Monday, February 2, 2009

Canadian Brain Drain to continue


The Canadian science community, hoping to harness energy from the southern winds of change, had some long faces as the Federal Budget was announced on January 28. As President Obama finds momentum for his $16 billion radical cash infusion into R&D, innovation, and academic infrastructure, the Canadian conservative government seems to be of the opinion that scientific research should not cost so much and investing in the blue collar economy is the best way to get out of recession. So lacklustre was the 2009 budget that the biggest headline seems to be a 15% Temporary Home Renovation Tax Credit! For all the Conservatives reading this – No, I have not forgotten about the miserly TFSA or the extra $500 you will save on taxes only to be ripped off at the gas stations. I am glad you lot are so easy to please. But, I digress – lets stick to what has been allocated to life science initiatives.

Here are the numbers:
• $750 million for the Canada Foundation for Innovation (CFI)
• $500 million for Canada Health Infoway
• $87.5 million for Canada Graduate Scholarships disbursed by NSERC, CIHR, SSHRC (over 3 years)
• $3.5 million for Industrial Research and Development Internship program (over 2 years)
• $200 million for the NRC Industrial Research Assistance Program (over 2 years)
• $250-million for deferred maintenance at federal research labs (over 2 years)
• $2 billion to “repair, retrofit & expand” infrastructure at universities & colleges.
• $80 million for Transformative Technologies program
• $1.5 billion each to Export Development Corporation & Business Development Bank of Canada.
• The taxable income threshold for refundable Scientific Research & Experimental Development (SR&ED) tax credits increased from $400,000 to $500,000

Where is some of this money coming from you ask? How about:
• $27.7 million cut from the NRC budget
• $147.9 million cut from the NSERC, CIHR, SHRC (over 3 years)
• $167.8 million cut from Health Canada & Public Health Agency of Canada (over 3 years)
• No new funding for Genome Canada

Upon initial review, one could say that it is a surprisingly decent “stimulus” package to spur on the knowledge based economy. But like most things in our society, the fine print always makes us cringe. Most of the increased funding comes with significant caveats, while the rest comes simply through re-allocation of funds from the total organisational budget to more focused initiatives.

For instance:
• The $2 billon earmarked for infrastructure projects can only be allocated if 50% of project costs are funded through other sources. Yet another great excuse for universities to raise tuition.
• Of the $750 million received by the CFI, $600 will be reserved for new competitions in “support of areas of priority identified by the Minister of Industry”. The conservative agenda will certainly be promulgated through this minor detail (no word of course on whether this is a use it or lose it deal).
• The money for maintenance of federal labs will be used to modernize government labs that submit a “realistic business plan” for their transfer to university, business, or non-profit group. In what seems to be a precursor to privatization of healthcare, the present government is clearly divesting interest in federally funded research capability.
• The cuts to Health Canada & PHAC will be achieved through streamlining operations it seems. Now while I certainly do believe both agencies could become a lot leaner, I also believe that both are understaffed. I hope the governments “strategic review” is not innuendo for layoffs.
• The provisions made to help small & medium life science enterprises secure capital is simply abysmal compared with other nation’s plans. France has already announced a tripling of their equivalent tax credit program, Norway has created a new fund valued at almost $500 million solely for biotechnology, the UK is currently working to confirm a new national fund specific to life sciences and the US is contemplating allowing the sale of tax losses for cash infusion to small emerging technology based companies.


This is not stimulus, and it certainly is not based on forward looking public policy. It is clear that the government intends to make the disbursement of allocated monies as challenging as possible. What they don’t seem to realise is that Canada will be falling behind the rest if we continue to ignore the competitive environment other nations will be adopting to help grow and stimulate their knowledge based industries that are vital to economic recovery in both the short and long term.

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