Science, technology funding to drop in 2008-09: StatsCan

Statistics Canada reported Thursday that federal spending on science and technology is expected to decline this fiscal year for the first time in five years, a result at least one analyst says isn’t likely to change given the chilly economic climate.

The federal government is expected to spend about $9.9 billion on science and technology in the fiscal year ending March 31, 2009, a drop about three per cent from the previous year, Statistics Canada reported Thursday.

If the forecast holds, it would represent the first decline in science and technology spending after five straight years of increases, according to the federal agency’s Science, Innovation and Electronic Information Division.

These forecasts, however, don’t always hold, as the government can often announce funding plans before or during the announcement of the federal budget, but after Statistics Canada completes its assessment and government agencies provide the agency with their numbers.

One example where the forecast underestimates funding — pointed out by a number of research analysts — is that it does not include the $95 million in funds added to Canada’s three university granting councils for direct and indirect costs in the last federal budget, an amount that would have come in after the agencies provided Statistics Canada with their projections. The addition of these funds alone would temper the projected decline to two per cent.

Last year the government agency’s forecast was similarly conservative in its projection for the fiscal period ending on March 31, 2007, projecting $9.5 billion in spending for that year. The preliminary results for that year, however, suggest the government actually spent about $10.1 billion.

“The results do tend to be higher than our forecasts because government departments tend to forecast prudently,” said Louise Earl, one of the authors of the report.

But some of the increase can be explained by one-time funding plans, said Ron Freedman, the CEO of science and research consultancy Research Infosource Inc.

For example, last year the government announced two weeks before the budget it would give $163 million to establish 11 new centres of excellence for commercialization and research.

The addition of that commitment raised the projected funding handed out to non-profit organizations to $408 million in 2007-08, Earl confirmed. The total handed out to non-profit organizations this year is expected to drop to $245 million.

“These numbers are meaningful because initiatives like the centres for excellence are unlikely to be coming this year from the government,” said Freedman. “We’re in a period of belt-tightening now.”

The Conservative government pledged a number of science and technology funding programs during the fall election campaign, including an additional $850 million on science and technology investments by 2009-10, a $75-million venture capital fund for late-stage technology companies and the addition of $200 million to the automotive innovation fund and the strategic aerospace and defence initiative.

These commitments, however, are not tied to this year.

Hard decisions on spending

In a throne speech delivered Wednesday by Gov. Gen. Michaëlle Jean, the Conservative government warned that federal departments may have to make “hard decisions” to control spending.

“Departments will have the funding they need to deliver essential programs and services, and no more,” Jean said. “Our government will engage Parliament and encourage members to take a more active role in scrutinizing spending and suggesting areas for restraint.”

Finance Minister Jim Flaherty is expected to deliver the government’s economic update next week.

The Statistics Canada study said that 63 per cent of spending will go to research and development, with the remaining 37 per cent going to related scientific activities. In current dollars, the forecast spending in R&D for this year will be four per cent less than last year.

Funding in natural sciences and engineering is expected to be just under $7.5 billion, while funding social sciences and humanities will get an anticipated $2.4 billion.

In a report released last month, the Association of Universities and Colleges of Canada called on the federal government and private sector to continue to spend on research and development even during the current economic uncertainty, to avoid falling behind the rest of the world.

The report, entitled Momentum, said Canada’s public and private sector spent a combined $29 billion on research and development last year, but would need to increase spending to $70 billion by 2015 in order to keep up with other nations.

By Paul Jay CBC News