No major increases but Budget's Austerity measures appear to have only small impact on science, technology and innovation

Budget 2012

Billed as a major change in direction for Canada's research enterprise, Budget 2012 has responded with a host of initiatives and policy directives designed to boost the impact of previous and ongoing research investments by increasing collaboration between business and the academic sector.

From the granting councils and the Business-Led Networks of Centres of Excellence Program (BL-NCE) and the Industrial Research Assistance Program (IRAP) and the Canadian Innovation Commercialization Program (CICP, the Budget builds upon and accelerates the evolving role of research in support of jobs economic growth and prosperity.

"History and our record speak for itself. No one has provided the support for science and research this government has," says Dr Gary Goodyear, minister of state for science and technology. "There's lagging innovativeness in the private sector (and) this Budget really focuses on that part of the (federal S&T) strategy to promote jobs for the future. It's a jobs and growth Budget."

Those looking for a sweeping, visionary statement of the importance of innovation and how the Budget's measures aim to realize that vision were disappointed, however, prompting one innovation expert to characterize the Budget as a lost opportunity.

"The most significant omission from the Budget statement is any sense of overall strategy or plan for the future, based upon what Canada's current strengths and weaknesses are," says Dr Richard Hawkins, a Canada Research Chair in the Social Context of Technology, a professor of science, technology and society at the Univ of Calgary. "A great opportunity has been lost here, in favor of a rather helter-skelter assemblage of measures and allocations based upon a lot of dubious and sometimes spurious assumptions about innovation as an economic phenomenon and how it contributes to growth and employment."

Budget 2012 contains a wide range of spending initiatives - some new, most extensions of previous programs - but the impact of the government's commitment to research and innovation is being partially offset by spending reductions the Harper government has proposed for virtually every federal department and agency (see charts).

The Jenkins Panel, SR&ED and the NRC

Details are sparse, but the Budget's science, technology and innovation (STI) provisions represent a muted response to recommendations contained in last year's Jenkins Panel report. The report of the Expert Panel Review of Federal Support to Research and Development contained a series of recommendations including a streamlining of the government's flagship R&D tax credit program for business and a radical revamping of the National Research Council (NRC).

 The scientific research & experimental development (SR&ED) tax credit program will see eligibility reduced by eliminating capital costs (depreciable machinery, equipment and instrumentation) and the rate most companies can claim reduced from 20% to 15%, freeing up an estimated $500-$600 million annually which the Jenkins Panel urged be used for direct support to firms. Analysis by Russ Roberts, VP tax, finance and advocacy for CATA Alliance, shows that the Budget does not committ the full amount of savings to direct support initiatives, leaving room for "future initiatives". More detail on changes to SR&ED will be featured in the next issue of RE$EARCH MONEY.

The NRC will create a concierge service to help facilitate access to all federal innovation programs by smaller firms and hold consultations with business, universities and college stakeholders. It receives $67 million to support its refocusing efforts, with no further explanation of how that money will be spent. Some are speculating that it will be used to replace funding lost by the sunsetting of the Technology Cluster Initiative (R$, June 22/11), while others argue that it will be used as severance for an as-yet unspecified number of laid off employees.

Goodyear confirms that some of the funding will go towards creation of the concierge service and other unspecified changes that will be announced in the service. He says the clusters initiative is being reviewed along with many other components of the NRC from the Jenkins Panel's recommendation for consolidation of S&T programs but won't comment further.

IRAP fared far better with a $110-million boost in funding, effectively doubling its budget. The Jenkins recommendation to spin IRAP out of NRC and into a new Industrial Research and Innovation Council does not appear to be in the cards.

Canada Foundation for Innovation

The Budget provides $500 million to the CFI - starting in FY14-15 to support new competitions including one for the College-Industry Innovation Fund. This means CFI can launch competitions before then so that recipients are selected and quantified before funding starts to flow.

Government Procurement

The Jenkins Panel was more successful with its proposal to increase the size of the CICP and make it permanent. The government did both, making the program permanent and providing it with $95 million over three years and $40 million annually thereafter.

The BL-NCE program was also made permanent and will receive $12 million annually. No word on whether another NCE program - Centres of Excellence for Research and Commercialization - will allow existing networks to apply funding renewal beyond a single five-year term.

The Granting Councils

The Budget's treatment of the granting councils is somewhat more problematic. While they appear to have been protected for at least one year from the deficit-reduction measures that hit virtually every department and agency, there's concern that the government's strengthening of the council's business-facing or strategic investment programs will undermine support for basic research.

Both the Natural Sciences & Engineering Research Council and the Canadian Institutes of Health Research received a $15-million per annum boost to their budgets while the Social Sciences and Humanities Research Council received $7 million. Budget reduction measures removed identical amounts from their respective budgets for FY12-13, however, and will reduce their budgets by the same amounts again in FY13-14 as the austerity measures ramp up. If next year's Budget does not replace the funding, granting council budgets will be reduced, prompting unpleasant choices as to where savings can be found.

Five-year funding commitments lacking

The Budget did not respond to requests for long-term stable funding for three organizations - Genome Canada, CANARIE and the Canadian Institutes for Advanced Research.  In its latest strategic plan, Genome Canada has requested stable, multi-year funding between 2012 and 2017 (R$, January 20/12). Instead it received $60 million over the next two years to hold a competition in the area of human health and "to sustain the Science and Technology Centres until 2014-15".

Both CANARIE and CIFAR have received five-year funding commitments since their inception. Budget 2012 provided funding for just two years, complicating those organizations' efforts to establish long-term collaboration with national and international partners. Without cash in the bank, S&T organizations are often frustrated in their attempts to participate in collaborations and consortia spanning several years.

Medical Isotopes

The government's intention to get out of the medical isotopes business received attention on two fronts. Natural Resources Canada received $17 million over two years to bring the production of four isotope projects to a commercial scale. This builds on the $31 million NRCan has also provided (out of a $35-million envelope) to four existing cyclotron and linear accelerator facilities to generate isotopes from non-reactor-based sources (R$, January 31/11). Atomic Energy of Canada Ltd received $107 million over two years to maintain operations and ensure a secure supply of medical isotopes until other sources come on stream.

Other Budget S&T initiatives include:

• $14 million over two years to double the size of the Industrial Research and Development Internship program, to be managed by MITACS, a Network of Centres of Excellence.
• $5 .2 million in FY12-13 to create the Canadian Depression Research and Intervention Network. The Mood Disorders Society of Canada will lead the network's development in conjunction with the Mental Health Commission of Canada. Additional private and public sector investments are anticipated;
• $6.5 million over three years to McMaster Univ to conduct a research project to evaluate ways to achieve better health outcomes for patients and make the heath care system more cost-efficient through the use of medical teams. Other partners are expected to contribute;
• $23 million over two years to Natural Resources Canada to for new satellite data and transmission facilities and to develpp a data management system;
• Creation of a Canadian Technology Accelerator in New York City to help Canadian entrepreneurs access venture capital, customers and partners in key US markets and catalyze their growth.