Budget received with cautious optimism despite near absence of S&T measures

End to 10-years of innovation-friendly Budgets

The federal government is taking another shot at developing a national science and technology strategy and will initiate an accountability and value-for-money review of the granting councils. The announcements were contained in the inaugural Budget of the new Conservative government which features a range of business and personal tax cuts (see page 3). But it represents a holding pattern for research and innovation that was widely anticipated by the S&T community.

Modest single-digit increases to the budgets of the granting councils, a boost to the indirect costs of university research and a small infusion of funding into the Canada Foundation for Innovation's (CFI) Leaders Opportunity Fund are the Budget's sole targeted R&D measures. They're being welcomed within the publicly funded research community as a signal that the Conservative administration has not forgotten the central role research and innovation play in the future economic and social well being of the nation.

But they're also a humbling reminder that, after 10 years of successive increases to the national research enterprise, R&D and innovation are not a priority of the current administration. University-based research aside, the Budget contained no specific measures for government labs and research institutes or programs designed to stimulate private sector R&D and commercialization.

"Research is not high on the radar screen for this government, at least this time around. I was not expecting a large increase in our A-base," says Dr Alan Bernstein, president of the Canadian Institutes of Health Research (CIHR). "There were some very good things in the Budget for science and CIHR in particular … The increase is welcome but it's not enough to deliver on our mandate … The research community is quite concerned."

CIHR received $37.3 million in new annual funding — $17 million or a 2.5% hike to its A-base, $16 million for the indirect costs of research and $4.3 million as part of a new $1 billion, five-year Pandemic Preparedness agenda — plus an unspecified amount for its role in a new Canadian Strategy for Cancer Control (CSCC). The bulk of CSCC's $52 million in annual funding goes to the Public Health Agency of Canada and Health Canada.

The Natural Sciences and Engineering Research Council received identical amounts in A-base and indirect costs funding. The Social Sciences and Humanities Research Council received $6 million in A-base funding and $8 million for indirect costs.

"I'm cautiously optimistic. There was recognition of the importance of academic R&D," says SSHRC executive VP Dr Janet Halliwell. "It's a holding-the-line Budget so we have to be pleased, although there are still some issues that need to be tackled, particularly for SSHRC."

The Budget's addition of $40 million to the Indirect Costs Program brings its annual Budget to $300 million. That increases the percentage of of granting council funding to 27%, far short of the 40% level recommended by the Association of Universities and Colleges of Canada.

In the Conservative election platform, the party pledged $500 million over five years for the granting councils and indirect costs program, but made no explicit mention of the CFI. Therefore, the decision to provide $20 million annually and endorse the continued use of arm's length foundations to the CFI was welcomed by CFI president and CEO, Dr Eliot Phillipson.

"Am I disappointed in the Budget? No. We hoped there would be some encouraging wording and there was … Even though the overall amounts of money could be viewed as insufficient, the messages are strong that they support research and innovation," he says. "There was a strong statement of support that foundations would continue to operate and the government would retain use of them as an important policy tool, especially R&D. It's a very strong statement and very encouraging."

Phillipson says the decision to increase funding of the CFI's Leaders Opportunity Fund by $20 million annually will ensure that the organization is able to continue its role in attracting and retaining top-flight research talent while the government conducts its review of the granting councils and formulates its own S&T strategy.

"While the S&T strategy is being developed, we don't want to lose faculty. International competition is becoming intense and further funding in this area is particularly helpful and effective."

S&T STRATEGY

The decision to develop an S&T strategy is also being viewed as an encouraging sign that research and innovation are considered key components in the government's attempts to increase competitiveness and productivity. The formulation of an S&T strategy is expected to take until the fall, at which time the government will unveil its approach to research and innovation.

"We have really needed a framework for S&T for the past few years," says Bernstein. "We've been reinvesting in research and programs have sprung up like mushrooms after the rain. All areas are now covered but it raises issues that it's time to look at … The UK has done it and they update their framework annually. It's a living framework and a beautiful document."

The backers of two recent reports on commercialization are viewing the S&T strategy as an opportunity to influence the new policy. The Expert Panel on Commercialization and the Conference Board of Canada (CBoC) have put together a small ginger group and are collaborating on a strategy to approach government to garner support (see page 5). But they acknowledge that the task is a formidable one.

"It needs to be on the radar screen and it needs political leadership. Other countries pick paths and political leaders need to be on side. It makes a huge difference," says Brian Guthrie, CBoC's director of innovation and knowledge management. "What's the sixth, or seventh or eighth priority for government. This is long-term stuff. It doesn't win votes."

GRANTING COUNCIL REVIEW

Reaction by the granting councils to news that the government will embark upon a review of their activities to determine accountability and value for money is generally positive. The review will be conducted by Industry Canada in collaboration with the Finance department and should be completed "in the mid term" according to a government official. But speculation is divided over whether the review is another form of the dreaded program review of the mid 90s that saw the budgets of the granting councils, line departments and other S&T organizations cut in the name of deficit reduction.

"The government is on an accountability fixation and they want to get a bang for their bucks. Large expenditures on R&D are obvious targets," says another official who wished to remain anonymous. "Any time you have Finance involved, you should be nervous ... It is clear that a new tone has been adopted by this government even though it is rolling in money."

CIHR is in the best position for the review, having recently undergone an extensive evaluation by an international review panel (R$, March 16/06). Bernstein asserts that once the government determines that the granting councils are accountable and generate value, the case for increased investment will be strengthened.

"The timing for the review could not be better," he asserts. "It's a good time for the government to invest in research, especially in CIHR."

The situation is somewhat different for SSHRC, which has been without a permanent president since the departure of Dr Marc Reneau last September (R$, September 2/05). In addition, SSHRC has proposed a dramatic transformation from granting council to a so-called knowledge council. Although the process was initiated three years ago, SSHRC has yet to receive an official endorsement from government.

"I'm not sure the timing (for a review) is bad. We're not as ready as we should be but we are making a bid for increased investment so it's fair to ask questions at this stage," says Halliwell. "We have more of a challenge than the other granting councils because the standard metrics don't apply to SSHRC. We are in good shape on accountability but value for money is a real challenge ... New methodologies are needed to measure return on investment."

$1 BILLION TRUST

The Budget also announced the creation of a new $1-billion trust for post secondary education, which would kick in if the FY05-06 surplus exceeds $2.3 billion. The funding is intended to "promote innovation and accessibility" and will be disbursed to the provinces over two years on a per capita basis. Stemming from Bill C-48 — the NDP amendment to the last Liberal Budget — the provinces have agreed to make investments in a range of areas including classrooms, laboratories and enhanced library and distance-learning technologies. The government has pledged to consult with the provinces before introducing a "new approach to long-term funding for post-secondary education and training this fall.

R$