{"id":990,"date":"2025-06-25T01:21:19","date_gmt":"2025-06-25T01:21:19","guid":{"rendered":"https:\/\/www.bemagnetic.co.nz\/?p=990"},"modified":"2025-06-26T00:13:55","modified_gmt":"2025-06-26T00:13:55","slug":"nzs-innovation-reset-why-aotearoas-next-leap-needs-more-than-funding","status":"publish","type":"post","link":"https:\/\/www.bemagnetic.co.nz\/insights\/nzs-innovation-reset-why-aotearoas-next-leap-needs-more-than-funding\/","title":{"rendered":"NZ\u2019s Innovation Reset: Why Aotearoa\u2019s Next Leap Needs More Than Funding"},"content":{"rendered":"<p data-start=\"1087\" data-end=\"1406\">In our recent article, <em data-start=\"1110\" data-end=\"1294\"><a class=\"\" href=\"https:\/\/www.bemagnetic.co.nz\/insights\/aotearoas-magnetic-moment-71m-investment-powers-advanced-technology\/\" target=\"_new\" rel=\"noopener\" data-start=\"1111\" data-end=\"1293\">\u201cAotearoa\u2019s Magnetic Moment: $71M Investment Powers Advanced Technology\u201d<\/a><\/em>, we explored the government\u2019s $71 million commitment to accelerate New Zealand\u2019s advanced manufacturing sector.<\/p>\n<p data-start=\"1408\" data-end=\"1590\">This was a strong signal of intent, but it\u2019s arriving at a time of economic headwinds. New Zealand\u2019s GDP contracted by 1.1% across 2024, which was the worst non-pandemic downturn since 1991. (<a class=\"cursor-pointer\" href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/new-zealand-fourth-quarter-gdp-rises-07-2025-03-19\" target=\"_new\" rel=\"noopener\" data-start=\"808\" data-end=\"918\">Reuters, 2025<\/a>) Despite a modest rebound in late 2024, the message is clear: our economic model needs a reset.<\/p>\n<p data-start=\"1408\" data-end=\"1590\">Behind this investment momentum lies a bigger shift, a transformation and rebuilding of NZ&#8217;s entire science, research and innovation ecosystem, which will impact our economy for decades to come.<\/p>\n<h2 data-start=\"1597\" data-end=\"1654\"><strong data-start=\"1600\" data-end=\"1654\">The Investment Is Welcome But NZ Still Lags Behind<\/strong><\/h2>\n<p data-start=\"1656\" data-end=\"1780\">Despite this latest investment, New Zealand continues to underinvest in research and development relative to our OECD peers.<\/p>\n<ul data-start=\"1782\" data-end=\"2062\">\n<li data-start=\"1782\" data-end=\"1868\">\n<p data-start=\"1784\" data-end=\"1868\">NZ invests just 1.47% of GDP in R&amp;D, compared to the OECD average of 2.7%. (Source: <a class=\"cursor-pointer\" href=\"https:\/\/www.oecd.org\/en\/data\/indicators\/gross-domestic-spending-on-r-d.html\" target=\"_new\" rel=\"noopener\" data-start=\"2073\" data-end=\"2161\">OECD Data<\/a>)<\/p>\n<\/li>\n<li data-start=\"1869\" data-end=\"2062\">\n<p data-start=\"1871\" data-end=\"2062\">Countries like Germany, Sweden, and South Korea consistently invest more than 3% of GDP into R&amp;D, recognising it as a key driver of productivity, resilience, and future economic growth.<\/p>\n<\/li>\n<\/ul>\n<p>This gap is especially stark in a year where GDP shrank, highlighting that productivity and innovation are no longer optional, but essential for our economic stability. While we are moving in the right direction, we are not yet investing at the scale required to be globally competitive.<\/p>\n<h2 data-start=\"2315\" data-end=\"2376\"><strong data-start=\"2318\" data-end=\"2376\">The Callaghan Transition: A System Rebuilt for Purpose<\/strong><\/h2>\n<p data-start=\"2378\" data-end=\"2571\">In 2025, the government announced the <a href=\"https:\/\/www.rnz.co.nz\/news\/political\/558379\/callaghan-innovation-confirms-67-more-potential-job-cuts-as-it-disestablishes\"><strong data-start=\"2416\" data-end=\"2460\">disestablishment of Callaghan Innovation<\/strong><\/a>, in an attempt to make research, development and commercialisation more mission-led and better aligned with the industries that drive our economy, designed to better connect research, industry, and national priorities.<\/p>\n<h3 data-start=\"2573\" data-end=\"2597\"><strong data-start=\"2577\" data-end=\"2597\">What\u2019s Changing?<\/strong><\/h3>\n<p data-start=\"2600\" data-end=\"2704\">Callaghan Innovation\u2019s closure is part of a wider reform of New Zealand\u2019s science and innovation system that will see the formation of new Public Research Organisations (PROs) focused on key national missions:<\/p>\n<ul data-start=\"2880\" data-end=\"3252\">\n<li data-start=\"2880\" data-end=\"2990\">\n<p data-start=\"2882\" data-end=\"2990\"><strong data-start=\"2882\" data-end=\"2900\">Bioeconomy PRO<\/strong> \u2013 supporting agriculture, food, forestry, biomanufacturing, and circular economy sectors.<\/p>\n<\/li>\n<li data-start=\"2991\" data-end=\"3112\">\n<p data-start=\"2993\" data-end=\"3112\"><strong data-start=\"2993\" data-end=\"3030\">Earth &amp; Environmental Science PRO<\/strong> \u2013 focused on climate, decarbonisation, geoscience, and natural hazard resilience.<\/p>\n<\/li>\n<li data-start=\"3113\" data-end=\"3252\">\n<p data-start=\"3115\" data-end=\"3252\"><strong data-start=\"3115\" data-end=\"3142\">Advanced Technology PRO<\/strong> (proposed) \u2013 designed to support advanced manufacturing, engineering, digital transformation, and automation.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"3254\" data-end=\"3458\">Key technical services like the <strong data-start=\"3286\" data-end=\"3328\">Measurement Standards Laboratory (MSL)<\/strong>, and programmes such as the <strong data-start=\"3357\" data-end=\"3392\">Bioresource Processing Alliance<\/strong> and <strong data-start=\"3397\" data-end=\"3420\">Product Accelerator<\/strong>, will continue under new governance.<\/p>\n<p data-start=\"3460\" data-end=\"3728\">(Sources: <a class=\"cursor-pointer\" href=\"https:\/\/www.callaghaninnovation.govt.nz\/stories\/the-government-has-announced-that-callaghan-innovation-is-to-be-disestablished\" target=\"_new\" rel=\"noopener\" data-start=\"3470\" data-end=\"3620\">Callaghan Innovation<\/a>, <a class=\"cursor-pointer\" href=\"https:\/\/www.sciencemediacentre.co.nz\/2025\/01\/23\/reforms-to-nzs-science-sector\/\" target=\"_new\" rel=\"noopener\" data-start=\"3622\" data-end=\"3727\">Science Media Centre NZ<\/a>)<\/p>\n<h2 data-start=\"3735\" data-end=\"3791\"><strong data-start=\"3738\" data-end=\"3791\">Funding Still Available But the Focus is Shifting<\/strong><\/h2>\n<p data-start=\"3793\" data-end=\"3916\">The end of Callaghan doesn\u2019t mean the end of support. Instead, funding is being redirected through MBIE and the new system in a more collaborative capability-building approach exampled through the likes of:<\/p>\n<ul data-start=\"3918\" data-end=\"4172\">\n<li data-start=\"3918\" data-end=\"4019\">\n<p data-start=\"3920\" data-end=\"4019\"><strong data-start=\"3920\" data-end=\"3939\">Endeavour Fund:<\/strong> Supports research with high impact for New Zealand&#8217;s economy and environment.<\/p>\n<\/li>\n<li data-start=\"4020\" data-end=\"4092\">\n<p data-start=\"4022\" data-end=\"4092\"><strong data-start=\"4022\" data-end=\"4040\">Catalyst Fund:<\/strong> Facilitates international research collaboration.<\/p>\n<\/li>\n<li data-start=\"4093\" data-end=\"4172\">\n<p data-start=\"4095\" data-end=\"4172\"><strong data-start=\"4095\" data-end=\"4117\">R&amp;D Tax Incentive:<\/strong> 15% tax credit on eligible R&amp;D costs remains in place.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"4174\" data-end=\"4299\">And the newly launched &#8220;Invest New Zealand&#8221; will play a bigger role in attracting foreign investment, and scaling domestic innovative industries. It does seem clear however that government support can only go so far. The economic challenges exposed by New Zealand\u2019s recent GDP contraction reinforce that industry must step up as the primary engine of innovation.<\/p>\n<p data-start=\"4301\" data-end=\"4402\">(Source: <a class=\"cursor-pointer\" href=\"https:\/\/www.beehive.govt.nz\/release\/bold-science-reforms-fuel-economic-growth\" target=\"_new\" rel=\"noopener\" data-start=\"4310\" data-end=\"4401\">Beehive NZ<\/a>)<\/p>\n<h2 data-start=\"4409\" data-end=\"4449\"><strong data-start=\"4412\" data-end=\"4449\">What This Means for NZ Businesses<\/strong><\/h2>\n<p data-start=\"2823\" data-end=\"3191\">We see the change borne as much from cost-cutting and consolidation pressures as it is from a bold vision for the future, though however you look at it, this structural change signals where the government sees the future of the Aotearoa economy.<\/p>\n<p data-start=\"2823\" data-end=\"3191\">It is indicated that the previous system, while very valuable to so many great NZ startups and innovators, had become fragmented and often difficult for businesses to navigate. The transition toward mission-led Public Research Organisations promises clearer pathways, more focused collaboration, and a stronger link between R&amp;D and commercial outcomes. However a better structure wont lift GDP, productivity, or exports unless the total investment in innovation continues to increase.<\/p>\n<p data-start=\"3193\" data-end=\"3484\">New Zealand\u2019s investment in R&amp;D remains well below the OECD average. Without lifting the overall commitment to funding (both public and private) this reset risks being a well-intentioned reshuffle rather than the step-change we truly need to continue to compete as an independent and leading innovator on the world stage.<\/p>\n<p data-start=\"3486\" data-end=\"3774\">Businesses should see this for what it is: an opportunity\u00a0to engage earlier with research, to embed innovation into the core of their strategy, and to invest in the capability &#8211; people, processes, and partnerships &#8211; that will determine whether they lead or lag.<\/p>\n<h3 data-start=\"4560\" data-end=\"4601\">The new innovation system focuses on:<\/h3>\n<ul data-start=\"4602\" data-end=\"4935\">\n<li data-start=\"4602\" data-end=\"4725\">\n<p data-start=\"4604\" data-end=\"4725\"><strong data-start=\"4604\" data-end=\"4650\">Tighter alignment with national priorities: <\/strong>decarbonisation, productivity, the bioeconomy, and advanced manufacturing.<\/p>\n<\/li>\n<li data-start=\"4726\" data-end=\"4824\">\n<p data-start=\"4728\" data-end=\"4824\"><strong data-start=\"4728\" data-end=\"4766\">More collaborative research models: <\/strong>industry working hand-in-hand with science, rather than in silos.<\/p>\n<\/li>\n<li data-start=\"4825\" data-end=\"4935\">\n<p data-start=\"4827\" data-end=\"4935\"><strong data-start=\"4827\" data-end=\"4868\">Commercial outcomes over grants alone: <\/strong>backing companies that can scale solutions with real-world impact.<\/p>\n<\/li>\n<\/ul>\n<h2 data-start=\"4942\" data-end=\"5004\"><strong data-start=\"4945\" data-end=\"5004\">A Magnetic Perspective: The Human Element of Innovation<\/strong><\/h2>\n<p data-start=\"5006\" data-end=\"5111\">At Magnetic, we see firsthand how innovation is more than tech, machinery, or labs&#8230; it\u2019s about people. There\u2019s a lot of noise around funding structures, government investment, and system design. But when you step back from the headlines, no amount of reform drives change without the right people in the right roles.<\/p>\n<p data-start=\"5006\" data-end=\"5111\">Sitting at the intersection of business, transformation, and capability, everyday we see that the success of advanced manufacturing, climate transition, digital transformation, or the circular economy is a talent challenge as much as it is a technical one.<\/p>\n<ul data-start=\"5113\" data-end=\"5318\">\n<li data-start=\"5113\" data-end=\"5173\">\n<p data-start=\"5115\" data-end=\"5173\">The engineers will drive electrification and decarbonisation in infrastructure.<\/p>\n<\/li>\n<li data-start=\"5113\" data-end=\"5173\">The scientists will push the boundaries of materials, climate soluitions or bioeconomy technologies.<\/li>\n<li data-start=\"5174\" data-end=\"5242\">\n<p data-start=\"5176\" data-end=\"5242\">The operations leaders will implement automation in manufacturing.<\/p>\n<\/li>\n<li data-start=\"5243\" data-end=\"5318\">\n<p data-start=\"5245\" data-end=\"5318\">The commercial leaders will turn sustainability into competitive advantage.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"5320\" data-end=\"5474\">From our vantage point, this structural reset is a clear signal to ensure that Aoteoroa New Zealand&#8217;s innovation ecosystem continues to mature. The new system should reward businesses that build internal capability, and it\u2019s people who make transformation and innovation happen.<\/p>\n<h2 data-start=\"6088\" data-end=\"6126\"><strong data-start=\"6091\" data-end=\"6126\">For Businesses: What to Do Next<\/strong><\/h2>\n<ul data-start=\"6128\" data-end=\"6593\">\n<li data-start=\"6128\" data-end=\"6222\">\n<p data-start=\"6130\" data-end=\"6222\"><strong data-start=\"6130\" data-end=\"6147\">Engage Early:<\/strong> Start building relationships with the new PROs aligned to your industry.<\/p>\n<\/li>\n<li data-start=\"6223\" data-end=\"6360\">\n<p data-start=\"6225\" data-end=\"6360\"><strong data-start=\"6225\" data-end=\"6255\">Build Internal Capability:<\/strong> Don\u2019t rely solely on external research; invest in the right talent, leadership, and innovation systems.<\/p>\n<\/li>\n<li data-start=\"6361\" data-end=\"6449\">\n<p data-start=\"6363\" data-end=\"6449\"><strong data-start=\"6363\" data-end=\"6380\">Think Global:<\/strong> Leverage international collaboration as part of your R&amp;D strategy.<\/p>\n<\/li>\n<li data-start=\"6450\" data-end=\"6593\">\n<p data-start=\"6452\" data-end=\"6593\"><strong data-start=\"6452\" data-end=\"6472\">Focus on Talent:<\/strong> The shift to advanced manufacturing, digital transformation, and sustainability is talent-driven. Are your people ready?<\/p>\n<\/li>\n<\/ul>\n<h2 data-start=\"6600\" data-end=\"6652\"><strong data-start=\"6603\" data-end=\"6652\">The Future Is Collaborative, and It\u2019s Here Now<\/strong><\/h2>\n<p data-start=\"6654\" data-end=\"6787\">New Zealand\u2019s innovation ecosystem is entering a new era. The system is more targeted. The mission is clearer. The stakes are higher. And on a backdrop of 1.1% GDP contraction, our economic foundations need reinforcement.<\/p>\n<p data-start=\"6789\" data-end=\"6927\">For businesses who are ready to engage, not just with funding, but with capability, talent, and transformation, the opportunity is enormous. The future of Aotearoa won&#8217;t be delivered to us, we will build it.<\/p>\n<p data-start=\"6929\" data-end=\"7136\">\n","protected":false},"excerpt":{"rendered":"<p>In our recent article, \u201cAotearoa\u2019s Magnetic Moment: $71M Investment Powers Advanced Technology\u201d, we explored the government\u2019s $71 million commitment to accelerate New Zealand\u2019s advanced manufacturing sector. This was a strong signal of intent, but it\u2019s arriving at a time of economic headwinds. New Zealand\u2019s GDP contracted by 1.1% across 2024, which was the worst non-pandemic&hellip;<\/p>\n","protected":false},"author":4,"featured_media":545,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","footnotes":""},"categories":[14],"tags":[],"class_list":["post-990","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/posts\/990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/comments?post=990"}],"version-history":[{"count":5,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/posts\/990\/revisions"}],"predecessor-version":[{"id":997,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/posts\/990\/revisions\/997"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/media\/545"}],"wp:attachment":[{"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/media?parent=990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/categories?post=990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bemagnetic.co.nz\/af-api\/wp\/v2\/tags?post=990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}