Expecting ROI from Ministry of Science and Innovation “too simplistic”: Joyce
“You don’t just have money, a bunch of scientists, stir, and ‘voila’, an innovative thing occurs.”
Thursday, February 16 2012 || News || BY Sarah Putt, Computerworld
The assertion that the $700 million a year spent by the Ministry of Science and Innovation should be subject to a return on investment, is “too simplistic”, says the minister in charge Steven Joyce.
Joyce was responding to a comment made by Orion Health CEO Ian McCrae, in which McCrae said that the country is not getting “good value whatsoever” from taxpayer funding of the MSI. “I think $600 million of it is spent to keep some research people happy... maybe it’s very harsh but we should at least know what return the country is getting on that investment,” McCrae told Computerworld last month.
But Joyce says McCrae’s suggestion is “too simplistic”.
“I think you could do that (an ROI) over the long term, but the reality is, in the case of public science and, if you like, what they call ‘frontier science’... this is by definition activity that is in the too early stage for private firms to do. So every government in the world has taken responsibility for doing a public science investment to encourage the science sector to have that opportunity to innovate, which can then be commercialised with the assistance of private firms,” Joyce says.
Joyce says that New Zealand’s public spend on science innovation is “not far below the OECD average”, and the challenge is to ensure that taxpayer investment doesn’t crowd out private investment. “The answer for the government is to look at where the market failure occurs and where it needs to assist to incentivise certain things.”
Science ecosystem
Where does Joyce think there should be assistance for ICT companies, to grow the export dollar?
“We’re going to keep looking at that and do an evaluation of what’s being done at the moment and what can be done in the future. I think it is important that we grow industries that don’t necessarily require subsidies from taxpayers and if they do then only for a short period of time because otherwise you really are convincing yourself to feel good, you’re basically paying taxpayers’ money to prop up an industry.”
Joyce says you have to grow an ecosystem. “You don’t just have money, a bunch of scientists, stir and ‘voila’, an innovative thing occurs.”
He points out that one of the "key enablers of innovation" is getting the right infrastructure, and he referred to the Ultra Fast Broadband network, which he set in place in his previous role as ICT minister. "My job will be to assist [Amy Adams] and facilitate not only the rollout, but also making sure that firms understand the opportunities."
IT the fourth science in schools?
In a speech to the Asia Pacific science policy studies research conference last week Joyce noted the “tremendous opportunity” in having a suite of portfolios that includes both MSI and Tertiary Education. Computerworld asked Joyce what he thought of McCrae’s idea that computer science should be the fourth science taught in secondary schools, that it should be elevated above physics, chemistry and biology.
“I can see how he’d argue that,” says Joyce. “But I don’t think that’s necessarily fair, they’re all important. I think the bigger question is: ‘are our teenagers making the right choices across that range of subject areas?’ and I suspect in some cases they’re not.”
Joyce says there is currently a review of careers advice in education and that involves discussions with the Tertiary Education Commission.
Joyce was responding to a comment made by Orion Health CEO Ian McCrae, in which McCrae said that the country is not getting “good value whatsoever” from taxpayer funding of the MSI. “I think $600 million of it is spent to keep some research people happy... maybe it’s very harsh but we should at least know what return the country is getting on that investment,” McCrae told Computerworld last month.
But Joyce says McCrae’s suggestion is “too simplistic”.
“I think you could do that (an ROI) over the long term, but the reality is, in the case of public science and, if you like, what they call ‘frontier science’... this is by definition activity that is in the too early stage for private firms to do. So every government in the world has taken responsibility for doing a public science investment to encourage the science sector to have that opportunity to innovate, which can then be commercialised with the assistance of private firms,” Joyce says.
Joyce says that New Zealand’s public spend on science innovation is “not far below the OECD average”, and the challenge is to ensure that taxpayer investment doesn’t crowd out private investment. “The answer for the government is to look at where the market failure occurs and where it needs to assist to incentivise certain things.”
Science ecosystem
Where does Joyce think there should be assistance for ICT companies, to grow the export dollar?
“We’re going to keep looking at that and do an evaluation of what’s being done at the moment and what can be done in the future. I think it is important that we grow industries that don’t necessarily require subsidies from taxpayers and if they do then only for a short period of time because otherwise you really are convincing yourself to feel good, you’re basically paying taxpayers’ money to prop up an industry.”
Joyce says you have to grow an ecosystem. “You don’t just have money, a bunch of scientists, stir and ‘voila’, an innovative thing occurs.”
He points out that one of the "key enablers of innovation" is getting the right infrastructure, and he referred to the Ultra Fast Broadband network, which he set in place in his previous role as ICT minister. "My job will be to assist [Amy Adams] and facilitate not only the rollout, but also making sure that firms understand the opportunities."
IT the fourth science in schools?
In a speech to the Asia Pacific science policy studies research conference last week Joyce noted the “tremendous opportunity” in having a suite of portfolios that includes both MSI and Tertiary Education. Computerworld asked Joyce what he thought of McCrae’s idea that computer science should be the fourth science taught in secondary schools, that it should be elevated above physics, chemistry and biology.
“I can see how he’d argue that,” says Joyce. “But I don’t think that’s necessarily fair, they’re all important. I think the bigger question is: ‘are our teenagers making the right choices across that range of subject areas?’ and I suspect in some cases they’re not.”
Joyce says there is currently a review of careers advice in education and that involves discussions with the Tertiary Education Commission.
Comment on so-called
Anonymous (18:18 Feb 16, 2012) ignores the purposes of R&D beyond commercial outcomes, specifically environmental and societal outcomes. His/her subsequent numerical discussion may therefore be interesting but is only of marginal relevance. Moreover, in the early 1990s, FRST projects were not allowed to have commercial outcomes, as there was the expectation that the private sector should/could do that type of R&D. Now the pendulum has swung and commercial outcomes from Crown investment are expected to be dominant. But private sector R&D in NZ is itself still not dominant, being perhaps only about half of the Crown investment.
Posted by Desmond Darby at 09:43 on February 17, 2012
Anonymous (18:18 Feb 16, 2012) ignores the purposes of R&D beyond commercial outcomes, specifically environmental and societal outcomes. His/her subsequent numerical discussion may therefore be interesting but is only of marginal relevance. Moreover, in the early 1990s, FRST projects were not allowed to have commercial outcomes, as there was the expectation that the private sector should/could do that type of R&D. Now the pendulum has swung and commercial outcomes from Crown investment are expected to be dominant. But private sector R&D in NZ is itself still not dominant, being perhaps only about half of the Crown investment.
Posted by Desmond Darby at 09:43 on February 17, 2012
Facts
I accept the longer term nature of the CRI and Univerisity R&D, but ultimatley there has to be commercial outcomes. Of the 107 companies backed by the NZ Venture Fund only 23 have come from CRIs and Universities.
The work that these CRIs and Universities were funded to do in the 1980 / 90s should have provided a flow for investors in 2000. At 23 companies over say 8 years that is 3 companies a year being generated by 6 (?) CRIs and 6 (?) Universities.
This is hardly game changing. The CRIs and Universities have secured around 80% of the R&D funding and yet only generate 20% of the VC backed flow.
For companies to get funding from government it is at best $ for $ why not insist on similar matrix for CRIs. IRL I think has around $16m of private revenues and $30m of government funding. They generate around $40k of private sector revenue per scientist.
If the government wants more from R&D then demand performance from its spending and 3 companies a year able to be backed by private investors from a $600 million spend is not great.
Posted by Anonymous at 18:18 on February 16, 2012
I accept the longer term nature of the CRI and Univerisity R&D, but ultimatley there has to be commercial outcomes. Of the 107 companies backed by the NZ Venture Fund only 23 have come from CRIs and Universities.
The work that these CRIs and Universities were funded to do in the 1980 / 90s should have provided a flow for investors in 2000. At 23 companies over say 8 years that is 3 companies a year being generated by 6 (?) CRIs and 6 (?) Universities.
This is hardly game changing. The CRIs and Universities have secured around 80% of the R&D funding and yet only generate 20% of the VC backed flow.
For companies to get funding from government it is at best $ for $ why not insist on similar matrix for CRIs. IRL I think has around $16m of private revenues and $30m of government funding. They generate around $40k of private sector revenue per scientist.
If the government wants more from R&D then demand performance from its spending and 3 companies a year able to be backed by private investors from a $600 million spend is not great.
Posted by Anonymous at 18:18 on February 16, 2012
Joyce specifically says you need to measyre ROI over a longer period - so where are the facts to show the outcome from earlier investment activity. He also says that work done by CRIs etc should lead in the future to commercial outcomes. Where are the facts that they have achieved this.
I used the NZVIF investment as a proxy of the market - it shows little coming from these sources. The private sector spends less on R&D as Desmond points out, but the fact is they generate signifcantly more commercial value.
given the state of the economy we should be focusing our spending on things that can generate commercial outcomes. I am not saying delete all soft R&D but we should get the balance right. Ian McCrae was highlighting the fact that while the government and others talk about $700m of government funding for R&D most of this is not invested in commercial areas, or at least not successfully.
Personally I would prefer to see the government foucs its R&D activities on improving the economy that might allow for non commercial activity to be funded in the future. We cannot afford it at this time.
Posted by Anonymous at 11:12 on February 17, 2012
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