Targeted funding flows to research base but commercialization measures lacking

Federal Budget

The federal government has lifted the lid on funding for research and innovation with $1.3 billion in new spending focused largely on the university research base and new environmental technologies. The measures in the populist-yet-strategic March 19 Budget provide a window on the forthcoming S&T Strategy, which was initially planned for release along with the Budget. It is now expected in the coming weeks.

The Budget brings relief to several organizations that were rapidly running out of funding such as the Canada Foundation for Innovation, Genome Canada and CANARIE (see page 3). It also provides the first details of the government's plan to transfer non-regulatory federal laboratories to universities (see page 4).

Notably absent were any measures relating to the National Research Council's proposal for a new institute in the Toronto area, enhancements to the Scientific Research and Experimental Development (SR&ED) tax credit program or a replacement program for Technology Partnerships Canada. SR&ED is the top priority of the business community, while the aerospace industry has been pushing for a replacement to TPC.

There was also disappointment that Finance minister James Flaherty did not include any strong commercialization initiatives, as recommended by the Industry Canada Expert Panel on Commercialization (R$, April 28 & June 22/06).

"It's more than tokenism but nothing aggressive," says one observer. "(Commercialization) is not a priority when you look at the thrust of the Budget."

A major new competitive program purportedly aimed at bolstering institute-based research and commercialization is also raising concern that the traditional method of choosing research through peer review is being replaced by a vague selection process based more on politics and lobbying than excellence.

The $300-million Centres of Excellence in Commercialization and Research Program (CECRP) will unfold in two tranches. It begins with the funding of seven selected research centres with $15 million each in FY07-08 (see chart) and segues into a major $195-million funding competition later this year. The seven centres can compete along with other centres for additional support. All government funds are to be matched from other sources.

The initial slate of CECRP centres was chosen by officials from the Industry and Finance departments in areas "where Canada has the potential to be a world leader" and where there is strong research and/or commercialization potential. That may help to explain why some of the selections are focused on university-based research, often with little economic potential.

Budget documents say proposals will be judged on the basis of international peer review and private sector advice. The Networks of Centres of Excellence (NCE) program may be tagged to deliver the program, but officials would only confirm that it is one of two mechanisms being explored.

selection process undefined

The CECRP concept is being fleshed out by Industry Canada. But the prospect of research institutes being compelled to compete based on new criteria has raised alarms within the research community.

"If the new ground rules are that you have to lobby to get funding, it will open the floodgates," says Dr Ronald Worton, outgoing CEO and scientific director of the Ottawa Health Research Institute and board chair of Research Canada, a national health research advocacy organization. "It's a shift in philosophy. Instead of providing enough funding through the granting councils, the government will do it selectively by putting it into centres of their choice … We're mystified by this approach of targeted areas. We don't know why or how they were chosen."

The CECRP is being introduced as the Budget delivers modest increases to the three granting councils and indirect costs of research program that barely cover the rate of inflation. The Canadian Institutes of Health Research (CIHR) along with the Natural Sciences and Engineering Research Council each receive a $37-million annual increase to their base budgets while the Social Sciences and Humanities Research Council receives $11 million.

The increases come with the proviso that the councils adopt a "more strategic approach and increasingly support multi-disciplinary collaborative research". The government is also dictating that the new funding be targeted towards energy, the environment and information and communications technologies (NSERC), health sciences (CIHR) and management, business and finance (SSHRC).

While all the granting councils are feeling the budget pinch, CIHR in particular is suffering from extremely low success rates in its major competition for research operating grants. CIHR president Dr Alan Bernstein recently issued an open letter warning of the agency's funding dilemma (R$, January 18/07), following a recommendation from the Finance Standing Committee to boost CIHR's budget by $350 million over three years. Research Canada supports the recommendation and Worton says it is based on giving CIHR the resources to fund all proposals ranked excellent through peer review.

"In the latest competition the grants were smaller (than requested) and there was an abysmal success rate of 16 per cent. I have scientists in my institute that achieved excellent ratings for their proposals and have not had their grants renewed in the last two rounds. It's devastating," he says. "We will start losing our top scientists. Many are already looking around … The latest increase does very little."

more scholarships

The Budget contains better news for universities beyond the granting councils with additional funding for graduate scholarships and enhanced post-secondary transfers to the provinces. The Canada Graduate Scholarships program is being increased by $35 million over two years to provide 1,000 new scholarships — 400 for CIHR, 400 for NSERC and 200 for SSHRC. The level of support remains the same — one-year awards of $17,500 for master's level students and three-year awards worth $35,000 annually for doctoral students.

The Canada Social Transfer is also being boosted by $800 million annually beginning in FY08-09. Details will be worked out in the interim in consultation with the provinces and they are subsequently slated to increase 3% on an annual basis.

There was also an encouraging signal to Canada's colleges with the decision to make NSERC's pilot College and Community Innovation Program (CCIP) permanent. Up to 25 college-industry projects will be launched once the program is up to speed, with $48 million over five years. NSERC announced the program pilot in 2003 and has provided $1.8 million to support six projects (R$, March 3/04).

federal labs

The contentious issue of transferring federal labs to universities was also addressed in the Budget with the announcement of an independent expert panel reporting to Treasury Board on what types of labs should be eligible. Officials say National Research Council institutes may be among the labs recommended for transfer. The most likely candidate is the National Institute of Nanotechnology, jointly operated by the NRC and Univ of Alberta. The expert panel will also be responsible for identifying five labs "that could be early candidates for transfer", suggesting that the process could stretch over a number of years.

One lab that has been in the midst of a lengthy transfer is the Materials Technology Laboratory (MTL) of Natural Resources Canada's CANMET division. The budget allocates $6 million in FY07-08 to assist in the lab's transfer to McMaster Univ's Innovation Park in Hamilton — a process one official estimates will cost $40 million.

MTL is Canada's largest research centre dedicated to metals and materials fabrication, processing and evaluation. With a staff of about 120, it is considered an ideal fit with the Hamilton region's industrial mix and the research strengths of area institutions. The decision to transfer the lab was approved by the previous Liberal government prior to its defeat (R$, July 22/05).

business-led NCEs

Changes to the Networks of Centres of Excellence (NCE) program — first announced in the government's Advantage Canada document — will see the creation of a new tier of business-led Networks. The Budget says $11 million will be allocated for the new NCEs. But it adds that funding will be drawn from "existing sources of funds", presumably the program's $82-million annual budget as current NCEs expire. A private sector advisory board will be struck to lead the selection process and all new networks must be industry led.

New funding will flow to the NCE program for industrial R&D internships. Modelled on a program currently being run by the MITACS NCE, the internships will receive $1.5 million in FY07-08 and $3 million annually thereafter to support up to 1,000 one-semester internships, partnering graduate and post-doctoral students with companies to engage in applied research.

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