Nieuws - 20 september 2011

Top sectors: who is footing the bill?

Princes Day, the day the government presents its plans for the coming year. Minister Verhagen claims to be investing in top sectors but in fact his plans are just a redistribution of existing resources.

In last week's memo on the private sector Verhagen outlined how the private and public sector, and research and educational institutes can contribute to the top sectors.
Verhagen has allocated 1.5 billion per year to the top sectors; perceived as being the lynchpins of the Dutch economy and innovation. That might sound like a substantial investment but in fact it is merely a redistribution of existing resources. Everyone has to chip in. The institutes for applied research - such as DLO, TNO and ECN - are contributing 250 million. The scientific organizations NWO and KNAW will bring 300 million to the table for fundamental research. In addition the government will create a 500 million fund for the MKB. Fourthly, Verhagen will take a further 300 million from the development aid budget, with the aim of strengthening top sectors which will also contribute positively to the economy of developing countries. Throw in a few more smaller funds and Verhagen has his 1.5 billion.
Natural Gas Revenue
For years the Dutch government funded high-level research in certain fields with the profits from natural gas exploitation, via the FES fund for economic structural reinforcement. The bad news is that this fund is going to be dissolved - in future the gas revenues will used to reduce the national debt. This is particularly worrying for those Wageningen institutes that are currently funded by the FES such as the Top Institute Food and Nutrition (TIFN),Green Genetics  and the water institute Wetsus.
Wetsus and TIFN
These institutes are likely to survive by being allocated to a top sector. Each sector will draw up an 'innovation contract' in the coming months; a collection of public-private partnerships. The public and private sectors and the top research institutes will reassess and define their targets for the next 4 years.
Some top institutes whose funding is coming to an end are in danger of missing the boat. To soften the blow Verhagen has made 40 million euro available to TIFN for 2011-2014 to provide a financial basis. In addition the Green Genetics institute and the genomics institute CBSG will receive a one-off funding package next year to help bridge the gap.
Tax breaks for companies
The government is willing to spend 1.5 billion on condition that the private sector contributes a minimum of 1.2 billion. As a result the private sector has had a significant role in the process of drawing up the 'innovation contracts'. In order to encourage their participation, companies have been offered tax breaks for investments in research and development to the tune of 500 million in 2015.

In the coming four months it will become clear who will be doing what in the top sectors. The rule is that there will only be funding from the ministry if the private sector contributes at least 40%. This will also apply to some of the DLO research. As a result 'matching' funding is going to become an important activity. For example, Verhagen has announced that the cabinet has made 5 to 10 million euros available for sustainability projects in the livestock sector, on condition that the participating companies do the same. Fortunately the agrofood companies have recently doubled their contribution to the top sector from 75 to 150 million euros per year. In fact they were already spending that 75 million but now their contribution will get a boost.