Ottawa taking $94 million from granting councils; further cuts proposed

By Debbie Lawes

Canada’s research granting councils could be facing a cut to their base budgets starting in 2005 as part of Ottawa’s attempt to cut $1 billion each year from federal government spending. The first cuts take effect this fiscal year, with the councils proposing to use surplus funds from the Canada Research Chairs (CRC) program to give back $94 million to the government. Next year’s contribution may not be so easy.

Janet Halliwell, executive VP of the Social Sciences and Humanities Research Council, says SSHRC was “taken by surprise” in September when they received notification from Industry Canada that their base budget could be cut in FY05-06. Similar clawbacks are being proposed for Science and Engineering Canada (NSERC), and the Canadian Institutes of Health Research (CIHR). If the cuts go through, it would represent the first decrease to the granting councils’ budgets since Ottawa began reinvesting in university research seven years ago.

Halliwell wouldn’t reveal the amount of the proposed cut for FY05-06, but said it is “significant”. “If we have to accommodate that hit within our (base) budget it will be a body blow,” she says. “We’re still trying to find out the magnitude and the way to manage that cut, but it is not an insignificant hit for us.” At the same time, she says “we’re asking to see if we can be released from this cut.”

According to the 2004-05 Supplementary Estimates released by Treasury Board on November 4, each of the granting councils would contribute to the $1 billion expenditure review: NSERC ($41 million), CIHR ($36 million) and SSHRC ($14 million). The councils have proposed using surplus funds from the Chairs program to pay for the cuts.

The CRC funds could provide some breathing room for the granting councils this year, although as the program’s director of operations, Denis Croux, points out, “It would be premature to speculate on any contribution that the Canada Research Chairs might make to the expenditure reduction.”

CRC is projecting a surplus in its current budget of about $100 million, falling to about $50 million in FY05-06 and to less than $8.5 million in FY06-07. The program may be able assist the granting councils again next year. But as Croux notes, the government’s $1-billion spending cuts are long-term, not one-time contributions.

“So the councils are going to have to look at alternatives to find the difference between the Canada Research Chairs budget and the other programs that they run,” says Croux.

Halliwell says SSHRC’s $14-million contribution was negotiated last year with then Industry minister Lucienne Robillard. The parties agreed that “if there were to be lapsed funding in the Chairs budget, that would be an appropriate and realistic contribution of the federal agencies. We thought that was a fair trade off,” she adds.

Both SSHRC and NSERC fall within the Industry Canada portfolio, which is earmarked to cut $96.9 million in spending for FY04-05. CIHR is funded through Health Canada which is slated to cut its spending this year by $57 million.

Final decisions on any spending reductions for this year are still subject to committee review in Parliament. Halliwell says she hopes that any proposed cuts to the granting councils can be offset through a separate expenditure review headed by the Privy Council Office (see page 2).

“We want to position ourselves effectively for the ($12 billion) expenditure review exercise in which we believe that the R&D agenda, the university agenda, has to come out as a recommitment of government priority,” she says. “That is where we want to see things go.”

CUTS TO NRC AND CSA

The research granting councils aren’t alone in contributing to the government’s $1-billion spending cuts this year. Two other organizations within the Industry Canada portfolio – National Research Council and the Canadian Space Agency – are each tagged to contribute $3 million this year.

Also targeted to lose money in 2004-05 are the regional agencies: Atlantic Canada Opportunities Agencies ($9 million), Economic Development Agency of Canada for the Regions of Quebec ($5 million), and Western Economic Diversification ($6 million).

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