Driving a more innovation-based culture requires a quantum shift by the government, academic institutions and New Zealand businesses to reduce the vulnerability caused by the lack of export diversity, says intellectual property lawyer Ceri Wells.

Citing the examples of successful innovation-led economies such as Israel, Denmark and Finland, Mr Wells said market forces alone were not enough to establish an innovation-focused culture.

"Investing in research and innovation and start-up projects is expensive, and business is by and large risk-averse," said Mr Wells, the founding partner of James & Wells, with offices in Tauranga and Hamilton, who has advised on intellectual property
matters for 30 years. He was speaking at a recent innovation seminar in Tauranga.

"That's why change has to be driven by government. Those countries that have successfully moved from where we are, to becoming high-performing economies, have only done so because their governments have committed to it."


The government's official budget commitment to promoting innovation is significant (see factbox). But Mr Wells asserted that the major problem with the government's approach was that its research investment was largely going into universities and Crown research institutes which were focused on producing primary products more cheaply.

A major reason why New Zealand was only 13th in per capita income in the OECD was that farming and tourism were the two biggest earners, and they were typically low-wage sectors, he said. If New Zealand wanted to be wealthier, it needed to start targeting higher tech industries.

"All we're doing is consistently pulling ourselves down to the lowest common denominator. Of our top 10 exports, eight involve growing things or dragging things out of the ocean. New Zealand has the lowest export diversity of any advanced country. We are very vulnerable."

Mr Wells cited a study, released earlier this month, which suggested innovation in New Zealand was in decline (see accompanying story).

He said much of the innovation coming out of New Zealand was originating from small- to medium-sized businesses, not the bigger corporates.

"The SMEs are very innovative and punch well above their weight and the reason for that is because they are usually owner-operators and have a vested interest in being innovative," he said.

"The difficulty with SMEs is that they are underfunded, they lack resources, and they don't get a lot of support. The venture capital community in New Zealand is small, and there are no R&D [research and development] tax breaks here, whereas there are in Australia and other countries."

Mr Wells also argued that, while government Research and Development grants were available, they were difficult and time-consuming for small companies to access "and you have to jump through a lot of hoops."

Government-backed organisations such as Callaghan Innovation were doing a good job in terms of the programmes they were trying to run, he said. "But we need a business culture that is much more receptive and open to new ideas and start-ups."

A number of local Bay of Plenty companies had received Callaghan Innovation R&D grants. Tauranga-based technology incubator WNT Ventures was the only regional company of the three business technology incubators funded under a three-year pilot programme that got underway in 2014. Callaghan recently confirmed two years of additional funding for the programme.

The programme allowed potentially high-growth, early-stage firms to access repayable grants. WNT Ventures established and nurtured businesses based on intellectual property and novel technologies, primarily sourced from NZ publicly funded research organisations, such as universities and Crown Research Institutes, as well as the public sector.

"Overall, government has been very supportive," said Carl Jones, WNT Ventures chief executive.

"They've put a lot of programmes in place that have increased the focus on STEM [science, technology, engineering and mathematics] subjects, and they've put the tech incubator programme in place."

Government support for innovation was probably better than it had been in the past, Mr Jones said.

Tax credits for early stage investment was an area the government could look at, but Mr Jones said he thought it was unlikely it would go down that route.

"At WNT Ventures, we just get on with it and work with what we've got."

Science and innovation funding includes:

·$410.5 million over four years in science and innovation through the Innovative NZ package announced in Budget 2016.

·By 2020, the annual investment in science and innovation will have increased by 15 per cent to $1.6 billion per year, which the government says is one of the largest single investments in science and innovation in New Zealand's history.

·There are also a number of other funds and programmes aimed at supporting research and innovation.

Innovation study
The Big I, little i: Tackling the Wicked Problems of Innovation at Large New Zealand Organisations study was conducted by innovation consultancy Previously Unavailable.

The study surveyed 44 chief executives of major organisations, including Spark, Fonterra, ASB, NZ Post, Auckland Council, Contact Energy and TVNZ.

It revealed that while most chief executives gave innovation a "10 out of 10" in terms of importance, most also scored their own recent innovation performance as a six or under.

Previously Unavailable founder and principal James Hurman said the study revealed some serious concerns. "Innovation output is in decline. That spells trouble," he said.

Mr Hurman said there were four main areas that were proving problematic for large businesses and organisations innovating: culture, prioritisation, speed and responsibility.

"It's important that we are realistic with ourselves as a business community," said Mr Hurman. "Innovation is not without risk. We have to be less consensus-driven."