Research and innovation get easy ride in cost-cutting Ontario Budget

MRI slated for marginal increase

The Ministry of Research and Innovation (MRI) emerged relatively unscathed from the Ontario government's $1.5-billion consolidation plan, unveiled in the province's March 29 Budget. With an emphasis on health and education, it was expected that other ministries would have to bear the brunt of cost reduction, yet MRI is on the hook for just $76 million in "streamlining" over three years, preserving a modest increase in its funding for FY11-12.

After two years of double digit increases that saw MRI's budget jump from $295 million in FY08-09 to $365.5 million in FY10-11, there will be an increase of just $4 million next year to $369.5 million, meaning that efficiencies and/or program reductions will have to be implemented.

"We will work to minimize the impact of the $76 million … I'm confident that we can have the same or higher impact with the resources we were given," says Bill Mantel, MRI's ADM research and innovation.

The $113.8-billion budget carries a $16.7-billion deficit despite slowing the increase in program spending to 1.7%. That compares to a boost of 11% for healthcare and 8.1% for education, which includes funding for 60,000 new spaces in provincial universities and colleges by FY15-16. Operating grants to universities and colleges will increase $64 million in FY11-12 and accelerate to $309 million by FY13-14.

In addition to preserving the bulk of MRI's spending, the Budget announced an additional $50 million over 10 years for the Perimeter Institute for Theoretical Physics and delivery of a significant innovation and commercialization component of a new water strategy, which will be managed by MRI.

"It's a good Budget for us ... If you look at the whole Budget, a lot of critical themes are there. It highlighted our key successes over the years like our success with venture capital," says Mantel.

budget hints at future direction for S&T

While weak on new S&T initiatives, the Budget provides some guidance on how innovation and S&T will be handled in the future. The government announced that MRI is currently revamping its 2008 Innovation Agenda "to help ensure that Ontario's economy remains a globally competitive, innovation-driven performer".

The Budget also revealed that the government will create a "specialized organization with a clear mandate to focus research activities on productivity growth in key sectors". The new entity is intended to better leverage private sector investments and comes with a cost savings of $3 million annually.

The move raises the spectre of a return to the alternative delivery model implemented by the former Mike Harris government. In 2001, the Harris administration transferred the administration of two key research programs — the Ontario R&D Challenge Fund and the Ontario Innovation Trust — to the Innovation Institute of Ontario, a not-for profit company (R$, January 5/01). The move was widely considered a failure and was blasted by the provincial auditor (R$, December 11/03) resulting in the McGuinty government bringing the two programs back in-house when it took power in 2003.

directional guidance

Mantel describes the Budget description as a "directional statement" calling for the MRI and other relevant ministries to "look at all the businesses we are implementing".

There has been a 50% increase in research spending in the seven years under the Liberal government, compared to the previous eight years of Conservative rule.

"What is the natural next step of being able to deliver our various research programs? We're in the very early days in the development of that," he says.

The impact of Ontario's future consolidation plans may not be as benevolent as their impact on this year's Budget, which calls for a government-wide review of program and services delivery. The review will be headed by former TD Bank economist Don Drummond.

R$