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SUBMISSION TO HOUSE OF COMMONS STANDING COMMITTEE ON FINANCE

2002 PRE-BUDGET CONSULTATION

Presented by the Partnership Group for Science and Engineering

August 22, 2002

The Partnership Group for Science and Engineering (PAGSE) is a cooperative association of more than 20 national organizations in Science and Engineering, formed in June 1995, at the invitation of the Academy of Science of the Royal Society of Canada. The national organizations which comprise PAGSE include thousands of individuals from industry, academia, and government sectors. PAGSE works together, and in partnership with government, to advance research and innovation for the benefit of Canadians.

Member organizations of PAGSE provide core support for its meetings and activities. These include defining the economic benefits of research in Canada and the effects of research budgets, analyzing intellectual property issues and other potential impediments to improving academic-industry symbiosis, examining the international dimensions of research projects and associations, and informing decision makers about science and engineering and their importance to Canada.

PAGSE represents an extensive resource that, through contracts, can hold events and undertake studies and assessments of benefit to government departments and agencies, to non-government organizations, and to the general public. The Royal Society of Canada acts as the agent for PAGSE for any contracts or agreements involving PAGSE projects. PAGSE has the Committee to Advance Research, a university-industry committee, which addresses issues of considerable importance such as the study on "Setting Priorities for Research in Canada". In addition, in partnership with NSERC, a monthly breakfast meeting is held on Parliament Hill known as "Bacon and Eggheads", to inform parliamentarians about recent advances in science and engineering. There are also presentations co-hosted by Industry Canada and PAGSE, on trends in science and technology policy, by key decision makers from different countries. Each fall a symposium is organized on science and engineering issues - the theme for 2002 concerns international research collaboration and is entitled "Canada: A Partner in Global Science and Technology".

1. General Comments

Research and innovation are of genuine value in building on our existing knowledge-based economy. Research is a continuum from basic to applied, with developmental work raising new issues which need to be addressed by creative, basic research. The outcomes of these investigations enhance economic development, thus raising the quality of life for Canadians.

PAGSE applauds the portfolio of government of Canada programs established in the past five years including, amongst them, the Canada Foundation for Innovation, Canada Research Chairs, Genome Canada, and the significant contributions to the coverage of indirect costs - a watershed development. We also appreciate the increased funding which was provided to existing programs such as Technology Partnerships Canada and the Granting Councils.

By the recent papers on "Knowledge Matters: Skills and Learning for Canadians" and "Achieving Excellence: Investing in People, Knowledge and Opportunity", the Government is inviting Canadians to be partners in some bold initiatives which will serve as a springboard to positioning Canada amongst the leading nations in investment in research and innovation. PAGSE is enthusiastic about a number of key recommendations made in these papers.

2. Highly Qualified Personnel

Pivotal to Canada's strategy in research and innovation in industry, universities and government, is the need for an adequate number of highly qualified personnel. Towards this end, we concur with the recommendation, in Knowledge Matters, to increase the percentage of 25-64 year olds holding post-secondary credentials from 39% to 50% over the next decade. We also recommend that the training of technicians, across a spectrum of disciplines, is critical to the realization of any innovation agenda.

Students often shoulder considerable personal debt as a result of their education. PAGSE recommends changes to the student loan system, whereby a substantial proportion (50-70%) of student loans would become "grants" (hence "forgiven") on a prorated and progressive basis, for individuals who remain in, or return to, Canada in a productive professional capacity for a specified period after graduation.

Graduates with masters and doctoral degrees are central to the success of a knowledge-based economy. We agree with the recommendation in Knowledge Matters that admission of masters and doctoral students to Canadian universities increases by an average of 5%/year through to 2010. However, we highly recommend that "stock - taking" occur in 2005 to determine whether this strategy should be pursued, or whether adjustments are in order. PAGSE does have concerns about the receptor capacity for M.Sc. and Ph.D. graduates in different sectors. It would be irresponsible of government to provide major increases in funds to support the education and training of highly qualified personnel, if there is an appreciable shortfall in the capacity of industry, academia, and government to appropriately employ such graduates.

PAGSE contends that the level of support of graduate students and postdoctoral fellows is a matter of greater urgency, both in terms of recruiting students into science and engineering, and retaining them on a career basis rather than wholesale transfers to business, law, etc. Paying competitive scholarship/fellowship stipends is also key to Canadians staying in Canada. Consider, for example, the recent announcement by Gordon Brown, the U.K. Chancellor of the Exchequer, increasing the annual Predoctoral Scholarships from 24,000$ CAN (10,000 pounds) to 31,200$ CAN (13,000 pounds), and the annual value of Postdoctoral Fellowships from 40,800 CAN (17,000 pounds) to 50,400$ CAN (21,000 pounds). [By comparison NSERC Predoctoral Scholarships are $17,300 or $19,100/year (depending on level), and Postdoctoral Fellowships are $35,000/year.]

PAGSE highly recommends that the value of Predoctoral and Postdoctoral awards be increased by 50% over a two-year period.

3. Research in Industry

PAGSE considers the issue of in-house research in industry to be Canada's most pressing challenge in the area of research and innovation. Simply put, Canada performs at an uncompetitive level in industrial research. Indeed, Deputy Prime Minister John Manley, stated in Research Perspectives (a publication by the University of Ottawa) in 1998 that "The Level of R & D in the industrial and private sector is a nagging problem in Canada". Furthermore Statistics Canada, on July 19, 2002 reported that industries plan to reduce spending on research and development by 6.1% in 2002. This estimate accentuates the magnitude of the challenge to Canada. Creative initiatives are required, on an urgent basis, to nurture research in industry.

PAGSE endorses implementation of the following actions under consideration by the Government of Canada, as described in Achieving Excellence:

Reward Canada's innovators by means of a prestigious national award presented annually to internationally competitive innovators in the private sectors. (Parenthetically, we recommend that this award complement that of the existing Manning Innovation Awards established by the Private Sector.)


Increase the supply of venture capital in Canada in all sectors, with the Business Development Bank of Canada acting as coordinator and manager.


Provide support for personnel to SME's via NRC's Industrial Research Assistance Program.
PAGSE also recommends the following:

Government supports research and innovation by graduate students and postdoctoral fellows working in SME's: researchers are to be paid regular employee wages (not Coop or Postdoctoral level stipends).
Increase the eligibility of the SR + ED Tax Credit Program to include funding to companies which are not yet profitable, in addition to those which are profitable.
Forums/Workshops be organized, in different areas of Canada, to consider "Best Practices" in industrial research and innovation by middle and senior management on a global basis.


4. University Based Issues

U.S. Congressman Vernon Ehlers, Chair of the Congressional Science Subcommittee for Environment, Technology and Standards, recently stated that "Basic research funded by National Science Foundation grants provides the base for our economic expansion for the future, and we must increase our efforts so the results of this research will provide great benefits to our children and grandchildren". It is through basic research, and the outcomes that accrue therefrom, that Canada will build economic capacity and increase productivity.

(1) Support for the Granting Councils (NSERC, SSHRC, CIHR)

PAGSE endorses the recommendation in Achieving Excellence, to increase support to the granting councils. PAGSE recommends that the Government of Canada provide a 3-year budget to the Granting Councils, with the magnitude of the budget increase to the Councils over the 3-year time frame being dependent on the specific needs in each case.

(2) Canada Foundation for Innovation

CFI, by its support of major infrastructure, New Opportunities, and infrastructure to Canada Research Chair holders, has transformed universities in Canada into globally more competitive institutions. Given the fact that: (i) funds remain for only one major CFI competition between now and 2005 (or two minor competitions); (ii) the substantial increase in New Opportunities and Canada Research Chair infrastructure funds as a consequence of numerous anticipated Faculty retirements, as well as the recruitment of Canadians and others from abroad; (iii) there is a genuine need to support highly visible international research collaboration not just for infrastructure but also to cover the costs of personnel, consumables, and travel. PAGSE recommends that CFI be allocated 350 million dollars for 2003-5.

(3) Indirect Costs

PAGSE was delighted that the Government of Canada in its budget for 2002, allocated funds for the first time as a contribution to the indirect costs of research. We endorse the commitment in Achieving Excellence, of the support of indirect costs. PAGSE recommends that Canada provide contributions on an ongoing basis to the indirect costs of research. We suggest that the support be increased from approximately 22% for this fiscal year to 30% for 2003, and 35% for 2004.

(4) Commercialization of Research

Technology transfer and business enterprise are now important elements of the outcomes of university-based research. Universities need to markedly build capacity for the commercialization of university research, including the training and employment of individuals with skill sets in intellectual property, contracts management, patents and licensing, venture capital negotiation and management. PAGSE recommends that the Canadian Government allocate new resources to the different elements of the commercialization of university research. Support could involve supplementary funding to the indirect costs program, or the creation of a Commercialization Office / Secretariat either reporting to Industry Canada, or created as a non-government organization. In addition PAGSE highly recommends the creation of a Canadian analog of the U.S. Bayh/Dole Act, critical to minimizing barriers to industry-university partnerships.

5. Canadian Academies of Science

In the Innovation Environment Challenge of Achieving Excellence, it is recommended that the Government of Canada consider support of the Canadian Academies of Science (CAS). PAGSE strongly supports this initiative. CAS would provide objective, independent expert assessments on pressing issues and matters of public interest. It would also serve as a voice for Canada in international science and technology.

6. Government Based Issues

In addition to new investments in IRAP (see above), PAGSE recommends that:

An enhanced, standardized, and well-coordinated Peer Review protocol be established for all proposed research in government laboratories, except for work in regulation (e.g. the US Department of Energy, which has had Canadians serving on its Review Panels, subjects universities and government originated project proposals to a common peer-review process).


A proposed initiative involving FINE, a network of researchers in government laboratories, be supported, with the added expectation of partnership with researchers in industry and/or universities.

The role of government labs in maintaining long-term information systems (e.g. weather data and mapping) be reviewed and renewed. Given that industry and academia does not usually pursue this role, and cognizant of the value and significance of such information to Canadians, this is an area where government can seize leadership and capitalize on new opportunities.