2012 Annual Report
Chief Executive's Report
A challenging year in which we have made excellent progress
Download the full 2012 Annual Report (PDF 6.2 MB)
Over my five years as NIWA's Chief Executive, I have seen our country face some of its most challenging and difficult times, significantly changing both the economic and natural environment we work in.
The natural resource and environmental opportunities and challenges we face – like water quality and allocation, marine resource use, natural hazards, biosecurity and climate change – are more prevalent than ever, and uncertainty in our economic environment requires all businesses to be more responsive and resilient. There are no quick fixes to either of these issues. Sound, long-term strategies will ensure we are well set up to face those challenges head on in the future.
Recognising this need, we have continued to change our structure and operations to ensure we maintain the appropriate capabilities and assets to meet the country's science and innovation needs, whilst still being prudent about increasing efficiencies and reducing waste.
Our response to the new environment we face has included streamlining many of our internal finance and administration systems so that our business operates more effectively and efficiently, continuing to carefully manage our costs but also making important investments in new technology and equipment to support our science staff, and reviewing our science capabilities and capacity to ensure we are well placed to meet New Zealand's environmental research and applied science service needs.
These reviews have resulted in changes to the way our national science centres are set up – by merging our coasts and oceans centres and changing our freshwater centre to the National Centre for Freshwater and Estuaries. Both changes are designed to ensure we have the right skills and expertise to focus our efforts on these vital areas of our natural environment as demand in these areas of science continues to grow.
To ensure our capabilities continue to meet demand, we have also established new advisory panels to help with our science planning process. These include a Strategic Advisory Panel that plays a key role in providing independent and forward-looking advice to the Board on research strategies, user relevance and knowledge transfer activities. We also have stakeholder panels who provide external advice to our national science centres on relevant research directions. We are grateful to these panel members for their extremely valuable input this year.
Through all these activities, and by showing a willingness to respond and adapt to the shifting environment we face, we had a strong year in 2011–12. Our final results show revenue of $121.4 million (2010–11: $117.9 million), with earnings before interest, tax, and depreciation (EBITDA) of $18.9 million ($16.3 million) and profit after tax of $5.5 million ($1.3 million). This is a pleasing achievement in a tough operating environment, and we can be rightly proud of these results.
Science that ensures our prosperity
New Zealand's environment is rich with natural resources. To ensure the nation's economic prosperity in the future, NIWA scientists are exploring ways to make greater use of those resources sustainably. This year that research has included Oceans Survey 20/20 voyages on board our deepwater research vessel Tangaroa to collect key seabed data that will help inform future development and management of potential oil and gas resources around coastal New Zealand (see page 19 of the report). Equipped with New Zealand's only DP2 (dynamic positioning) system, and ice-strengthened for work in Antarctica, Tangaroa is a New Zealand asset key to the continued enhancement of the country's marine resources, and it is set to make its tenth journey to Antarctica in 2013.
Our science staff continue to work closely with the aquaculture industry, helping the sector to meet its $1 billion target by 2025. For over 30 years, NIWA and its predecessors have worked closely with New Zealand's salmon industry to explore ways of adding value through applied research. The industry earns more than $60 million in exports each year and a similar amount from domestic markets. Results of our research have fed directly into the industry's breeding programmes, and as a result commercial production stocks are expected to improve significantly in future seasons, with direct financial benefits (see page 19 of the report). Working closely with the aquaculture industry, we are also continuing to progress the development of commercial farming of several high-value species, including kingfish and hāpuku.
Science that sustains our environment
How we look after our natural resources is also important. The Speech from the Throne, December 2011, emphasised that "balanced and sensible management of our resources will protect the environment while promoting stronger economic growth". NIWA's science makes a very important contribution to the sustainable management and development of our natural resources. For example, we collaborate with the fishing industry, the Ministry for Primary Industries and other research providers to survey abundance and analyse catch and age information on more than 100 commercial fish species. We have estimated sustainable harvest levels from complex population modeling of 20 key species, and we provide vital information to the international agency CCAMLR (Commission for the Conservation of Antarctic Marine Living Resources) on the sustainable management of Antarctic toothfish (see page 29 of the report).
On a lighter note, we were even able to deliver New Zealand's favourite emperor penguin, Happy Feet, home to his natural environment in the sub-Antarctic, courtesy of a fortuitously timetabled southern blue whiting survey earlier this year.
We are also learning more about the unique species that live in our environment. On a recent trip on Tangaroa to the north Chatham Rise, our scientists trawled deeper than ever before – down to 2730 metres, and found new-to-science fish close to the deep ocean seafloor. NIWA was also part of a team that discovered three new-to-science species down one of the world's deepest underwater caves near Nelson, brought home new footage of an undersea volcano from the Kermadecs, and discovered a 'supergiant' amphipod in the Kermadec Trench: discoveries that all contribute to our understanding of New Zealand's unique biodiversity, helping ensure we can sustain and protect it.
We are particularly proud of Dr Dennis Gordon, who helped New Zealand become the first country in the world to catalogue its entire known living and fossil life (see page 42 of the report).
Science that benefits all New Zealanders
One of Sir Paul Callaghan's legacies is the leading role he played in communicating science to the wider public. NIWA has a reputation for high quality science, but for this science investment to provide maximum value to New Zealand, it must be delivered to stakeholders and customers – be it government, businesses, councils, industry or individuals – in a way that encourages uptake and application. Recognising this, in April NIWA joined forces with the other Crown Research Institutes and several other science organisations, to hold the inaugural 'Science in the City' event in Auckland. During the one-day event – which included a public open day and lectures – more than 5000 people had the opportunity to get some hands-on experience of the amazing work going on in the science sector and how it directly impacts their lives. Because of its outstanding success, a similar event is planned for next year.
NIWA is also helping to transfer knowledge to our future New Zealand scientists by joining forces with the University of Auckland to open the Joint Graduate School for Marine and Coastal Sciences. Combining the complementary capabilities and resources of both organisations is intended to extend scientific leadership in coastal and marine science in New Zealand and deliver greater benefits to the management of New Zealand's coastal and marine environment.
Tools that NIWA creates also have direct application to the work councils, industry and iwi are doing. Examples developed this year include the 'Impacts of Climate Change on Urban Infrastructure and the Built Environment Toolbox' – a resource to help planners, engineers, asset managers and hazard analysts in New Zealand urban councils understand and evaluate the potential impacts of climate change on their city (see page 24 of the report), and the Ngā Waihotanga Iho estuarine monitoring toolkit for iwi, developed to equip iwi with tools to measure environmental changes in their estuaries (see page 27 of the report).
Science that protects us
New Zealand's location over an active plate boundary in a windswept ocean exposes us to earthquakes, storms, floods, tsunamis, landslides, damaging winds and waves, stormsurges and volcanic eruptions. The impact of these hazards on our society and the economy are enormous (the insurance bill from the Christchurch earthquakes has already topped $15 billion), and the hazard risk continues to increase as the population and infrastructure grows. NIWA, in collaboration with others in the Natural Hazards Research Platform, is providing information and tools, to reduce New Zealanders' exposure to hazards, and timely forecasts to minimise the impacts of extreme weather events.
Using our specialist environmental monitoring service, EcoConnect, we are providing port companies, regional councils, the fishing industry and energy companies with continually updated forecasts of weather-driven hazards such as flooding and storms, down to areas as small as 1.5 square kilometres. Through EcoConnect, forest owners, rural land management agencies and the public will also have earlier and better warnings about rural fire dangers, thanks to a joint project between NIWA and the National Rural Fire Authority.
The Hazards Forecasting System (HAFS), developed by NIWA, is another useful tool that can be directly employed by end users to mitigate risks of natural hazards. HAFS outputs are now being used in the horticulture sector to mitigate Psa-V infection risks, estimated to cost the kiwifruit industry more than $400 million over the next five years, and more than double that in the long term through lost development opportunities (see page 23 of the report).
One of our most innovative and powerful pieces of computer code – cylc – was developed by meteorologist Dr Hilary Oliver to run our forecasting system. Cylc has since been selected by the UK Met Office to run its operational forecasting and climate research, and is being used by other institutes, including the Max Planck Institute for Meteorology, the US Naval Research Laboratory, and the Department of Atmospheric and Oceanic Science.
Our scientists have also been investigating the frequency and magnitude of historical earthquakes, in order to better understand the likelihood of large earthquakes occurring in active regions like Wellington and Poverty Bay. All of this information will help the Government and regional councils better understand, and prepare for, future seismic risk.
Science that excels
This year, many of our people have been recognised for the significant contributions they have made to New Zealand, and international, science and research. In December, Dr Philip Boyd and other members of the Centre for Chemical and Physical Oceanography from NIWA and the University of Otago were awarded the top 2011 Prime Minister's Science Prize. The $500,000 award is one of New Zealand's most highly regarded science accolades, recognising a transformative science discovery or achievement which has led to an economic, health, social and/or environmental impact on New Zealand, or internationally (see page 39 for more details).
We also offer our sincere congratulations to NIWA's Chief Scientist, Climate, Dr David Wratt, who was awarded a Queen's Service Order (QSO) for services to science. Throughout his career, David has been a leading figure in New Zealand climate science and is also a Bureau member of the International Panel for Climate Change (IPCC) (see page 38 of the report). For more examples of our team's achievements this year, see the Our People section of this report (page 36).
What lies ahead?
Five years on as Chief Executive of NIWA, I am not only heartened by the significant achievements we have made in recent years, but also reassured to know that the changes and strategies we have implemented have set us up well for the future. As New Zealand's leading environmental research and applied science service provider, demand for our services will continue to grow in the future. I am certain, with the profound level of expertise our people have and the assets we have to support them, and by continuing to work in a cost-effective and competitive way, we will meet that demand head on.
That said, we must remain agile and responsive, as business conditions shift and science priorities change. Our science, and the way we do it, has evolved enormously from what it was like 20 years ago. That evolution will continue. We cannot predict what might happen, but we can still be well prepared for it. With our new national science centres and a new and well-defined strategic focus for our work, I am confident we are.
I am proud of the NIWA team and the significant achievements we have made this year. Through strong commitment and hard work, we have had a very successful year. I also want to thank the NIWA Board and the Executive Team for their ongoing support and leadership. It has been a challenging year, but one in which we have made excellent progress. I look forward to the year ahead with NIWA contributing to advancing New Zealand's economic and environmental prosperity as the country's leading natural resources and environmental science services provider.
The pages in this year's Annual Report highlight just a few of our significant achievements this year.