Stable Funding
1. This direction comes into effect on 1 July 2008.
2. This direction replaces the previous direction, 4 May 2006, given to the Foundation for Research, Science and Technology made under section 103 of the Crown Entities Act 2004. This direction does not replace or revoke any direction made under the Foundation for Research, Science and Technology Act 1990 (“FRST Act”), including directions to allocate funds in accordance with a ministerial scheme or notice of priorities that the Foundation for Research, Science and Technology (“the foundation”) must adhere to. Nor does it vary the Foundation’s obligations under the FRST Act.
Purpose of the Direction
3. This direction instructs the foundation to:
(a) give effect to government policy to improve the effectiveness and stability of the Vote Research, Science and Technology funding environment;
(b) evaluate the implementation and effect of this direction with the Ministry of Research, Science and Technology.
Application of the Direction
4. This direction applies to all funds that are within the New Economy Research Fund, Research for Industry or Environmental Research output expenses, but does not apply to:
(a) Outcome-based Investments; or
(b) any funds covered by any ministerial scheme within either Research for Industry output expense or Environmental Research output expense.
Policy
5. This direction covers aspects of the Government’s policy for a more effective and stable funding environment for science (CAB Min (06) 14/1 and CAB Min (07) 45/4 refers). This policy includes the Government’s intent that the foundation implements specific negotiated funding processes to apply within the New Economy Research Fund, Research for Industry and Environmental Research output expenses (“the Negotiated Investment Process”).
Direction
6. In pursuance of the policy referred to in paragraph 5,
I direct the foundation, in its allocation of funds to which this direction applies, to ensure:
(a) there will be progressive implementation of the Negotiated Investment Process for eligible programmes within Vote Research, Science and Technology;
(b) that to be considered eligible for a Negotiated Investment Process, a research programme will have to:
(i) be of sufficient size;
(ii) demonstrate strategic relevance to Government and/or sector goals;
(iii) have undergone a technical review that demonstrates satisfactory performance; and
(iv) have previously received funding from the foundation.
(c) that research programmes eligible for the Negotiated Investment Process also satisfy quality and relevance criteria that include, but are not limited to, a combination of the following:
(i) scientific and technical quality, including track-record of delivering benefit to New Zealand; and future potential to deliver benefit to
New Zealand;
(ii) long-term comparative advantage in an area of direct benefit to New Zealand, or unique significance to New Zealand;
(iii) alignment with relevant end-user and Government strategies;
(iv) evidence of end-user support and industry
co-funding; and
(v) a track record of the research organisations’ accountability for public money.
(d) that Negotiated Investment Processes will be applied only in the following output expenses:
(i) New Economy Research Fund (with the total value of Negotiated Investment Process investments not to exceed 30% of this output expense);
(ii) Research for Industry (with the total value of Negotiated Investment Process investments not to exceed 40% in each of this output expense); and
(iii) Environmental Research (with the total value of Negotiated Investment Process investments not to exceed 40% in each of this output expense).
Outcome-based Investment and funds to which a ministerial scheme applies do not count toward the calculation of the percentage cap within the Research for Industry and Environmental Research output expenses, but do form part of the total relevant output expense.
(e) there will be progressive implementation of technical review for all research programmes within Vote Research, Science and Technology to improve performance and develop a strong evidence base to inform future investment decisions.
7. I direct that, when allocating funds for the 2008/09 financial year onwards, the foundation consider, in accordance with the FRST Act, using a mix of processes that include but are not limited to the Negotiated Investment Process and contestable processes. The foundation will be the sole decision-maker regarding whether an investment is made via a contestable process, Negotiated Investment Process, or otherwise.
8. When determining the type of process to be used in allocating funds, I direct that the foundation pay particular attention to the government’s desire that the allocation process achieve:
(a) more consistent delivery of longer-term research, science and technology outcomes to the private and public sector that benefit New Zealand;
(b) reduced transaction costs and complexity for research organisations;
(c) enduring linkages and collaboration between research organisations and the end-users of the research; and
(d) greater clarity for research organisations to plan and develop strategies for the longer-term.
9. I direct that the foundation monitors the implementation and effect of this direction at a time to be agreed by the foundation and the Ministry of Research, Science and Technology. This evaluation will be a joint undertaking led by the Ministry of Research, Science and Technology.
The direction dated 4 May 2006 and published in the
New Zealand Gazette, 18 May 2006, No. 47, page 1183, is revoked.
Dated at Wellington this 12th day of March 2008.
HON PETE HODGSON, Minister of Research, Science and Technology.