Possibly my last word on this matter.
The researcher defines the research question, authors his/her own writing, and hangs his/her personal reputation (and not the university's) on the written products.
Now, if the VCs and the government want to play the game of extrinsic, economic/fiscal, carrot-and-stick incentives around funding formulae, then let them do that.
But, for the sake of the quality of research, and the culture or environment in which research is proposed and performed, it is best that they (VCs and government) do not include us (academics) in that game.
Tasks (such as research) that require autonomy and creativity, and that are complex and non-routine in nature are well known (thanks to relevant research*) to be performed better when extrinsic incentives are avoided. An eye for short-term financial gain, for instance, will tend to undermine the intrinsic incentives upon which such complex activities rely. So long as a researcher is paid a reasonable salary, the results will flow, if the researcher has the autonomy and freedom to produce them.
So, for example, I would not find it at all motivating as a writer (I'm not a researcher!) to be part of an organization that tells me that my incentives to write and publish are: 1. To make more money for the institution, and 2. To avoid the sack. And I say this in all seriousness, as that is exactly what is happening at VUW and Canterbury. It would not satisfy me to be told that I don't have to worry because I have plenty of publications. I simply do not respond, as a writer, to such carrot-and-stick incentives. In fact, it is demotivating! And it would sicken me to think that this 'for itself' thing that I do (if I failed to do it) could become a source of surveillance and disciplinary actions.
So, let us reassert our 'reason' for doing research. After all, we do already own it.
* A rather cheesy and populist, but nonetheless easily digested, summary of this research can be found in Daniel Pink's Drive (2009).