Funding research for economic return sounds good – but that’s not how science really works

The announcement by Science Minister Judith Collins this week that half of New Zealand’s sole fund for fundamental science will now go to research with economic benefits – with social sciences and the humanities no longer supported – came as a shock to many.

Perhaps it shouldn’t have. The signs have been there for a while. In August, Collins spoke at the 30th anniversary celebration of the Marsden Fund. Her insistence on economic impact worried many in the room because this fund was meant to support pure – not applied – research.

Her statement that “we must endeavour to invest our money in areas that we believe have the best chance of showing a return on investment” may not seem extraordinary.

Indeed, for most government research funding – including through the Endeavour Programmes, Smart Ideas funding, the Crown Research Institutes or the Health Research Council – the purpose of research is important. But this is explicitly not what the Marsden Fund was set up to do.

Former National Party minister Simon Upton quoted his own words from 30 years ago at the anniversary event:

For the first time, the government has made funding available for research, not on the basis that the research will be useful, though it may be, or that it will solve an urgent problem, although it could do, but on the basis of its ingenuity and the likelihood of generating some first-class science.

A bipartisan history

The Marsden Fund was set up to underpin the generation of knowledge in our university and science systems.

In its latest allocation last month, the fund invested NZ$$75.82 million to support 113 projects. But the funded projects represent only 10% of the applications received (12% for the shorter fast-start grants). These low success rates mean many good ideas miss out.

The proposed change is massive: the issues with expecting research to deliver predetermined outcomes – referred to in science policy terms as “picking winners” – have been discussed for a long time.

If we could know the outcomes of a research project in advance, we could undoubtedly be more efficient in allocating funding. But if we knew the outcomes, it wouldn’t be research, and any knowledge produced would not be new.

More targeted research is, of course, useful and is therefore funded by the different mechanisms mentioned above. But the ideas that underpin real value in commercially viable science are often first prompted by discoveries in fundamental science. If it were something everyone already knew, it wouldn’t be intellectual property.

Cather Simpson, a physicist at the University of Auckland, founder of three deep-tech start-ups, and a winner of the Kiwinet Commercialisation Icon award puts it this way:

Fundamental research is essential for long-term economic success. It’s how we generate new ideas and clever people for the future. We’ve been eating our “seed corn” with our overemphasis on short-term economic impact for a wee while; this change means we’ll be scoffing it down.

Where to from here?

In her announcement, Judith Collins said she wants the Marsden Fund to focus on “core science”. In her definition, this means physics, chemistry, maths, engineering and biomedical sciences.

Some argue these cost more, because of equipment or laboratory costs, than the humanities and social sciences, which are now excluded from the fund.

This is true in part. But New Zealand already has all the other funding mechanisms to support applied research with economic impact. The humanities and social sciences have no other major source of baseline research funding.

When the ACT Party shares figures amounting to hundreds of thousands of dollars for research that sometimes looks like it produces no more than reports and books, their concerns about the value of this expenditure may seem valid.

But it is important to understand where the money allocated by the Marsden Fund actually goes.

New Zealand has had a fully-costed research system for a long time. This means that for every dollar the grant pays for researchers’ salaries, the university (or other employing institution) is paid 115% in addition.

The money paid to institutions is called “overheads”. It is essentially direct funding for universities for office space and administrative support and it may pay for student scholarships, software licenses or travel – the basic costs of getting the research done.

But it is not a nice-to-have: in many other countries, the proportion of direct funding for universities is higher, because they do not have this fully-costed research funding model.

Reducing the overhead rate paid on research grants has been discussed as one way to make research funding go further. But we must be realistic: direct funding for universities would need to increase significantly to make up the difference.

This might be one way of enabling institutions to support the humanities and social sciences through internally allocated research funds.

Preempting the science sector review

New Zealand is currently in the middle of reviews of the university system and the science sector. Advisory groups have reported back to the government with their recommendations, but the government has delayed making these public.

The changes to the Marsden Fund have been announced before the overdue science review, preempting whatever recommendations the review will bring. The science system is a complex entity and unilateral changes to any single part of it will have unintended consequences.

In the absence of direct research funding for humanities and social sciences, one such consequence is that the existence of many of these areas of scholarship will be even more threatened than we’ve seen already, as many universities have shed staff and cut entire departments.

The alternative is that we accept major cuts to our tertiary education system. That would be a loss for everyone. Not only would we lose the return on investment associated with university education, or see a diminished economic impact from science. We would also risk eroding the “critic and conscience” work done by academics in the humanities and social sciences that plays an essential role in a free society.