Leveraging Research and Technology

(Address to The R&D Management Conference)

The topic of this conference, "the leveraging of research and technology", is of great interest to this Government.

If New Zealand is to prosper in the future we must get the best possible results from our investments in research and technology. We must focus on our strengths and build our research and technology partnerships - both domestic and international.

New Zealand must reinvent itself. This transformation is not optional. It is a necessity and we know that research and technology have a pivotal role to play in securing it.

New Zealand needs to transform its economy. This means moving forward from a reliance on primary industry commodities to more added-value and knowledge-based production.

There is little doubt that primary production will continue to be an important part of this country's economy. But commodities are not enough on their own to maintain the standard of living New Zealanders expect.

This transformation is more than a shift in economic strategy. It is also about creating a society that recognises and rewards innovation; creating a society that has an education system that encourages inventive thinking; creating a society that admires and encourages entrepreneurship.

We need to build a nation in which all New Zealanders value knowledge, see its potential for wealth creation and recognise it as the foundation of a dynamic economy and inclusive society.

The challenges we face as a nation are reflected in the three major themes of this conference.

We need to generate and access knowledge. We need to encourage individual creativity and entrepreneurial potential. And we need to keep enhancing our capacity to innovate.

New Zealand has always had a natural advantage in primary production. Our fishing, forestry, horticulture and agriculture industries are world leaders.

Along the way we've used our scientific capabilities to help primary industries create more wealth for New Zealand.

Because of our primary production, because New Zealanders can grow things well, and do it for a living, it is inevitable that our innovative future will encompass the various biotechnologies to a greater extent than in other nations.

We are already good at it. That is why we are the most efficient primary producer in the world. Our history of innovation in primary production is second to none. But it's not enough.

We must expand our innovative expertise in the new biotechnologies and we must build our capacity to commercialise the results.

Recently I visited Israel and Silicon Valley. I wanted to see the rationale for, and the instruments of, Government initiatives to encourage technological innovation and economic growth in the United States and Israel.

In both countries I saw evidence of successful government interventions that helped firms take higher technological risks and accelerated the development of venture capital. I also saw that high levels of partnering between industry and academia provided the potential for research-based business opportunities.

These visits strengthened my belief that government can usefully and efficiently do much more to help the economic transformation of New Zealand than it has attempted in recent years.

We know that basic research is an important driver for high-tech industries. We must give this research the support it requires.

We have to make sure our methods of protecting intellectual property encourage researchers to commercialise new technologies.

Government needs to help firms take technological risks. It's a big ask for a lot of New Zealand companies to take on R&D based ventures - especially when so many are classified as small or medium sized enterprises.

Government can assist through training people in developing and managing new technologies and by co-funding R&D projects.

I believe the Government also needs to explore options for accelerating the formation of venture capital in New Zealand. I'll come back to this important point, but I want to say something first about the second theme of your conference, which is the importance of developing individual creativity and entrepreneurial potential.

I want government to do what it can to unleash the creativity and entrepreneurial potential of people who have good ideas, and who want to turn these ideas into wealth.

I mentioned that government has to support basic research. A prime reason for this is that basic research can produce the breakthroughs that will be the foundation of tomorrow's industries. Increased basic research is a feature of new economies.

In recognition of this we're building extensively on an initiative started by the previous Government called the New Economy Research Fund. This provides more than $50 million of public money for basic research where the results have strong potential for new product development.

One example is research on light emitting polymers at the University of Otago. These be used as substitutes for LED displays or for simple functions such as lighting in a refrigerator. They promise to be a cheaper and more reliable light source than bulbs or diodes.

Another example is the Advanced Materials Technologies research project at IRL, a Crown Research Institute. This is an integrated package looking at a whole field of new technologies including high temperature superconductors, advanced ceramics and new surfaces and coatings.

I've thrown these examples in just in case any visitors have the impression that somehow we are limited in R&D to applied biology. Emphatically we are not.

Enhancing innovative capability is the third theme of this conference and that brings me back to the issue of venture capital.

Venture capital is vital for supporting start-up businesses. In New Zealand we have a gap in the "seed capital" part of the market. This probably reflects a lack of experience and expertise in this high-risk area of investment.

To encourage entrepreneurship in New Zealand, the Government has a role to play in accelerating the development of seed capital for high-tech investment.

I've started working on this. We're looking at partnering with the private sector here and overseas to create several new venture capital funds that will focus on the seed capital part of the spectrum.

Many innovations are approaching commercialisation but, for a series of reasons are not crossing the threshold. One reason is funding and another is expertise.

With careful planning and with governance structures that lie very close to the private sector, venture capital brings that funding and expertise. Policy development in this area is well under way.

I also want to support the development of incubators for new businesses. Some work on this was done by the previous administration and some money has been set aside by this Government to support incubator development.

Various incubators operate in New Zealand, with both universities and local authorities playing a role. I'm committed to help this existing incubator base to expand. Policy development in this area is also well under way.

The ability of an organisation, region or country to innovate is critical to its success. New Zealanders have always prided themselves on their ability to develop practical solutions to challenges. We call it the "number 8 wire mentality" or "Kiwi ingenuity". We have a proud history of innovation, and often our innovations were due to the challenges of our unique nation. But we are now faced with a new challenge.

We need to renovate that spirit of invention. We need to use it to face the challenge of a world in which wealth and prosperity will increasingly come from our capability with research and technology.

My Government knows this. We've been around for just 15 months, but we are moving quickly.

And it's not just R&D that we are attending to. Its education, immigration, foreign direct investment, industry development, education, e-commerce and, most of all, leadership.

As a Government we are continually researching and developing our approach to a rapidly changing innovation system. We are monitoring and evaluating our programmes. We'll ramp up those that work and discard those that don't. We're interested in any knowledge and experience that can help us achieve the economy and society we want.

Beware. Wherever you go, whatever you say, a New Zealand Government official may be taking notes. The harder you push the boundaries, the more furious will the note taking become. These days Governments too must be innovative and quick.

I wish you well in your discussions over the next two days.

Thank you.