Introduction (ROBERT GIROUX)

Mr. Chairman, our group welcomes the opportunity to appear before this committee as it ponders its advice to the Minister of Finance concerning the forthcoming federal budget.

When we appeared before the committee in June, we urged the government to stay the course - to continue to make strategic investments in the education of people, in knowledge and innovation.

This approach remains the best strategy, especially in these times of international economic turbulence and uncertainty. The forces at play present daunting challenges. They also offer tremendous opportunities.

Canadians assume that their government will engage in prudent financial management. They also expect that it has the wisdom to make investments in key strategic areas to enable Canadians to turn the forces of internationalization to their advantage.

Mr. Chairman, we applauded the strategic investments the government made in education, knowledge and innovation in the last two budgets. We also believe that the government has much unfinished business to attend to.

We are more than willing to rise to the challenge the Minister of Finance put to Canadians in his most recent presentation to this committee. Mr. Chairman, we believe that now is the time to make strategic and enabling investments in areas which will have a greater sustaining impact than symbolic tax reductions.

Events of the last few months has shown that Canada's reputation as a commodity or resource-based society exacerbates the country's vulnerability to the unpredictability of the international marketplace.

Our anaemic research effort is one of the most telling indicators of the country's ambivalent commitment to transform itself into a knowledge-based society.

Our inability to offer internationally competitive levels of funding is one of the key factors explaining our difficulties in attracting and retaining highly productive researchers.

Depleted core funding means that universities are unable to nurture a research environment to sustain excellence in research and scholarship over the long term.

Student indebtedness is discouraging many from pursuing graduate studies.

Moreover, our human science research capacity is largely untapped. Success in a world in which knowledge and brain power are the main sources of comparative advantage requires that we make social and technological innovation the hallmark of our collective actions.

These are the challenges we urge the federal government to confront in preparing the 1999 budget.

Canada's lack of investments in research has been documented extensively. What is less appreciated is the extent to which this affects the university sector. Mr. Chairman, our researchers do not have access to internationally competitive levels of support due to under-investment on the part of the federal government.

Our estimates indicate that the Canadian government supports university researchers at about half the level provided by its American counterpart. In fact, provincial governments and the private sector in Canada invest proportionately more than comparable sectors in the U.S. However, their higher contributions do not begin to make up for the under-investment by the federal government.

A further measure of the very large funding gap between Canada and the U.S. is the size of the average research grant awarded by each country's principal federal funding agencies. Such a comparison shows that average grants, exclusive of indirect costs, are three times greater in the U.S. than in Canada.

The message -- that Canada is a place where challenging research careers are difficult to pursue -- is reinforced by the continuing decline in core or operating support of universities.

Total support for higher education has slipped significantly over the past 15 years. Over the past five years alone core support for universities was reduced by some $1 billion. These cuts translate into a 23 percent real loss of funding, equivalent to $1,500 on a per student basis.

Again, this situation contrasts with the rising levels of funding of the higher education system in the U.S.

(LOUISE ROBERT)

Mr Chairman, Canada has an under-utilized university research capacity.

Canadian researchers are increasingly perceived as "free-riders", with little more than good-will to offer their foreign counterparts.

Canada accounts for the creation of only three percent of the world's knowledge production. Our researchers must therefore be connected to global networks of knowledge and know-how in order to harness the cutting-edge ideas the world has to offer. To build on them. And to put them to work for the benefit of all Canadians.

Mr. Chairman, we confront unfinished business also in the sense that we must look beyond the customary approach to innovation that focuses solely on technology-based innovation.

Many of the problems facing organizations, governments and individuals are non-technical matters requiring a different type of innovation. Examples of such problems abound:

• health care restructuring and the new emphasis on home care;
• the changing workplace as it adapts to new technologies;
• problems with youth crime, child poverty and the pressures on the family;
• the innumerable moral and ethical questions arising from our increased understanding of some of nature's most fundamental processes.

These problems are not necessarily intractable. What Canada needs is to match its innovation efforts on the technological front with a comparable effort on the social, organizational and policy fronts.

Only through the exploitation of knowledge produced by social scientists and humanists will we contribute fully to the prosperity of Canadians. This knowledge will evolve into more effective approaches to organizational learning and redesign, will mould cultural change and will enhance the quality of life.

This knowledge cannot be imported. Studies conducted abroad can suggest fruitful avenues of investigation for Canada but their conclusions can rarely be applied to the specific social, cultural and economic situation of this country. We must tap into this large pool of knowledge expertise to master intellectual, cultural, social and organizational innovation.

Canada's health care system is currently severely challenged. Research is part of the solution because it can shed light on what can be done to improve the health of Canadians and how best to do it.

A novel approach to health research is being developed entitled the Canadian Institutes for Health Research (CIHR). This project seeks to create virtual institutes to link, coordinate and support health research across Canada. Designed to bring about an integrated national research effort, the CIHR will address the full spectrum of health concerns from fundamental research on the determinants of health and the causes of diseases to the organization, management and delivery of comprehensive health services so as to address issues of efficacy, efficiency and access.

Conclusion (RUBINA RAMJI)

The federal government has come some way toward preparing Canada for the knowledge society. It has done so through targeted investments in knowledge, education and innovation.

Canada must sustain and improve on current measures.

First, the federal government cannot ignore the issue of core funding of universities. Our coalition of students, researchers from all fields and university administrators

• strongly supports a staged increase in the Canada Health and Social Transfer as part of a package of strategic investments to strengthen higher education and to enhance innovation and equality of opportunity.

These investments are enabling investments. They are a necessary complement to strategic investments in direct support of university research.

Second, we urge the federal government to make significant additional investments in university research over the next five years to ensure that university researchers have access to internationally competitive levels of support. More specifically, we recommend that the federal government:

• correct its under-investment in social sciences and humanities research by doubling the budget of SSHRC;
• commit to a multi-year plan to invest significant resources in the Canadian Institutes for Health Research;

• progressively increase the budget of NSERC by 50%; and

• double current investments in the Networks of Centres of Excellence program.

The primary objective of our recommendations is to prepare Canada and all Canadians for a globally competitive economy and information-age society. Rising to the challenges confronting Canada's society and system of innovation requires significant, strategic investments in the research enterprise.

In closing, we wish to alert you to the fact our federal partners are less and less able to participate in and to contribute to the smooth operation of the innovation system. Mr. Chairman, the full range of activities which comprise our national system of innovation needs to be strengthened. All of the major partners must be healthy if the system is to function effectively and efficiently.

Thank you for your attention and look forward to a fruitful discussion with all Committee members.

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