Q&A
1. What was wrong with the old CRI system?
CRIs have the potential to be powerful engines of economic growth, transferring new knowledge to key New Zealand sectors.
The main factors impeding CRI performance relate to their funding, ownership and governance arrangements. This is demonstrated in several ways:
- It has been unclear if a CRI's objective is to create value for itself, as a company, or to generate value for New Zealand.
- There appears to have been undue emphasis on producing outputs that individual CRIs can capture in their statements of revenue and balance sheets, rather than on research that contributes to the wellbeing and prosperity of New Zealand.
- There have been multiple lines of accountability that dilute the CRIs' sense of purpose and direction.
- CRIs have been heavily dependent on competitive contracts, which are often short-term relative to the timeframe in which science produces results. This makes it difficult for CRIs to operate strategically.
- Funding and governance arrangements have positioned natural partners such as universities and firms as competitors.
2. How will the Government provide greater clarity on the role and purpose of each CRI?
Government will work with each CRI to develop a statement of core purpose which will define the exact role each CRI should play in delivering benefits to New Zealand. These documents will recognise the distinctive role of each CRI.
3. How will the Government provide greater certainty of funding for CRIs?
The Government will fund each CRI to achieve its core purpose. To deliver these core purposes, Government will provide certainty of funding by providing a greater level of CRI funding directly to CRIs, on a long-term basis. Greater certainty of funding will be accompanied by a commensurate shift of responsibility to CRIs' boards to lead and be held accountable for their results.
4. How will the Government strengthen CRI board accountability?
Board accountability is a central to CRIs' performance. Government will strengthen board accountability by asking CRIs to have open annual general meetings, and will annually monitor and evaluate performance against the companies' core purpose and statement of corporate intent.
5. What performance indicators will be put in place to measure the success and national benefit of CRIs?
The Government will measure the extent to which the benefits of CRIs' ideas contribute to the wealth and wellbeing of New Zealand; and introduce measures to ensure CRIs remain financially viable and accountable for all Government funding. Measures of scientific excellence will be assured through greater use of expert science panels. In addition, a percentage of CRI core funding will be put "at risk", subject to performance against agreed milestones.
6. Is the Government going to remove the requirement for CRIs to deliver profit?
The Government does not own CRIs to make a "profit". However, it does expect them to remain financially viable so that they continue to operate, meet their obligations and replace assets.
CRIs will continue to be asked to demonstrate their financial viability by showing a rate of return on equity. As a result of the report's recommendation, shareholding Ministers will meet with each CRI to determine an appropriate rate of return on equity, taking into account the cost of capital to the Crown.
7. How are the changes going to be implemented?
Implementation will begin immediately, with most changes expected to be in place by 1 July 2011.
Cabinet endorsed the overall intent of the CRI Taskforce's recommendations in March 2010. The Minister of Research, Science and Technology was given overall responsibility for implementing the recommendations. The Ministry of Research, Science and Technology (MoRST) was directed to lead the implementation of the policy changes required, working with CRIs and other Government agencies. Implementation will be overseen by a ministerial reference group chaired by Minister Mapp.
MoRST will project manage the work streams arising from the taskforce recommendations, reporting to the Minister and the Ministerial reference group on deliverables. Each work stream will be led by officials from either MoRST, the Foundation for Research, Science and Technology, Treasury's Crown Ownership Monitoring Unit (COMU) or the Ministry of Economic Development (MED). CRI staff and other stakeholders will have the opportunity to engage with these work streams as they progress through collaborative work and consultation.