The 2026 Marsden Fund round is open. It is also the last. After 30 years of funding the kind of open-ended, curiosity-driven research that produces discoveries nobody saw coming, New Zealand’s premier blue-skies fund is being wound down and folded into a new government-directed structure designed to deliver measurable economic impact.
That sounds reasonable. It is not. The economic impact everyone wants is downstream of the discovery work being defunded. Cutting the pipeline while demanding more output from the tap is not a productivity strategy. It is, as University of Auckland physicist Professor Richard Easther put it, “liquidation by another name.”
Death by a thousand modest cuts
No single Budget killed the Marsden Fund. The government managed it with a series of reductions, each presented as minor.
Budget 2025 trimmed annual funding from roughly $79 million to $74 million. In July 2025, a further $15 million one-off cut for 2028 was announced with one day’s notice to the Royal Society. Budget 2026 redirected another $5 million to the new Institute for Advanced Technology. By 2028/29, baseline Marsden funding will sit at $55.8 million, a 29% reduction over three years.
The Royal Society noted in 2025 that the Marsden Fund represented just 7.5% of total government R&D investment. A 29% cut to a 7.5% slice is not fiscal discipline. It is raiding the one fund that exists specifically to do what no commercial entity will do on its own.
Where the money goes instead
Research Funding New Zealand (RFNZ) was established in early 2026, consolidating the Marsden Fund Council, the MBIE Science Board, and eventually the Health Research Council. From 2027, research proposals go directly to MBIE rather than the Royal Society. Funding flows through four thematic pillars designed to channel research toward commercial outcomes.
The Royal Society warned in July 2025 that embedding both the RFNZ board and fund administration inside a government department created clear risks of political interference. Thematic direction replaces open-ended curiosity as the organising principle. The $1 million interdisciplinary Council Awards have already been dropped from the 2026 round.
The government’s own Cabinet paper frames the reforms as necessary to ensure the science system “delivers impact and drives economic growth.” That framing has a superficial logic to it. The old system was fragmented and slow. But the assumption that bureaucrats directing research toward known priorities will outperform researchers pursuing unknown questions contradicts the entire history of discovery science.
The business case the government keeps ignoring
KiwiNet CEO Dr James Hutchinson identified the core problem: “Game-changing innovation does not come from translation alone.” MacDiarmid Institute director Nicola Gaston put the logical flaw plainly: “If we knew the outcomes, it wouldn’t be research, and any knowledge produced would not be new.”
This is not an academic complaint. It is a business problem. Cather Simpson, a University of Auckland physicist who founded three deep-tech startups, described the trajectory: “We’ve been eating our seed corn with our overemphasis on short-term economic impact for a wee while; this change means we’ll be scoffing it down.”
The cuts land on a country that already has a structural R&D deficit. New Zealand spends approximately 1.5% of GDP on R&D, roughly half the OECD average of close to 3%. Innovation leaders like Israel invest 5.9% of GDP. An NZIER analysis found that matching the OECD average in 2020 alone would have required $8.4 billion in R&D spending, nearly double the actual $4.5 billion spent that year.
The government’s own advisers disagree with it
The Science and Technology Advisory Council stated explicitly that targeted public investment in science offered “one of the most direct and high-impact pathways to restore momentum” for New Zealand’s poor economic performance. Budget 2026 moved in the opposite direction.
Nicola Gaston said there was “nothing to celebrate” in the Budget for research and science, noting the government had ignored its own advisory group’s recommendation to increase funding during the sector’s upheaval. Troy Baisden, co-president of the New Zealand Association of Scientists, pointed out that business R&D had flatlined, suggesting the public system was failing to catalyse private investment.
In February 2025, University of Auckland’s Dr Austen Ganley posed a question the government has never answered: “Could you imagine the Government directing, say, Fonterra to sell some things and not others, and to focus on selling existing products rather than developing really novel ones?” He noted that China had deliberately invested in blue-skies research as a tool for building an innovation economy.
The damage from this decision will not show up in the next Budget or the one after that. It will show up in a decade, when New Zealand’s deep-tech sector is thinner, its universities are less competitive for global talent, and the high-value industries the government says it wants have less to build on. By then, nobody will connect the dots back to the year the seed bank was raided to fund the harvest.
Sources
- Vale, Marsden Fund: a 30-year ‘safe harbour’ for discovery closes its doors (2026-06-08)
- What scientists really think of this year’s Budget (2026-06-07)
- Scientists not holding out hope for big Budget boost after year of cuts and sector overhaul (2026-06-05)
- Marsden Fund shake-up raises potential for political interference, Royal Society says (2025-07-22)
- Marsden Fund says it was given only a day’s notice of further funding cuts (2025-07-23)
- Further cuts to fundamental research – Royal Society Te Apārangi (2025)
- NZ science funding reforms starve discovery research pipeline (2026-04)
- Growth through innovation will be tough without Marsden funding (2025-02-10)
- Funding Decisions for the 2026 Marsden Fund Round – NZ Gazette (2025-11-27)