Good morning everyone, it’s my pleasure to step in today for my colleague Dr Mapp who’s in the United States and speak at this year’s EDANZ’s conference.

The conference theme ‘Innovation through collaboration -driving innovation across the economy’ – is one that this Government strongly agrees with.

Growing the economy is the Government’s number one priority, and science and innovation have a key part to play in that growth.

Indeed, this Government has made science and innovation one of the six cornerstones of its economic growth agenda. We’ve done this because New Zealand needs an economic jolt. Our productivity and economic growth have been sluggish for decades and as a result we have slipped down the OECD’s ranking of national wealth per capita.

Our performance compared to other smaller advanced economies has been uninspiring at best. For example, in 1976 our per capita income was slightly ahead of Australia. It was nearly 20 percent greater than the OECD average.

We are now 20 percent behind the OECD average. Australia, by contrast, is still about 20 percent ahead.

Finland is another example of our relative decline. In 1979 our per capita income lines crossed - New Zealand going down and Finland going up. The Finns are now about 20 percent ahead of us.

So, how do we turn the situation around?

The answer is not by working harder – New Zealanders work about 12 percent more hours than the OECD average - we need to work smarter.  Our productivity, the value of the output for each hour worked, is also 20 percent below the OECD average.  That’s no coincidence.

For us to raise productivity, for us to work smarter, we need to have smart businesses. We need businesses producing high-value products for overseas markets and businesses using R&D to develop those products which drives other benefits, like better production processes and marketing.

Basically it’s about using innovation to drive our economy.

We have some of these companies already – the likes of Fisher and Paykel, Tait and Rakon.  Our world-leading dairy industry also owes much of its success to innovation.

So, the challenge is to create more of these businesses and then help them grow through R&D.  That’s where we see connections as being important and where EDANZ can play a leading role.

As a small country, we lack the advantages of scale. We need to work together to get things done. One of the advantages of being small is that it is relatively easy to make those connections.

However, we need to be more connected. For example, research and business often see each other as operating in different worlds and both business and research could have better ties to government.

The Government has taken numerous steps to improve these links.  We have made the largest reforms to the science and innovation system in two decades. These include creating the Ministry of Science and Innovation.  One of its most important tasks is to facilitate the relationships between businesses, research organisations and government, so that good ideas flow between all three and the whole country benefits.

We want to get knowledge and technology transferred from the laboratories of research organisations to businesses that can turn that into products and profit.

To achieve that as part of our increased investment in supporting business R&D, we have also introduced the Technology Transfer Vouchers.  These are aimed at giving businesses access to the skills and knowledge inside research organisations.

The Government has also made major reforms to the Crown Research Institutes. They have been given longer-term funding certainty, which allows them to better plan for the future.  It also means they spend less time, money and paperwork on applying for funding and more on good science.

CRIs are also shifting their focus away from the bottom line to delivering results for all New Zealand.  And they are getting better connected to the users of their work - including business.

These reforms are ongoing. Plans are underway to improve commercialisation by improving the connections and coordination between the organisations that commercialise research here.

The economic downturn and need to prioritise spending means that Government finances are tight.  The Canterbury earthquakes have added to these difficulties.  But we are still committed to supporting innovation and the Government has been looking at successful economies like Singapore, Queensland and Denmark. These are economies where innovation has been one of the biggest factors in economic growth.

One thing they have in common is centres for innovation and knowledge transfer – such as the Danish Technology Institute and Finland’s Technopolis.

These centres become hubs of invention. They act as a link between research and business. They are large enough to provide services and facilities that businesses need. They also have in-house research capabilities and development facilities.

The Government has commissioned a review of the high-value manufacturing and services area from experts in this field.

The review covered the role that research organisations play in business research and development, commercialisation, technology and knowledge transfer. The major focus is to strengthen the process of getting products to market which ultimately benefits the economy.

The panel’s recommendations are with Cabinet and we will be making some important decisions shortly.

Feedback to date says the Government’s programme of reforms is succeeding. CRIs are better connected to the sectors they serve, with businesses reporting better engagement with them. Everyone is talking about innovation and that talk is being turned into action.

R&D spending

Last year’s R&D Survey from Statistics New Zealand showed that total R&D spending for 2010 was almost $2.5 billion, up 13 percent from 2008.  Just over a billion dollars of that was business R&D, up 10 percent on 2008.

While it’s a good start, we need to do more. EDANZ has an important part in helping that happen. We support your goals of creating connections, networks and clusters to complete research, develop products and services and establishing channels to market.  This is the way to convert smart ideas into export-generating results.

In many ways, good connections are about partnerships; Crown research institutes, universities and other research organisations working with firms, central and local government, and other players.

Central government’s partnerships with the Economic Development Agencies have been strengthened recently through the creation of the fourteen Regional Business Partners.

Each of the 14 Regional Business Partners have as part of their team an EDA from within the region. Many of the regions have taken a broader approach by involving chambers of commerce and business incubators.

By working with the Ministry of Science and Innovation and New Zealand Trade and Enterprise to give advice, support and funding to businesses in the regions, the Partners are performing a valuable job. For many businesses, the Partners are the first point of contact with the government and the support it provides.

The Regional Business Partners are making access to funding, advice and support easier and much more coordinated, providing a ‘front door’ for businesses wanting to engage with the government.

Since the Partner programme was established in 2008, the Partners have invested more than $13 million in supporting R&D in more than 1100 businesses.  As Richard Bentley mentioned earlier today, it has been a record year for investment by the Partners, who have approved nearly 500 applications for funding worth almost six million dollars.

Finally, in terms of fostering innovation, you may be interested to hear of how this Government has been leveraging immigration to grow the economy. As you’ll be aware, one of the constraints on the growth of our economy has been availability of capital. Upon becoming the Government, we identified significant gaps in the existing business migration policies.

Now we have a package that makes New Zealand very attractive to business migrants, and in 20 months we have attracted over $600 million in potential investment capital.

To date $155 million has been transferred and invested in New Zealand and an additional $195 million has been approved for funds transfer. Applications from investors worth an additional $253 million are being processed.

Since the policy has been operating, it’s attracted several times the amount of potential investment capital compared to the previous Government’s policy.

So how does this relate to the EDANZ conference? I understand one of the issues being discussed is raising finance for businesses. EDANZ is also about helping businesses innovate and grow.

One of the key aspects of the business migration package is attracting investors who have capital and a greater ability to support New Zealand businesses. Yes, this package is about attracting investment, but what’s equally important is that we are attracting people with commercial nous, experience and global networks.

The marketing of our Business Migration Package is also targeted at key OECD markets including the United Kingdom and the United States. We’re also looking at the major developing markets in India and South East Asia.

Although the majority of business migrants are investing their funds in vehicles such as bonds, shares and securities, there could be opportunities for EDANZ to link more closely with Immigration New Zealand and explore options for tapping into the new capital that’s flowing into our country.

EDANZ as a group represents one of the economy’s engine rooms.  You know your regions and have a strong footing in them.  If the Government is going to grow the economy then we need to do it across the country. We need EDANZ to help us do this.

We look forward to collaborating with you to ensure that innovation drives our economy forward into a better future.

Thank you(Source Beehive, J Coleman)