Pursuant to section 103 of the Crown Entities Act 2004, I give the following direction to Callaghan Innovation to give effect to government policy.

Revocation of Previous Direction

This Direction revokes the Direction to Callaghan Innovation—Criteria for Assessing Proposals for Funding Project and Student Grant Funding dated 3 October 2018 and published in the New Zealand Gazette, 3 October 2018, Notice No. 2018-go4864.

Policy Objective

The Policy Objective of this initiative is to:

• increase New Zealand businesses’ investment in research and development (R&D) to support long-term economic growth; and
• support New Zealand tertiary students to gain and develop their technical skills in a commercial research environment, while bringing capability into New Zealand businesses.

This objective will be achieved by providing grants that support students to undertake research and development within a commercial business environment.

RS&T Funding to be allocated by Callaghan Innovation

Pursuant to section 5(2) of the Research, Science and Technology Act 2010, the allocation of Research, Science and Technology (RS&T) funding from the following appropriation administered by the Ministry of Business, Innovation and Employment (MBIE) will be subject to the decision-making process specified in this Direction:

• Student Grant category of the Targeted Business Research and Development Funding multi-category appropriation.

Callaghan Innovation will use funds from this appropriation to cover the cost of providing grants and supporting services to businesses under this initiative. Callaghan Innovation will not use funds from this appropriation to cover the costs of administering this initiative.

Callaghan Innovation must allocate funds under this initiative in accordance with the following:

• Public Finance Act 1989;
• The rules specified in this Ministerial Direction; and
• Any guidance published by Callaghan Innovation in accordance with this Direction.

Defined Terms

Eligible Entity means an entity that is:

• A Company incorporated and registered in New Zealand under the Companies Act 1993 that is not controlled by the government or one or more government agencies; or
• A Limited Partnership registered in New Zealand, under the Limited Partnerships Act 2008 that is not controlled by the government or one or more government agencies; or
• A Māori Trust or Incorporation under the Te Ture Whenua Māori Act 1993, or a similar organisation managing Māori assets under multiple ownership.

and

• Has an Active R&D Programme within its business.

Callaghan Innovation will issue and maintain guidance to applicants on the criteria it will use for determining which businesses are not eligible for funding under this initiative.

Eligible Student means a person that:

• is a science, technology, engineering, design or business student from a New Zealand tertiary education institution;
• is studying a degree or diploma at NZQA levels 6–10 or equivalent;
• has appropriate immigration status at the time of application (or an application in progress that is subsequently approved); and
• will be physically present in New Zealand for their period of involvement with the business under the Student Grant.

Callaghan Innovation will issue and maintain guidance for potential applicants on the criteria it will use for determining an Eligible Student.

Active R&D Programme means that the business is undertaking a programme of eligible R&D.

Callaghan Innovation will issue and maintain guidance for potential applicants on what constitutes an Active R&D Programme.

Eligible R&D Expenditure means the costs associated with the student undertaking the placement with the business, which may include the wages and salary of the student, a tax-free stipend for the student, and tertiary fees.

Authority to Issue a Student Grant

Callaghan Innovation may only issue a Student Grant to a business that:

• meets the Eligible Entity criteria set out in this Direction; and
• employs an Eligible Student to build technical knowledge relevant to the R&D programme rather than other parts of the business activities.

Callaghan Innovation must not knowingly provide a Student Grant to a business that would bring the reputation of Callaghan Innovation, the Government, or the R&D Student Grants programme into disrepute.

Callaghan Innovation may develop further criteria for Student Grants, provided that criteria are consistent with the Policy Objective.

Evaluation Criteria

Callaghan Innovation will use the answers to the following questions in assessing to their satisfaction the alignment of applications with the Policy Objective.

Constraining Measures

Callaghan Innovation will put in place additional measures, if necessary, to ensure expenditure on the R&D Student Grants does not exceed the funds allocated to this initiative.

Any constraining measures must be consistent with the Policy Objective and the overall design of the initiative described in this Direction.

Administrative Processes

Callaghan Innovation must make sure it has processes in place to:

• Market and call for proposals on the initiative;
• Carry out appropriate due diligence on grant applicants;
• Refer grant applicants to other complementary advice and services;
• Capture data insights to evaluate the initiative;
• Monitor grant recipients to ensure that the funding is used appropriately; and
• Seek to recover funding as appropriate and in line with clawback provisions.

Callaghan Innovation must inform MBIE prior to making any material changes to any guidance or constraining measures issued in accordance with this Direction.

Consideration of Government Priorities

I may, at my discretion, specify to Callaghan Innovation in writing specific Government priorities that Callaghan Innovation must consider when assessing grant applications and selecting grant recipients. If I specify Government priorities to be considered, Callaghan Innovation will publish the document setting out those priorities on its website.

For the avoidance of doubt, if I have not specified Government priorities to be considered, Callaghan Innovation will not infer any Government priorities to be considered as a factor in decision making.

Clawback Provisions

To ensure the appropriate use of public funding, Callaghan Innovation will require a grant recipient to return some or all grant funding during or following a grant agreement if the entity breaches any term of a grant agreement, misappropriates funding, provides incorrect information to Callaghan Innovation, or claims ineligible expenditure.

Callaghan Innovation may specify additional conditions under which the entity will be required to return some or all of the funding. These conditions must be consistent with the Policy Objective or significantly improve Callaghan Innovation’s ability to administer the initiative.

Callaghan Innovation must ensure that grant recipients agree to clawback provisions that provide for the return of grant funding to Callaghan Innovation in the circumstances described above or in other circumstances prescribed by Callaghan Innovation in accordance with this Direction.

Collection and Provision of Information

Callaghan Innovation will collect information relevant to the monitoring and evaluation of this initiative, policy development more generally, analysis of business performance, and other related research, including business-level information on all applicants and recipients of funding under this initiative and individual-level information on the students who were employed under this initiative.

Callaghan Innovation will make the information described above, and any other information collected or generated as consequence of administering the initiative, available:

• To MBIE, upon request, for the purposes of monitoring and evaluation of the initiative and policy development more generally.
• To Statistics New Zealand, on an annual basis, for the purpose of making it available to researchers on a de-identified basis through the Longitudinal Business Database (for business-level information) or the Integrated Data Infrastructure (for individual-level information).
• To other Government Departments or Agencies for the purposes of achieving wider Government policy objectives.

Callaghan Innovation will ensure that it obtains the necessary consent from all applicants and recipients under this initiative to collect and share the information described above.

Dated this 27th day of June 2023.

Hon Dr AYESHA VERRALL, Minister of Research, Science and Innovation.