Budget 2019 – Expert Reaction

The Government has delivered its ‘Wellbeing Budget’, which includes funding to combat kauri dieback and support innovation.

Science-related funding announcements included:

  • A new $300 million fund to help fill the ‘capital gap’ for New Zealand firms that expand beyond the early start-up phase;
  • $20m over four years the fund strategic research to combat kauri dieback;
  • A $229m Sustainable Land Use Package to protect and restore at-risk waterways and wetlands;
  • $4m over four years to help the Ministry for the Environment improve recycling and resource recovery, and shift NZ to a more efficient zero-waste economy.

The SMC gathered expert reaction to the Budget announcement.

Dr Andrea Byrom, Director, New Zealand’s Biological Heritage National Science Challenge, comments:

“Conservation received a big top-up in last year’s Budget, so while it’s pleasing to see that support flow through from last year’s allocations it does not surprise me that the focus is on biosecurity this year, with a strong emphasis on managing biosecurity risks via trade, travel and import pathways.

“The management and containment of biosecurity risk organisms is an ongoing issue for New Zealand and it’s great to see this beefed up too. Although this allocation is operational rather than science, increasingly I think there is a lot the science sector can do to work closely with government and industry to help strengthen the biosecurity system.

“Likewise it’s heartening to see further investment in freshwater, particularly around water allocations, wetland restoration and mitigating weeds and pests in lakes. In terms of science and innovation, the top-up for kauri dieback research will provide a much-needed boost to the 2018 investment to save one of Aotearoa’s most iconic trees. This should enable scientists to accelerate strategic research into new tools to combat this pathogen.”

No conflict of interest.

Professor Murray Cox, Co-Director of Te Pūnaha Matatini, comments:

“Funding venture capital to support high-value start-up companies with the aim of lifting New Zealand’s research and development (R&D) spend to 2% by 2027 is critically important for the country.  New Zealand is well known for training extremely high-value staff, who are then often forced to go overseas to find jobs.

“Our corporations have markedly lower R&D than other OECD countries, and we are particularly off the mark when measured against small dynamic countries like Israel.  We will need to hear more about how this change of focus will be implemented, which has often been a drag on improving NZ’s productivity in the past.

“There is little discussion in the budget about the poor state of our tertiary sector, with growing discrepancies within New Zealand, and a fall in standards even for our top organizations relative to international peers.  I had hoped to see funding associated with structural change in this area, but there is little of note beyond a $50 million capital injection in the form of a loan to support Unitec Institute of Technology. This does not seem to go far enough to tackle the big problems faced by the sector.”

No conflict of interest. 

Dr Jeff Seadon, Department of Built Environment Engineering, Auckland University of Technology, comments:

“Today’s Budget fulfils what the Government has been signalling in recent months as its main focal points for the waste sector. It has long been acknowledged that waste data in New Zealand is sparse compared to many other OECD countries and this initiative will enable the Ministry for the Environment to gain a better perspective on the actual waste quantities in New Zealand. This data will support better resourcing to target key areas to divert waste from landfills in the future.

“The actions of China in rejecting low-quality recyclables has resulted in a need to develop better onshore processing and to rethink how the recycling sector operates. The era of collect and consign for someone else to deal with is over as more and more countries are rejecting the dumping of so-called recyclables. The Budget addresses this need.

“Mandatory product stewardship schemes, while enabled in legislation, have not been implemented yet. The industry has long acknowledged that this is the most effective way to deal with used tyres and this Budget signals implementation of this tool. Similarly, refrigerants have been an issue since the 1990s when they were targeted as ozone depletion chemicals and a long-term programme is now extended to remove them from circulation. The development of a lithium battery product stewardship scheme is a proactive move on the part of the government in that this waste stream is relatively new and only expected to increase in the future. Implementation of measures at this stage will enable diversion of these batteries and reduce the need for virgin material that has a large impact on the environment.

“The highly targeted measures in this Budget are a controlled expansion on the work the Ministry for the Environment has been engaged in, but it sets the path for significantly larger programmes in the future to divert waste from landfill.”

No conflict of interest.

Dr Heide Friedrich, president, New Zealand Association of Scientists (NZAS), comments:

“I always wonder what proxies to use to describe a thriving society. We know that traditional economic indicators do not necessarily measure what really matters for a society. It is great to see an attempt is made to specifically highlight human, natural and social capital alongside traditional economic indicators in the 2019 Budget.

“Whilst we might be looking for new funding increases in traditional and established science funding processes, we will not find those in the 2019 Budget. Instead, the emphasis is on specific initiatives, such as resilience of our biosecurity system, focus on freshwater for various applications, climate-resilient growth and sustainable land use, which will result in flow-on effects into our NZ science system.

“With the Government supporting innovation, and aiming to invest two per cent of New Zealand’s GDP into R&D by 2027, I am wondering how universities and CRIs can adapt their often massive operations to better incubate and work with start-ups to align with the Government’s desire to support more radical and disruptive innovations?”

Conflict of interest statement: The New Zealand Association of Scientists is made up of a wide cross-section of the New Zealand science community, from University departments to CRIs to those working in independent research organisations or in science-related policy development.

Dr Nicola Gaston, Associate Professor, Department of Physics, University of Auckland; Co-Director, The MacDiarmid Institute for Advanced Materials and Nanotechnology, comments:

“My immediate question for the Wellbeing Budget was whether it would put numbers and action around this Government’s commitment to act on climate change, in particular to put some muscle behind the goals of the somewhat aspirational Zero Carbon Act.

“Of course, the $27 million for the National New Energy Development Centre in Taranaki was announced a few weeks ago, at the Just Transition Summit, along with the $20 million investment into technologies such as ‘organic photovoltaics (solar), superconductors, nanotechnologies and inductive power’ – it is really positive to see the Government invested in making it clear to Kiwis that there are solutions to some of the problems caused by climate change that we can solve here in New Zealand.

“Relatedly, though on a smaller scale, it is positive to see the initiatives being put in place around zero-waste, including product stewardship schemes for lithium batteries.

“But of all the things I learned at the Just Transitions Summit, the one that sticks with me is the extent to which the necessary investments intersect with a wide range of societal needs: the $300 million for venture capital to support start-ups to expand is relevant, as is the total investment of $157 million into innovation and business; even more relevant, perhaps, are the targeted workforce development components of this Budget.

“It remains to be seen what will be delivered by the $200 million for vocational training reforms, but there is no doubt at all that education and skills development matter. Also of interest to me is the $75 million for redevelopment of the Callaghan Innovation site at Gracefield; this is a long-delayed project and overdue.

“At the other end of the spectrum, $155 million seems like a big boost to tertiary tuition subsidies, but at a 1.8 per cent increase this will only slightly alleviate some of the pressures associated with inflation. As I calculated recently, a PhD student today would need to be paid a third more to match the PhD stipend I was paid in 2003, accounting for inflation; these pressures really do matter as they impact on wellbeing and productivity.

“In summary? More important than the specific numbers, to me, is the messaging. And to see a Budget in which wellbeing is intimately related to climate change, to our societal responsibility to support young people to develop and future-proof their careers, and to innovation BOTH for its economic impact and its ability to create step change in how we deal with natural resources and sustainability? The implementation is what this Government will and should be judged on, but the big picture that is being painted is one that gives me hope.”

Conflict of interest statement: The MacDiarmid Institute is a government-funded Centre of Research Excellence that supports research into Advanced Materials and Nanotechnology, including some of the technologies listed above, such as batteries, superconductors, and photovoltaics.

Professor Justin Hodgkiss, Co-Director, The MacDiarmid Institute for Advanced Materials and Nanotechnology, comments:

National New Energy Development Centre (NNEDC)

“Decarbonisation and sustainability can be an economic opportunity for New Zealand, however energy technology is capital intensive – partners and investors with deep pockets and engineering capability are essential, and they must intersect with deep research expertise and new IP. To seize the opportunity of developing new energy technologies, we must use our world-leading R&D capabilities in niche areas to create a pipeline of valuable intellectual property and deep-tech that is connected to an ecosystem of export focused companies and investors. The National New Energy Development Centre could create a space to achieve exactly this.”

Advanced Energy Technology Platform

“This funding priority was announced when the Prime Minister opened the Just Transitions summit in Taranaki earlier this month. The specific strategy behind this initiative is now clearer; rather than only addressing New Zealand’s direct energy needs, the fund also seeks to also develop export opportunities from energy technologies in niche areas, where pockets of deep expertise and capability exist in New Zealand. This strategy is consistent with our view that decarbonisation can be an economic opportunity for New Zealand, as well as our experience that commercial opportunities in deep-tech are always built on world-class, excellent research. This funding initiative should also complement the establishment of the National New Energy Development Centre, which will benefit from a pipeline of IP to develop.”

Conflict of interest statement: The MacDiarmid Institute is a government-funded Centre of Research Excellence that supports research into Advanced Materials and Nanotechnology, including some of the technologies listed above, such as batteries, superconductors, and photovoltaics.

Professor Shaun Hendy, University of Auckland, comments:

“In my #nofly2018 year I became intimately acquainted with our public transport infrastructure, and so I welcome further investment in our railways. Rail will be crucial in our transition to a zero-carbon economy, yet intercity passenger rail is virtually non-existent in New Zealand. The Auckland to Wellington train only runs three times a week, so it was hard to work into a schedule. The infrastructure is also less than ideal; watching tourists scrummaging desperately to collect their baggage in the rain is a memory that will stay with me for some time. There is no wifi on our long-distance passenger trains, and believe it or not, you will only rarely strike cell phone coverage. Rail remains one of the most comfortable, enjoyable, and environmentally-friendly ways to travel, but it’s not a viable option in New Zealand unless you are a tourist with time on your hands.”

Professors Angus Macfarlane and Gail Gillon, Co-Directors UC Child Well-being Research Institute, University of Canterbury, comment: 

“Māori have solutions within their own tikanga for areas where inequality pervades, and the Budget ’19 provisions for Whānau Ora, E Tū Whānau and Paiheretia te Muka Tangata all move in the right direction of recognising this reality. Some years ago Professor Sir Mason Durie set out the modest aspirations of Māori living ‘as Māori’ and as global citizens while enjoying good health and satisfactory standards of living.

“Elements of this Budget resonate with research projects that kaupapa Māori teams are working on at the University of Canterbury, including a research project that highlights five key Māori constructs that are enablers of Māori wellbeing: Mana Motuhake – a positive sense of identity; Mana Tū – a sense of courage and resilience; Mana Ūkaipo – a sense of place; Mana Tangatarua – a sense of inclusivity; and Mana Whānau.  In this research, the first four constructs are compelling, emerging themes, but ubiquitous to them all is Mana Whānau – the overarching lever that will lift outcomes for all.

“This Budget provides scaffolding for these outcomes and the increased support for tamariki Māori, be it through Oranga Tamariki or through healthy eating and exercise at schools, raising literacy – combined with reduced education costs will lift our whānau and their tamariki – the tāonga of our people. So, there are reasons for optimism within Budget 2019.”

No conflict of interest. 

Professor Troy Baisden, BOPRC Chair in Lake and Freshwater Science, University of Waikato, comments:

“Much of the focus on the Wellbeing Budget will naturally fall on health and equity, but the Budget also includes focus on innovation and environment funding. These areas underpin our wellbeing by enhancing productivity through technology, research and development, and by addressing issues undermining the sustainability of our biosphere, including biodiversity decline, freshwater degradation and climate change.

“Environment announcements in the Budget highlight biosecurity and conservation, where immediate pathways for investment are a good fit for the Government’s ‘year of delivery’. Biosecurity has been a stable, but neglected area of investment for many years. Only with expensive incursions, including Mycoplasma bovis infecting cattle, has a major increase been justified. This is a mixture of response, and a realisation that investment in better systems will pay off. By 2020, this budget will be nearly double the $205 million spent in 2017, but current expenditure appears even greater due to responses to incursions.

“Investment in Conservation is projected to increase to $600 million by 2020, making up for many years since 2012 when spending was projected at or just below $450 million but actual spending repeatedly fell short by $36 to 49 million through 2016. A small but important indicator in the Budget has been whether funding for Predator Free NZ is indeed flowing. Last year’s Budget presented cause for worry, but this year’s numbers suggest $4.3 million was spent in 2018 and $9.5 million will be spent this year and next.

“Wider environment funding paints a more complex picture. A substantial Sustainable Land Use Package of $229 million over four years has been announced, but most will not reach full funding levels until the 2021 financial year. This reflects time to form a permanent Climate Commission and the outcomes of the Freshwater Task Force being delayed until after this Budget. In addition to delay to work through the complexity of these environmental issues, levels of funding announced within the components of the Sustainable Land Use Package appear just enough to be a credible start, and not a total solution.

“As a result, spending with an ‘Environmental’ Functional Classification is flat for this year, but increased 40% from $0.92 billion in 2017 to $1.28 billion in 2018. A question to ask is whether the projection of $1.55 billion for 2020 will be achieved. Appropriations containing ‘climate change’ show an even more concerning history. In 2020 they are projected to finally exceed the $64 million projected to be spent 2009, and actual spending peak of $49 million in 2010. This spending bottomed out under $12 million in 2014, and estimated to recover to $30 million this year.

“There is work to do to establish a fundable pathway for delivery on climate change overall. However, the substantial funding to forestry initiatives and accelerating support for rail transport do represent the obvious and achievable delivery pathways on climate change.

“Addressing the Wellbeing agenda’s more difficult long-term goal of transforming to a more sustainable economy will require a healthy research and innovation system, able to receive targeted investment from both government and business. Across all funding packages in research, science and innovation, projections and actual spending show a clear and steady increase over time, reflecting previous year’s budgets. If business research and development spending continues to increase as well, the trend is consistent with reaching the target of reaching ‘2% of GDP over ten years’ set out in the coalition agreement between Labour and New Zealand First.

“Budget estimates of $1.7 billion for research, science and innovation in 2020 will be more than double the actual levels I calculated for 2011, but also reflects a much greater diversity of funding mechanisms and recipients. A persistent problem with actual spending falling below budget estimates by well over $100 million has been reduced but not eliminated, undermining the health of research institutions. This gap undermines the ability of institutions to support early career researchers, particularly in environmental research, where knowledge is specific to New Zealand’s unique landscape and biota. Within this wider issue a particular concern, which I have heard voiced widely, is the need to develop the careers of Māori researchers.”

No conflict of interest.