NZ Association of Scientists Conference 2012

I want to begin by acknowledging Sir Paul Callaghan who died three weeks ago.

He was someone I considered a friend.

I last spoke to him just a couple of days before he died, I said thank you for his contribution to the country, but also for his influence on me personally.

I first met him when I took over Labour’s science and innovation portfolio.

I read his Wool to Weta book, about our need for a new economy, a clever economy.

Our conversations were always passionate and wide ranging – with me doing most of the listening.

But two experiences he spoke about in his life stood out to me.

First, he was grateful to his maths teacher at his Whanganui school who taught him calculus – who opened a whole world for him – a world that led him to physics and his wonderful achievements.

But he also told me about his own breakthrough into an understanding about the role of science in our future economy.

That was the development of portable magnetic resonance spectrometers that he developed while doing geophysics research into global climate change in Antarctica.

That led to international demand from other researchers internationally, and so the export company Magritek started, selling high tech magnetic resonance technology to the world.

The experience gave him an insight into the rarity of links between our science and our business.

And it convinced him of the potential for science-based entrepreneurship to change our destiny. To create a new New Zealand.

The potential of science

Sir Paul’s point to me was simple, yet profound:

For decades we have been on the slide, from one of the world’s richest countries, to one that’s barely hanging onto our rich world status.

So why have our incomes dropped further and further behind the rest of the world, when we used to earn more than those countries?

Why do we work harder than virtually anyone else in the developed world, but earn less?

The answer is not rooted in something the present government has done, or the last one did.

We have to look deeper than that, because the issues are deeper.

One crucial reason is we are not capturing enough science, technology and research in our business to produce a clever economy.

And that happens at many different levels.

Forty years ago, when we were near the top of the global rankings, our meat exports paid for our pharmaceuticals bill eighteen times over. Now it pays for it around seven times over.

In intellectual property, we have just 3 US patents a year for every 100,000 of population. Finland has five times as many, and the US has nearly nine times more.

We are having some real success with the top 200 high-tech companies which generate $6.5 billion, nearly 80% exported and growing at around 4%.

But we must do much better at commercialising ideas and ensuring the value stays in New Zealand.

Two of our health companies, F&P Healthcare and Orion Health are two examples of companies that have grown rapidly into overseas markets. Much of their success involves their investment in research.

The question is how do we do much better, how do we make that step change?

Massive investment in research and development led to the emergence of Nokia in Finland as the world’s leading cell phone manufacturer in a place where little cell phone activity was present before.

Nokia was passed last week by Samsung as the world’s number one supplier of cell phones.

Yet even as Nokia hits headwinds, its success on the way up has created thousands of offshoot tech companies there, like the one that makes Angry Birds - the top-selling game on platforms.

The point is the massive spill over effects of successfully marrying science and business.

Not just in one successful business - but in many more that grow along side.

Samsung, the Korean company that displaced Nokia, is itself an example of how science has transformed the Korean economy.

Samsung has revenues of $220 billion produced by only 340,000 employees – larger than New Zealand’s entire economy.

As a Korean company, it has been at the forefront of Korea’s transformation from one that was largely based, 40 years ago, on low-value exports such as cotton and textiles, to one that today is a global tiger.

It isn’t stopping there. South Korea is investing hugely over the next five years to promote science-based clean technology.

We don’t have to replicate those companies – we possibly shouldn’t and couldn’t. We have our own areas of expertise and advantage.

But what is the lesson here? It’s very simple: that science and research lead to innovation, and innovation is key to higher productivity and higher earnings as a country.

Both countries invested massively in education and science and research – as did Singapore, Israel, Denmark.
That’s why I kept the science portfolio when I became Labour’s leader.
Science, along with education and research, is central to my vision for New Zealand and the new, clean and clever economy I want us to create.
I believe in the power of science to transform our economy.

I believe in the power of ideas, knowledge and research to improve the lives and wellbeing of New Zealanders.

And I believe that it takes leadership to unleash our science, and to create a clever economy.

Many New Zealanders believe our competitive advantage in agriculture is our climate.

I think they are wrong. There are many countries with a temperate climate like ours.

Some of them are quickly developing lower cost structures than we have.

Our agricultural excellence actually lies in our decades upon decades of investment in science.

It goes right back to the development of refrigeration science that allowed us to diversify from wool exports to sending meat and butter overseas.

But as good as New Zealand is at agriculture, there’s a ceiling on how much beef and milk you can make off New Zealand grass.

Our economic viability is linked directly to our ability to produce new and innovative products and solutions. Some of those will lie with agriculture, much of them will be elsewhere.

That type of economy in turn will better generate the jobs that will keep our young and talented people in New Zealand.

It’s not a question of either agriculture ‘or’ high-tech. We should be and can be doing both.

If we want more innovation and science in our industry then we need the leadership and co-ordination that will create it.

Regrettably I believe that increasingly, the role of science, research and innovation is becoming a fault line between differing political philosophies and is not universally shared.

I want to spell this out.

It matters.

The present government has systematically made choices that I believe have set science backwards.
Their economic picture of the future goes something like this: As China and Asia grows richer they will demand a higher protein diet. We grow protein, therefore we’re ideally positioned.

That’s not a strategy. It’s a hope.

It explains why the first thing they did on taking office was cancel tax credits for research and development.

The tax credit was a huge boost to our businesses, targeted precisely at our most innovative companies.

The grants at half the value of the tax credits that finally replaced the tax credits took nearly two years to put in place. It wasted time that could have been spent on commercialising science.

More than two-thirds of OECD countries offer R&D incentives. And we no longer do.

We’re not even in the game.

Those incentives are needed to provide certainty and encouragement to companies, both big and small. Not just only raise the research effort bring about a change in culture within our companies.

In 2010 the government made a decision to axe post-doctoral fellowships in New Zealand.

Hundreds of leading Kiwi scientists depended on those fellowships.

Getting rid of them guts our ability to keep people here.

If you wanted to farewell our best and brightest at the airport, people we’ve already massively invested in, you could hardly pick a better way.

If keeping and attracting our best is important, putting back post-doctoral scholarships for scientists to continue working after their PhDs is the first step.

This is a time for urgency, not complacency.

The latest Government idea is not about moving forward but moving offices.

The absence of an overall plan means the science sector is again being turned upside down.

In 2010 MoRST and FoRST were merged.

Now it seems the biggest problem with science and innovation is that it’s not in the same department as social housing.

Ironically, it’s a merger done in the least scientific way possible – without evidence or research, with no idea of how many jobs will be lost or how much money will be saved, or any due diligence.

Nobody I speak to has any idea how the shuffle will help promote science.

Even – and nobody knows for sure – if there were small administrative gains, think about how big they would have to be to outweigh the costs of delay and loss of focus.

Just take one straightforward example: The Ministry of Science and Innovation has a brand new attractive website.

After MoRST and FoRST were merged it must have cost a lot of money and effort to create the new site, resource it, maintain it and update it.

Will we now see a new one for the Ministry of .Business, Innovation and Employment? These sorts of administration will occur right across the organisation.

Jobs lost or reapplied for, teams disbanded and reformed, reams of paper wasted on restructuring plans, consultation documents, evaluations, and structural diagrams and change management programmes.
All attention, not directed at science but at distraction.
Instead of reshuffling government department offices, I would have started in our schools.

The prime minister’s own science adviser said last year that science education in New Zealand is not in terrible shape – but we have a long tail of underachievement.

I believe we can’t settle for that.

We need to aim for the best in the world.

I come back to Paul Callaghan’s story about his maths teacher who inspired him further.

That sort of inspiration can be spread still wider in our schools.
Unfortunately, the numbers taking science and engineering at university are flat lining while accounting numbers are soaring.

That needs to be reversed.

The place to start is looking at how science in schools becomes more enticing for our young people and how we promote a career in science and where it might lead.

There have many attempts to reform the science education over the last 20 or 30 years, for example, to make it more appealing and attract students from a wider range of backgrounds.

But, as the PM’s Science Advisor notes, “while this work sometimes resulted in the appearance of new words in official curriculum documents, it has had very little effect on the way science is taught in schools.”

We have challenges before us. Big ones.

I’ve spoken today about my vision for a new economy, a new New Zealand and the central place for science in forging that future.

New Zealand’s future prosperity depends on us doing better than simply keeping up.

We have to outperform other countries.

The science community is critical to that effort.

I don’t come here with all the answers.

But I do come with a passion and conviction that science, research and development are the way of the future. It’s the reason I kept this portfolio.

And over the coming months we will want to discuss with you how you believe science can be better supported. How our institutions can work more effectively and better together.

We want to begin our government in 2014 with a clear plan.

I’ve spoken mostly about science and innovation and its links to business.

I want to finish by emphasising that our expertise in fundamental science remains core. It’s the foundation that underpins other endeavours.

Nor should we overlook that public good science that keeps us well, safe and cares for our environment.

Sir Paul Callaghan said his vision for New Zealand was that it should become the place where “talent wants to live”. He meant too, where our talented young people want to stay rather than heading away.
As he said, people want to come here because we have a land of astonishing beauty, but they need to come for more than being a tourist.

If we fulfil his vision, keep and attract those talented people we will be well on the way to creating the new New Zealand that we can be proud of.

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