Fundamental science, research facilities and innovation share in historic $6.4-billion Budget boost

In what may be well be remembered as Canada’s first truly 21^st century research and innovation Budget, the Liberal government has committed to investing more than $6.4 billion in scientific research, technology and business innovation assistance. The Budget’s provisions begin the task of fleshing out the government’s new Innovation and Skills Plan and act on recommendations from the Advisory Panel for the Review of Federal Support for Fundamental Science, the Advisory Council on Economic Growth, and Treasury Board Secretariat’s (TBS) inventory of federal programs aimed at supporting business innovation and clean technology, among other policy and advisory inputs.

A record $1.7 billion is being invested in the three federal granting councils and research institutes such as the Institute for Quantum Computing and the Centre for Drug Research and Development – part of a $3.9-billion investment in the federal research system which will be overhauled.

In addition, the Budget commits $2.6 billion to innovation-related initiatives such as the National Research Council’s (NRC) Industrial Research Assistance Program (IRAP) and the regional development agencies. The new funding underscores the government’s intention to help firms scale and access international markets

The program landscape will also be dramatically altered, with 92 distinct programs reduced to about 35 through a process of consolidation to make them more business-centric. The impact of these changes will be evaluated by TBS using new data generated by Statistics Canada, which received $1 million to “improve performance evaluations for innovation-related programs”.

The NRC and IRAP also came away from the Budget with significant new funding and major changes to the scope and extent of their activities. The NRC’s budget was increased by $108 million a year or $540 million over five years while IRAP gets a $150-million annual boost, raising its budget to $420 million and allowing it to undertake projects of up to $10 million.

Aside from IRAP, the Budget was relatively silent on new measures to directly support business innovation, such as changes to the Scientific Research and Experimental Development (SR&ED) tax credit program. Instead, the predominant focus is on facilitating business-academic-government collaboration (such as the recently concluded Innovation Superclusters Initiative competition).

Granting Councils

Of the 35 recommendations contained in Canada’s Fundamental Science Review, none attracted more attention that the call for a $1.3-billion boost to the fundamental research budgets of the granting councils and additional funding for the Canada Foundation for Innovation (CFI). While the Budget’s funding falls short of the recommendation, it is nonetheless significant – boosting the collective budget of the granting councils by $925 million over five years. That translates into $354.6 in new funding for both the Natural Sciences and Engineering Research Council (NSERC) and the Canadian Institutes of Health Research (CIHR) - $90.1 million annually ongoing – and $215.5 million for the Social Sciences and Humanities Research Council (SSHRC) or $54.8 million ongoing. The cumulative increase is an historic 25%.

In addition, $275 million over five years ($65 million a year ongoing) and starting in FY18-19 is being provided for a new Tri-Council Fund to “support research that is international, interdisciplinary, fast-breaking and higher-risk”. It will be administered by SSHRC.

The SSHRC-administered Canada Research Chairs program also receive a significant funding hike with $210 million over five years ($65 million a year ongoing) with a focus on enhanced support for early-career researchers and greater diversity among recipients including more women.

Indirect costs were also addressed with an additional $231.3 million over five years for the Research Support Fund. While welcomed by the academic research community, Vivek Goel, Univ of Toronto’s VP research and innovation, says the cash injection “does not substantially increase the proportion of funding for these costs”. Indirect costs currently average about 21% of the value of research support for post-secondary institutions – well short of the target of 40% long advocated by the university community.

Canada Foundation for Innovation

In addition to receiving $763 million over the next five years, the CFI has been given a commitment that, by FY23-24, it can expect permanent, predictable funding of $462 million annually – a longstanding call by former CFI president Dr Gilles Patry. The new funding includes $160 million for CFI’s Major Science Initiatives Fund which currently helps to support SNOLAB, the Canadian Light Source and the Canadian Research Icebreaker Amundsen.

Federal Laboratories

The Budget also breaks ground with the announcement of the first phase in the renewal of federal laboratories. While the Budget chart (see below) shows $87 million over five years for the labs, their renewal will be jumpstarted with $2.8 billion to construct a series of “multi‐purpose, collaborative, federal science and technology facilities” starting in FY18-19. The facilities will be built for Agriculture and Agri-Food Canada, Natural Resources Canada, Fisheries and Oceans Canada, Environment and Climate Change Canada, NRC and others “to advance interdisciplinary research” on climate change, ocean protection, human health and other public good issues within their sphere of responsibility.

Digital Research Infrastructure (DRI)

Exponential increases in data generation and the growing need for its storage, curation and analysis were recognized in the Budget with the announcement of $572 million over five years ($52 million ongoing) to implement a Digital Research Infrastructure Strategy. The government plans to consult with the provinces and territories when developing the strategy which will consider how to strengthen and streamline services by incorporating “the roles currently played by the Canada Foundation for Innovation, Compute Canada and CANARIE”. It’s unclear whether the budgets of these organizations related to DRI will be moved over to support the new strategy, whose budget peaks at $166 million in FY20-21.

NRC

The NRC, having completed a major assessment of its facilities, capabilities and strategic direction, has successfully advocated for significant new funding and structural changes by tying itself closely to the Innovation and Skills Plan and the government’s diversity and inclusion agenda. Starting next month, its annual budget will be increased by $108 million annually ($540 million over five years) as part of what Budget documents brand as a “re-imagined” NRC.

The government has also agreed to convert “longstanding temporary funding into ongoing permanent funding by providing $298 million over five years and $59.6 million per year ongoing” – providing predictable long-term funding as the Budget did with the CFI.

The measures raise NRC’s total budget to $1.1 billion.

Of the new funding, $150 million will be allocated towards "high-risk, high-reward research" to "fund (NRC) scientists to work with innovators from post-secondary institutions and businesses on multi-party research and development programs”. This new multi-sector collaborative initiative is modelled on the US Defense Advanced Research Projects Agency (DARPA).

The new funding also includes $30 million over five years to establish an “ideation fund” utilizing a competitive peer-reviewed process “to target breakthrough research”.

The Budget also addresses an obstacle to greater industry and academic collaboration, namely high access fees to NRC facilities. NRC will devote $62 million over five years ($12.4 million per year ongoing) to lower the fees charged to small- and medium sized businesses, universities and colleges.

IRAP

As noted above, IRAP’s budget is being increased from $270 million to $420 million annually, primarily to allow it to fund projects up to $10 million - dramatically higher than the current $1-million threshold. The move enhances IRAP project funding and business advisory function to a whole new level although historically IRAP has funded larger projects in the past (with Treasury Board approval required for projects of more than $1 million). The new $10-million threshold means that the Innovation department's Strategic Innovation Fund (SIF) will no longer fund projects under $10 million, allowing it to focus on “support (of) larger projects that can lead to significant job creation and shared prosperity for Canadians”.

On the flipside, IRAP will shed its highly successful Concierge program, which will be merged into Innovation, Science and Economic Development Canada (ISED) and consolidated with the new Innovation Canada’s Accelerated Growth Service program. The Concierge service will become one of four flagship programs, the others being the SIF, Canadian Trade Commissioner Services and the regional development agencies (RDAs).

College and Community Innovation Program

Chronic underfunding of the R&D activities of colleges and polytechnics received a boost to their main federal support program. NSERC’s College and Community Innovation Program (CCIP), will be increased by $140 million over five years starting in FY18-19 – a 53% increase. While welcome, the new money won’t do much to boost the overall share of federal research funding received by colleges and polytechnics, which currently stands at a paltry 1.7% of the $3 billion+ in annual federal funding for higher education R&D.

Colleges will also benefit from the funding boost to IRAP, the new Indigenous Skills and Employment Training Program, and the $2-billion investment in development funding to advance gender equality around the world, including the new Feminist International Assistance Policy.

Regional development agencies

Changes are also afoot for Canada’s regional development agencies (RDAs) – some intended to eliminate the longstanding (and often accurate) perception of the RDAs as pork barrel funds for vote-hungry ministers. The Budget provides RDAs with $511 million over five years ($400 million on an accrual basis) beginning in FY18-19 to support the Innovation and Skills Plan. Of that amount, $105 million will be devoted to a new Women Entrepreneurship Strategy and $35 million goes to “supporting skills development and economic diversification activities to help workers and communities in the West and in the Atlantic region adapt to Canada’s transition to a low-carbon Economy”.

Core funding of the RDAs is also being increased, including:  $20 million to the Canadian Northern Economic Development Agency to continue its economic development programming, and $920 million over six years to renew funding for the Federal Economic Development Agency for Southern Ontario.

The RDAs were included in the government’s program reduction initiative with the government exploring ways to “simplify the existing suite of 22 programs”.

There will also be a greater emphasis on assisting firms in scale-up efforts, developing new markets and adopting new technologies and processes.

Women Entrepreneurship Strategy

In addition to targeted funding for the RDAs, the government’s new Women Entrepreneurship Strategy has several components to boost the participation of women. As the Budget notes, “Women entrepreneurs face unique barriers in accessing capital, supply chains and export programs compared to their male counterparts. Women entrepreneurs may also have a harder time receiving training and finding mentorship.”

New women-focused funding announced in the Budget includes $5 million over five years for Advancing Women – Expanding Diversity of Entrepreneurs and $1 million over five years for Advancing Women Business Leaders.

New IP Strategy

The Budget announced the government’s intentions to overhaul its intellectual property (IP) strategy with $85.3 million over five years beginning in FY19-19 ($10 million ongoing). Details of the new strategy, which includes targeted initiatives for women and Indigenous entrepreneurs, will be forthcoming from ISED in the coming months.

What’s known so far is that it will include:

• $30 million in FY19-20 for a pilot Patent Collective, allowing entrepreneurs to pool patents, so that SMEs have better access to critical IP needed to expand their businesses;
• $21.5 million over five years for ISED to develop IP expertise and legal so that entrepreneurs can access IP legal clinics at universities and help them develop tailored IP strategies for expanding into international markets; and,
• $33.5 million over five years to create IP tools, including $4.5 million to establish an IP marketplace – a “one-stop listing of public sector-owned intellectual property available for licensing or sale to reduce transaction costs for businesses and researchers”

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Source: Federal Budget 2018