Review of Crown research institutes finds just the right balance

OPINION: Nineteen years after their formation, Crown research institutes have been the subject of a comprehensive review. Neville Jordan's task force has completed a swift and intelligent survey which should be implemented forthwith. Scientists will be relieved that there are to be no upheavals.

A clearer public-good focus and reduced contestability are the big changes. That they may be seen as "big" tells a story about the way in which ambiguity in public reform - and ministerial neglect - can wreak significant harm. For in truth, most of the task force's recommendations match the sort of balance I was striving for nearly two decades ago.

In saying that, I cannot deny that the likelihood of derailment was greatly enhanced by the decision to make 90 per cent of the CRIs' funding contestable. Disestablishing the old science departments provided the opportunity to hand out at least some of the money on a contestable basis. Without a clear idea of the appropriate balance, I considered that at least 40 per cent of the funding should be non-contestable. The Treasury, full of the joys of spring, rooted for full contestability.

I lost that battle. The best that could be salvaged was 10 per cent of so-called "non-specific output funding" which was money handed over on a pro-rata basis ostensibly to counter the otherwise overwhelming power of a monopoly purchaser, the Foundation for Research, Science and Technology. I was, and remain, deeply sceptical about the ability of science "purchase agents" to know enough to make seriously discriminating funding decisions.

Scientists are bright people and they manage to do most of what they want to do regardless of the funding system that is erected. The asymmetry of knowledge in their hands means that whatever the pretensions of funding agencies, they will always be running from behind. A funder's 'power' resides in its ability to create obstacles and withhold money. The 10 per cent non-specific output funding was an (inadequate) acknowledgment that the foundation would almost certainly get it wrong.

But even a 90 per cent contestable system could have been able to work better if the foundation had taken a very high-level, long-term, strategic view of how it spent its funds. Instead, an army of breezy "portfolio managers" started dissecting their "investments". And, with political approval, a proliferation of different pots of money sprang up. Getting this all in hand is long overdue.

So in an important sense, the task force's review is fundamentally a review of the foundation. But it has, with equal accuracy, diagnosed problems with the CRI model. And this is where ambiguity on the part of successive governments has been subversive.

As the task force records, CRIs were set up principally to deliver public benefits. I don't think I agree with their terminology of "market failure". It suggests that governments only have a role where markets fail - an intrinsically doctrinaire position. Some of us consider that there are public goods that taxes should legitimately secure - goods that through their free availability will enable a more civilised and productive society.

Information about the basic geological, bio-physical and sociological contours and risks of our islands come to mind. Call it market failure if you like, but the provision of these goods requires sustained intellectual inquiry by human beings who, over their careers, become dedicated stores of knowledge that in crises can be literally invaluable.

For that reason, it was made clear at the outset that although a company format was being adopted, the Crown did not own CRIs with the objective of extracting financial dividends. I recall being subjected to sustained and strenuous questioning by opposition MPs about whether there was not a hidden agenda here. I stuck by that commitment for nine years. To general wonderment, the same sceptics, in government, declared $50 million worth of dividends in 2001.

In truth, the agents responsible for monitoring CRI performance were able to exploit the ambiguity of the Crown's ownership rationale to push continually for a more SOE-ish approach. It's not hard to understand why - there's something comfortingly "scientific" about financial metrics. Monitoring a long- term public-good ownership interest is much harder. So the task force's call for an even more explicit statement of core purpose is welcome.

But to be meaningful, it will have to be at the forefront of conscientious ministerial oversight. The responsible minister has to do his or her homework and engage in carefully prepared, arms-length exchanges with boards. The potential for distracted attention in this area is the endemic weakness of public ownership.

The other risk posed by a reduction in contestability is an incestuously cosy relationship between CRIs and those who both fund and monitor them. This is manageable, but again it will require a sceptical, questioning frame of mind on the part of the responsible minister.

There is no perfect model. An exceptionally high-calibre task force has demonstrated a sophisticated understanding of that. It remains to be seen whether ministers and officials can match it. Perhaps reviews every 20 years are the irreducible minimum.

Newest First

Oldest First