STI investments deferred as Budget focuses on balancing books, middle-class electioneering

The federal Budget's lengthy list of science, technology and innovation (STI) initiatives obscures a lack of short-term financing as the government focuses on balancing its annual deficit and gears up for a fall election. Funding for the majority of STI commitments have been deferred to future years or sourced from existing funding. Of the $1.4 billion committed to support advanced research and manufacturing, just $115 million is booked for FY15-16, slowly ramping up to $396 million by FY19-20.

The National Research Council (NRC) was one of the few big winners in Finance minister Joe Oliver's April 21st Budget while the losers were the granting councils, particularly their support for discovery research. Nearly all of the $46 million the granting councils received is targeted and isn't scheduled to flow until FY16-17.

The absence of new funding for fundamental research has amplified concerns that the government's support of Canada's (largely academic) research base is taking a back seat to industry-focused STI measures targeting automotive, aerospace, forestry, mining and manufacturing.

The government took several actions to generate A $1.4-billion surplus for this year, including a decrease in its annual contingency fund from $3 billion to $1 billion, the sale of its General Motors shares, use of surplus Employment Insurance funds and the controversial reduction of sick leave benefits for federal civil servants, prior to an agreement being reached with the public service union.

While the NRC did not receive the Budget's largest funding commitment - that was reserved for the much-anticipated refunding of the Canada Foundation for Innovation (CFI) - it was one of the few STI organizations to receive funds in the current fiscal year. The NRC will receive $119.2 million over two years, enabling it to "continue fulfilling its new role as Canada's research and technology organization by supporting business innovation initiatives across Canada".

The Budget also referenced the NRC's new Factory of the Future (FoF) program, which includes a $104-million commitment for major upgrades, acquisitions and repairs. The new program was announced last November by prime minister Steven Harper as part of a $380-million package for federal laboratories and research facilities (R$, November 27/14).

The NRC declined to provide any further details on either the FoF or the Budget's two-year funding extension to support its ongoing transformation.

Exceptions to the Budget's general deferment/reallocation trend included new initiatives like the Canadian Centre for Aging and Brain Health Innovation and agencies whose funding expired March 31/15, namely CANARIE and the Council of Canadian Academies (CCA). CANARIE received $105 million over five years while the CCA received $15 million over five years (compared to its original $30-million, 10-year funding allocation in 2005).

TRIUMF

TRIUMF also received a $45-million funding boost starting this year as a top-up to the $222 million over five years it received in the 2014 Budget (R$, February 24/14). The additional funding will allow the Vancouver-based physics laboratory to more fully implement its 2015-2020 strategic plan. That includes construction of its new Advanced Rare IsotopE Laboratory (ARIEL) that uses "superconducting accelerator" technology to deliver rare, short-lived exotic isotopes for use in simultaneous and multiple experiments (see page --).

Previously announced but included in the Budget is Canada's $243.5-million, 10-year commitment to the Thirty Meter Telescope with $25 million booked for the FY just ended (R$, April 16/15).

Canada Foundation for Innovation

The CFI received $1.33 billion over six years beginning FY17-18. The advance notice allows the CFI ample time to mount major competitions and firm up collaborations with other STI organizations such as Compute Canada. The Budget announced that some of the CFI's new funding ($75 million) will support a $100-million digital research infrastructure commitment, with the remaining $25 million coming from the CFI's unallocated interest income.

A new Digital Research Infrastructure Strategy includes policies on research data management and storage and provides a coordinated, a long-term approach to the funding and provision of networking, high-performance computing, and software tools. The strategy will also "promote coordination among the federal agencies involved in the delivery of digital research infrastructure and will help to optimize ... investments in digital research infrastructure".

Automotive

The automotive sector in vote rich southern Ontario received $100 over five years to create an Automotive Supplier Innovation Program (ASIP). ASIP will receive $50 million over three years, sourced from the existing Automotive Innovation Fund and $50 million in new funds starting in FY18-19. The program is intended to strengthen the sector's parts supply base, create "a favorable environment for automotive research and development" and provide opportunities for firms to enter global supply chains. It will offer cost-shared support for product development and technology demonstration projects.

ASIP aims to fill a gap between early-stage basic research and pre-commercial development by funding up to $10 million for activities such as prototype development, process engineering, and pre-commercial product testing and validation. Smaller companies must provide 20% of a projects costs.

The Budget also provides a one-time cash infusion of $65 million over four years for business and industry associations to engage with "willing post-secondary institutions to better align curricula with the needs of employers". A pilot project between Canadian Manufacturers & Exporters, Siemens Canada and several post-secondary institutions is aimed at developing a new curriculum to support advanced manufacturing skills certification. Further rollout will see funds used for industries such as mining and forestry and engaging smaller companies, providing graduates with skills to enter the workforce.

Natural Resources Canada

NRCan was the beneficiary of three industry-focused initiatives requiring federal R&D expertise. The department's Forestry Innovation Program and Expanding Market Opportunities Program receives $86 million over two years in extension funding beginning FY16-17 (R$, March 26/15).

NRCan also receives $22 million over five years for renewal of its Targeted Geoscience Initiative, with $1 million in FY15-16 and peaking at $7 million in FY17-18. GIS provides critical knowledge and expertise for companies to seek out deeper mineral deposits and works in partnership with industry, universities, the provinces and territories.

The third funding announcement for NRCan provides $23 million over five years to "stimulate the technological innovation needed to separate and develop rare earth elements and chromite". Rare earth elements are critical for the production of permanent magnets, consumer electronics and other high value-added high-tech products, while chromite is an essential ingredient in steel and steel and other alloys essential for producing gas turbines, aircraft engines and other high temperature devices. Canada has significant quantities of these materials and sees a major global market opportunity in their exploitation.

Granting Councils

For the first time in recent memory, the budgets of the granting councils will remain flat this year, with announced increases taking effect in FY 16-17. At that time, the three councils will collectively receive $46 million (including $9 million for indirect costs) - the same amount omitted in the 2014 Budget.

The Natural Sciences and Engineering Research Council (NSERC) will receive a $15-million boost to its annual budget with $10 million devoted to "collaborations between companies and researchers" in the four priority areas outlined in the updated Science, Technology and Innovation Strategy. The remaining $5 million will be used to boost funding for the College and Community Innovation Program. NSERC will also realign its business innovation programs as part of streamlining exercise that will integrate its university and college programs.

The Budget further specifies that NSERC will develop an on-line business portal to provide industry with a single point of entry and connect to the NRC's Concierge Service. In addition, NSERC, NRC and the Mitacs internship program are charged with collaborating "to streamline and integrate application and review processes, enabling interested applicants and companies to more easily access a comprehensive range of available innovation support".

The Social Sciences and Humanities Research Council is required to devote its $7-million funding increase to support collaboration between academic researchers, businesses and other partners.

The Canadian Institutes of Health Research (CIHR) will use $13 million of its $15-million budget enhancement to expand its Strategy for Patient-Oriented Research (SPOR) (R$, November 26/13). The remainder ($2 million) will go towards research to combat anti-microbial resistant infections.

Also in the health area, the Budget contributes $42 million over five years beginning this year towards the $100-million Canadian Centre for Aging and Brain Health Innovation at Toronto's Baycrest Health Services. The balance will be provided by Baycrest and its partners which include IBM, Johnston & Johnston, Rexall and the Ontario Brain Institute.

While collaborative health research is valued as an integral component of the innovation ecosystem, the stagnation in support for fundamental research is raising alarm bells.

"Without continued, predictable, consistent and indexed investment in discovery research we well stall ... No government has yet figured out the right proportion of investing along the continuum. We need a plan," says Deborah Gordon El-Bihbety, president of the health research advocacy organization Research Canada. "For discovery research, we're seeing a decrease in successful applications. We've got some problems with the system."

A Budget analysis by Higher Education Strategy Associates says the absence of new funding for the granting councils means researchers are losing to inflation. Since the peak of funding in 2009, CIHR funding has dropped 9.1% in constant dollars, while the declines at NSERC and SSHRC are 8.4% and 9.4% respectively.

Even the new funding for CFI is less than it appears as the $1.33 billion is spread over six years averaging $222 million annually. That's far less than the $----million average the CFI has received in the past.

Space and Aerospace

The Canadian Space Agency (CSA) will receive $30 million over four years to participate in the Advanced Research in Telecommunications System (ARTES) program of the European Space Agency (ESA). As the only non-European member of ARTES, the CSA will use the funding (which kicks in next year) to help Canadian firms boost their participation in global supply chains, open new markets and support Canada's role in space.

The Budget taps the Strategic Aerospace and Defence Initiative for $6 million in FY 16-17 to fund an aerospace supplier development initiative modelled on the successful MACH program pioneered by Aéro Montréal. The initiative is intended to enhance the aerospace supply chain's competitiveness and performance in conjunction with the Aerospace Industries Association of Canada and other stakeholders. A key feature of MACH is the sponsorship of smaller firms by large equipment manufacturers to improve performance, identify gaps, and determine the actions necessary for improvement.

AECL

The continuing transformation of Atomic Energy of Canada Ltd receives $72.3 million this year to maintain operations at its Chalk River Laboratory. The funds are being provided "on a cash basis" and will also be used to meet licensing requirements and other regulatory obligations. An announcement of a new contractor to operate the laboratories - now named Canadian Nuclear Laboratories - is expected later this year (R$, November 12/14).

Mitacs

Mitacs received a major boost in its support of graduate-level industrial research and development internships with a $56.4-million increase for its Accelerate program. Starting in FY16-17 and spread over four years, the new funding will double the number of internships by 2020. The announcement comes on the heels of a funding boost for the Mitacs Elevate program for post-doctoral fellowships to help train business managers and researchers. Earlier this month, the government committed $10 million over four years, augmenting the $8 million over two years provided in last year's Budget.

Entrepreneurs and Women

The Budget also found funding for entrepreneurial training, committing $14 million this year for the Canadian Youth Business Foundation - rebranded as Futurpreneur Canada in 2014. The 20-year-old organization will use the money to assist young entrepreneurs (18-39) in launching new businesses with pre-launch coaching, business resources and start-up financing. The funds are over two years beginning this year and contingent upon securing matching funds from non-federal sources.

The budget also directs the Business Development Bank of Canada to make available $700 million over three years for the financing of women-owned businesses, hold a national forum for women entrepreneurs and provide them with tools, networks and connections via the new Action Plan for Women Entrepreneurs.

Full coverage and reaction to the federal Budget will be available in the next week's issue of RE$EARCH MONEY.

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