2012 federal budget: “We in Canada have yet to learn, so it seems”

My friend had called from Ottawa right after the budget lock-up to “re-assure me” that the three research councils did OK. The AUCC president, Paul Davidson, had also issued a press release offering praise for “investments (that) will preserve current levels of basic research and scholarships funding”. Most universities websites followed suit in congratulating government. Then came the email, “With NSERC, it is as we feared! They have extracted and diverted substantial funds. See the CIC press release below. The response given on UBC’s website is just wrong on the facts!” 

The 2012 budget indicates indeed that Government has directed Canada’s research granting councils to pursue internal savings of $74 million phased in over 2012/13 and 2013/14. Although $37 million in savings are being reallocated within the granting councils in 2012/13, these are targeted to industry-academic research partnership initiatives. For example, in NSERC’s case, this directive may amount to essentially re-allocating $15M from its Discovery Grant Program, where basic research is supported, to its Research Partnership Program. This depends of course on the suggested potential cuts put forward by NSERC as part of the government’s 5-10% cost cutting exercise. I guess we will know soon enough.

One could of course try to rationalize this move as essential in the context of a cost-cutting budget, where government needs to find some cash to support companies R&D effort. But then one realizes that what was supposed to be a “transformational” budget for R&D, has instead turned out to be a treasure trove for those who count on government money to do D&C (i.e., Development and Commercialization).

Indeed, Chapter 3 of the 2012 budget provides $65M for the NRC to help it refocus on business-led, industry-relevant research, $110 million per year to double support to companies through the Industrial Research Assistance Program (IRAP), $400 million to help increase private sector investments in early-stage risk capital, and to support the creation of large-scale venture capital funds led by the private sector, $100 million to the Business Development Bank of Canada to support its venture capital activities, $12 million per year to make the Business-Led Networks of Centres of Excellence program permanent, $105 million over two years to support forestry innovation and market development, $95 million over three years, starting in 2013–14, and $40 million per year thereafter to make the Canadian Innovation Commercialization Program permanent and to add a military procurement component.

What did the universities get? Essentially, $500M for Canada’s Foundation for Innovation (CFI) over 5 years to build research infrastructure, but not before the universities (and their provincial governments) divert their own resources to find 60% in matching funds. Is this why the AUCC is rejoicing?

That the government has elected to direct its cuts on Tri-council programs, which support thousands of researchers at Canada’s universities, is surely the prerogative of an elected majority government, but why are the universities cheering on? Why can’t they at least say how short-sighted it is to be spending so generously on development and commercialization, while continuing a multi-year trend of cutting support for advanced basic research at universities, which is the key to any future development?

The universities cannot ignore what is being articulated and said by their best scholars, the likes of Richard Hawkins, a Canada Research Chair in the Social Context of Technology, at the University of Calgary.

“The budget is at its most disappointing with respect to the role of higher education in the innovation system. This is important in that universities constitute the one part of the system that depends almost entirely upon the public purse. Statements about “reallocations” in research councils may be innocent, but they smack of government setting the research agenda; prioritizing research spending according to assumptions that one form of knowledge has more market value than another.

Economies grow largely because they are able to diversify and create new combinations of production factors. In a knowledge economy, diversity is everything, making the notion that you can pick or prioritize knowledge winners the most erroneous of all erroneous assumptions. Moreover, public investment in “blue sky” science has been shown consistently to yield the highest coefficients in terms of stimulating and supporting innovation. This unencumbered exploratory capability is also what virtually every survey has shown to be the principal value of university research to business. The Budget has a decidedly competitive agenda on the business side, but on the basic research side there is more than a tinge of winner picking.

The main focus of the Budget, however, is not on basic research, but on knowledge transfer, commercialization and industry partnerships. The problem is that there seems to be no awareness at all of how closely these outcomes are related to increasing our strengths in basic research. One cannot be prioritized and not the other. This is a lesson that our principal competitors learned long ago, but that we in Canada have yet to learn, so it seems.”

It remains to be seen, whether the 2012 federal budget will lead to a call to arms for Canada’s research community. The Canadian Consortium for Research has fired the first salvo in this press release (CCR.Press.release).  I expect to see more coming in the year ahead.

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11 Responses to 2012 federal budget: “We in Canada have yet to learn, so it seems”

  1. Nilima says:

    The only surprise is that we’re surprised. Let’s see: basic research is typically (and properly) funded by government; 5-10% across the board ‘savings’; ergo basic research will lose funding. This was predictable even before the budget was announced. I’d have hoped for a coordinated, and well-articulated, response from universities and scholarly bodies, given the high likelihood of this outcome.

    • Ghoussoub says:

      I agree that the government had so brilliantly managed to lower expectations that the –lower than announced– cuts looked like early Christmas. But this was trumpeted as an “Innovation-friendly” budget, and so it was worth pointing out that the basic research component of the Tri-council is being cut, even in this context.Think about next year, when the priorities could lie elsewhere. My point here is that universities need not cheer so loudly, when there is not much to cheer about, and that any hope to turn things around in the next few years is going to require a serious mobilization of the whole research community. Do not expect much from the AUCC or from the tri-council presidents.

  2. Bryan says:

    It wasn’t as bad as I had feared, but I agree with Hawkins – the gov is trying to set research priorities, and doing so in a way that runs counter to how the full process of how research turns into products. I think I’ve use the pipeline analogy here before, but its worth repeating – because of how patent/IP laws work, if you don’t “own” the primary discovery, you cannot commercialize it. Meaning, if you don’t feed basic science into the front of the pipeline, the commercialisable stuff coming out of the end will quickly dry up.

    I’d also criticize – strongly – the govs approach to improving RD&C; nothing (as far as I can see) has been done to improve the movement of IP derived in universities to commercialization. Instead there simply seems to be more money for the various failed “partnering” programs that are currently in place. Having been through that process, I can honestly say that the fundamental limitation in RD&C from the uni side is the near total lack of partners in private industry – despite many programs to promote those kinds of partnerships. What we need, if you really want to get uni-based IP commercialized, is either some sort of carrot to make venture funding into science/tech industries a really attractive option, or alternatively, have a federal agency that directly provides venture capital. I’ve seen one commercialization attempt after another fail before they even start (including some of my own) because no company will partner with you until you have venture capital, no venture capitalists will fund you because you don’t have the backing of a partner, and no gov commercialization funds can be sought due to the lack of partners – either venture capitalists or RD&C partners. In the end most of us end up selling our IP – usually to american companies.

    However, I would criticize your characterization of the CFI refunding. I am ecstatic about it. As a liberal initiative on its last year of funding, many of us were afraid the cons would let it die – and along with it, the ability for us to purchase large pieces of equipment. Moreover, the funding scheme seems to be unaltered compared to before (although your 50% number makes me think the formula may have been re-jiggered). Historically, CFI was 40% federal funds, 40% “other” and 20% “in kind”. Usually, the 40% “other” came from provincial agencies (my experience is limited to Alta and Ont, but in both of those cases formal collaboration existed between CFI and the provincial agencies, making the application for the “other” 40% little more than a check box on the federal application). The “in kind” was from the manufacturers (usually in the form of “free” extended warranties and training). I’ve been part of a few CFI applications (and am involved in 2 right now); in all cases the sole financial liability for the universities/research facilities has been financial support for maintaining the equipment post-warranty; an expense they’d have incurred regardless of the mechanism used to purchase the equipment.


  3. Ghoussoub says:

    Isn’t it brilliant that everybody is saying, “not as bad as I had feared”? For the CFI (you’re right it is 40% from government), I was arguing that the $500M for 5 years is too little compared to past investments. Plus, this amount would essentially cover about 3 average research facilities per year, in a competition where more than 100 universities and colleges are eligible to compete. Note that even the modest changes to SR&ED will be saving government over a billion dollars. The hope was that they would re-invest some (most) of it in more direct funding for R&D … at least in an “innovation budget”.

    • Bryan says:

      I agree that $500M/5 years is too little given what is expected of research these days, but until the budget was released the expectation was $0, so there is something to celebrate. $100M/yr (essentially $250M/yr after provincial/”in kind”) remains a pretty significant investment (that is more than is available this CFI round; thoughbeit, this round is running onf “leftovers”). It would have been nice to see some reinvestment, but given the adversarial relationship between the current gov and science, I think what we got was far more than most expected.


  4. Nilima says:

    I would not expect Tricouncil to formally object- aren’t they part of government? I’d expect the AUCC to be less tongue-tied. And I see no evidence to believe the Tories know much about the research pipeline. In your recent posts you’ve been far more sanguine about their intentions regarding science policy. There’s little evidence to suggest ‘Innovation Budget’ meant anything BUT cuts to basic science, even before the budget was tabled.

  5. Ghoussoub says:

    Nilima, you are right. I may have been more optimistic than warranted. The struggle to protect advanced basic research at Canada’s universities will continue.

  6. One typically Canadian problem is that we spread our research funding dollars too thinly. We have too many mediocre universities and regional fairness in allocating the funds then starts to become an issue. There is also a lot of “you scratch my back and I’ll scratch yours” going on in the funding decisions. Many of the smaller universities that we have should be cut-off from research funding altogether so that the funding can be concentrated at ‘real’ research universities. These smaller and 2nd-tier universities should focus on undergraduate teaching and in many cases should be combined with their local community colleges.

    • Phil Hultin says:

      I guess I can tell what kind of university YOU are at. Your response reminds me of what Isabelle Blain said when I asked how she explained why “small” schools had a lower success rate for the Discovery Grants than “big” schools. She said “I guess big schools are more selective in their hiring”. That is, you must be no good if you work at a smaller university.
      I work at a large university but one that is not at the top of the pecking order in Canada. Until I was cut off by NSERC I was publishing in the top journals in Organic Chemistry and my students were getting NSERC PDF fellowships and even a Banting PDF fellowship to work at top US institutions. Nobody can say we were not doing top-quality work.
      You are repeating the NSERC party line: quantity is what matters. If you are not able to churn out quantity, who cares about your quality. You should do well in the current system, I think.

    • Even if it was true that every single professor at University X was better than every professor at University Y, that does not mean that those at Y are terrible. Indeed, there are plenty of good reasons why a world-class scientist would choose to work at an institution deemed lesser by a magazine, e.g., family, the city or simply that not nearly enough jobs at X are ever available. Those who make it through grad school/post docs/etc to land a tenure track job are almost always going to be excellent at research. It would be an enormous waste of talent to have these people solely teaching undergraduates.

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