Province’s innovation engine needs strategic investments to capture benefits

Alberta Budget

Frustration within Alberta’s S&T community is spreading as the province continues to hold back on making the strategic decisions and investments considered essential to its long-term future as a knowledge-based economy. For the third year running, the oil revenue-heavy provincial Budget was largely devoid of investments designed to capitalize on the world class research emanating from the province’s universities and institutes. Nor were there any taxation measures to entice local capital into high-tech or attract more venture capital to the region — long considered the province’s Achilles heel for long-term wealth and prosperity.

Anticipated funding for the Alberta Ingenuity Fund (AIF) and provincial matching funds for Canada Foundation for Innovation (CFI) projects was inadequate or absent from April 8 Budget.

The Budget did provide $30 million over three years for a Climate Change Action Fund and $10 million for the Alberta Energy Research Institute (R$, October 7/02), indicating that S&T investment is forthcoming at least in the province’s key priority areas.

And there was also funding of three previously announced research buildings at the Univ of Alberta and the Univ of Calgary. U of A received $105 million for a Health Research Innovation Facility and $25 million for a Natural Resources Engineering Facility, while U of C received $105 million for a Health Research Innovation Centre.

“The work that’s being done now is setting the foundation. In recent weeks, we’ve released an Agriculture Research and Innovation Strategic Framework and the Integrated Life Sciences Strategy for Alberta,” says Dr Ron Dyck, executive director of research for Alberta Innovation and Science (AIS) and secretary of the Board of Management of the Alberta Science and Research Authority (ASRA). “There are a number of things that will come to the table in the coming months. Stay tuned.”

That doesn’t wash with many in the S&T community, particularly those in the academic sector who contend that the intellectual property they create requires a dynamic strategy to ensure an appropriate return on provincial and federal investments.

“We’ve been hearing the words ‘stayed tuned’ for a while,” says Dr William Bridger, AIF’s president and CEO. “Our fund’s endowment and matching funds for the CFI are the two main areas in which we were expecting something, and they have not been attended to in the Budget.”

When the AIF was launched two years ago with a $500-million endowment, the government pledged to inject an additional $100 million annually depending on the financial health of the province’s finances. Slumping financial markets reduced the value of the Fund last year, but this year’s Budget was flush with surging oil and gas revenues. Yet it allocated just $21 million to bring its “book value” up to $500 million. The current market value stands at $441 million. Bridger says the expectation was for the AIF endowment to have $700 million by now, but the Budget was silent on whether the government intends to honour its original commitment.

“We are somewhat hampered in what we are able to do. The size of our responsibilities (all science and engineering disciplines) is enormous,” he says. “It’s become the cause for concern throughout the province. People are frustrated.”

Concern is also mounting over Alberta’s ability to match CFI funding of research infrastructure projects. Several from the last major CFI competition were not matched, and for the forthcoming CFI competition, it’s anticipated that up to half of the Alberta projects could go unfunded. The province has also stopped matching the CFI’s infrastructure support for Canada Research Chairs, a decision that means about $25 million must be obtained elsewhere.

“It’s a big shortfall and it puts Alberta at a huge disadvantage compared to our main competition,” says Bridger. “The CRC program provides $125,000 per chair which has to be matched and its now up to the universities to find the entire match. For the institutional awards, the province is only matching those within the government priority areas of energy, the environment, life sciences and information technology. That’s also been the policy for the last competition.”

REVIEW POINTS TO AREAS OF IMPROVEMENT

The frustration of the S&T community is reflected in a review of ASRA. The review was submitted May 15/02 and only released last month. Prepared by an international review committee (IRC) chaired by Dr Calvin Stiller (chairman and CEO of Canadian Medical Discoveries Fund), it is supportive of ASRA’s vision and the work it has completed in developing sector strategies. It commends ASRA and its “unique symbiotic relationship” with AIS and notes that several critical factors are required for its vision to be realized.

However, the IRC’s nine recommendations for how ASRA and the government can help to fulfill the province’s S&T potential cut to the heart of many weaknesses for which the S&T community have long sought remedies. They include:

• Strengthening the province’s ability to finance long-range projects;
• Identifying R&D objectives, obtaining long-term funding required and fully engaging the private sector;
• improving R&D planning and execution with key departments and foundations; * delivering an annual “State of the Union” address on innovation and science to Cabinet; and,
• sponsoring a high-level task force to identify mechanisms to increase involvement of the private sector in R&D and technology commercialization.

It was the last recommendation that prevented the report’s submission to government on December 15/01 The government asked the IRC to clarify and validate the recommendation on boosting private sector R&D and commercialization — a process that involved extensive consultation and re-writing that took another six months.

It’s easy to see why the province wanted to be sure the recommendation and the IRC’s observations were endorsed by the private sector. It describes this area of innovation as the “single most important weakness in the Alberta innovation system” and called for the introduction of “measures such as tax and investment credits”

“Undeveloped intellectual property leaves Alberta with significant advantage to the Province.,” states the report. “This could only happen in a region that has the luxury of giving away the undeveloped value created from its first-class science, because it has another source of short- and medium-term income (oil production).”

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