RSNZ/2002 Yearbook/Policy

2002 Annual Report Of The Royal Society of New Zealand

Incorporating the 2002 Academy Council Yearbook

Policy papers

A prime role for the Royal Society under its Act is to provide expert, informed and cross-disciplinary advice to Government and public organizations in the form of policy and review papers, written for both specialists and general audiences. In doing so it draws on its Fellows, Companions, members, constituent societies, staff and other distinguished scientists and technologists in New Zealand and overseas.

This year the Royal Society had been particularly active in providing advice to Government on human cloning and stem cell research; developing human capabilities in science and technology; amendment of the Hazardous Substances and New Organisms Act; and improvements to New Zealand's strategy for science and technology. The Royal Society also met with Ministers and parliamentary select committees to emphasise the points made in the papers.

Following are the texts of the Society's advice papers presented in 2002.

Statement on human cloning and stem cell research

January 2002

Dear Prime Minister,

In recent months the Council of the Royal Society of New Zealand, chaired by Sir Gil Simpson, has initiated broad discussion on the question of human cloning and stem cell research. This discussion was carried out in fulfillment of our dual mandate to enhance public awareness of issues involving science and technology, and to provide informed advice on scientific and technological matters.

The Royal Society commissioned a discussion paper from Professor Stewart Gilmour of the University of Auckland, and invited general comment on the paper. The Society has also released a brochure designed for schools on the implications of stem cell research.

Following feedback, the Council of the Royal Society debated the issue at its November meeting, and resolved to publish a statement. In particular, Council would like to draw your attention to the recommendation that Government move quickly to introduce legislation to ban in New Zealand the implantation of any embryo whose genetic material has been derived from a human somatic cell. The Council also recommends that New Zealand's proposed legislation on artificial human reproduction should be worded to permit appropriate research on human embryonic stem cells by approved laboratories, subject to control by rigorous national ethical and practical guidelines.

STATEMENT ON HUMAN CLONING AND STEM CELL RESEARCH

This statement should be read in conjunction with the discussion document, Embryonic stem cells and human therapeutic and reproductive cloning, by Professor Stewart Gilmour (http://www.rsnz/govt.nz/news/stem/discuss.php).

The Council of the Royal Society of New Zealand believes that, quite apart from the serious ethical considerations that must be taken into account, there are strong and compelling scientific reasons for banning the cloning of human beings at this time. The Council urges Government to move quickly to introduce legislation to ban in New Zealand the implantation of any embryo whose genetic material has been derived from a human somatic cell.

The Council believes, however, that research directed towards the study of stem cells derived from human embryos up to the fourteenth day of development has great potential value for the development of tissue replacement therapy and the treatment of human disease.

The Council recommends that the proposed legislation on artificial human reproduction should be worded to permit appropriate research on human embryonic stem cells by approved laboratories, subject to control by rigorous national ethical and practical guidelines.

The Royal Society of New Zealand offers its assistance to Government in the preparation of a draft set of guidelines for discussion.

Cooperative research

In a letter to the Government, the Council of the Royal Society of New Zealand strongly shares the view that urgent measures are needed in New Zealand to increase the degree of research cooperation between research institutions, including universities, Crown Research Institutes, and New Zealand's entrepreneurial sectors.

While the Tertiary Education Advisory Commission's recommendation of "Model B" centres is aimed at such a target, two or three similar initiatives developed during this period. For example, criteria for the current CoRE centres do include an element of cooperation in the selection process. New Zealand's new Venture Investment Fund may also cover part of the same policy territory. The initiative most directly falling into the same policy territory, however, is the Foundation for Research, Science and Technology's "Consortia" initiative, aimed at extending long-term funding to those who cooperate in research.

While the Royal Society is loath to ignore any opportunity to increase funding in this area, it does believe that sufficient instruments are now under development in this field. Additional funding would be better applied via one of these. We do understand, in saying this, that creativity will be needed to merge Vote Education, Vote RS&T, and Vote Economic Development into a unified policy instrument.

The preference we express in the paper is that the Foundation's Consortia initiative forms the base upon which an expanded and cooperative approach be undertaken. In the Council's view, the Consortia initiative needs stronger government direction and increased funding to assure its success.

Since our own paper was drafted, the Council has noted, from the Prime Ministers' address on 12 February, that the Government has named three areas (biotechnology, ICT and creative industries) for particular emphasis. This aligns well with the paper's own suggestion that Government take a stronger role in setting this level of policy.

HARNESSING EXCELLENCE

February, 2002

The November 2001 report of New Zealand's Tertiary Education Advisory Commission (TEAC) recommended the establishment of a separate Fund of substantial magnitude (reflecting the importance of research-enterprise linkages in a knowledge society) for the development of Model B Centres/Networks of Research Excellence aimed at supporting national priorities. Access to this Fund would require leveraged funds from other sources.

The Commission believed that two different types of centres of excellence are required. The first involves world-class research at the creation/discovery end of the spectrum irrespective of discipline, theme, extent of collaboration or nature of research outputs; the second, which is referred to as Model B, also involves world-class research but has a number of additional elements, including: lifting private sector investment in R&D, networking between researchers and users; and improving the uptake and use of research findings.

This response from the Royal Society of New Zealand expresses our views on the
above proposal and considers the most effective ways to achieve its goals.

The Royal Society has considerable experience in nurturing, funding, and putting excellence to use through its stewardship of the $28 million Marsden Fund since 1995; its Academy Council, which is devoted to excellence; its administration of the new Centres of Research Excellence (CoRE) Fund; and its awards for outstanding science and technology. The Council of the Royal Society has committed to consult and volunteer recommendations to the Tertiary Education Commission and the Government on centres/networks of excellence.

1.EXECUTIVE SUMMARY

The November 2001 report of New Zealand's Tertiary Education Advisory Commission recommended the establishment of a separate Fund of substantial magnitude for the development of Model B Centres/Networks of Research Excellence aimed at supporting national priorities. Access to this Fund would require leveraged funds from other sources. Model B Centres would emphasise lifting private sector investment in R&D, networking between researchers and users; and improving the uptake and use of research findings.

In the Royal Society's view, these goals do represent some of the most urgent and problematic challenges for innovation now facing the country.

Since the Royal Society prepared its advice paper last year on Centres of Excellence and Innovation, new policy instruments have entered the picture including the Foundation for Research, Science and Technology's Consortia initiative, the Venture Investment Fund (VIF), Centres of Research Excellence (CoRE), and a number of Industry New Zealand programmes. Many of these programmes occupy or overlap the same policy area as TEAC's Model B proposal, leading to a danger of confusion, redundancy and multiple application processes from too many overlapping initiatives. In particular the Foundation's consortia model offers many of the advantages sought by Model B centres. Consortia objectives map almost exactly onto Model B goals.

The Foundation's initial consortia funding, however, is a somewhat timid $25 million for the first three years of operation. The Royal Society contends that consortia should be more actively encouraged, consortia areas of endeavour should get strong leadership from the Cabinet level, and disincentive to joining consortia, which may exist at industry level, should be removed.

We propose that new funding be found, and/or reserved in roughly equal proportions, from Vote RS&T, Vote Economic Development, and Vote Education. Funding should allow consortia to be built from best performing components across the national research and innovation system. Initial fund investment of perhaps $10m per year from each of the three Votes could be followed by new tranches of $5m each year until the total fund reached $90m per year after five years (eventually to be matched or exceeded by private sector funding).

It is the Royal Society's strong belief that overarching guidance on at least some of the consortia areas should come from the Government level. In particular we would see Government's role, supported by the necessary policy advice, as naming new areas of endeavour where capabilities can be built and exploited for New Zealand's future.

2. INTRODUCTION

In April 2000, the Royal Society published an advice paper on Centres of Research Excellence in response to TEAC's proposal at that time¹ recommending the establishment or recognition of national centres or networks of excellence within the tertiary education system, with linkages to a national strategy and the international research community.

Our response took the view that the major purpose of centres of excellence would be to enhance and exploit New Zealand's excellence in research and innovation. We proposed five related objectives for centres of excellence and innovation:

1. Focus intellectual effort in fields of endeavour important to New Zealand.

2. Accelerate the development and use of new knowledge, insights and results.

3. Develop teams of sufficient size and concentration to stimulate creative synergies and cross-fertilisation of ideas.

4. Bring appropriate multiple disciplines, institutions, cultural views and sectors to bear on the problem area.

5. Build human capacity by training and providing a future in New Zealand for a new generation of outstanding researchers.

Subsequent Cabinet decisions set the vision as:

1. support world-class, excellent research;

2. contribute to New Zealand's development;

3. enhance New Zealand's ability to develop as a knowledge society by knowledge transfer activities, especially in research training; and

4. encourage tertiary education institutions to work collaboratively with each other and develop relationships and linkages with other research organisations, enterprises, and other end users.

This vision was to be embodied in three objectives for research that:

1. is excellent;

2. contributes to New Zealand's future development; and

3. incorporates knowledge transfer activities.

The research was to be assessed in the context of five strategic goals: innovation; economic development; social development; environmental sustainability; and fulfilling the obligations of the Treaty of Waitangi.

¹ Shaping the Funding Framework; Fourth Report of the Tertiary Education Advisory Commission, November 2001

In approving more detailed selection criteria, Government placed more emphasis on knowledge transfer in the training of researchers than on transferring results into innovation. The Government allocated some $60M over four years to Centres of Research Excellence (CoRE).

The November 2001 report of New Zealand's Tertiary Education Advisory Commission refers to its original vision for these as "Model A" centres, and the report further recommended the establishment of a separate Fund of substantial magnitude (reflecting the importance of research-enterprise linkages in a knowledge society) for the development of Model B Centres/Networks of Research Excellence aimed at supporting national priorities. Access to this Fund would require leveraged funds from other sources.

In its report, the Commission saw a need for a greater concentration of research effort within the tertiary sector and an improvement of linkages between tertiary providers, industry and the wider community. While commending the current initiative to establish Centres of Research Excellence (CoREs), the Commission believed that two different types of policy instrument are required. The first, referred to in Shaping the Strategy¹ as Model A, involves creation/discovery research from all disciplines and with any level of collaboration. The second, known as Model B, has a number of additional elements such as lifting private sector investment in R&D, networking between researchers and users; and improving the uptake and use of research findings.

3. POLICY GOALS

The Government set out four goals for research, science, and technology that aim to develop human capital and enhance our knowledge of the economic, environmental, social, and health determinants of our well being. In addition, TEAC's report implies that four goals were behind their recommendations for Model B centres:

1. leveraging and lifting private sector investment in research and development

2. enhancing collaborative networking between research providers and users

3. improving the uptake and use of research findings (including commercialisation)

4. focusing upon the nation's strategic goals, in terms social development and environmental sustainability as well as economic development

In the Royal Society's view, these goals do represent some of the most urgent and problematic challenges for innovation now facing the country. They will not be easy to achieve. Innovation seems to have stalled in three areas, and New Zealand's urgent priorities are to build:

1. a private sector which values and performs research because it sees the commercial advantage in delivering value-added in the economic, social and environmental spheres

2. research partnerships that stimulate entrepreneurship in delivering goods and services in the economic, social and environmental spheres

3. reservoirs of trained and talented people, and career paths that can drive these partnerships

A number of recent reports from TEAC, the Science and Innovation Advisory Council (SIAC) and others have stressed that we must embrace innovation, life-long learning, and a Government that does not punish risk-taking. With regard to research collaboration and leverage they recommend that:

1. Firms must learn to use R&D and invest more in it. Much more business collaboration is needed with tertiary and CRI researchers.

2. Industry must build consortia and clusters, attract talented people, and use the Kiwi diaspora.

3. Research and tertiary education should support innovation; economic, social and environmental goals; and adhere to the Treaty of Waitangi.

4. Research funds should be awarded by research quality, not student numbers, to help research units reach centre of excellence status.

SIAC also noted that innovation provides New Zealand with the best opportunity to lift our economic performance, enhance our social well being, and manage our future uncertainty. They saw our main challenges as:

1. rewarding "can-do", risk taking, and success

2. educating for a knowledge economy

3. becoming a magnet nation for talent

¹Shaping the Strategy; Third Report of the Tertiary Education Advisory Commission, July 2001 An Innovation Framework for New Zealand; Report to the Prime Minister, August 2001

4. generating wealth from ideas and knowledge

5. excelling globally

6. networking, collaborating, and clustering

7. taking an investment-driven approach to Government

This seeming plethora of visions and goals carry some common threads, and TEAC's implied goals for Model B Centres (given above) fall generally in line with Government policies. The view that will be developed in this paper is that other and more appropriate vehicles than Models B already exist or can readily be adapted to pursue these four goals.

4. CURRENT POLICY INSTRUMENTS

Last year the Royal Society published an overview of Government policy instruments for innovation, and the table is updated below for 2001/2.

Table 1: Government Policy Instruments for Innovation

The shaded area in the table roughly represents the policy area corresponding to TEAC's goals for Models B. However, since the Royal Society prepared its advice paper last year on Centres of Excellence and Innovation, new policy instruments have entered the picture including the Foundation for Research, Science and Technology's Consortia initiative, the Venture Investment Fund (VIF), Centres of Research Excellence (CoRE)¹, and a number of Industry New Zealand programmes. Many of these programmes occupy or overlap the same shaded policy area as TEAC's Model B proposal, leading to a danger of confusion, redundancy and multiple application processes from too many overlapping initiatives.

In particular the Foundation's consortia model offers many of the advantages sought by Models B. The Foundation lists Consortia objectives as to engage early-user involvement and commitment to research to:

1. enhance the relevance of Public Good S&T and New Economy Research Fund investment

2. improve the use and uptake of knowledge

3. enhance collaborative user-research provider networks

4. increase private sector investment

5. and thereby improve the transformation of research into wealth and wellbeing

These map almost exactly onto Model B goals. Key Features of the Consortia model are given as:

1. the Foundation contracts with single legal governance entity to manage Foundation contract and associated sub-contracts (with typically an annual turnover of $5 million)

2. flexibility consortia cover environmental and commercial both sector and cross-sector

3. target achievement of tangible outcomes around focused objectives

4. intellectual property arrangements agreed by consortium parties before the venture begins

5. investment case include critical path milestones, review points and grow/exit strategy

6. consortia manage research priorities as circumstances change

7. consortia should include at least two "research users"

8. foundation investment for a limited life 37 years. FRST will finance up to 50%

However, initial funding (or profiling of PGST funds consortia have no new money) is seen as somewhat timid at $25 million over the first three-year period of operation. The Royal Society's contention is that the consortia should be more actively encouraged, strong leadership on consortia areas of endeavour should be given at Cabinet level, and disincentives to joining consortia, which may exist at industry level, should be removed.

¹It is essential to recognise that the CoRE model eventually settled on by Government is not the same as the original model A proposed by TEAC. Model A advocated excellence only, while CoRE permits some of the collaborative elements proposed for Model B. Thus, CoRE occupies some of the policy space of Model B. While it does so, CoRE serves a highly valuable function of allowing and encouraging tertiary centres to take a lead in working amongst themselves and in conjunction with other players to develop critical masses of excellence.

5. INVESTMENT IN CONSORTIA

Government funds for research, excellence and innovation are currently associated with three Votes (Education, RS&T, and Economic Development), and ways must be found for funds under all of these Votes to work in harmony, synergy, and support for each other.

For the immediate future, the Royal Society proposes no change in Vote structure, but consortia should require complementary arrangements in other Votes. We propose that new funding be found, and/or reserved in roughly equal proportions if necessary, from Vote RS&T, Vote Economic Development, and Vote Education. The funds from these sources could remain within their Votes, and be available on first call for consortia formation. In this manner, no single partner would be required to pay for the participation of partners from other parts of the innovation system, each would receive their own assistance. Unused funds would revert to original uses in their Votes. The Royal Society also believes that the Centres of Research Excellence (CoRE) currently being selected should also operate on similar funding principles.

Consortia need a new set of incentives, performance expectations and rules to allow them to be established in new areas of highest potential benefit. Funding should allow consortia to be built

from best performing components across the national research and innovation system, and would encourage the creation of consortia where no suitable capability exists to date.

Arrangements must be made for the start up of the fund, for room for new consortia over time, and for the eventual exit of both for individual consortia and the fund as a whole, in the event that it should terminate. An important consideration in the development of new consortia will be to ensure the on-going development of capability within Maori and Pacific Island communities.

Initial fund investment of, say, $10m per year from each of the three Votes, could be followed by new tranches each year of $5m each until the total fund reached a total of $90m per year after five years (eventually to be matched or exceeded by private sector funding). As consortia moved to sunset, funds would start to released again for new cycles of investment. In any one year, funds would not be allocated unless applications of sufficient excellence were received.

While no typical level of funding is likely to exist for a centre, a Government input of $90m per year might reasonably support ten centres. New Zealand criteria should encourage private sector and local government co-investment, with such contributions growing over time. A condition of Government investment should be that some substantial (and increasing) level of co-investment is found from other sources. Those consortia most successful in attracting other funding will likely present the best exit strategies, but consortia mainly engaged in "public good" environmental or social research might find that matching funds can only be found from other Government or local government sources.

6. ADMINISTRATION

It is the Royal Society's strong belief that overarching guidance on the areas in which at least some consortia should be established should come from Government level. By default, much of the policy work with regard to future research and innovation priorities has fallen to the Foundation for Research, Science and Technology. In our view this is an abrogation of Government responsibility. While an agency such as the Foundation should indeed be charged with implementing Government policy in an arm's length way, it should not be asked to carry decisions which are more properly taken at Government level, where a proper overview and synthesis of a wide spectrum of views can be taken into account. In the words of SIAC: "We [must] build a national movement for revitalising our economy, led by the Prime Minister, with widespread support from business, educators, local government, and other community leaders.The Government funds a good deal of New Zealand's total research effort, and must somehow identify priorities for this research. The Prime Minister, as the lead citizen, must drive the change."

In particular we would see Government's role, supported by the necessary policy advice, as naming new areas of endeavour where new capabilities can be built and exploited for New Zealand's future.

While the Foundation would administer the selection of consortia, it will need to conclude a purchase agreement that allows for funding from three votes. It may need to chair a small steering body to deal with strategic and coordination questions arising from Government direction, drawn from the ministries of Economic Development, RS&T, and Education.

The steering body would be responsible for passing on Government instructions as to fields of endeavour where consortia would be sought in each investment round. It might for instance ask FRST to announce contests for specific areas as identified by Government, and open competitions for part of the year's investment, with the onus on the applicant to show benefit to New Zealand.

Human capability issues in science and technology

September 2002

Dear Minister,

At its meeting just before the election, the Council of the Royal Society resolved that Academy Council President Paul Callaghan and CEO Steve Thompson should request a meeting with the Honourable Pete Hodgson, Minister for Research, Science and Technology, as soon as possible after the election to make representations on long term funding, career path development and human capability issues.

Scientists work in the most uncertain of all human endeavours. This transcends risk into the dimensions of the pure discovery. We believe that New Zealand can do more to ensure continuing effective contributions from our scientists, who take the greatest risks of all.

We seem to accept the phrase "Human Capital" when talking of scientists. And in a world that is changing fast, it is commonplace to see physical capital treated as expendable. Buildings 10-20 years old may be knocked down to make way for something new. Production lines are routinely scrapped for a faster, or totally different, approach. Human Capital can all too easily find itself a candidate for replacement too. But scientists get better, buildings do not. Scientists are creative, buildings are not. We know that scientists in New Zealand have the creativity to change with the world, and to cause part of that change.

The Government has set out four goals for RS&T that aim to develop "human capital" and enhance our knowledge of the economic, environmental, social, and health determinants of our well being. A knowledge society is built on talented people and a willingness to provide the long-term support necessary to establish careers and infrastructure needs. In order to acquire and then harness that capital, our strategy must encompass the time scales associated with higher education and professional employment. We must send appropriate signals to young people about their career choices and to the institutes regarding their management policies. We believe there are four "behavioural" goals for research:

excellent and Effective Research for New Zealand's Benefit - encouraging focus and production of excellent research outputs and intellectual property capable of generating significant export earnings for New Zealand
excellent and Effective Researchers developing and retaining excellent researchers/ innovation workers for the national needs, and using them effectively across the full spectrum of activity from basic to applied research and from wealth generation to policy application
effective Critical Masses and Concentrations of Researchers - developing and maintaining an excellent research capability / infrastructure based upon networks, collaboration and co-operation across the public and private sectors
effective Use of Research to Underpin Public Policy and Private Sector Innovation developing a cadre of New Zealanders who are S&T literate and intelligently able to commission needed research, interpret its results, and embody their findings in public policy and the private sector
the Council's resolution stemmed from a deep concern that Council members have to ensure that scientists and technologists are able to make the best contribution possible to New Zealand's future

HUMAN CAPABILITY ISSUES IN SCIENCE AND TECHNOLOGY

Talented People

Nurturing and challenging talented people are essential to achievement of a knowledge society. The broad parameters to be addressed in any strategy to develop the best scientific talent include:

educating and training not just enough students, but in the right areas to match supply with demand for a skilled workforce of scientists, technologists, technicians and support staff
attracting sufficient students and apprentices into developing areas of science and technology
recruiting a skilled workforce from those recently trained in New Zealand and by migration
retaining a skilled workforce both New Zealand-trained and immigrant
Combatting negative factors that affect training, recruitment, retention and attraction back to New Zealand, such as:
the short duration of contracts for people starting careers compared with the normally long duration before research outputs are achieved
personal debt resulting from the student loan scheme
the lack of early career support systems
low pay

An urgent challenge is to re-stabilise the RS&T work force by favouring longer, rather than shorter, research contracts. The loss of a research grant can lead suddenly to the loss of valued researchers. While some solutions will bear fruit over the longer term, several human resource issues can be addressed immediately:

Science demands a high personal investment

The educational (and intellectual) requirements for a career in science are the most exhaustive and time consuming of almost any profession. Typically, a four-year honours degree qualifies the

student as a technician, for a technical/managerial role in industry or for entry into a teacher-training course, all of which provide satisfying and challenging careers. However, if a career in scientific research is sought then a doctorate requires further years of study, frequently followed by more years as a post-doctoral fellow. Borrowing to finance this training is typically followed by a salary that makes debt repayment difficult at a time of life when family and home purchases are a priority. We believe that the student loan scheme must be rethought, and a review made of some of the instruments intended to capture young scientists (e.g. Bright Future). The Royal Society advocates further review of:

rates of interest
mode of repayment (through the tax system)
earning level at which repayment starts
effects arising from the differential costs associated with various courses
a system which favours those studying shorter courses which take them into service industries and disadvantages those doing masters or PhD courses that are necessary precursors in the training of scientists

Invest in the best

To encourage students to attain the basics necessary for science and technology careers, postgraduate scholarships should be increased to match typical graduate salaries in the workforce. As a trade-off scholarships could be limited to three years duration, as in the United Kingdom, to focus both the mind of the student and the supervisor.

However, the Royal Society would argue that a special career start position should be made available to the very best. In other words, the fact that someone has a PhD doesn't make them automatically eligible for further career options, just because they are scientists. It seems to have become increasingly possible for mediocrity to gain a PhD in today's world!

The evidence is (and the FRST post-doctoral competition demonstrates this) that there are some exceptionally able PhD graduates available to the country. For these very top people (perhaps no more than 6 per year) New Zealand should offer a 5-year PDF at a higher salary rate. This would be in addition to current FRST PDFs and would enable 6 more elite-grade post-doctoral fellowships to be awarded each year. They should be strictly for New Zealand tenure and restricted to New Zealand citizens or residents. They could be available to people who have already had a 2- to 3-year Fellowship. Some form of bonding may be needed, and taxation issues surrounding grants would need to be addressed. A key factor in the award would be the commitment of a level of host institution support.

The absence of such a "funding instrument" is, in the view of many, the biggest gap in the human capital development aspect of Vote RS&T.

Science pay is low

Science and technology remuneration is less than in most other professions such as law, medicine and dentistry. It offers insufficient compensation for the years invested in training, and the degree of responsibility carried. The differential was compensated in the past by:

opportunities to pursue areas of personal research interest
reasonable job stability
a degree of respect for scholarship

Today those factors no longer compensate. Job stability appears tenuous and intellectual freedom is constrained or dictated by funding bodies, while the personal investment costs of an education has risen and the low salaries persist. The result is that science as a career has become a joke among young people.

The job carries high responsibility

Scientists and technologists welcome the opportunity to become more accountable for their actions. However, that accountability reflects a higher level of responsibility to society a responsibility which is not reflected in status or remuneration. Ultimately, if this situation is to be changed, society will have to increase either the financial or non-financial inducements to a point where society's best and brightest will want to enter a career in science.

Higher pay is a start

New Zealand faces an increasingly competitive internal market for S&T human resources. This is due to ageing populations in countries richer than ours. New Zealand needs to have a clear plan as to how to deal with this in the long term. One solution is to pay more and, as the major employer, the government is in a position to set the standards through its shareholder status in Crown Research Institutes.

But the key lies in maximising scientists' talents

While pay is a sine qua non, the key lies in maximising scientists' and technologists' incentives, talents, challenges and rewards, both financial and non-financial. These might include a degree of career stability where some degree of control was retained by the individual and the employing organization, rather than control resting with faceless committees and a funding organisation that appears to bear no responsibility for retention of human capacity or capability.

Priorities shift in strange ways

Adjustments in relative priorities have not been properly debated in recent times. In the case, for example, of environmental science, this change seems to be based on no more than followership of other OECD countries, without reference to what New Zealand might need. On the other hand, freezing funding to environmental research programmes or rolling over funding well past original long-term funding allocations, means some programmes have dollar amounts that have not changed since 1995-96!

Investment is a long-term proposition

Currently, FRST investments average 4.5 years duration, yet in many cases research grants could profitably extend over five or more years with continuation expected on the basis of good performance and ongoing capability requirement. The Royal Society recommends a shift from short-term contracts (1-3 years) for beginning scientists (e.g. after a post-doctorate) to a longer tenure (say 5-10 years as is the custom overseas). This time horizon has been recognized by the government in setting up Centres of Research Excellence, and the Royal Society believes there is sound logic in the opportunities and returns arising from longer term work being more widely recognised. Mechanisms should be put in place to ensure that output and creative pressures exist on providers and monopoly-provider situations do not occur. We do not want New Zealand science and technology to become an intellectual monoculture.

Investment should allow for changing economic conditions

FRST investments should also allow for inflation and salary expectations. One option that could be considered is full-cost funding from dual sources, with research grants covering non-salary operating costs, while host institutions would be funded to cover overheads and salaries.

Transition arrangements are essential

Paradoxically long-term investment can be counter-productive if it is not accompanied by effective transition arrangements when a programme of work does come to an end. Where research funding changes are desirable then transition funds and opportunities for retraining, redundancy or early retirement should be factored into the change. Where research leads to spin-off opportunities, CRIs need to extend "prodigal son" clauses to scientists to return if the business does not work out.

In this case one might expect that when a funding body had to account for the full costs of reallocating funding, then a more responsible and thoughtful approach to funding research would be taken. A true strategic partnership between funder and fundee might develop where both parties would be accountable for their actions in terms of maximising benefit jointly to New Zealand, the research providers and individual scientists without allowing any of the parties to take advantage of the particular position they occupy. In other areas of government policy it is common to require that account be taken of "externalities", for example in costs and harm to the environment. The same notion has not, it appears, been applied to "human capital".

Recognise broader talents

The issue of human capital brings us back to the issue of responsibility and status in society. One of the prime aims of the Royal Society is to recognise, celebrate, and harness to good use excellence in science and technology. But we are discouraged by a corresponding lack of enthusiasm from Government and industry. There are virtually no scientists among the 600 or so directors that the

Government appoints to the Boards of the agencies such as SOEs and CRIs that it is responsible for. Perhaps this more than anything indicates the way in which the Government regards scientists.

Provide a sound evidence base

New Zealand has adopted the concept of a knowledge society. But we need to ask ourselves what knowledge is needed and who can provide this knowledge? How do we match supply with demand? Information flow is very important here. Answering these questions requires a clear picture of:

the current supply of science and technology workers
the forecast demand for science and technology workers
the skill sets and flexibilities required
the current and required morale, quality, and excellence of our science and technology resource.
the S&T labour market is global, and perhaps the most mobile and fluid of any so any serious New Zealand study must maintain surveillance of international stocks

The Royal Society has put proposals to Government departments (and is currently awaiting a response) to undertake a major ongoing project in assessing the current state of, and future needs for, science and technology (S&T) people in New Zealand. As it is built progressively over the years, this information will provide the basis for policy recommendations to Government, the tertiary sector, research providers and industry, allowing them to assess where supply and demand will be sufficient or insufficient in time to take remedial action. As the picture is completed and regularly updated, the Royal Society and others will develop instruments to ensure the continuing efficient operation of the "market" to match S&T supply with forecast S&T demand.

In conclusion, the Royal Society acknowledges the government's right to shift priorities, as long as this is done in an orderly and transparent fashion in order for there to be a market in science skills that is based on freely available information. If Government's science and technology aims are not carried out in a planned and logical manner, a further reduction in the morale of a growing number of scientists will occur. Their continued lack of faith in science as a career and feeling that society does not value them will, unfortunately, continue to rub off on young people.

The Royal Society believes that much more can be done to invest in outstanding talent, to support early careers with more stable job contracts, and with pay scales that do not rely upon New Zealand being a "cheap source of labour". We need a "New Directions" process and adjustment period when strategic funding changes direction. CRI and university spin-off companies need prodigal-son clauses. But above all, we need policies to develop a society and industry culture with an insatiable thirst for innovation, a culture that values creativity more than cheap labour.

Response to the Ministry for the Environment Public Discussion Paper on:
Improving the Operation of the HSNO Act for New Organisms

By the Royal Society of New Zealand
November 2002

In September 2002, the Minister for Environment commissioned a review of New Zealand's Hazardous Substances and New Organisms (HSNO) Act. The public's views on changes that might be made to the Act were sought. The Royal Society of New Zealand presents this response to the paper issued by the Ministry for discussion and response.

Guiding Principle

The view of the Royal Society of New Zealand is that the HSNO Act must be amended to ensure that the operational and compliance mechanisms for experiments performed in containment are in line with international practice, particularly with those of our major trading partners.

PART A: Legislative and Policy Proposals in Response to the Royal Commission on Genetic Modification
1. Introduction

1.1The introduction of legislation was both necessary and desirable to ensure that the practice and application of in vitro genetic manipulation in New Zealand is regulated in a way that safeguards the environment, human, animal and plant health and is consistent with the principles

of the Treaty of Waitangi. However, the Hazardous Substances and New Organisms (HSNO) Act is a flawed piece of legislation, for a number of reasons. The Royal Society of New Zealand was pleased that the Royal Commission highlighted many of the practical and operational difficulties that have emerged over the past two or three years and was delighted that the Government expressed an urgent desire to see these difficulties resolved through appropriate amendment to the legislation.

The Royal Society is disappointed that the changes recommended by the Royal Commission and the proposals made in the discussion paper are largely designed to "patch up" the situation and do not address what we believe to be fundamental flaws in the legislation that require a much more rigorous revision of the Act. We will discuss this problem before proceeding to address the specific questions under this general heading.

1.2In our view, it is unfortunate that, for reasons that are not fully clear, the drafters of the HSNO legislation decided on formulating an all-purpose Act to regulate the importation, storage, handling and release of both chemical substances and biological organisms. From both scientific and practical points of view, these represent quite distinct activities. The decision to combine them in one all-encompassing piece of legislation led to a huge Act that is unwieldy, internally inconsistent, and raises compliance difficulties that are seriously affecting the application of genetic modification technology to scientific research in New Zealand.

We recommended that the ideal solution to the problem (at least in the longer term) would be separation of the "hazardous substances" and the "new organisms" aspects of the HSNO legislation into two separate Acts. To stimulate thought along these lines, we tabled draft suggestions with the Commission to show how the division of the HSNO legislation into a "Hazardous Substances Management Act" and "Gene Technology and New Organisms Management Act" might be achieved. We were disappointed that this point was not picked up by the Royal Commission, although we appreciate that such drastic reorganisation of the legislation is probably neither possible nor (given the time that it would take to achieve) desirable in the first instance.

1.3Although we will, in this submission, be making suggestions for improvement to the Act, we have no difficulty in accepting that applications for the uncontained release of GMOs into the environment are most appropriately dealt with by ERMA on a case-by-case, organism-based, approach as endorsed by the Royal Commission. The submissions made to the Royal Commission, however, clearly showed wide public acceptance that the laboratory-based use of in vitro genetic modification technology can be adequately contained and that an approach based on consideration of the experimental details involved is acceptable.

We submit, however, that attempts to regulate this aspect of the use of the technology have resulted in a mechanism for handling applications for contained, laboratory-based research that is unnecessarily clumsy, is not in accordance with internationally-accepted practice, and introduces avoidable problems of enforcement and compliance. The problem arises from the fact that the legislation is organism based and we have concerns about the legality of using Regulations to circumvent problems that are raised by the wording of the Act itself.

1.4We submit that the root cause of these difficulties is the fact that the drafters of the legislation made two significant decisions:

the introduction of a "new organism" represents an environmental hazard
any GMOincluding those held in containment in New Zealand at the time of commencement of the Actis a new organism and therefore constitutes an environmental hazard

There are no scientific grounds to support any assertion that in vitro genetic modification of an organism automatically increases the environmental hazard presented by the unmodified organism. Yet the effect of these decisions was to include all GMOs held in secure containment in the same "environmental risk category" as organisms proposed to be released in New Zealand for the first time.

1.5Discussion of these issues is complicated by an apparent lack of appreciation on the part of the drafters of the legislation of the distinction between "hazard" and "risk". For the purposes of this response to the discussion paper we will make the following distinction:

HAZARD: is a potential for harm

RISK: is the likelihood of the harm being realised.

The important point is that, in New Zealand and internationally, the experience of nearly thirty years has shown the efficacy of appropriate containment in preventing the accidental escape of

GMOs from the laboratory. In that time, there has been no authenticated example of any escape leading to any environmental or health damage. In other words, while a specific GMO might present a hazard if released in the environment, the risk to the environment is extremely (and acceptably) low, provided that GMO is held in secure containment that is designed to prevent its escape.

Internationally, this fact has been recognised by the development of containment guidelines that are based on phenotypic rather than genotypic considerations. In formulating these guidelines for appropriate containment, use is therefore made of a knowledge of the biological properties of the host organism, the foreign DNA to be inserted, the vector(s), any specific experimental procedures that will be used, and any phenotypic changes in the host (increased virulence, expression of specific proteins etc.) that might result from the genetic manipulation. This approach to containment was, of course, used in constructing the containment guidelines that were administered informally in New Zealand by the ACNGT for 20 years before the advent of ERMA. It is, perhaps, fair to say that many of the apparent cases of non-compliance revealed during the review that was made a few years ago stemmed from a failure on the part of New Zealand scientists to appreciate the difference in approach between the old and the new regimes.

The difficulties that the "organism based" approach would raise in practice was pointed out during the drafting stages of the legislation. The objection was, however, countered with the response that any difficulties that these decisions might raise would readily be overcome in due course by introducing appropriate "regulations" to govern the application of the Act. This, of course, is what has happened. We wish to restate our argument that it is bad practice to try to repair the deficiencies of an Act by regulation. Furthermore, we are concerned that the amendments outlined in this Discussion Paper simply perpetuate and extend what we believe to be an undesirable solution to the problem.

For these reasons, before we discuss the revisions to the Act that are put forward in the Discussion Paper, we wish to revisit the definition of "new organism" and put forward a proposal that, if accepted, will go a long way towards solving the problem and simplifying the implementation of the Act without in any way compromising environmental safety.

1.6Our proposal has two key elements:

That the Act be renamed "The Hazardous Substances, New Organisms and Gene Technology Management Act", to allow the treatment of GMOs to be separated, where appropriate (and particularly in relation to "low risk" experiments) from the treatment of "new organisms". A change of title along these lines would to allow the regulation of other technologies (such as regeneration of a new organism by somatic nuclear cloning) to be included in the Act as the need arises.
That the definition "new organism" be applied to a GMO only when consideration is being given to releasing that GMO from approved secure containment. The effect of this would be to exclude from the definition any GMO already held in containment at the commencement of the Act, any GMO constructed in approved containment and held in containment since the introduction of the Act; and any GMO of an organism that is already in New Zealand for which approval for importation into containment has been given.

1.7The main effect of these changes would be to allow the construction of a GMO in containment, or importation into approved containment of a genetically-modified version of an organism that is already in New Zealand, to be determined by Regulations that are based on phenotypic and practical considerations. The need for the biological description of the organisms concerned with the genotypic detail that is required for an organism that is the subject of an application for full (or partial) environmental release would be obviated.

1.8An important issue, of course, is the definition of "approved containment". We argue in Section 4 (below) for a distinction to be made between a "contained field test" and a "partially-contained field test". If a field test can, indeed, be fully contained, then a GMO in such a trial would not be a "new" organism under our definition. We appreciate that this distinction, while desirable, may not be acceptable, at least in the current climate. In these circumstances, we would propose that the definition of "approved containment" be restricted to "containment in a laboratory, plant house or animal facility that is approved under the appropriate New Zealand or Australasian standard".

1.9From the practical point of view, change along these lines would have several advantages:

It would give recognition to the fact that the essential factor in determining the containment of laboratory based experiments is hazard/risk to health (human, animal or plant) and not environmental risk.
It would remove the need for the (largely arbitrary) distinction between "Low Risk" and "Not Low Risk" constructions that is at present made by the so-called "Low Risk" Regulations. Classification would now be on the grounds of hazard, given that experience has demonstrated that such hazards and the risk to human, animal or plant health can be managed by appropriate experimental practice.
It would allow for the existing Regulations to be amended to recognise that many in vitro recombinant constructions have been shown by thirty years of international experience to pose no hazard to human health and can be safely confined to the laboratory by containment that is based simply on sound laboratory practice. In countries such as Australia and Great Britain, such experiments are exempt from any form of statutory regulation. We would hope that, at least in time, consideration will be given to introducing similar exemptions in New Zealand.
It would allow the Regulations to be amended to permit adjudication of all laboratory-contained experiments to be delegated to IBSCs, with a requirement only for notification of decisions to ERMA. This makes scientific sense, since the expertise for such adjudication is at the workface. Existing ERMA and MAF auditing processes would still be there to provide assurance to the public that all work was being properly assessed, monitored and contained.

1.10The suggestions that we make are not based on semantic arguments but on genuine practical considerations that have been shown internationally to be acceptable and effective. Their adoption would bring experimental, laboratory-based work in New Zealand to be brought into line with accepted international practice and would greatly simplify the operation of the HSNO legislation without in any way compromising environmental, health or cultural safety. GMOs constructed in, or imported into, containment would still be identified as potentially harmful. Experiments involving GMOs would still be subject to statutory control, appropriate containment, and rigid compliance requirements.

1.11We see it as particularly important that these changes would allow New Zealand to bring its regulatory practices more in line with those of our major trading partners, especially those of Australia, where effective legislative and regulatory control has been introduced that is not complicated by the artificial constraints of the HSNO Act.

The need for this is emphasised in the discussion document, New Zealand Biotechnology Strategy, issued by the Ministry of Research, Science and Technology. It is appropriate that the present review should include the specific issues raised by that document, as well as by the MfE Discussion Paper.

We urge the Ministry for the Environment to consider these proposals carefully before any large-scale change to the existing legislation is contemplated.

We will refer back to these suggestions where appropriate as we now proceed to discuss the specific questions raised in the Discussion Paper.

2. Simplifying Approval Processes for Laboratory Research

Group approvals for low-risk GMOs:

2a: What other ways are there to group (and handle/process) approvals for low-risk work?

2b: Is this approach workable?

Question 2a. This is a good suggestion. It is certainly appropriate that the Regulations be amended along these lines. However, the argument that we have outlined above makes it clear that it is confusing and inappropriate to classify GMOs held in secure containment as "Low Risk" or "Not Low Risk". Properly defined and operated containment practice means that any GMO held in a laboratory will pose minimal, and acceptable, environmental risk. The issue to be considered is hazard, particularly to the health of the experimental personnel and the risk of escape. The re-definition of "new organism" to exclude GMOs constructed in, held in, or imported into defined containment would solve this problem. The role of the Regulations would be to ensure that the containment is appropriate to the experiments and to the phenotypic properties of the GMOs that are to be constructed in or imported into that containment facility.

Question 2b. The approach outlined under 2.2.2 is certainly workable. For reasons that we have given above, however, we believe that the present requirement for some experiments to be referred directly to ERMA is an arbitrary and unnecessary requirement. We believe that responsibility for all approvals for the construction of GMOs in approved containment should be delegated to the IBSC, with a requirement only for reporting to ERMA. We do, however, endorse the present requirements whereby the operation of containment facilities and the procedures of IBSCs are

subject to regular audit by MAF and ERMA, respectively.

How could the requirements for identifying organisms be simplified?

2c: Which option is more appropriate: 1: Retain only a requirement to describe "low-risk" projects. 2: as for 1, but add requirement to identify the GMO resulting from the work

2d: What level of identification is required for intermediate and for resulting organisms?

2e: When should the identification of the resulting organism occur?

Question 2c.We support Option 1. As we have outlined, the important considerations are the properties of the host, the vector, the genetic material concerned, and, where relevant, the nature of the experimental procedure that is used. We believe that the Regulations should permit a flexible approach to the classification of experiments that can accommodate small changes in these parameters that do not require an increase in the level of containment. Any change that requires an increase in containment level would have to be considered by an IBSC as a new application as an amendment to an existing application.

Question 2d. If a library has been constructed under appropriate containment, it makes no sense to require a single GMO isolated from that library to be treated differently from the library as a whole. There should therefore be no requirement for any more stringent identification of intermediate or resulting organisms that are held under approved containment, or that are transported under secure conditions to another approved containment facility.

Question 2e. Whether or not our proposal for the re-definition of a "new organism" is accepted, we recommend that the detailed description of a GMO as required by the HSNO Act should be required only when an application is made to release the GMO into the environment or to use it in a situation (such as a field test) where containment can no longer be assured.

Defining Low-Risk GMOs:

2f: Is it sufficient to base the criteria for a low-risk organism on the host organism, the nucleic material being inserted, and the vector, where present?

2g: Will these criteria limit the importation of organisms that are demonstrably low-risk but have been developed according to other possibly higher-risk procedures?

2h: What other criteria might be appropriate (e.g. the phenotype of the organism)?

2i: Are there other general approaches to characterising low-risk organisms that may be better? If so, what are they?

Question 2 f. The criteria used for classifying a GMO for importation should be identical to those used for classifying the laboratory construction of that GMO. Option 1 is the logical approach that should be used.

Question 2g. The experimental procedures to be used to construct a GMO are important in determining the human health hazard/risk of a proposal as well as the risk of escape and thus the level of containment necessary to ensure protection of the personnel involved. Once the GMO has been constructed, however, the actual procedure used for its construction becomes irrelevant. The considerations governing the importation of a GMO should be based on the biological properties of the host, the vector, the inserted DNA, and the phenotype of the recombinant organism, to ensure that the GMO is held and used under appropriate secure containment.

Question 2h. Questions such as phenotype (e.g. whether the host is pathogenic; whether the inserted DNA is expressed; the properties of any expressed protein, etc.) are covered by the considerations already discussed under the answer to Question 2c (above). We are not able to identify any other criteria that need to be used.

Question 2i. We believe that the procedures discussed above are appropriate and workable.

3.New Organisms Regenerated from Tissues

GM in Human Cell Lines:

3a: Is it necessary to include genetic modification of human cell lines in the HSNO Act at this stage? If so, what do you think would be the best way of doing this.

3b: Should consideration of the control of genetic modification of human cell lines be done as part of the Ministry of Health's wider consideration of all aspects of human cell and tissue research? Would guidelines be sufficient in the interim?

3c: What is the likely impact to existing practice of the changes outlined in the options given above?

Question 3a.We believe that Option 1 provides the most appropriate solution and support the suggestions made for the scope of this amendment. The exclusion of tissues derived from humans from the definition of "organism" has always been an anomaly of the Act. This will most appropriately be done by changing the definition of "organism" so that, while a human being or a genetic structure derived from a human being is still excluded from the definition, a cell line derived from a human being is not.

Human cell lines are already listed in the "Low-Risk Genetic Modification" Regulations as approved hosts for genetic modification. Changing the definition of "organism" in this way would subject the genetic modification of human cell lines to the same rules that apply to the modification of cell lines from other organisms.

Question 3b.The genetic modification of human beings is excluded from the HSNO Act and should be included in the Ministry of Health review. We believe that the genetic modification of human cell lines is properly included in the scope of the HSNO Act and of ERMA and should not be referred for inclusion in the terms of reference of the Ministry of Health review.

Question 3c.Clearly this amendment will have the effect of regulating experiments that are not at present under statutory control but, given the cultural sensitivity of work involving human genetic material, this would not necessarily be a bad thing. The most serious effect would be the hindrance that it would place on the importation of genetically modified human cell lines. This effect would be considerably lessened if the amendment to allow IBSCs to adjudicate on importation of GMOs into containment were approved.

New organisms regenerated from tissues:

3d: How should the HSNO Act be changed to best cover new organisms produced using cloning technologies?

3e: What other ways might there be to regulate these organisms?

Question 3d.The handling of the issue of regeneration of a new organism from somatic tissues would be simplified if our suggestion to rename the HSNO Act to "The Hazardous Substances, New Organisms and Gene Technology Management Act" is accepted (see Section 1.6, above). This would allow a new definition of "genetic technology" to be added and the regeneration of an organism that is not present in New Zealand to be included in this definition. The addition of "an organism, whether genetically modified or not, that is not present in New Zealand and that has been regenerated from somatic cell nuclear material" to the definition of "new organism" would bring cases of this sort within the scope of the HSNO Act.

At what stage in the process should the HSNO assessment be carried out?

3f: At what stage do you think a regenerated new organism should be assessed under the HSNO Act?

Question 3f.Regulations will need to be drawn up to cover the regeneration from somatic tissue of an organism not presently in New Zealand. While it is likely that ERMA would wish to adjudicate on proposals concerning animals, the applications for the regeneration of plants or fungi or other eukaryotic micro-organisms to be held in containment for experimental purposes should be delegated to IBSCs. Any proposal for release of such a regenerated organism from containment would, of course, be handled by ERMA under the normal requirements of the HSNO Act.

4. Conditional Release

4a: In what situations should controls be used to manage organisms after release?

4b: Are there any purposes outlined in the preceding section for which conditional release should not be used?

4c: Are there any additional purposes that conditional release could be used for?

4d: Should agencies other than ERMA be able to decide where GMOs are permitted? If so, on what basis?

4e: Are there other ways in which location controls could be managed in practice?

4f: How could purposes for the conditional release category be defined?

4g: How tightly should ERMA's setting of controls be defined in the HSNO Act?

4h: What would be the advantages and disadvantages of a separate approval process for conditional release?

4i: How would you see the application process working?

4j: How should the controls on conditional release approvals be reviewed?

4k: Are the existing reassessment provisions in the HSNO Act sufficient for this purpose. If so why?

4l: What alternatives would you propose and why?

4m: To what lengths should authorities go to check compliance with controls on release of new organisms?

4n: What other mechanisms could be used to achieve a high level of compliance with controls placed on organisms under conditional release?

4o: What would be the most appropriate way to assign responsibility for ensuring compliance with and enforcement of conditional release controls?

4p: Are there other models that could be effective?

4q: Is full/partial cost recovery appropriate for conditional release applications?

4r: Who should bear the costs of compliance checking and enforcement of controls under conditional release?

4s: After reading section 4, what do you believe the potential advantages and disadvantages of conditional release to be?

4t: Should all releases continue to be made without controls (should the status quo remain)?

Question 4a. In our submission to the Royal Commission, we pointed out that the biological behaviour of many organisms growing in the open is frequently different from their behaviour when they are propagated under more confined or artificial conditions. We argued a case for the recognition of four situations: (a) contained laboratory experiments, (b) contained field test, (c) partially contained field test, and (d) full-scale environmental release.

Our addition of (c), partially-contained field test, was made to overcome the "all or nothing" approach of the existing legislation and to recognise the fact that there is a need for a class of field test that is between a fully-contained test and a general release. That is, one in which every effort is made to ensure containment, but where there is significant risk of escape from containment. The risk of an environmental hazard resulting from such a test is probably negligible if the test involves large domestic animals (see Discussion Paper Section 11.9), but is certainly greater for plants and even more so for bacteria, viruses, insects and other more mobile organisms. We, further, submitted that the process of assessing permits for full-scale release would be enhanced if the legislation were made more flexible to allow ERMA to set conditions on environmental releases, where this was appropriate.

Apart from increasing the flexibility of research, such an extension of the Act would allow a new organism to be fully evaluated and realistic assessments of risk-benefit issues to be made before full-scale release. We strongly support the proposals made in this section of the Discussion Paper. We are, however, concerned that the compliance cost of such conditions could be very high. Proper design of field tests should minimise the need for controls and care must be taken to ensure that any monitoring or other conditions imposed by ERMA are truly necessary and are based on hazard/risk considerations that can be substantiated scientifically. The use of controls in cases where commercial or other releases are proposed must, similarly, be subject to careful consideration on a case-by-case basis.

Question 4d. At this time, it is appropriate that all determinations regarding the release of GMOs should be made by a single agency (ERMA), consulting with other agencies (e.g. MAF) as appropriate.

Question 4g. We believe that references to controls in the Act should be general. All proposals should be adjudicated on a case-by-case basis. Any attempt to specify controls in the Act could have the effect of unnecessarily increasing the cost of compliance. It is essential that the Act should allow ERMA complete flexibility in setting such controls as it deems necessary after full consideration of the scientific evidence.

Question 4h. As we have stated above, we see "conditional" release issue as one that encompasses experimental tests as well as environmental release for commercial or other purposes. We believe that this option should be available to ERMA as it considers applications on a case-by-case basis. In our submission to the Royal Commission, we proposed that a fast-track procedure that did not involve such extensive public consultation could be introduced for fully-contained field tests. Applications for partially-contained field tests would still clearly have to be adjudicated on a case-by-case basis. However, applications for environmental release that is not part of an

experimental process should be treated flexibly. We see both Options 1 and 2 as viable. An applicant should be able to apply for "conditional" release if that is desired, but ERMA should be able to downgrade applications for "unconditional" release if that is the most appropriate outcome. It is important that the Act be sufficiently flexible to allow these options to be used without the need for re-hearing applications simply because not all possible options were specified in the original application.

Question 4i.See above.

Question 4j.We support Option 2 as the first step, but with Option 1 still possible. Conditional release will only work if the conditions are monitored regularly. Clearly the first onus for monitoring must fall on the applicant, but it is essential that there should also be an independent review made by MAF and reported to ERMA. ERMA should have power to review and revise the conditions as it wishes. However, there should also be provision for an applicant to be able to apply to ERMA for such review and revision if desired.

Question 4m.There is no point in setting controls without monitoring the effectiveness of those controls and the compliance on the part of the user. However, it is important that, whatever approach is used for monitoring adherence to conditions, that it be workable from the points of view both of the user and the enforcement agencies and that the cost of compliance is no higher than is necessary. The important issue is not to make the legislation prescriptive but to keep it flexible enough to allow solutions to be tailored to suit specific cases. We favour Option 2 as the mechanism for granting approval for conditional release. This would ensure that ERMA is aware of where and when new organisms are used and assess the impacts of their use in particular locations or circumstances.

Question 4o.Option 2 would provide the greatest flexibility and would allow greater community involvement in cases where there is a specific local concern. Enforcement could be targeted to the agencies with responsibility for the environments in which conditional release occurs. The advantages of devolving decision-making and enforcement to the local level were discussed in Part B of the RSNZ Submission to the RCGM. Option 2 would facilitate this while sustaining ERMA's overall responsibility for compliance.

Question 4q.The answer to the question of cost recovery depends upon the purpose of the application. Where the applicant is a commercial organisation that is seeking approval for a release for commercial purposes, it is appropriate the majority of the costs should be borne by the applicant. In the case of a commercial organisation that is seeking approval for release of a GMO for reasons that are largely associated with the public good, then it is appropriate that a significant proportion of the costs should be borne by public funds.

Question 4r.See above.

Question 4s.See answer to Question 4a, above.

Question 4t.No, we believe that the category of "conditional" release would fill an important gap in the legislation and allow a much more flexible approach to using the benefits of genetic manipulation for New Zealand.

5.Assessment of GMO Medicines

5a: Do you think medicines that are or contain new organisms (including GMOs) should be subject to a streamlined approval process for release? Why?

5b: If yes, which of the options described above do you prefer? Are there any alternatives that you can think of that reduce compliance costs but also adequately consider environmental issues and public consultation?

5c: Do you think that conducting an environmental risk assessment that does not include some of the areas currently covered in the HSNO Act (e.g. economic or cultural considerations) would be an appropriate way of streamlining the approval process for these medicines? Why?

5d: Options 3 and 4 above propose to streamline the process by requiring only one formal application to the lead agency. Do you have a preference for which agency should lead the approval process: Medsafe or ERMA? Why?

5e: What level of public participation and consultation should there be in the approval process for new organism medicines?

5f: Do you think veterinary medicines that are or contain new organisms (including GMOs) should also be subject to a streamlined approval process for release? Why? If not, why not?

5g: If yes, which of the options described above do you prefer? Are there any alternatives that you can think of that reduce compliance costs but also adequately consider environmental issues and public consultation?

5h: Do you think that conducting an environmental risk assessment that omits some of the areas currently covered in the HSNO Act (e.g. economic or cultural considerations) would be an appropriate way of streamlining the approval process for these veterinary medicines? Why?

5i: Options 3 and 4 above propose streamlining the process by requiring only one formal application to the lead agency. Do you have a preference for which agency should lead the approval process: ACVM Group or ERMA? Why?

5j: What level of public participation and consultation should there be in the approval process for such veterinary medicines?

5k: Do you believe that human new organism medicines that have veterinary applications should be restricted to use in humans only?

Question 5a.Given that medicines containing GMOs will have passed extensive clinical tests before the proposal to release, there is a good case for streamlining the process for their approval and an appropriate mechanism should be devised. We do, however, see cultural and consumer issues as important and believe that there should still be public consultation.

Question 5b.We support Option 4. Under this option Medsafe would first assesses a medicine on the basis of its impact upon individuals and its public health impacts. Medsafe should have a right of veto at this stage, so that if a medicine does not meet their approval there is no need for ERMA to carry out a further assessment. If Medsafe approves the medicine, then ERMA can carry out an environmental risk assessment of the medicine. Assessment is then broadened out from the individual, to the public, to the environment, and this change in investigatory focus is mirrored in the parallel shift in responsibility of the nominated regulatory bodies and their relevant areas of expertise.

This option also means that the public can be appropriately involved in the process under ERMA regulations. This would allow an adequate opportunity for the expression of any relevant broadly based cultural concerns around the medicines. The level of public participation and consultation surround the approval process should remain high as much of this medicine has still to be defined and described and its social effects may be highly significant.

Question 5c.The environmental risk assessment should be appropriate for the organism that is involved and the Act should be flexible enough to permit this so that compliance costs are reduced. We believe, however, that cultural concerns are important and should be evaluated.

Question 5d.Given that ERMA must make the final assessment with respect to environmental risk, it makes sense for that Agency to lead the approval process, but refer all applications to Medsafe for approval for clinical use, before embarking on its assessment.

Question 5e.We believe that public participation is important, and that the opportunity to make submissions and appear at public hearings will be an important part of ensuring involvement by the community in decision-making. We suggest that this be reviewed after a period of three years in the light of the compliance costs involved and the levels of engagement by people in this process.

Question 5f.Option 4 would also be appropriate for veterinary medicine. In a case where a medicine containing a GMO has been approved for human use and subsequent to this there is a desire to use the medicine on animals, then the following should occur. The Agricultural Components and Veterinary Medicines Group must first approve the medicine for animal use, and then ERMA must assess the environmental impact of the medicine for its new use. That is, the medicine may now enter the food chain and so must be subjected to a separate assessment by ERMA. ERMA would be able to call on the information used to gain approval for human use and this may speed up the application process.

Question 5g.We believe that Option 4 is the most appropriate approach.

Question 5h.We submit that economic and cultural considerations are just as important for veterinary medicines as for human medicines, but there may be other ways in which the process can be streamlined.

Question 5i.For the reasons given in our answer to Question 5d (above) we believe that ACVM should be the Agency that must first approve the medicine for animal use. This would be followed by a separate assessment of its environmental impact by ERMA.

Question 5j.We believe that public participation is important, and that the opportunity to make submissions and appear at public hearings will be an important part of ensuring involvement by the community in decision-making. We suggest that this be reviewed after a period of three years in the light of the compliance costs involved and the levels of engagement by people in this process.

Question 5k.No, there are no scientific grounds for such a restriction. There may, however, be cultural or other issues that have to be considered before releasing a human medicine for veterinary use.

6. Confidential Information

(No comment on this component of the discussion document)

7. Grounds for Ministerial Call-In

7a: Do you agree or disagree with the proposal to include significant cultural, ethical or spiritual effects as grounds for call-in for Ministerial decision?

Question 7a.We favour the inclusion of reference to "significant cultural, or ethical, or spiritual effects" in section 68. We also agree with the Government's decision to focus on "cultural, ethical and spiritual effects" rather than "issues". However, while ethical and spiritual matters are "cultural", we have some concerns about the use of the term "cultural" as a generic term to cover "ethical and/or spiritual" in section 2. Economic activity and the construction of "health" as a social good are also "cultural". In this context "cultural" refers to cultural differences and the need to attend to the effects on different cultural groups in Aotearoa/New Zealand.

There are some advantages in distinguishing the grounds for call-in associated with effects on different cultural groups from ethical and spiritual effects. The sets of issues and areas of expertise relevant to consideration of ethical effects of new organisms and their potential use are best signalled by explicit reference to ethical effects. Similarly the areas of expertise associated with assessing spiritual effects may be quite distinct from those associated with issues relating to cultural difference.

Part B of the RSNZ Submission to the RCGM made a strong case for the need to attend to Maori cultural positions on the use of genetic modification, particularly the possibilities of "cultural risk" posed by particular biotechnologies. The inclusion of reference to "significant cultural, or ethical or spiritual effects" in section 68 would be consistent with that submission.

8. Liability Issues

8a: For the purposes of considering liability issues, are GMOs and their effects significantly different from other activities or technologies?

8b: Where a GMO has been approved for release and the conditions for release have been complied with, how much weight do you think should be placed on this in considering whether the existing liability rules are adequate?

8c: Do you consider that existing liability rules will be effective in encouraging precaution in relation to harm that might be caused by GMOs?

8d: Do you consider that existing liability rules will be effective in providing compensation in relation to harm that might be caused by GMOs?

8e: Are the factors that limit the effectiveness of liability regimes significant in relation to GMOs?

8f: In the context of GMOs, is an appropriate level of precaution most likely to be achieved through:

the current mix of regulation under HSNO and existing liability rules?
extended liability rules?
new regulatory mechanisms?
some combination of these approaches?

8g: What are the costs and benefits of any extension of the liability rules or regulatory regime to achieve the appropriate level of precaution?

8h: If you consider that extended liability rules are desirable, what liability rules should apply and who should be liable?

8i: If you consider that further regulatory mechanisms are desirable, what should they include and how would they be enforced?

8j: Should any extended liability rules or regulatory mechanisms only apply in certain situations, such as:

where a GMO has not been approved for release?
where it has been approved for release but the conditions have not been complied with?
where the operator has been negligent?

8k: Should those extended liability rules or regulatory mechanisms apply where the harm is caused by the actions of a third party?

8l: In relation to questions 8j and 8k, what would be the risks, costs and benefits of these approaches?

8m: Are existing liability rules likely to result in an appropriate level of compensation for harm that might be caused by GMOs?

If not:

8n: What is an appropriate level of compensation in this context?

8o: Are extended liability rules likely to be an effective mechanism for achieving an appropriate level of compensation?

8p: Are other compensation mechanisms likely to be more effective in achieving an appropriate level of compensation?

8q: How effective will liability rules or other compensation mechanisms be in ensuring funding for action to remedy or contain GMO-related harm?

8r: Where action is taken by a government agency to remedy or contain GMO-related harm, should the costs of that action be recoverable by the government from persons who caused the harm, and/or from a levy on a specified class of persons such as users of GMOs?

8s: What do you see as the costs and benefits of any extension of the liability regime to achieve the appropriate level of compensation?

8t: To what extent is insurance for GMO-related liabilities currently available in New Zealand or overseas? On what terms?

8u: How is the market for such insurance likely to evolve over the next five to 10 years?

8v: Which, if any, of these options do you think should be adopted?

8w: Should any of these options not be adopted?

8x: Are there any other options you think should be considered?

Question 8a. The release of living organisms is significantly different from other activities and technologies in terms of effects on the environment. In the context of a situation in which there is unlikely to be any immediate change to the existing liability regime, we favour attention to a robust approval process for all environmental releases of living organisms, as well as commitment of resources for enforcement and monitoring of the effects of the use of GMOs. The information arising out of an effective enforcement and monitoring process can be used in the pursuit of liability claims on the basis of personal injury, property and environmental damage, and financial or economic loss.

Liability issues were addressed in Part B of the RSNZ submission to the RCGM. The argument was made that the principle of "internalisation" should apply to the effects of GMOs, where the costs of the effects of product development are borne by the developers, not the community. While this may discourage some commercial interests from applying to release GM products in New Zealand, this must be weighed against the potential risks of unintended outcomes following product release. The submission argued for consideration of the establishment of an indemnity fund to which companies releasing genetically modified products would contribute.

Part B: Improving the Operation of the HSNO act for New Organisms
9.Zoo and Circus Animals

We make no comment under this section.

10.Enforcement Agency for New Organisms

10a: Do you agree with the proposal to formalise MAF as an enforcement agency for new organisms in containment?

10b: If not, what alternatives do you suggest?

Question 10a. We strongly support the proposal that MAF's enforcement role be formalised. MAF already has responsibility for much of this area and has effective working mechanisms in place. From the points of view of both efficiency and compliance, it is important that the number of agencies involved is kept at a minimum and there seems to be no reason to add OSH to the list of enforcement agencies.

11. Issues Arising from Operation of the HSNO Act

11a: Do you agree that the time to release a decision be extended to 30 days?

11b: Do you agree that there is a need to provide for organisms that arrive by natural means or as accidental hitchhikers? Can you provide examples of where a HSNO approval has been considered necessary for such organisms?

11c: What mechanism would you favour: by an Order-in-Council or by ERMA after consultation with other agencies? What alternative mechanism do you suggest?

11d: What criteria do you consider?

11e: Is the risk species process adequate to deal with organisms at a level below the species level? How could it be improved?

11f: Do you see any problems with the inclusion of the phrase 'any subspecies, infraspecies, variety, strain or cultivar' in the definition of new organism?

11g: What other mechanisms might be used to address the above issues?

11h: What other examples are there in addition to orchids where it might be appropriate to have approvals at a level above the species level?

11i: What other mechanisms might be used to address this issue?

Question 11a. There is no point in specifying a time limit that is unworkable. On the other hand, it is important that there should be a requirement for ERMA to notify decisions promptly. We agree with the suggestion that the time period be extended to "not later than 30 working days".

Question 11b. It makes sense for organisms that have arrived accidentally and have become established to be recognised. The problem is to define "have become established". Clearly an organism such as the painted apple moth can not yet be considered as having become established and perhaps it is still possible that the Varroa mite, which is much more widespread, can be eradicated. Each will have to be decided on a case-by-case basis.

Question 11c. Given that ERMA is responsible for adjudicating on "new" organisms, it would seem important that they should be responsible for making this decision after appropriate consultation.

Question 11d. This will have to depend, at least, upon the degree to which it has become established, and what attempts have been made to eradicate it.

Question 11e. With the exception of micro-organisms for release as bio-control agents (which, clearly must be adjudicated by ERMA), most applications for the importation of pathogens will be for importation into containment for research purposes. The possession and study of pathogenic micro-organisms Zealand is regulated by legislation administered by MAF and the Department of Health and, provided the micro-organism that is the subject of a particular application is not on a proscribed list, the concept of "risk species", using sub-species phenotypic descriptors such as pathogenicity rather than strain names should be completely adequate for setting appropriate containment requirements.

Question 11f. The possibility of describing plants at a level lower than species would raise serious difficulties in the case of bananas, which are usually triploid or tetraploid and are quite unstable genetically. Under the HSNO Act, the banana fruit is an "organism". It is clearly quite impracticable to require each importation of banana fruit to be adjudicated for importation on the basis of description at a level below species.

Furthermore, in contrast to the argument put forward in the Discussion Document, we believe that it would be a retrograde step to attempt to require the description at a level below species of micro-organisms, such as bacteria or fungi, that are being imported into containment. The problem is that each isolate of a bacterium tends to be regarded as a new strain and it is virtually impossible to decide whether a new "strain" is already present in New Zealand or not.

Question 11g. The important issue from the point of view of containment of micro-organisms is the phenotype and it is this, rather than the name of the strain itself, that should be the deciding

factor as long as adequate containment is ensured.

Question 11h. Interspecific hybridisation is very unusual in animals and, in general, the identification at the species level of organisms in this kingdom raises few problems. Plants on the other hand, are much more prone to hybridisation (sometimes among several species). In some cases parental species of some of these hybrids maybe present in New Zealand, in others the parents are either unknown or absent. The proposal to permit the description at a higher level of taxonomic classification (genus) than species of plants that cannot be accurately described at the species level, in conjunction with the risk provisions in the HSNO Act, makes a great deal of sense and should be pursued. This would, for example, facilitate the importation of some commercially important genera and hybrids (e.g. of Rhododendrons and Roses) while still allowing the importation of some significant pest plants within those genera (e.g. Rhododendron ponticum, Rosa canina) to be regulated.

As a further complication, the concept of "species" is tending to break down in the cases of some bacteria. In many cases, description at the level of genus (e.g. Nostoc spp.), in conjunction with any unusual phenotypic characteristics (e.g. pathogenicity) will be sufficient to fix the level of containment into which the isolate is to be imported. It is therefore important to extend the concept of describing organisms at a higher level than species to micro-organisms as well as to plants.

Question 11i. See above answers.

Prions:

11 j: Should the HSNO Act definition of "organism" include prions?

11 k: Do you see any negative implications for such an amendment? What are they?

11 l: Do you agree or disagree with this proposal?

Question 11j . It is desirable that the importation of prions that are dangerous to human or animal health should be regulated and their containment assured but, scientifically, it is impossible to see how a prion can be called an "organism".

Question 11k. Prions are not organisms and it does not make scientific sense to include them in that definition. The Discussion Paper gives the impression that this issue is based on the premise that prions are proteins that are infectious only to animals. This position is outdated. There are now at least three well-established examples of prions in fungi and yeast-like fungi and it seems likely that further research will extend the "prion phenomenon" to other organisms. It is also likely that many prion-like proteins will pose no threat to animal or human health and, indeed, that some may have biotechnological value. From the point of view of the HSNO Act, the most scientifically acceptable way of handling this problem would be to include prions that are infectious to humans and animals under the definition of "hazardous substances" and regulate their handling accordingly. It will not be anomalous that prions are defined as "organisms" under the Biosecurity Act. Adjudication on the importation of any prion that is not already in New Zealand is already controlled by MAF under that legislation.

Question 11l. This is the same problem as discussed under Question 11a (above). If the present time limit is unworkable, it should be changed.

Last day for notice of appeal

11m Do you agree or disagree with this option (to delete the requirement that the compliance order state a last day for appeal)?

Question 11m. If there is no advantage in setting a time limit, then it should be removed.

Prosecutions:

11n: Do you consider that there should be a change in the:

(a) starting time from "time of knowledge" to "time of offence"?

(b) period of 120 working days in which to lay information?

11o: Should these times be aligned with those in the Health and Safety in Employment Act or the Biosecurity Act?

11p: Do you consider it necessary to differentiate between offences for hazardous substances and for new organisms?

Prohibited Organisms

11q: Do you agree or disagree with the proposed changes? Please give your reasons.

11r: Are there other changes you consider should be made?

No response is made to the above questions

Large scale fermentation

11s: Do you agree or disagree with the proposal (to develop alternate criteria to the 10litre rule)?

11t: What other mechanisms might be used?

Question 11s. The "10-litre rule" is a hangover from the containment precautions introduced in the US and Britain in the 1970s. It arose because, at that time, 10 litres was the largest volume that could centrifuged as a single batch and, presumably, it was considered safer to limit the number of centrifugings permitted in a single experiment. The rule was incorporated into the old ACNGT guidelines. When the IAG was set up, fermentations greater than 10 litres were considered "field trials" simply because they were not permitted under the ACNGT guidelines and this classification persisted into the HSNO legislation. Times have changed and it is important that the rule be relaxed to allow large fermentations of "low risk" organisms to be made for experimental purposes under contained conditions.

Question 11t. The easiest way to handle this issue will be to remove large-scale fermentations from the definition of "field test" in the HSNO Act and to develop criteria and regulations for large scale fermentation in containment.

Take an integrated view in weighing up the potential benefits of the work against risk of adverse effects of any escape.

11u: Do you agree or disagree with this proposal?

Question 11u. This issue is largely tied up with the argument that we have put forward in sections 1.41.8 and our response to Question 4a (above) and we would urge that those proposals also be considered under Section 11.9 of the Discussion Paper. Please see, also, our answer to Question 4a, above. Common sense must prevail and we support the suggestion that Section 45 of the HSNO Act be amended to make this possible.

Mid-Course Correction
A Strategy for Innovation, Research, Science and Technology

Royal Society of New Zealand

November 2002

INTRODUCTION

In September 2002, the Minister for Research, Science and Technology (RS&T) commissioned a rapid review of New Zealand's Science and Technology system by saying that he was looking for lateral, not radical thinking. He asked what could be done to build confidence, boost private sector investment and identify bottlenecks to improving the system.

New Zealand is not short of ideas. A series of reports on science and innovation has appeared in recent months. All agree that stronger government leadership and clarity is needed. This paper from the Royal Society highlights some of the emerging needs. In a few pages, it does not purport to be fully comprehensive or exhaustive in its coverage, nor does it reassess the evidence base commonly quoted in many other reports. This does not mean that there is no need for closer scrutiny and exposure of such "evidence to peer review. At the heart of the Society's proposed strategy are four major elements:

Vision: New Zealand needs political leadership from the highest level, informed by expert knowledge and public processes, which produces a vision for future directions that are clearly expressed and broadly agreed to.
Focus: New Zealand must further clarify the target areas that are to be given priority. Prioritisation is essential, as NZ has limited resources to carry out R&D at a globally competitive level. The process of prioritisation must be transparent and the reasons behind decisions exposed to public gaze, to check the validity of the arguments and achieve buy-in to the methods of achieving goals.
Commitment: An innovative society is built on human capabilities and a willingness to provide the long-term support necessary to establish careers and infrastructure needs. In order to acquire and then harness those capabilities, New Zealand's strategy must encompass the time-scales associated with higher education and professional employment.
Investment: Government must align investment more closely to the needs of the country.

This paper is organised under three headings:

1. The main drivers for sustainable economic growth, and RS&T's place among them.

2. New approaches, policies and instruments in support of economic growth and innovation and in the application of social and environmental knowledge in the service of sustainable economic growth and sustainable use of the natural environment

3. Incentives for effective public/private partnerships in support of growth and innovation

1. THE MAIN DRIVERS FOR SUSTAINABLE GROWTH

show political leadership at the highest level, informed by expert knowledge and public processes
integrate government planning for sustainable stewardship of the environment, social well being, and economic growth arising out of new ideas, their successful application, and broad appreciation and management of risk
create an entrepreneurially spirited, technologically literate, private sector
maintain a formidable and world-class capability for scientific research

We take the view that growth implies stewardship of our environmental, social and economic resources in such a way as to enhance the state of each, and the flow of services from each for the good of New Zealanders. While the research underpinning each of these areas is low in quantity it is high in quality. However, the uptake of research for value-added purposes remains catastrophically low in New Zealand.

The main driver for growth lies in the application of new ideas in the environmental, social and economic areas. New Zealand has established a Growth and Innovation Advisory Board (GIAB) to advise on economic matters, and has instituted task forces to define ways ahead in our Information and Communications Technology, Biotechnology and Industrial Design sectors. New Zealand also needs a Sustainable Development Advisory Board (SDAB) to work with GIAB and others to ensure the integration of environmental and social aims, and limitations to economic growth. Both of these bodies should report to the Prime Minister and interact with government ministries.

On the economic front, pushing solely from the research side will not bridge the divide between industry, public policy needs, and research. Currently, small companies simply cannot fund research except when they are effectively subsidized by the researcher. One driver that would reinforce New Zealand's science community more than any other would be the presence of an entrepreneurially spirited, technologically literate, private sector. A suite of policies and instruments is needed to create a thirst in industry for innovation, enterprise growth, and aggressive exporting. One instrument would be funding for the short-term placement of our best technology graduates in leading-edge global technology companies to gain familiarity of their commercialisation processes. Of the 280,000 or so firms in New Zealand, only a few dozen currently export at any significant value, but several thousand could be described as export-ready, given the right conditions, which could include training and awareness programmes, grants programmes that reward innovation for export purposes, and targeted tax relief. The main thrust of New Zealand's industry policy should be aimed at these export-ready companies.

On the environmental front, New Zealand is in urgent need of improved knowledge and application of existing knowledge to environmental management. Understanding of the functioning of natural environments, environmental variability and its drivers, and knowledge of natural processes can be applied to improved renewable resource management, reduction of pollution, conservation of habitats, and in assessing risk that natural environmental variability can deliver to users of resources that are impacted by natural processes. Similarly, social science research not only assists in improving human health and welfare but also should make a large contribution to understanding the impacts on the economy of not formulating well-informed policy on areas such as the relationships between income, nutrition, early childhood rearing and effective teaching at pre- and primary school levels on the supply of skilled labour and reduction in numbers needing long term state support.

We stress that the greatest urgency lies in creating a well-educated work force and technologically literate, private sector. This will not be achieved with current policies; neither will it be achieved overnight. The implication is that a relentless emphasis on technology transfer by Crown Research Institutes will fall on stony ground, in New Zealand at least, for some years to come. In the Royal

Society's view, CRIs have a strong role to play, and need to concentrate more on underpinning capability development in readiness for increased industry maturity. In the meantime, CRIs' route for commercialisation may well lie with enterprises overseas. Put crudely, New Zealand has an under-demand for industrially-orientated research in the sense that it cannot yet use it domestically, and some CRIs must look overseas for markets. This involves partnering with other organisations and investors who recognise the skills and cost effectiveness that New Zealand has to offer to them. While these markets will contribute only marginally to New Zealand's short-term growth, they will allow New Zealand to build knowledge platforms as future springboards.

2. NEW APPROACHES, POLICIES AND INSTRUMENTS

train the S&T community in dialogue processes to engage in debate as part of society
Ministerial policy units must include science advisers, and key science-using ministries should create chief scientific adviser positions
create incentives for foreign direct investment, and research in export-oriented firms and start-ups
improve evidence-based approaches to decision making on environmental and social issues
improve the ability of environmental and social research to contribute to economic growth through risk assessment using knowledge obtained by these research sectors
increase both basic and user-oriented research double funding in the Maori, Social sciences, and Excellence (Marsden) areas
encourage industry applicants for the Research for Industry fund (require at least 50:50 leverage for the fund)
nurture talented people, informed of workforce needs, with lower student debt, more stable and promising careers, and competitive pay
reduce the 100% dependence of CRIs on contestable funding, fully fund their core activities with regular external review, and create a national fund to purchase/operate high value national S&T equipment and asset

Science in Society

The science that confronts people in their daily lives generates real controversy and demands a more consultative approach to decisions. Science organisations must be enabled to provide scientists with encouragement, training and incentives to engage more regularly and effectively with the non-specialist public. Scientists must be able, as well as willing, communicators. The public must feel confident in what scientists are trying to do on their behalf. All sections of society should have the chance to understand and engage with it. It is now essential to fund and train the S&T community in dialogue processes to engage in debate as part of society.

As a corollary, policy analysts need to confront the fact that lack of transparent and open public processes leaves a number of stakeholders without a forum to express their views and to receive feedback concerning subjects such research in the service of sustainable resource use.

Science in Government Policy

Science is now an essential component of some of the biggest policy issues facing governments today, such as food safety, water quality and global climate, but government remains structured to emphasise economic advice with little or no science input. Both scientists and economists should be able, and funded, to advise on what is known and what remains unknown or subject to risk, but neither discipline is well equipped to assess public reaction to risk.

Government (local and central combined) is responsible for approx 40% of GDP. Many extremely important areas of our national life are the direct responsibility of government operations. Yet changes in the structure and operations of government departments lack analysis of evidence, or sustained attention to outcome evaluation and feedback. For our national RS&T/Innovation strategy to succeed, ministries and agencies must engage with and implement evidence-based decision-making. Policy options should be based on good scientific evidence, but responsibility for policy must ultimately lie with governments, rather than with working scientists. To achieve this, ministerial policy units must include science advisers, and key science-using ministries should create chief scientific adviser positions.

Science in regional/local government also represents an important dimension. Councils have extensive influences over whether the constituent parts of New Zealand develop in an

environmentally sustainable way everything from regional planning and development of roads and public transport through to emergency management and coping with natural disasters. These groups need access to social and natural sciences advice but uptake, mechanisms, and ability to pay vary markedly across the country.

Industry Incentives

The Royal Society sees a need for new approaches in the Vote Economic Development to include incentives for foreign direct investment in order to create skilled employment opportunities for New Zealanders, which will increase industry awareness of overseas best practice, and have multiplier effects across all business. Tax incentives for research (especially targeted to companies intending to export) and for export-oriented clusters, would also put New Zealand on an equal footing with other countries. Government should also consider research grant and tax subsidies, focussing on start-up businesses and encouraging industrial R&D, that match those available to businesses elsewhere. There is also room for a pre-seed fund to address the "Innovation Progression Gap" the discontinuity in funding and commercialisation resource between research and market ready opportunities.

Aside from monetary incentives, the biggest single assistance for technology is information. The world's technical literature is spread over thousands of journals, and private researchers simply cannot afford e-subscription to each one they need. New Zealand needs to provide affordable e-access to private subscribers.

Role of Environment Research

We see a need for Government and its advisers to form and present a clear view of the environmental research that it needs to achieve its goals. The role of institutions that fund, provide, and apply research, need to be clarified along with the role of the acquisition of basic, underpinning information. Quite often scientists get ahead of advisers and Government's preparedness to act, and this needs to be addressed. There also needs to be an appreciation at the highest levels of the contribution that research on environmental variability and biological processes has on the assessment of economic risk.

Role of Social Science Research

Government departments possess few or no means to carry out social science research that informs effective policy making. There is an important role for government to be clear about what research it needs, how it will be applied, and the appropriate institutions to carry out the various roles.

Research Incentives

It is essential that the aims above be supported by research, and the Royal Society argues strongly that the two ends of the spectrum user-oriented research and research which underpins and builds human capabilities must continue to be strengthened. Around the world, Government and private sector track record is less than perfect in picking science winners. Hence the need to ensure appropriate levels of underpinning science. International linkages and information flows are essential to New Zealand's scientists, and international exchange opportunities should be broadened. There is also a need for greater research emphasis on examining scientific and technological literacy in both compulsory and tertiary education.

Research for Industry

Technology New Zealand requires 50:50 joint funding, and the new consortia will aim for something similar, but new budget investment in these two areas