An Irish science adviser tells Chris Barton why research is still key to growth.
On the face of it, the lip service paid by successive New Zealand governments to developing a knowledge economy was a lucky escape. Just look at Ireland. The so-called Celtic Tiger, long held up as the example to follow - remember "Catching the Knowledge Wave" in 2001? - is now looking like an unwell pussycat.
"The crisis is a crisis," says Ireland's former chief science adviser Patrick Cunningham, here to give a lecture entitled "Growing the Knowledge Economy - an Irish Perspective".
"We have gone from less than 5 per cent unemployment in a couple of years to 15 per cent and there is a considerable amount of emigration."
There is indeed. A record 87,100 people left the Emerald Isle in the year to April - almost 2 per cent of the population. Irish nationals accounted for 53 per cent of the total, with the largest exodus - 39,500 - in the 25-44 age group.
The diaspora, not unlike our own to Australia, has been steadily growing in the wake of the global financial crisis, with people leaving Ireland for greener pastures, mainly in Australia, Britain and Europe.
"It is, in the long term, a real concern that we should lose a lot of talent," says Cunningham, here as a guest of Gravida, a government-funded "Centre of Research Excellence" at Auckland's Faculty of Medical and Health Science.
"Our expectation is that as the economy picks up we will get that reverse flow coming in."
Waiting for things to pick up. It sounds familiar. But in Ireland it is an exercise in the unknown. In 2009 Ireland's gross domestic product (GDP) fell by 12 per cent. In 2010 it was forced to seek an €85 billion ($133 billion) bailout and today carries debt forecast to peak at 121 per cent of GDP next year. Amid flickers of growth - 0.9 per cent projected for 2012 and 1.5 per cent for 2013 - the Government's €24 billion in austerity measures since 2008 keep a chill in the air. Next month there will be €3.5 billion in tax rises and spending cuts.
In the face of such gloom, Cunningham is unrepentant about the key building blocks of the Irish economic miracle. "There was no flaw in the model on which we built education and then a superstructure of scientific competence through the nineties and particularly in the first decade of this century."
The cause of the collapse, he says, was strictly financial. "It was a super exuberant building boom that should have been foreseen and should have been restrained and there were undoubtedly policy errors along the way."
Plus the effects of belonging to the European Union - easy access to easy money. "We had in a sense the savings of the people of 17 countries, probably 200 million people's savings ... and they flowed without much regard through the whole system."
That system was made up of Ireland's bloated, some might say corrupted, banks. The science component of the Celtic Tiger formula, in particular the investment in education, is still valid, says Cunningham. "Science undoubtedly played a role in building the economy."
He's referring to the investment in universal secondary school education begun in the 1960s, expanded to no-fees tertiary education in the 1970s, resulting in a highly educated workforce.
"That investment in the competence of individuals and of society as a whole made possible not just the attraction of foreign investment in the country, but the sustaining of it."
Ireland's growth spurt from the 1990s onwards came about largely because of its low corporate tax rate - 12.5 per cent across the board - which attracted an influx of direct foreign investment. Even in austerity, GDP per head in Ireland is US$42,000 ($51,500) compared with US$30,000 for New Zealand, largely because of foreign direct investment - US$228 billion in Ireland compared to US$67 billion in New Zealand.
But from the mid to late 2000s Ireland also did something else - raised its gross domestic expenditure on research and development, or GERD. Today it's worth US$3.1 billion compared with New Zealand's US$1.7 billion. Ireland's spending on R&D amounts to 1.8 per cent of GDP, compared with New Zealand's 1.3 per cent. The target for eurozone countries serious about developing their knowledge economies is to spend 3 per cent of GDP on R&D, with a third coming from government and two thirds from business. For New Zealand that would mean doubling investment.
During his tenure as chief science adviser from 2007 until August this year, Cunningham played a key role in persuading the Government to spare science from the austerity axe. But last month the Government abolished the science adviser's office and transferred its responsibilities to the head of research-funding agency Science Foundation Ireland.
Earlier in the year it refocused public research spending on 14 areas with the greatest potential for creating jobs and wealth.
The change of heart worried scientists, particularly those involved in exploratory or so-called "blue-skies" research, who fear they will no longer receive support. Such concerns have been echoed in New Zealand regarding the restructuring of Industrial Research, one of the Crown Research Institutes, into Callaghan Innovation. In her speech announcing the name, the chair of the new organisation's establishment board, Sue Suckling, said: "Our success will be measured by the step change in profitable cash registers ringing in firms from the application of science engineering technology."
The change of focus from research to cash registers was too much for physicist Jeff Tallon. Callaghan Innovation, he said, would become "a mere broker of technical knowledge - a middle player between industry and university". Longer term, if research continues to be downplayed, "we will continue to bleed our best".
Similar disquiet greeted the news that Tertiary Education Minister Steven Joyce was threatening to force Auckland University to take more engineering students, even though the university said it could cause layoffs elsewhere on the campus.
The Government has increased the tertiary education budget for science and engineering while freezing funding for all other subjects. In principle, Cunningham says research investment should always aim to deliver long-term prosperity. But in science, he says, such returns take time - in the order of 10 years - and should not be considered as a quick fix for short-term economic woes. Targeted research also shouldn't be to the exclusion of supporting excellence in other fields. Or research in history, literature and the arts that doesn't have a direct economic benefit.
"We should fund scholars who spend their lives increasing our knowledge. We should support them. They are advancing a front that is common to us all."
Cunningham's formula is to have 65-75 per cent of funded research targeted for economic outcome, 15 per cent policy-related research directed to society's needs, and 10-15 per cent for the rest. Funding focused largely on business as usual and waiting for the economy to pick up. It's a pragmatic formula, but ironically, perhaps not particularly scientific.