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Private foundations help with new solutions

Higher Education Minister Morten Østergaard's speech at dialogue meeting: Funding The Grand Challenges, in Copenhagen the 11th of March 2013.

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Thank you very much for the invitation. It is a pleasure to speak to you here today. I can only acknowledge the importance of the theme of this dialogue meeting: Funding the Grand Challenges. Many of you here today represent Industrial Foundations – foundations that own businesses.

You can find similar Industrial Foundations around the world. But nowhere else do they appear to be as economically important as in Denmark. It is perhaps the closest we get to a “Danish model” within the field of business administration. Many of the Industrial Foundations are trusted to invest part of their surplus in the advancement of science and innovation. So the Danish science and innovation system benefits from this unique model. And this is also the case when it comes to funding the Grand Challenges of the future.

Doing well by doing good

The title of my presentation is; The Grand Challenges as Drivers for Innovation. I could also have borrowed the fine catch phrase from my Indian colleague; "Doing well by doing good". And this is what the national innovation strategy is all about. We launched the innovation strategy back in December. The ambitions are high: We want Denmark to be a nation of solutions.

More specifically we aim not only to be in the top five amongst the OECD countries when it comes to public funding of research and development.

We aim also to be in the OECD top five when it comes to:

  • Private investments in research and development
  • The number of Danish businesses characterised as being innovative
  • And the amount of the highly educated workforce employed in the private sector.

Today - and in all three areas - we are far from the OECD top five – even though we are to be found in the top five when it comes to public investments in research and development. The strategy is a paradigm shift where the demand for new solutions to the Grand Challenges drives innovation.

The challenges are numerous:

  • We have to find solutions for sustainable energy production.
  • For reduction in environmental and climate impacts.
  • For healthy and safe food production and clean water.
  • And for better and cheaper health and welfare solutions.

Let me give an example on how the innovation strategy will address these challenges. It has to do with an animal. Some people would consider it to be the national animal of Denmark (which it is not): the pig.

Denmark exports pigs and pork for around 30 billion per year. The challenge today is - that in respect for the environment there is a natural limit to how many pigs we can produce. The answer in the innovation strategy is a partnership - a partnership of architects, environmental experts, pig-farmers and Denmark's most prominent researchers in the field.

Over three years, the partnership will develop a cutting-edge green pig barn with no environmental impact, high animal welfare and increased productivity. The target is a large scale production without burdening the environment with nitrogen, phosphorus and greenhouse gases.

If we succeed in decoupling production and environmental impact the result will be new jobs, exports and growth. It will be doing well by doing good.

Partnerships are an important part of the innovation strategy. The idea is that these partnerships will constitute up to a third of the funds from the current public investment in research, technological development and innovation. The partnerships will pave the way for new forms of collaboration between the public and private sector, including private foundations.

We will initiate four pilot partnerships this year. Each of them addresses a dimension of the Grand Challenges and has at the same time a great business potential for Danish companies.

The pilot partnerships are hopefully going to give us the experience we need to establish a more generic model for national partnerships. And we hope that relevant public councils and private foundations will take part in the pilot partnerships and the development of the national partnerships. Therefore, we would also very much like to encourage your involvement in the INNO+ initiative, that will lay the foundation for the future selection of partnerships.

With INNO+, we have opened a dialogue with a wide range of stakeholders in order to highlight specific and significant societal challenges, in which there are a potential for Denmark to create innovative solutions.

Some of you have already contributed to this work and I am grateful for that. And we hope to see even more dedicated involvement from you as a sector. The foundations have an excellent understanding and knowledge about the Danish research and innovation environment. We saw this in relation to the RESEARCH 2020 process. So we hope that the private foundations will take part in the further development of the innovation strategy.

A revision and merger of the public councils

Denmark is not the only country that has strengthened the focus on innovation. The European Union will – with the new European Framework Programme in research and innovation, Horizon 2020, address societal challenges by helping to bridge the gap between research and the market.

Horizon 2020 aims to ensure intensified public private partnerships. The ambition is also to make the funding simple, to get rid of bureaucracy – and make it easier for companies to participate – especially the SME’s. As a part of the innovation strategy we will also implement a revision and merger of the public councils focused on applied research and innovation.

We know that individual parts of the Danish research and innovation system works. This should rightly be applauded. However this does not change the fact, that the overall research and innovation system not sufficiently creates growth and new jobs.

As I will return to, we can see that the private investments in research and development are declining - as well as the number of innovative companies. This is the tendency we have to confront. And we have to be ambitious. That is why the government wants to reform the part of the council structure that supports strategic research, innovation and technology development.

We want to create a new strong foundation for innovation.

I have no doubt that the Council for Strategic Research, the Council for Technology and Innovation and The Advanced Technology Foundation all have strong merits.

  • We will build on the experiences and practices from the three funding bodies.
  • We will ensure that best practice from the three funding bodies will set the agenda in a unified and coordinated effort for innovation in Denmark.
  • And we will take the best from the three, and establish something even more powerful.

A new foundation with one objective: to get the best value out of the substantial public investment in research and innovation.

So I hope that we can stop the discussion on structure and focus on content. A new foundation will streamline the national activities and simplify the system from the perspective of the users, researchers, universities and not least companies. It will make it easier, especially for small businesses, to find their way. It will also provide better opportunities for larger, coherent investment. And it will create a closer linkage between research, innovation and business development.

Public and private investment in research

From day one the Government has given high priority and invested in research and innovation. In the Budget for 2013, we ensured a high level of funding for research, innovation and higher education. The total public research budget in 2013 to DKK 20.3 billion corresponding to 1.09 per cent. of GDP. It has never been higher. And it has never been a greater share of GDP.

The Government has maintained that the target of spending 1 per cent of GDP on research, should not be a boundary but a baseline. At the same time, we have strengthened the universities' autonomy. Universities’ appropriation for basic research is now set for a three-year period - whereas it was a year at a time before. It gives universities greater opportunities to plan their investments in research.

So I am very pleased that there also has been a significant increase in donations from the large Industrial Foundations in the recent years. The largest foundations donated 5.6 billion kroner in 2011, which is three times as much as in 2009.

We don’t have the numbers for 2012 yet, though it is estimated that we will see a similarly high level. But when it comes to private companies new figures show that private investment in research has declined by a total of 4.4 percent in the same period. Denmark can compare with the best when it comes to public funding.

But as I already mentioned there is a potential when it comes to private investment. If we were in the top five in the OECD on both public and private investment, private investments in research would be 15 percent higher. And that would result in an increase in employment by 30,000 people. Investment in research is essential for growth and jobs.

Therefore, this Government has put forward another reform; Growth Plan DK – with concrete initiatives aimed at making it more attractive to invest private funds in research.

We have are proposed greater tax credits when companies invest in research and development. This means a capital injection for particularly small businesses and start-ups and better opportunities for knowledge-intensive entrepreneurship.

Funding and cooperation

The government is firmly convinced that investing in research and innovation is a crucial prerequisite for providing for Denmark's future. The public funding system benefits from the massive private investments from Industrial foundations as we have seen in recent years.

We want to be even better in working together. We have the same goal: To get the greatest possible return on our investments. To secure future growth and welfare. And find solutions for the Grand Challenges. I wish you a continued interesting and productive conference.

Thank you.

last modified Mar 13, 2013