Ontario Budget 2019 takes "slice-and-dice" strategy to research funding

The impact of the Ontario’s Progressive Conservatives first budget on research and innovation is becoming clear: A slew of cutbacks, amounting to at least $300 million, are putting major research programs and innovation initiatives at risk and will cause the closure of others.

Many of the funding reductions were buried in the province’s Estimated Expenditure tables and are only slowly becoming public. They span multiple ministries, but a 20% budget reduction to the Ministry of Economic Development, Job Creation and Trade - the result of a merger of the Ontario Liberals’ Ministries of Economic Development and Growth, and of Research, Innovation and Science - led to many of the cuts.

Those affected programs support research in biomedicine, health systems and policy, mental health and addictions, artificial intelligence, environmental science and technologies, as well as incubators, accelerators, scale-up programs and business support programs.

The cuts—and the near-clandestine way they have been rolled out—have left some members of the research community reeling. Others are struggling to discern a strategy that explains why research areas in which Ontario excels have been targeted.

“At the University of Toronto, we understand the province’s fiscal position and continue to assess the impact of these cuts with concern about how they may impact Ontario’s growth in the future,” Dr. Vivek Goel, University of Toronto VP of Research and Innovation, said in a statement to RE$EARCH MONEY. “Public investments to date toward research in artificial intelligence and regenerative medicine have positioned Ontario as a world leader in these fields. This has leveraged major private-sector investments in both of these emerging industries that in turn have led to job creation and growth for Ontarians. We have only begun to see the tremendous benefits of Ontario’s leadership in these areas.”

The cuts to artificial intelligence are concerning as they come at a time when many countries such as South Korea, China and Singapore are making massive public investments. Closer to home, the centre-right Coalition Avenir Québec government allocated $329.3 million in new funding in its inaugural budget towards AI across a wide range of activities from translation and applied research to training.

In an interview, Bryan Evans, a professor of political science at Ryerson University who has studied this year’s budget, said, “We have a budget which is unique in my experience anyway, in that it appears to be informed by a strategy of opaqueness linked to a strategy of slice and dice.”

“The cuts are all highly targeted. Part of the thinking behind that can be that you don't want to mobilize a broad opposition,” added Evans, who worked as policy advisor for the province of Ontario from 1987 to 1999.

In addition to the cuts, the province announced last fall in the 2018 Ontario Economic Outlook and Fiscal Review that it is reviewing support for research and development, including R&D tax incentives like the Ontario Innovation Tax Credit (OITC), an 8% tax credit on R&D expenditures for small- and medium‐sized enterprises. According to the budget, "the review will consider the appropriate level of R&D tax support for business, taking into account research findings on the cost and benefits of R&D tax credits."

Good and Bad News

Bradly Wouters, executive VP of Science and Research at the University Health Network (UHN), acknowledges that while anxiety over research funding is running high in the face of a new government focused on deficit-cutting, the budget contained both good and bad news for UHN.

For example, funding for the Ontario Research Fund (ORF) increased slightly from $58 million in 2018 to $67 million in 2019. ORF is the province’s largest independent research fund, covering operational and infrastructure costs for research institutions.

In a pre-budget submission, the Council of Academic Hospitals of Ontario urged the government to maintain the current funding level for the ORF in 2019-2020 “to support the current government’s priorities of strengthening the economy and creating jobs for Ontarians.” The Council's members, which include UNH representatives, conduct 80% of publicly funded health research in the province.

The province informed UHN last week that it is launching the next Ontario Research Fund - Research Excellence competition, Wouters says. He is still awaiting information about the Research Infrastructure competition, which leverages funding from the Canada Foundation for Innovation to cover the costs of research facilities and equipment.

The budget also dedicates funds to new initiatives that will affect the research community. For example, it committed $40 million over three years to strengthen competitiveness and innovation in the automotive sector as part of a new 10-year auto plan. The province has also charged an expert panel, led by Jim Balsillie, retired chairman and co-CEO of Research in Motion, to deliver an action plan for a provincial intellectual property framework. The panel's recommendations are expected in December.

In contrast to the ORF, the Progressive Conservatives cut the Health System Research Fund (HSRF), which is administered by the Ministry of Health and Long-term Care, by $21 million.

HSRF primarily supports health-policy relevant research and knowledge translation through program awards and specialized research centres, including the Institute for Clinical Evaluative Sciences based in Toronto.

As a result of the cuts, 14 research projects funded with $28 million over three years in 2017-18 are in jeopardy. The projects are focused on some of the Ministry’s key priorities, including health quality and safety, mental health and addiction, and long-term care. One is an ongoing clinical trial focused on improving pain management and opioid practices post-surgery. Wouters says UHN is looking for a way to finish the trial.

He also underscored the strategic importance of the health system performance research, which “is designed not only to change outcomes but also the cost curve and to give us new therapeutic options. So the investment in research is inseparable from the way we think about how to fund health care. It's not a choice.”

Catalyzing Growth

In the 2019 budget, the province also cut funding to the Structural Genomics Consortium (SGC), a global not-for-profit, public-private partnership supporting the discovery of new medicines. The SGC operates seven laboratories globally, including one at the University of Toronto, where provincial funding was used to carry out open drug discovery.

CEO Aled Edwards, who is on leave from the University's Department of Molecular Genetics to run the SGC, confirmed the cuts in an email to RE$EARCH MONEY, but did not disclose how much funding was lost.

He highlighted that SGC has consistently leveraged provincial funds to attract private investment, indicating that for every $1 the province has spent on the SGC, the private sector spent $3 in support of Ontario science. The SGC scored a high-profile success early this year when biotechnology company Celgene made a US$40-million upfront investment in Canada as a direct result of research conducted by SGC. The deal could eventually be worth as much as $1 billion.

“I cannot fault the Ontario government for making a decision – they need to bring finances under control. But they must appreciate that they are sending what appears to be a clear signal that they are not supportive of our kind of industry-led research organization,” said Edwards.“The other jurisdictions in which we operate (EU, US and Brazil) are very supportive.”

Evans’ assessment of the budget cuts is similar. “There's a growing sense that this government doesn't understand the relationship between public policy, public money and public investment into research and development. Whereas almost every other government in the world understands that government plays a strategic role in financing, at least in part, scientific research and development, the Ontario government appears to be an anomaly,” he said.

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