Hutchison Paul: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Hutchison Paul: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Volume:646;Page:15664] 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you Mr Chairperson for the opportunity to speak on the performance and current operations of Industrial Research Ltd. There is no question that the nine Crown research institutes are a very important part of New Zealand’s science platform and innovation platform. 
Indeed an indication of how they have performed over the last 9 years was given by the National Science Panel—the most esteemed group of scientists in the country—at a meeting of the Royal Society of New Zealand last night. The panel said: “Between the vision of the science system and the reality there is a serious disconnect and that indeed is a great worry to New Zealand and of course in terms of the Labour Party’s performance.” It went on to say: “In our view science policy over the past decade in New Zealand has resulted in a gradual disempowerment of science and scientists. As a result science has ceased to play a leading role in shaping the nation’s future.” Once again that is an incredibly serious indictment on the performance of the system and the management of it by the Labour Government over the last 9 years. 
The panel even went on to say: “New Zealand does produce some outstanding science and has a rich heritage derived from its past great scientists but with high transaction and compliance costs and low intake of quality students from our secondary schools means that our capacity to continue to do so is diminishing.” In fact the president of the Royal Society told a meeting of MPs not so long ago that the science dollar that was handed out by the Foundation for Research Science and Technology ended up being worth at the laboratory bench approximately 50c. In other words transaction and compliance costs and the entangled bureaucracy set up by this Labour Government have absolutely diminished the value of those very important dollars. 
Let us look specifically at the Crown research institutes. Between 1992 and 2001 there was an increase in the equity of the Crown research institutes in the order of 106 percent. Over the last 6 years the equity has pretty well remained static. That again must be a damning indictment on the management of this Labour Government. 
If one looks at Industrial Research Ltd which was one of the jewels in the Crown research institutes’ crown up until about 2000 one sees that in 2002-03 its return on equity was minus 2.1 percent the next year it was minus 14.8 percent the next year it was minus 20.2 percent the next year it was minus 6.4 percent and the next year—that is 2006-07—it was a very concerning minus 25.8 percent. Equity itself went down from $27.7 million in 2002 to $19.3 million in 2006-07. What is worrying is the Crown Company Monitoring Advisory Unit commentary which is extremely understated in saying that Industrial Research Ltd’s financial performance was below expectation with a full-year loss of $5.7 million. Over these last 5 years Industrial Research Ltd has been seriously eroded in terms of its return on equity its equity and its ability to support the other very important scientific platforms. 
That has been the sort of management we have had under a Labour Government. I note in the OECD review of New Zealand’s innovation policy a comment made on governance. The appraisal noted concerns about finding suitable directors for Crown research institutes and concerns about turnover of directors. It said that although some steps have been taken to address these problems the Crown research institute boards continue to have a relatively high level of turnover and a relatively high proportion of inexperienced directors. As we stand here today 23 directorships of Crown research institutes are vacant. 
Chris Tremain 
: How many? 
Dr PAUL HUTCHISON 
: Twenty-three directorships are vacant as we stand. Surely any Government worth its salt should have ensured that those directorships were filled in an orderly and timely manner.