The Government has announced "a huge change" to the funding of its research institutes.
Science and Technology Minister Wayne Mapp this afternoon said Crown Research Institutes (CRIs) would be asked to work more for the benefit of the country than for themselves.
"These changes are the most significant in the sector in 20 years," Mr Mapp said.
The Government was eyeing CRIs as "potential powerful engines of economic growth".
The changes have been announced in response to a taskforce report, released earlier this month, which was critical of the performance of the eight CRIs.
Mr Mapp said CRIs would have more clarity about their roles and purpose; more targeted funding; more accountability and would be subject to a new set of performance indicators.
Mr Mapp singled out the changes to funding as "a huge change".
It would mean that what was spent on CRIs would be better lined up with what industries needed and would produce better science. They would become "powerful engines of growth," Mr Mapp said.
The changes mean each CRI will have to work with the Government to develop a "statement of core purpose" defining their exact role. Funding will be targeted at that core purpose. CRIs will now also have to have open annual meetings and a percentage of funding will be put "at risk" and subject to performance.
There are eight CRIs operating around New Zealand. They employ a combined staff of 4400. In 2008/09 the total revenue of the eight CRIs was $675m and they accounted for a quarter of the countrys total research effort.
The CRIs would have to have make a "significant behavioural shift" under the changes.
"The Government expects to see CRIs form closer relationships with research users, an improved focus on science quality through the use of science review panels, and greater collaboration and partnerships with other research institutions," Mr Mapp said.
The Government last week announced that the Foundation of Research Science and Technology, which funds CRIs, will be merged with the Ministry of Research Science and Technology (MORST).
MORST has been asked to start working on the changes immediately, Mr Mapp said.
The taskforce report found it was unclear whether CRIs were supposed to create value for themselves or for New Zealand. It also found there was too much emphasis on outputs that captured revenue, rather than on quality research.
Implementation of the changes would start in July 2011.
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