Science funding in Canada cut sharply

By Douglas Powell

For the first time in more than a decade, science funding in Canada has been significantly curtailed, with cuts of at least 15% over the next three years and possibly more to come.

"We will be putting government activities on a commercial basis wherever that is practical and productive," Finance Minister Paul Martin said when presenting his budget to the House of Commons in late February. "In the future, our science and technology efforts will be concentrated more strategically on activities that foster innovation, rapid commercialization and value-added production...to stretch government's science dollars further and more effectively."

Computing research emerged largely intact, as only sciences that can be translated into employment, particularly applied research, will be favored. According to Industry Canada, revenues for the information technology sector in Canada increased from $43 billion (Canadian) in 1992 to $49.5 billion in 1993. The industry employs 343,000 people, up from 317,000 a year earlier.

IDC Canada, a Toronto-based market research company, pegs the value of the Canadian IT sector at $19 billion, including computer hardware, telecommunications equipment, and packaged software and services. The much larger Industry Canada figure includes consumer electronics, office equipment and electronic components. Still, using the conservative IDC numbers, the Canadian IT sector grew by 6.7% in 1994.

For a government mired in debt, those numbers are welcome news. Within government departments, science activities were reshaped with a series of cutbacks, the introduction of user fees and a move toward industrially oriented research. Of the 54 programs administered by Industry Canada, nine have been terminated, including scholarships and technology outreach programs, and 34 will not be renewed. Only 11 will continue, including Canada's venture on the information highway, the Canadian Network for the Advancement of Research, Industry and Education (CANARIE).

Providing a "vision"

Two days after the budget was presented, Junior Science Minister Jon Gerrard said at the annual meeting of the Information Technology Association of Canada, "First and foremost, our federal government must provide a vision. In the area of information technology, we have provided a vision of a more open society in which we build on Canadian strengths to improve employment and innovation, to improve Canadian content and culture and to ensure universal access to Canadians at a reasonable cost."

Indicative of the jobs-from-science mantra sweeping Ottawa, Gerrard said CANARIE will generate new jobs and investment far in excess of the federal government's contribution. "The estimated incremental sales resulting from CANARIE R&D activity are $2.3 billion over a period of about 25 years. The incremental employment over the 10-year period from 1993-2002, directly attributable to CANARIE, is some 24,000 person years," he said.

Gerrard did not discuss the source of these numbers. Annual increases of 1.5% for university granting agencies, which were promised in last year's budget, are gone. Instead, the Natural Sciences and Engineering Research Council (NSERC) and the Social Sciences and Humanities Research Council (SSHRC) are facing 13% and 12% reductions respectively by 1997-98.

The Medical Research Council is facing a 12% shortfall. The cut will translate into fewer grants and stipends for research and training and a reduction in research infrastructure support. An MRC spokesperson said, "We're already funding the cream of the cream."

Within the National Research Council, which is a network of government laboratories, reductions will total 15% by 1997-98. When coupled with previously planned reductions, the cuts total $76 million, with $40 million gone this year.

"I'm disappointed. We've certainly taken a hit," said NRC President Arthur Carty. "With limited resources you just can't afford to spread yourself too thin."

The cuts to NSERC, SSHRC, the Canadian Space Agency and the National Research Council total $321 million over three years, a 23.6% decrease from 1994-95 expenditures. The good news is that, relatively speaking, these cuts are small.

Budget of restraint

Canada boasts the worst debt load in the Group of Seven industrialized nations, except for Italy, when measured against gross domestic product. The weakened Canadian dollar (trading at about $0.71 US) and a runaway national debt now totaling $500 billion forced Martin to create a budget of restraint. The budget includes spending cuts of $13.4 billion over two years and the elimination of 45,000 civil service jobs, about 15% of the government payroll.

The impact of the science cuts on specific programs is unclear. Federal S&T activities, totaling $5.8 billion in 1994-95, are spread over 18 departments. A 1994 report by the auditor-general of Canada was extremely critical of the federal government's overall science strategy, calling the present allocation of funds among various fields of science and technology "more incidental than the result of a well-formulated strategy."

In response, last year the government launched a major review of federal spending on science and technology involving consultation across the country and an internal department-by-department review. The results are expected in June.

"There hasn't been a science strategy for 30 years," said Bill Milliken, a spokesman for Industry Canada. While acknowledging the interdepartmental turf wars that have blocked such attempts in the past, he added that "a shortage of funds tends to focus things."

Martin's budget also takes aim at the $1 billion spent annually on R&D tax credits--especially the popular practice of claiming credits for upgrades to computer software and hardware--by tightening eligibility and launching a review of the entire system.

Banks and other financial institutions, including investment dealers, will not be able to collect federal R&D tax credits during this review. Last fall it was revealed that Canada's largest banks had filed $300 million in claims for R&D tax credits dating back to the mid-1980s, some for long-completed computer software upgrades. Banks had been eligible for a credit of 20% on their R&D expenditures.

Douglas Powell is a graduate student at the University of Guelph in Ontario.