – the cutting-edge, emerging technologies that give companies and countries a competitive advantage.
In the 21st century, they include artificial intelligence, quantum computing, semiconductors, gene editing technologies, robotics, alternative proteins, precision healthcare, 3D printing, clean energy and space technologies.
While other nations identified these technologies as crucial to their future economic prosperity and invested in them strategically, we held the course, spraying too few research dollars at too many projects and institutions.
Muddling along
My view, not MBIE’s, is that ministers and senior advisers were captured by CRI and university leaders who fought passionately to preserve what they’d built.
Who can blame the scientists? The agricultural sector stuck to its tried and tested formula, securing innovation dollars befitting its importance to the economy but looking over its shoulder rather than to the future.
No one had a coherent strategic view of the science we needed to do to shore up our future. We didn’t even pick winners, just muddled along with success predicated on the idea that we would lift science and innovation funding across the board.
Only we didn’t. In real terms, we are investing less in science and innovation than in 2016/17.
“This is placing significant pressure on the financial viability of research organisations and some CRIs in particular. It will be increasingly difficult for us to maintain critical research capabilities in both universities and CRIs,” MBIE notes.
Our woeful rate of R&D spending as a nation (1.45% of GDP compared to the OECD average of 2.71% in 2021) is “particularly striking”, notes MBIE.
The now-defunct Productivity Commission estimated that underspending on R&D is responsible for 40% of our “productivity gap” with other nations.
We do have some impressive emerging capabilities in advanced technologies like space, aerospace, and quantum technologies.
Spillover benefits
But in a separate MBIE briefing to the minister for space, a hat also worn by Collins, the advisers point out that the momentum built by Rocket Lab, Dawn Aerospace and others is threatened because of a lack of government investment.
“New Zealand government spending on space is low in comparison to many other countries, both absolutely and per capita, and the government is not an anchor customer for space companies operating out of New Zealand,” MBIE notes.
“This means that companies here not only miss out on the direct benefits of a large anchor customer, but they also miss out on the spill-over benefits of having government use provide confidence to investors, commercial customers and overseas governments.”
As a result, MBIE is sceptical of the National Party’s goal of the space industry being worth $10 billion a year by 2030, without us launching a national space programme and the NZ Defence Force being an anchor customer.
What’s the answer?
We need to make up lost ground, funding important areas of advanced technology and, as MBIE puts it, placing “collaboration with industry at the heart of that research”.
“Easy-to-use pilot and scale-up facilities can encourage the growth of innovative technology firms. Aligning a critical mass of resources, deep research capability, private sector activity and international engagement can provide a platform for accelerated, high value,” MBIE adds.
The opportunity to halt the decline lies in the Te Ara Paerangi – Future Pathways process for reform of the science and innovation sector that Labour kicked off but never saw through to completion.
The consultation over the past two years revealed deep-seated problems with the research sector that go beyond the declining spending that is causing a crisis in scientific institutions.
“Of the 885 submissions received from the public, businesses, industry groups, researchers and research organisations, there was not a single submission claiming the system was working well,” MBIE notes.
So the new coalition government has difficult decisions to make about the $2.3b a year it spends on R&D and where to reprioritise spending towards advanced technologies that will help give us a competitive edge and help us transform the economy.
There’s no point in spending more money until we have a coherent idea of the research and innovation priorities. But the longer our political leaders allow things to drift, the further behind other countries we will fall.