How the Government really could grow a 'deep tech' economy

As the Government’s long-anticipated science system reforms take shape, there are pieces of the puzzle that remain missing. Prime Minister Christopher Luxon, in announcing his new science and technology council, said that our system is “held back by outdated settings” and that we need “clearer priorities”.

It is perplexing therefore, that the Prime Minister’s Science and Technology Advisory Council comprises so many qualified people, yet we would argue needs the specific scientific expertise in those areas that the Government has previously indicated as priorities, which in the context of our public research organisations, or in the Catalyst fund for international collaboration, are quite clearly stated.

This is no criticism of any of the expert individuals involved; there is certainly expertise relating to more established technologies. But a key role for the council must be to advise the Government on the grounds for changing research priorities, and particularly on the opportunities for Aotearoa New Zealand around advanced technologies as they emerge.

From the more established focus on bioeconomy, to advanced technologies such as quantum and artificial intelligence, the same topics appear repeatedly in Government documents, and were some of the priorities mentioned at the announcement of the new Advanced Technologies Public Research Organisation (ATPRO) too, which provides a useful reference for what this council will need to consider.

We would argue that the council would greatly benefit from expertise in those aforementioned areas to help guide our research system, if the council is expected to do this. No governance or leadership structure has been announced for the ATPRO. Until one is, who will be guiding funding decisions?

Perhaps it is useful to think more deeply about what the definition of ‘advanced technology’ in the ATPRO actually is. We would argue that advanced technologies are synonymous with emerging technologies that are dynamic in nature. This could align with the concept of ‘deep tech’, a term used in the investment community, but in a research context means technologies that remain deeply connected to the fundamental science on which it is based.

If New Zealand really is to maintain its global competitiveness, advanced and quantum technologies must be represented and prioritised at the highest level. Australian, UK and other governments already consider them critical and have acted accordingly, prioritising funding in them.

If our system is indeed held back by outdated settings, surely the update to those settings should be aligned with our national ambitions for our science system.

The announcement of $71 million for the first piece of the ATPRO puzzle, awarded to Paihau-Robinson Research Institute for their work applying deep expertise in the use of strong magnetic fields to sectors such as cryogenics and aviation, provides some clarity on the pathway to the formation of the new organisation.

Much of the expertise in advanced technologies sits, as with the Paihau-Robinson Research Institute, within our universities. So does a lot of the expertise in research commercialisation – whether in the tech transfer offices, Kiwinet, or in groups such as the Product Accelerator.

But while the individual puzzle pieces might be evident to those of us in the sector, the mechanisms by which they will cooperate within the framework of the new ATPRO remain unknown

In our own sectors of deep tech, recent industry commentary on the necessary system settings has been captured in both the 2024 report of the Cleantech Mission and the Photonics and Quantum Technologies Industry report. These voices of industry from both New Zealand and Australia are clear about the need for government investment to make international investment more attractive, through getting our startup companies to the necessary scale and ensuring skilled people are being trained locally.

Thus, while Science Minister Shane Reti recently celebrated an increase in business expenditure on research and development, it is not clear that that success story will continue to pay dividends while our science system as a whole remains woefully underfunded.

Last year the National Science Challenge research funding was cut from the Budget; this year the Ministry of Business, Innovation and Employment has announced the cancellation of the Endeavour funding round for 2026. While existing contracts may be extended and not all of this funding should be lost, this will impact negatively on researchers in applied science and innovation, the exact science this Government has repeatedly stated it wants to encourage.

At 1.5 percent of GDP, our investment in science does not compare well to OECD countries of the same population, such as Denmark, Finland, Norway and Ireland, which average 2.4 percent of GDP. It gets worse when you look at actual dollars: we invested NZD$6.4 billion in 2023 whereas they averaged NZD$16.6 billion.

This underlines the loss to New Zealand due to continued underinvestment. Yes, we manage to do some excellent science in this country. But we do not have the scale to leverage that investment for economic impact: our GDP remains abysmally low in comparison to those countries that invest more as a result. As Sir Paul Callaghan said: we are poor because we choose to be poor.

This Government should be aiming to grow our investment in science in order to fulfil its own stated aim of growing our GDP. Perhaps it would be more honest to set a target in absolute dollar terms, rather than a percentage, to reflect the scale of investment needed to shift our economy in the direction of growth based on advanced technology. But whatever the target is, there is no doubt that we need one.

As the Science System Advisory Group report to government stated so clearly: “Every other country that shows higher productivity growth compared to New Zealand decided some years ago to invest more significantly in R&D”.