Editorial - 25-5

The aftershocks of the 2008 economic meltdown and subsequent orgy of stimulus spending are putting the squeeze on new investments aimed at boosting innovation. Bulging federal and provincial deficits have resulted in a slew of budgets in which S&T, R&D and innovation are fighting an uphill battle with soaring health care and education spending.

The March 22 federal Budget contained a relatively high number of relevant investments but they are modest in comparison to previous years and many are decidedly political in nature. The end of a two-year fiscal stimulus package is returning the budgets of most R&D and S&T organizations back to their pre-recession levels.

To compound matters, many organizations appear to be caught in a state of limbo created by the unusually high number of reviews and strategies — the R&D Review (known as the Jenkins Panel) and the Digital Economy Strategy, whose release may be delayed from May until the fall. The Budget added yet another review of all direct government spending to be completed in FY11-12, superceding the ongoing strategic reviews which will be suspended.

At the provincial level, S&T and innovation aren't faring much better. Few contain any new initiatives of note and deficit-reduction measures are threatening to eat into the gains of recent years.

Where that leaves the state of Canadian innovation will become the focus of increasing debate. Spending smarter is one positive outcome but a round of serious cuts could place Canada's innovation aspirations in jeopardy.