In New Zealand's new system for supporting science, Crown Research Institutes (CRIs) operate as commercial companies, with their own boards and two government ministers as ‘shareholders’.

They must attain ‘profit targets’ — surpluses of government grants and ‘private’ earnings over expenses — set by the government, which are then retained for investment.

The ‘purchasing’ of science is carried out by the Foundation for Research, Science and Technology (FRST). It distributes the so-called Public Good Science Fund (PGSF), rather like competitive grants bodies elsewhere except that it is told by the government how to divide up its funds, currently NZ$282 million (US$161 million).

Grants are allocated by panels according to priorities set for 17 categories linked to commercial, industrial, agricultural, social or environmental sectors. These have now been joined under the jurisdiction of Williamson by the NZ$24 million health research grants.

As the largest recipients of PGSF support, with NZ$230 million this year, the nine CRIs depend on FRST for funding, which must be competed for every two years. Selection depends on research being cost-effective and relevant to national needs.

Critics say this resulted in a short-term, applied focus of research funding. But Stephen Thompson, FRST's new chief executive, describes the fund as “an investor in science”.

Sean Devine, director of the Association of CRIs, challenges descriptions of the system as a market, saying it is “contrived, far from ideal and extremely one-sided”.

He believes pricing may shift successful grant applications from the highest quality towards “a greater volume and mediocrity”. But Andy West, who helped set up the system, describes the reforms as “a solid success”.

West was recently appointed chief executive of the Institute of Geological and Nuclear Sciences Limited (IGNS), the smallest institute with a 1996-97 budget of NZ$24 million. It won research contracts worth $17.9 million from government last year, the rest of the income coming from the private sector. It retained its operating surplus of NZ$564,000, rather than repaying it to the Treasury.

Williamson's predecessor, Simon Upton, says the CRIs will not be privatized. But West queries “the whole notion of governments owning research institutes”.