Budget greeted with cautious optimism as S&T fares better than expected

Few new initiatives

Strategic reviews and advisory committees threatened to outnumber the number of new S&T initiatives in the 2010 federal Budget as the Conservative government unveiled its medium-term deficit reduction plan for eliminating billions in red ink. A new program for post-doctoral fellows, a commercialization fund for small businesses and funding to develop new sources for medical isotopes were the lone new R&D-related programs amidst a flurry of expenditures that provided small base increases to the granting councils and extended the mandates of several existing agencies and organizations.

Combined with legislative measures designed to improve the volume of foreign direct investment and US venture capital, the Budget takes a low-level approach to R&D, S&T and innovation. But given the diminished expectations leading up to Budget day, the inclusion of so many moderate funding initiatives is being met with considerable relief and even tempered praise.

The university community in particular has been largely supportive of the Budget, with the exception of the Canadian Association of University Teachers which gave it a ‘D' grade. The Association of Universities and Colleges of Canada (AUCC) welcomed the Budget and its "strategic choice to invest in university research" while the presidents of Canada's 13 largest universities issued a joint statement supporting the government's decision to launch a review of its $7 billion in support for R&D, including the scientific research and experimental development (SR&ED) tax credit program.

"While there weren't huge increases there was progress in a range of areas … The new post doctoral program is an important element of the argument for talent — $45 million is worthy of note," says AUCC president Paul Davidson. "We're disappointed that the government did not include (support for AUCC's recommendation of $100 million for an international recruitment strategy) but the Budget had no major new initiatives. I would continue to argue that there is fiscal capacity but the government says it doesn't have it."

For post-secondary education, the Budget provided for a new Post-Doctoral Fellow ship Program worth $45 million over two years beginning in FY10-11. To be administered by the granting councils, it will make awards of $70,000 annually for two years to post-doctoral students, with 140 students being supported once the program reaches maturity. Such a program has been advocated by AUCC, the Canadian Institutes of Health Research (CIHR) and the Partnership Group for Science and Engineering.

The granting councils were afforded small increases in their base budgets totalling $32 million — $16 million for CIHR, $13 million for the Natural Sciences and Engineering Research Council (NSERC) and $3 million for the Social Sciences and Humanities Research Council (SSHRC). Overall, the increase to the granting councils for FY10-11 is $50 million when the impact of other Budget initiatives are factored in.

The impact of the strategic review on the council budgets is $7.1 million for FY10-11, meaning there's an increase of $42.9 million. The real bite kicks in next year when strategic review-related cuts soar to $69.7 million. If Budget 2011 provides no new funding for the councils, their collective budgets will be reduced by $14.7 million for FY11-12.

Indirect costs received an $8-million boost for FY10-11, an amount equal to 25% of the increases to the granting councils. The impact on the current ratio of 23% of direct costs of research is negligible.

The Budget delivered good news to Canada's colleges and polytechnics with a $15-million annual boost to NSERC's College and Community Innovation Program. The increase effectively doubles funding for the program, which was made permanent in 2007 with a budget of $48 million over five years (R$, March 26/07).

"This is very good news. It's a life saver for the program," says Ken Doyle, director of Policy for Polytechnics Canada. "They've also made the program much more flexible for institutions."

For Canada's colleges, the Budget reflects the government's increasing recognition of their role in the innovation system.

"Colleges in my view are more of an untapped resource for the federal government. They can contribute but they haven't been asked to do so," says Dr Gary Goodyear, minister of state for science and technology. "We have an increased need to utilize our colleges and the skills they have as we move towards the future economy."

SME pilot program

Also new is a two-year, $40-million pilot program designed to facilitate the adoption and demonstration of new technologies and products by federal departments and agencies. Called the Small and Medium-sized Enterprise Innovation Commercialization Program, it will be administered by Public Works and Government Services Canada through its Office of Small and Medium Enterprises. The minister responsible is Rona Ambrose.

The Budget's third and last new S&T program is a multi-faceted initiative to develop alternative technologies for the production of medical isotopes. Budgeted at $48 million over two years, the bulk of the funding ($35 million) goes to Natural Resources Canada to support R&D for new technologies. CIHR receives $10 million to examine the application of new technologies through a clinical trials network. Health Canada receives $3 million to work with the provinces and hospitals to optimize existing supplies.

In the short term, it's hoped that the existing NRU reactor — now slated to resume operation in May — will provide sufficient quantities of isotopes until the new technologies are developed, proven and implemented. Last November, NRCan received a report from the Expert Review Panel on Medical Isotope Production that recommended replacement of the NRU with a multi-purpose reactor and an R&D program for cyclotron-based Tc-99m isotope production.

federal spending review

The fate of future S&T funding could be significantly impacted by the Budget's announcement of a strategic review of all its R&D spending, exclusive of government labs. Estimated for 2009 at about $7 billion ($4 billion in direct federal support and more than $3 billion for business R&D tax credits), the spending review will be led by Industry Canada in consultation with industry and the provinces. While the review appears likely to have a particular emphasis on boosting private sector R&D and the commercialization of research, it will also reflect the government's push for increased accountability and value for money .

"This part of an overall strategy to make sure that there are maximum benefits coming out of these types of programs," says Goodyear. "The bottom line is to ensure that we're getting as much into S&T as we possible can and Canadians are getting the most out of it."

Also subject to further review is Canada's digital economy. Despite being a talking point of ministers for the past several months, the Budget only announces the development of a Digital Economy Strategy to "enable the ICT (information and communications technologies) sector to create new products and services, accelerate the adoption of digital technologies, and contribute to improved cyber security practices". Canada already has a new program dedicated to digital media (Canadian Digital Media Network) and many competing nations are well advanced in preparing for advances in the digital economy, leading some to contend that the government should be moving faster. "We need to get moving. The time for indecision is over," says Kevin Tuer, managing director of the Canadian Digital Media Network. "Some countries are on their second and third strategy now. Enough talking."

Status quo and follow-on

Most of the Budget's S&T measures represent a continuation of long-term funding for key initiatives, programs and facilities. NRCan received $100 million over four years for a follow-on to its Transformative Technologies Pilot Demonstration Program. The Next Generation Renewable Power Initiative targets the development, commercialization and deployment of bio-based technologies in the forestry sector and aimed at renewing and diversifying the industry. The initiative stems from a 2009 report by the Forest Products Association of Canada urging government to increase support for R&D and innovation to help diversify the industry. The report — Future Bio-pathways Project — also calls on government to expand and extend existing commercial adoption and demonstration programs and develop a "Made-in-Canada clean energy plan".

"A program to ensure the fair and transparent distribution of funds and define the scope of eligible activities is under development," says NRCan in a written response to questions posed by RE$EARCH MONEY. "Industry groups and several provincial governments have indicated that they see more technology demonstration funding with a longer time horizon as a key priority for supporting the renewal of the forest sector."

TRIUMF

The Budget positively responded to most of the S&T organizations and facilities whose funding was due for renewal. TRIUMF received the same allocation as it did five years ago ($222 million over five years) despite requesting $305 million to implement an expansion of its activities and enhance its leadership position for the production of rare isotopes, accelerator design and nuclear medicine (R$ October 8/09). Of the $222 million, $126 million is new money while $96 million comes from NRC, as per a long-standing agreement between the two organizations.

TRIUMF director Dr Nigel Lockyer says the renewed funding precludes it from several planned initiatives including the development of high-powered targets, an upgrade of its helium liquification facility to allow for recycling and a new beamline using protons on an actinide target.

The latter would have allowed TRIUMF to enhance its rare isotope program and conduct research with Nobel prize-winning potential. Originally slated to commence in 2014, it will now be pushed into the next five-year funding cycle.

What will proceed is the development of a superconducting electron accelerator, which received $17.2 million in the last major competition of the Canada Foundation for Innovation (R$, May 19/09). TRIUMF is still waiting to hear from the province of British Columbia about matching the CFI contribution but Lockyer is confident it will come through.

"As far as I know they are happy but I need to hear it from … the minister's mouth to say we're going ahead," says Lockyer. "The federal Budget was really to supplement the CFI proposal in a sense … Our top priority was for an expansion in nuclear medicine which is going to happen now."

Lockyer adds that Industry Canada has encouraged TRIUMF to pursue other funding initiatives in the budget, the most obvious being the medical isotopes funding awarded the NRCan. "We are definitely going to be in that line," he says.

RADARSAT III

The Budget provides the Canadian Space Agency with $397 million over five years to develop the RADARSAT Constellation Mission, the multi-satellite successor to RADARSAT II. The Canadian Space Agency will contribute $100 million to the $497-million project through re-allocation from other budget lines. The constellation will be built from a new design with a minimum of 70% Canadian content, although the technologies involved will be largely off-the-shelf or taken from RADARSAT II.

Unlike RADARSAT II, the RADAR-SAT Constellation will be government owned, thereby avoiding the debacle surrounding the sale of space assets owned by MacDonald Dettwiler & Associates Ltd (MDA) (R$, March 27/08). MDA is also the prime contractor on the RADARSAT Constellation but 75% of the work will be subcontracted to MDA's Montreal subsidiary and companies such as COMDEV and Bristol Aerospace.

RE$EARCH MONEY has additional Budget coverage in its on-line version at www.researchmoneyinc.com.

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