Dr Ian McMahon, delegates, thank you for the opportunity to give the opening address to the 11^th Annual Conference of the Australasian Research Management Society. I note that this is the second time that New Zealand has hosted this conference, the first being in Auckland in 2003.

This conference is very timely. The themes and presentations that you will be discussing over the next three days are very much the issues that Governments on both sides of the Tasman are grappling with right now. The recession not only challenges government and society; it also forces new thinking.

Today I first set out the process and the challenge of setting science priorities. This is directly related to the conference themes of supporting, evaluating and encouraging research in areas that will enhance growth. Second, I will discuss the opportunities that New Zealand and Australia have to work together to advance science.

The Government's fundamental priority for New Zealand is economic growth. Improved growth is the only sustainable path to building the jobs, incomes and society that New Zealanders want and expect. As a country we have underperformed and we need to do better. Innovation is one of the main pathways to achieve the growth we need.

It is easy to set that as an objective. The hard part is recognising the impediments to growth, and what we have to do to change.

There is general agreement in New Zealand that our science and research system is too complicated and too fragmented. We need greater investment and a big improvement in getting science from the lab to the marketplace.

These issues are not unique to New Zealand. Australia is going through its own review of science, and it is noteworthy the priority setting exercise in Australia is virtually identical to ours.

I also note that Dr Janet Halliwell, who is speaking later at this Conference, has described the Canadian science and innovation system as having "... low business expenditures on R&D, a concentration of radical innovation in a limited number of sectors, and more generally, cost containment, dominating innovation as a strategy for competitiveness". I have heard similar concerns in many forums in this country.

If these are the common problems, then what are the solutions?

The first one is that the Government needs to make its priorities much more explicit. This process has already started. For instance, Budget 2009 put more funding into fundamental capability development through substantial increases to Marsden, the Health Research Council and capability funding to Crown Research Institutes.

The Primary Growth Partnership also recognised the ongoing importance of the "cultures" - agriculture, horticulture, aquaculture, viticulture and others - to the New Zealand economy. Within that initiative was also investment into climate change and environmental issues that are critical to our economic base.

There is also a need to revisit the balance of science funding. The current largely contestable model has resulted in short-term approaches, excessive competitive behaviour and an emphasis on funding for funding's sake, rather than longer-term science.

Of course competition matters - the best science always needs to be specifically encouraged and recognised. But our overarching goals for growth mean that we need a more strategic approach. There is no point in promoting competition where it is obvious where the expertise lies and what needs to be done.

The Centres of Research Excellence have been very successful at bringing together science teams across universities.

The same approach is behind the recent Hazards platform, led by GNS but with several other institutions involved. The reality is we know that in New Zealand we need to study natural hazards such as earthquakes. It is not optional for us to study these things. It makes sense to draw together the best expertise and fund them on a far more strategic basis. It is simply pointless to have an artificial contestable funding system that adds cost and compliance with no benefit to the science output. Of course there will be opportunity for new knowledge and new people to enter the platform.

What should the other platforms be? That is something that we will be seeking input into over the coming weeks. As we deliver those platforms, it will become clear where this Government's priorities lie. Areas such as food research, energy and oceanography are areas that New Zealand has both expertise in, and a vested interest in staying ahead of the competition.

Identifying these priorities is particularly important for "enabling" science, where the benefit underpins the economy but is not directly translatable to short-term profit.

The question that will inevitably follow the clearer science priorities and more strategic funding is whether the current structures are well aligned. Are there too many funding pots? Are there too many providers, with the attendant duplication of administrative overheads? These issues will be well discussed over the next few months.

A critical task is getting science and business working more closely.  We want to push science out of the universities and CRIs and into the commercialisation space. We also aim to build greater enthusiasm for science from businesses. It isn't that our institutions can't do the science; the challenge is stimulating the demand from business.

IRL's recent contest "What's your problem NZ?" was an innovative way to engage more businesses in research. Resene Paints was the winner, but IRL now have a huge range of companies interested in working with them. These are companies who can now see what research and innovation could do for them and their profitability.

Another way of stimulating demand is simplifying the system. This simplification will help both generators and users of science know what schemes are relevant to them. It should also reduce the compliance time and cost.

We also need far better information as to the impact of our investment. The Government priority is economic growth. We therefore need to measure what growth has occurred, and whether the long term objectives of strategic science are being realised. We need objective evidenced based information to inform ongoing investment.

The importance of this goes well beyond the Government. One of the biggest challenges in science is getting investment from outside the public sector. Business has been reluctant to invest in R&D because it does not clearly see the benefits.

We need far more transparent measures of how investing in R&D actually helps growth. It is not good enough to use anecdotal information or assume that it must be "a good thing". Shareholders are reluctant to invest on this basis, and taxpayers should be too.

Fortunately, there are many success stories. Investment in Plant and Food Research led to the gold kiwifruit from Zespri, which is now the foundation of $400 million of exports. We need to ensure that this "cause and effect" is clearly understood. In saying this there will always be failures and scientific blind alleys. We can learn just as much from the failures as we can from the successes - but only if we can objectively evaluate which is which.

The reality is that Government investment in science will always be constrained by available resources and competing demands. Substantial growth in investment will have to come from the private sector.

There are many ideas about how we should stimulate business to invest in science. Showing business that there is a direct link between science investment and their growth is the most obvious. Once they are convinced of this, they will search out the science they want.

I want to turn now to the opportunities that New Zealand and Australia have in working together. This is especially the case in what the Prime Ministers Chief Science Adviser, Sir Peter Gluckman, has called "big science".

What do I mean by "big science"? It is where the science itself is the objective, rather than a contributory factor to economic growth. The intent is to increase the global knowledge base.

Fifty years ago, "big science" was concentrated in the larger nations, in areas such as the exploration of space. It was fuelled by a global power competition. New Zealand and Australia had little to contribute to this endeavour, though Australians at the Parkes Observatory were famously involved in receiving the transmissions from Apollo 11.

In the 21^st century global circumstances may be working in our favour. New Zealand does have expertise in areas like greenhouse gasses, particularly pastoral emissions. These are global problems that are demanding global co-operation on solutions.

Similarly, astronomy has transformed into a concerted and collaborative global effort to find out more about the universe. This has led to projects like the Square Kilometre Array (SKA).

The benefits to both countries would be immense. The global investment in the SKA in high-performance computing, broadband, infrastructure, and fundamental science could transform our research and development base. It represents an opportunity that New Zealand on its own could never have.

Geography has led to Australia and New Zealand being uniquely suited to this project. We have to make a concerted and cooperative effort. The recent meeting between the two Prime Ministers last month highlighted this opportunity, and we will be working side by side with Australia on our joint bid.

Our two countries have a good record of working together. This is particularly true of universities and research institutions. Bigger projects, such as the Synchrotron in Victoria, have increased the co-operation. The SKA could take it to a whole new level.

In a fortnight, I will again be meeting with Senator Kim Carr, my Australian counterpart. This follows on from our meeting at the Australia-New Zealand Leadership Forum. We will be sharing ideas on how we can fundamentally improve our science systems and also discussing progress towards the SKA.

The overall relationship between New Zealand and Australia is getting closer across a whole range of areas from defence to immigration procedures. Science is a particular area where the sum of our efforts can allow us to take a far bigger role in global initiatives. The Australasian Research Management Society is proof that you have figured out these benefits years ago.

At this conference you are directly addressing issues that are not only important to you, but important to us as a Government and to the people of New Zealand. Our science consultation will involve you, and I know that many of you will contribute to that consultation.

Sir Paul Callaghan set the key imperatives in his book "Wool to Weta", stating that:

"The crucial determinant of funding direction for economically focused tools should be the quality of the proposals, the science excellence, the potential for innovation and the entrepreneurial capabilities of the team."

Innovation lies at the heart of modern economies. The public enthusiasm for science has been well illustrated by the interest in Sir Peter Gluckman's appointment as Chief Science Adviser to the Prime Minister. There is strong expectation for change and improvement. This conference plays a key part in setting the scene for reform that will benefit us all.