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CAUT Bulletin Archives

May 1997

The Liberal Record on R & D

In the late 1980s the Liberals often spoke of the importance of research and development. As opposition MPs Liberals were quick to point out Canada’s poor performance in funding R&D compared with other G-7 countries. In 1989 M.P. Rey Paktaghan said in the House of Commons "It is absolutely necessary for the Canadian government to increase spending in the area of research and development." In the same year Jim Peterson asserted that "We (in the Liberal Party) do not think that our young people should be handicapped because the government is not prepared to do as much as other governments in the world are prepared to do in terms of creating a technological base and the research and development critical for it."

The Red Book devotes a section to the importance of research and innovation. The Red Book also acknowledges that Canada’ s investment in R&D is at the bottom of the G-7 countries and that other nations around the world have implemented policies that give their industries a competitive advantage. While it is not explicitly promised, the Red Book gives the reader the impression that a Liberal government would be committed to creating a comprehensive science and technology strategy.

Since assuming office the Liberal government’s number one priority has been deficit reduction. This priority has made it very difficult for the government to provide consistent support and direction for research.

In the 1995/6 budget the Liberal government introduced the Canada Health and Social Transfer (CHST).The CHST replaced the Established Programs Financing system of transfer payments that financed post-secondary education in Canada. Since the introduction of the CHST, cash transfers to the provinces have been reduced by more than 31 per cent.

Not only did the CHST mean an overall reduction in federal money going to the provinces, it also meant that federal funds were not targeted in any way. This gives individual provinces the power to determine their own spending priorities for health, post-secondary education and social assistance. Not surprisingly, provincial cutbacks in operating funds to universities have been dramatic. The CHST, more than any other government intervention, has diminished the ability of universities to support research activities.

The granting councils are the primary instruments for direct federal support of university research. In the 1995/96 budget Finance Minister Paul Martin announced that he was freezing the budgets of the granting councils, but not cutting them. He said the this reflected "the priority we place on R&D." In 1996/97 budget, the government announced that not even the granting councils would be spared over the next three fiscal years. Over the last three years, when budgets are adjusted for inflation, MRC has had its budget slashed by 17.9 per cent, NSERC was cut by 11.8 per cent and SSHRC has had it budget reduced by 12.9 per cent.

In addition to cuts to transfer payments and the granting councils, the government has also cut budgets to government organizations that collaborate with the university community and provide much needed research support — the National Library almost 36 per cent — the National Archives 18.6 per cent. The government has also cut funds to the research facilities of Atomic Energy Canada Limited and to the Ministry of Fisheries and Oceans.

The 1997/98 budget was a good budget for research. The government committed $800 million over the next five years to establish the Foundation for Innovation. The Foundation, designed to support infrastructure, will provide matching grants to support the development of laboratories, field stations, databases, software, computer hardware and other networking technologies.

The budget also designates the Networks of Centres of Excellence Program as permanent, funded at $47 million per year. The Networks of Centres of Excellence Program is designed to promote private sector collaboration in research, dissemination of research results and development of commercial applications.

The Industrial Research Assistance Program, at the National Research Council, is another federal program which supports collaborative research and diffusion of technology between university researchers and small businesses. This program has been targeted by the Liberal party to receive an additional $136 million over the next fours years should the party be re-elected.

In looking at the Liberal’s record, what is missing is a coherent and realistic science and technology strategy for Canada. All the rhetoric about the importance of research and development and Canada’s poor performance in innovation and productivity means little if there are no clear goals established for improvement or a corresponding strategy for realizing these goals.

When the Liberals came to power, they launched a full scale review of Canada’s science and technology policies. Many stakeholders from business, government and the academic communities participated in the process. In March 1996 the government published "Science and Technology for the New Century." This document was supposed to be the government’s vision for science and technology policy into the next century. Instead the document is full of vague rhetoric and mixed messages. Moreover, it completely ignores the contributions and the role of the university sector.

The document not only stresses the federal government responsibility to promote innovation, but also states that in the coming years government budgets will be reduced. In light of these reductions the document stresses the importance of doing more with less, creative partnerships with the private sector and an increased emphasis on dissemination and commercialization of research results. The document does not make any mention of Canada’s poor performance in R&D in comparison with other industrialized nations and the economic consequences. Nor does it mention that Canada’s R&D effort, as a percentage of GDP, peaked in 1993 at 1.63 per cent.

To be fair, it is a complicated dynamic. The real slacker with respect to R&D in Canada is the private sector. In 1993, private sector investment in R&D as a percentage of GDP was less than half of what it was in Sweden, the US, Japan, Germany or France. Moreover, previous interventions to promote private sector R&D have not been successful. Canada’s system of tax incentives is considered to be quite generous by OECD standards and yet it has not achieved significant results. Yet, this distinctive Canadian dynamic points to the importance of developing a comprehensive science and technology policy that stresses innovative interventions, to ensure that Canada will be able to compete in the emerging knowledge-based global economy.