Christopher Adams

The Business Herald’s markets and banking reporter.

Big new science institute promised by Govt

Photo / Dean Purcell
Photo / Dean Purcell

The Government, should it be re-elected this month, plans to boost investment in the science sector and transform Industrial Research Limited into an advanced technology institute that will function as New Zealand's "high-tech HQ".

The announcement has come out of Powering Innovation, a report into how the country can more successfully grow its high-tech manufacturing and services sector that has been released today.

Prime Minister John Key said that over the next five years the size and capability of Industrial Research Limited (IRL) would be doubled, transforming the crown research institute into an advanced technology institute with up to 700 employees and a "far greater reach".

"The high-tech manufacturing and services sectors have great potential to achieve the same cutting-edge reputation, but they need the support and expertise of technology-focused research to grow, to increase exports and ramp up productivity," Key said. "High-tech sectors could contribute substantially more to the economy than they currently do.

We already have successful companies in this sector, particularly in areas like ICT, biotechnology and medical technology, but we need more of them and we need them to be bigger."

The Government said the new institute would have a strong, business-focused culture and a nationwide remit.

It would be located close to the country's high-tech businesses, with facilities in Auckland and Christchurch.

The new institute would also retain IRL's existing Gracefield facility in Lower Hutt.

"Establishing the advanced technology institute doesn't add to any of the funding tracks in the Pre-Election Update," said Key. "We won't have to take on extra debt to fund this, and our surplus and deficit forecasts remain the same."

The government said estimates indicated that the establishment of the institute would cost $120 to $150 million over five years, in addition to IRL's current funding.

"This is an average of $24 to $30 million a year of additional funding, which the Government will pay for out of the new operating allowance in next year's Budget," said Key. "We will earmark up to $80 million from the Future Investment Fund [to be made up of the proceeds of planned state-owned asset sell downs] for capital spending in areas like new buildings and equipment."

BusinessNZ chief executive Phil O'Reilly said the policy was the best single action that could be taken to grow the high tech manufacturing and services sectors.

"The planned advanced technology institute will operate in the border between business and science, providing a welcome focus on the development side of research and development," he said. "Exploiting untapped opportunities in the high tech manufacturing and services areas including ICT will be a major step forward for New Zealand's economy."

The Powering Innovation report is based on the findings of an independent panel - comprised of Phil O'Reilly, AUT University's Professor John Raine and Professor Mina Teicher, an Israeli academic - who looked at the high value manufacturing and services sector earlier this year in order to find ways research organisations could better support firms.

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