NEW ZEALAND: Research fund aims for NZ$2 billion

New Zealand businesses are expected to contribute NZ$700 million (US$534 million) to an ambitious government project aimed at injecting NZ$2 billioninto research and development in the pastoral and food sectors. The government has signalled that universities and research institutes would be key players benefiting from the fund but just how it will work in practice is not yet clear.


An example of possible expenditure given at a launch of the project included a funding set-up for a robotics engineering degree at a university if New Zealand's large food industry decided it needed more automated processing plants. A general principle for the fund is that it should provide industry-wide benefits. However, it is expected that businesses will tend to fund R&D related directly to their interests while government funding is more likely to be for basic research.

One of the fund's goals is to encourage international companies to base research and development units in New Zealand but whether foreign businesses will be able to contribute to and benefit from the fund is still under discussion.

The nation of 4 million has a low proportion of R&D spending compared with other OECD nations, particularly in terms of investment by business. In fact, business spending on R&D represents barely 0.4% of GDP compared with an OECD average of about 1.5%.

But the government hopes to change that with the announcement of its 'Fast Forward' scheme. The $700 million will earn interest and eventually be drawn down in full during the next 10-15 years for a total spend of $1 billion. The expectation is that businesses will match that investment to provide a total fund of some $2 billion.

A team of officials and industry representatives is currently working on the scheme's details and is expected to complete its work next month, opening the way for businesses to start making commitments to the initiative.

At the front of the line of potential business partners is New Zealand's biggest multi-national company, the dairy giant Fonterra, which government documents indicated was last year prepared to spend up to $60 million on the project.

In launching the scheme, Prime Minister Helen Clark said it represented one of the largest investments in innovation in New Zealand's history. One observer later compared its significance to the government's investment in railways in the 1870s.

"New Zealand has long enjoyed a competitive advantage in industries such as farming, horticulture, and fisheries, but that is no longer a given," Clark said. "We need to lift our levels of innovation on the farm, in the factory, and in the laboratory to keep ahead of the rest of the world and ensure that our pastoral and food industries are part of the new economy for New Zealand in future."

She said the fund would focus on four main areas: sustainable pastoral systems, research and education capability, food innovation clusters and internationalisation. It was expected to focus on a few larger investments to deliver a step change in innovation in these sectors. john.gerritsen@uw-news.com
*John Gerritsen is editor of NZ Education Review.