Contestability and contested stability: life and times of CSIRO's New Zealand cousins, the Crown Research Institutes.

SUMMARY

The progress of the Crown Research Institutes (CRIs) since their formation in 1992 from the dismantling of the centralised Department of Scientific and Industrial Research (DSIR) is charted. Particular attention is paid to the funding environment, characterised by the concept of contestability, in which the CRIs have operated. In recent years, the CRIs have lobbied for more funding stability arguing that contestability has resulted in fickle funding decisions, eroding their ability to plan for the long-term and build human capital. Certainly recent changes in policy reflect a greater concern with CRI capability. When the Government moved to increase the amount of core funding for CRIs, however, the universities, concerned that this would reduce their access to funding, argued that this 'stability' would result in ossification and less than excellent science. The paper concludes with some reflections on the contrast between the CSIRO and CRI cousins, and on the future for CRIs.

KEY WORDS

contestable research funding; Crown Research Institutes; university research funding New Zealand; new public management; science excellence; public choice theory

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For the first time in 60 years the Government is realigning its departmental science effort to focus on the greatly changed needs of New Zealand ... Establishing Crown Research Institutes around a productive sector, or oriented to people or resources, ensures that they will be focused on needs and end uses of science and technology.

While DSIR, MAF Technology, Forest Research Institute and New Zealand Meteorological Service have served New Zealand well, increasingly their ability to do so has been constrained by their departmental format. By establishing research institutes with full commercial powers, the ability to transfer technology to users will be greatly enhanced, to New Zealand's benefit.

(Ministerial Science Task Group 1991: v)

So said Simon Upton, Minister of Research, Science and Technology, in his forward to the landmark document that paved the way for the dismantling of New Zealand's public sector research, including the Department of Scientific and Industrial Research (DSIR), and the formation of the ten Crown Research Institutes (CRIs) that would 'provide the building blocks for the research community well into the next century'. Formed out of the research arms of four government departments, the CRIs came into being on July 1 1992. They are now several years into the 'next century' so it is timely to reflect on their fourteen years of existence.

POLICY PURITY

The science policy and structural changes that accompanied the formation of the Crown Research Institutes in 1992 were one small part of a period of major change that occurred throughout the public sector at that time, 'merely another item on a reforming agenda applied to all and sundry' (Scott 2003: 82). Commencing in 1984, following a fiscal crisis and change of Government, New Zealand progressed through a period of macro-economic stabilization and structural reform, particularly in the public sector, that has been called one of the 'most notable episodes of liberalization that history has to offer' (Evans et al. 1996: 1856). Influenced by public choice theory, 'new public management' (NPM) discourses and practices have been popular in recent decades with governments around the world (Aucoin 1990), including Australia (Keating & Holmes 1990) and New Zealand (Scott et al. 1991; Boston et al. 1996), and science was not immune to the trend (Boden et al. 2006; Cartner & Bollinger 1997; Leitch & Davenport 2005). The New Zealand version of NPM, however, is widely acknowledged for the 'coherence and rigour of its intellectual base and the rapidity with which it was given effect' (Poletti 2004: 19).

While it is not the intention here to review NPM (see Hood & Guy 2004 and Boston et al. 1996), it was essentially based upon the marriage of new institutional economic ideas, such as contestability, user choice, transparency and incentive structures, with 'managerialism', (professional management expertise, requiring high discretionary power), now viewed as central to organizational performance (Hood 1991). Of particular relevance here are the seven NPM doctrinal components and their justifications identified by Hood (1991: 4):

1. Hands-on professional management in the public sector (accountability requires a clear assignment of responsibility for action);

2. Explicit standards and measures of performance (accountability and efficiency require a clear statement of goals and objectives);

3. Greater emphasis on output controls, to stress results rather than procedures;

4. Disaggregation of public sector units, to create efficient and manageable units and separate provision interests;

5. Greater competition in the public sector as rivalry is key to lower costs and better standards;

6. Stress on private sector styles of management practice and use 'proven' private sector management tools;

7. Stress on greater discipline and parsimony in resource use, to 'do more with less'.

For science, it was the disaggregation of units coupled with a drive for more efficiency and accountability in science investment that drove the reforms, including the break up of the CSIRO equivalent, the DSIR. The DSIR was established 1926 after it was recognized during the First World War that science could usefully be applied to agricultural and industrial problems (Fleming 1987). By 1939, eight divisions, five research associations (dairy, leather, fuel (later coal), wheat and wool) and a research station had been established. This structure formed the basis of New Zealand's science and technology through to the end of the 1980s (Palmer 1994).

From the 1970s, with a continuing downturn in an economy heavily protected by trade barriers and subsidies, signs of the need for change began to emerge. Run with a very lean head office infrastructure, the DSIR was then the primary provider of science policy advice as well as the sole controller of the distribution of funding to its researchers (Winsley and Hammond 1997). During the 1980s, the DSIR head office increased greatly in size as it struggled to comply with the increased accountability measures NPM demanded, restructuring and introducing processes for prioritizing work and contestability of funds (Palmer 1994). Despite these moves, DSIR suffered greatly reduced public funding relative to rampant inflation as New Zealand's gross expenditure on R&D as a percentage of GDP fell from 1.4% in 1981 to 0.91% in 1989 (Palmer 1994: 42). DSIR was directed to move to a 'user pays' system and increase commercial income, which it managed to improve from 10% in 1984/85 to 27% in 1990/91. DSIR still struggled to dispel the image of an organization full of 'lazy and unresponsive' scientists managed by 'tyrannical and conservative science directors' (Winsley 2003: 78), so was ripe for the attention of a reforming government. Several reviews highlighted the comparatively poor state of New Zealand's investment in science and technology and provided the underpinning logic for reform. The remedies to address this under-investment suggested by the various reviews included 'increased funding, better prioritization of funding, incentives to increase the level of private sector investment, and structural reform to improve efficiency within the overall system' (CCMAU 2005: 33). The parallels with CSIRO experience are striking.

Using a 'steering approach' to research (Rip and van der Meulen 1996), structural reform was introduced first and, in the late 1980s and early 1990s, new institutions were formed to separate provision of research services from the functions of policy advice and the purchase of services. Policy advice became the primary function of the Ministry of Research, Science & Technology (MoRST), funding (purchasing) of outputs was the domain of the Foundation for Research, Science & Technology (FRST), and the performance of research was the role of universities, research associations and the Crown Research Institutes. The CRIs were formed from the DSIR, the Forest Research Institute and the research arms of the Ministry of Agriculture and Fisheries and the Meteorological Service. The ten institutes, each with a particular sectoral orientation, were set up as Crown Owned Entities with instructions to perform research 'of benefit to New Zealand' and to be financially 'viable'. There was concern from the beginning that the social sciences CRI may not be able to meet the latter criterion and it subsequently closed in 1995.

The CRIs were to have a 'broad focus' and 'flexibility' and be 'vertically-integrated' over the value chain (Ministerial Science Task Group 1991: 23). No strategic consideration appeared to have been given to the relative proportion of the research effort that should be put towards particular sectors, however, so, in basing the CRIs on then current activity, the new organisation merely propagated the previous strong agricultural and environment research focus. Thus, in comparison with other OECD nations, New Zealand still appears to severely under-invest in research related to industry (Bibby 2002).