S&T progress made over last decade of S&T reveals major challenges on horizon

From the RE$EARCH MONEY archives

What a difference a decade makes. Since the dawn of the new millennium, science and technology in Canada has experienced both the exhilaration of increased investment in research capacity and the frustration of interrupted strategies and an apparent decline in priority at the federal level. The decade witnessed remarkable advances in Canadian S&T despite being bracketed by economic shocks that stalled gains in industrial R&D. At the same time, governments at various levels struggle to develop strategies to stimulate the business sector while taking into account the rapidly global nature of innovation.

As Canada's primary outlet for news and analysis of R&D, RE$EARCH MONEY has reported on the key trends and events shaping the national innovation system. Between 2000 and 2009, the image of Canada as a potent source of research and technological innovation was significantly enhanced, only to have that hard-won reputation threatened by more aggressive nations and the inability of the federal government to formulate and implement a robust S&T strategy. Emphasis on the knowledge economy has given way to leveraging Canada's dominant traditional strengths in natural resources.

RE$EARCH MONEY has combed through its archives to identify the high and low points of the Canadian S&T enterprise and compiled a list of noteworthy, hot-linked headlines so that readers can revisit the stories that comprised the decade (see opposite page). A more comprehensive list of highlights can be found on-line at www.researchmoneyinc.com.

A great start

The beginning of the decade started remarkably well with the birth of several key initiatives stemming from a build-up in R&D investment both in academia and industry. Genome Canada, the Canadian Institutes of Health Research (CIHR), Alberta Ingenuity and the Atlantic Innovation Fund were all launched in 2000. Technology Partnerships Canada was increasing assistance to business in all sectors with interest-free loans for risky R&D projects designed to penetrate global markets.

Then finance minister Paul Martin called for a massive increase in investments in research and education. After the cost-cutting and budget balancing of the 1990s, the federal government was ready to lead the charge in placing Canada on the international map, challenging the nation to move from 15th to 5th in R&D expenditures as a percentage of gross domestic product.

Sadly, federal labs were not as fortunate. After suffering major cuts related to program review in the mid-90s, there was little attempt to reinforce the research capacity of national laboratories, with line departments and agencies such as the National Research Council (and its Industrial Research Assistance Program) receiving mainly targeted or temporary funding.

With successive majority governments, the Liberal administration appeared to take the challenge of creating a knowledge-based economy seriously. With industry posting impressive R&D hikes, it focused on university-based research pumping billions of dollars into the Canada Foundation for Innovation and Genome Canada. The granting councils also enjoyed hefty increases, albeit not enough to satisfy the demand for projects deemed worthy of funding.

Emerging gaps in the research funding system were not immediately or inadequately addressed, however, leaving institutions scrambling to pay for the operating costs associated with their enhanced research capacity. Policies and programs targeting the movement of research results into the marketplace were often confused, leaving the government open to criticism that it wasn't sufficiently concerned about the return on investment of public dollars.

On the policy front, the decade began with two key federal advisory bodies — the Advisory Council on Science and Technology (ACST) and Council of Science and Technology Advisors (CSTA). They were joined in 2004 by the Office of the National Science Advisor — a position held by Dr Arthur Carty. The NSA was immediately beset with problems. Underfunded and lacking in sufficient authority, it struggled for four years, shunted from the Privy Council Office to Industry Canada before being killed by the Conservative government in early 2008.

The demise of the NSA coincided with a new body — the Science, Technology and Innovation Council (STIC) headed by Dr Howard Alper. In contrast to the CSTA, ACST and NSA, however, STIC conducts its business in private and its reports to government are not made public.

The decade also saw the creation of another advisory group — the Council of Canadian Academies — which received $30 million over 10 years in 2005 to conduct expert panel assessments at the behest of government. While most of its reports have been well received, it has been criticized for a lack of flexibility in what aspects of S&T it decides to assess and for not funding expert panels conceived by the three learned societies that comprise its base.

government changes hands

With the end of the 13-year rein of the Liberal Party in 2006, the years of hefty funding hikes to universities and direct business assistance programs began to ease. New policy directives emphasized the attractiveness of the overall economy over targeted intervention, in contrast to competing nations that selected sectoral strengths and supported them. By the end of the decade, dreaded terms such as brain drain and hollowing out made their re-appearance. In 2008, several events and political decisions resulted in an outpouring of criticism both nationally and internationally. In just one example, an attempt by MacDonald Dettwiler & Associates to sell their space assets to a US firm created a storm of controversy (MDA's space assets were heavily subsidized by public dollars) resulting in an unprecedented decision to veto the divestment.

Businesses were still registering sporadic R&D increases for most of the 2000s but the decline of top-ranked Nortel Networks Corp and the economic crisis of 2008 found that there were few levers remaining to assist the flagging tech sector. Other than IRAP and the scientific research and experimental development (SR&ED) tax credit program, businesses outside of the aerospace and defence sectors were left largely to their own devices — a predicament made worse by the collapse of the venture capital industry. As a result, industry's share of total R&D output declined, several high-profile firms were sold to foreign interests and Canada's GERD/GDP ratio fell to its lowest level in 10 years.

Financial entities such as the Business Development Bank of Canada has entered the breach with new funds targeting early-stage and follow-on financing, but it's still too soon to determine their impact.

provinces to the fore

With the declining influence of the federal government on S&T, the provinces have stepped into the breach, both with strong regional policies and considerable funding to boost the ability of their jurisdictions to compete globally. Virtually every province developed a new research and innovation strategy, with the larger jurisdictions devoting large sums to bolster research and commercialization capacity.

Alberta, Ontario and Quebec have been particularly active in formulating new S&T policies and backing them with new programs and financial resources. Each of these provinces has recently created private sector-led funds of funds to stimulate the financing of emerging and growing technology companies.

With more at stake, the provinces have been keen to coordinate efforts with their federal counterparts. But since the change in government, attempts to hold joint strategy sessions have failed.

As Canada's efforts to build S&T capacity appear somewhat stalled, events globally are creating concern in several circles. With the movement of India, China, Brazil, Russia and others up the R&D food chain, technology practitioners and policy makers are increasingly challenged with finding niches where Canada can excel and succeed.

After years of inaction, international S&T appears to be gaining some traction. Collaborations with California, India, China, Brazil and Israel are currently in play. But their scale must be dramatically expanded if they are to have a significant influence on future Canadian productivity and prosperity.

How much enthusiasm (or fiscal room) the federal government has for moving S&T up its priority ranking reminds to be seen. The March 4th Budget could make or break many initiatives both existing and planned.

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