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Another $3m of taxpayer's R&D money down the toilet?

Now I've long been a strong critic of the tendency for successive governments to believe they have some magical ability to "pick winners" when it comes to funding research and development activities in NZ.

The truth is that they don't.

In fact, they have an appalling track record in this area and goodness knows how many millions of taxpayer dollars have been wasted on hair-brained schemes whose only strength was that they spun good story or had some slick-willy up front pitching a load of BS to a bunch of dimwits.

Let's have a little look at one of those "picking winners" enterprises that seems to be slowly expiring after having received a cool $2m from central government and another $900,000 from regional funding.

I'm talking about The Geospatial Research Centre in Canterbury.

You could tell right from day-one that this was never going to be the success that its leader was claiming.

By now, the company was supposed to be self-sustaining and churning out UAVs capable of mapping and aerial photography for a price of just $10K each.

Unfortunately, most of GRC's activities have been drawn back under the wings of the University of Canterbury, their current website making no mention of the "Korimako E" UAV or other craft that taxpayers' money went into developing.

Their website now states "The company explicitly recognises the current global recession and its severe, and ongoing, impact on global contract R&D expenditure, as well as the difficulties inherent in launching novel products and services on a global scale from within New Zealand".

Ya reckon?

$3m of public money went into a venture without even anticipating that there were "difficulties inherent in launching novel products and services on a global scale from within New Zealand"??

But hey, there's a recession right? Anyone can have their business-plans derailed by a downturn in the global economy -- right?

Well, in recent months I've had a very steady stream of inquiries from companies and at least one overseas government, all interested in obtaining UAVs and/or the underlying technology. The market has (if anything) never been more buoyant than it is right now.

I wonder if the reality is simply that GRC ran out of public funding and, for all that almost $3m, had not a single commercial product to show.

Based on my observations, I'd say the venture was doomed from the outset and was never going to be a commercially viable operation.

Their website regularly announced new staff who'd joined up (presumably on decent salaries) and featured pictures of those people engaged in all sorts of activities -- such as skydiving, enjoying the rugby and much more. There were virtually no images of them actually doing any actual work though.

WTF?

I'm sure many long hours were spent planning and working on projects that management were sure would eventually become economically viable -- but the perception their web-presence created (at least from my perspective) really did hint at a bunch of academics partying on $3m out of the public purse.

I've seen far too many well-funded startups blow all their money by trying to run before they could walk. Some management types seem to think that the metric of their own success is the number of people on the payroll -- so they rush out and hire as many "qualified" personnel as they can find.

Big mistake!

People are a huge expense when you're in startup phase. Yes, you need good people but it's silly to make the mistake that "more is better", because it's not.

There's an old saying: "No matter how many women you put on the job, it still takes nine months to have a baby" and all too often, that also applies to developing new technology in a startup.

GRC also seemed to lack focus.

They had so many projects all going at once that they seemed to make no commercially realisable progress on any of them.

So now that all that money is down the gurgler (a fair whack of it going on imported employees), will there be a review to see why it qualified for such a huge chunk of public money?

I suspect not.

After all, that would weaken governments' cases for "picking winners" wouldn't it.

Best that this failure (like so many others) be kept quiet, swept under the rug and forgotten about -- or at least I bet that's what more than a few involved are thinking to themselves.

I was going to speak up about GRC way back in 2007 but didn't, because I was involved in the same industry working with a tiny amount of private capital. To critique GRC could have been seen as simply a case of sour grapes or envy on my part -- so I kept quiet. It did peeve me significantly however, that the government was taking *my* money (by way of tax) and giving it to a competitor so that they could (in theory) compete against me in the marketplace. That's *not* a level playing-field.

Now, of course, at this juncture I should remind people about the Martin jetpack.

Time ticks slowly past, still we have nearly a million dollars of taxpayers money in this venture. And guess what?

No sales, and the only revenues (if any) are coming from turning the product into an amusement ride for a tiny handful of tourists.

I really don't think we're going to see a return on that investment for all the reasons I've previously stated.

Something has to be done about the way governments play favourites with our money when it comes to promoting something as important to NZ's future as research and development activities.

Even the current government is still picking winners. It's favouring large (already successful) companies who (let's be honest) really don't need the help anyway.

The struggling entrepreneurs with clever ideas that, given the right environment, could be turned into huge money-winners for themselves and NZ's export ledger, are once again neglected.

And, instead of taking a "zero risk" attitude to assisting R&D by using over-unity tax-credits, they're handing out money to all those who qualify, regardless of the merits of their work or its potential to show a return on that investment.

It really looks as if we're forever destined to be a low-wage economy unless someone wakes up to the folly that is the NZ government's oppression of real R&D.

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