montreal

Canada is the latest country to declare its commitment to developing a ‘knowledge-based economy’. Flush with a healthy fiscal surplus, finance minister Paul Martin last week presented a budget devoting Can$1.8 billion (US$1.2 billion) to encouraging research and innovation over the next three years.

The grand total of new spending is Can$18 billion, and the share devoted to science and technology related items is second only to the health sector's. The health service will receive Can$11.5 billion over the next five years, of which Can$550 million over three years is new money for research. This includes plans for a coordinating body to be set up in 2000 and known as the Canadian Institutes for Health Research. The CIHR was first proposed last year by the Medical Research Council of Canada (see Nature 393, 613; 1998).

Four areas are identified as critical to the knowledge-based economy: creating knowledge, disseminating it, commercializing it, and hiring people to support it. One body to benefit from the new funding over the next three years will be the Canadian Space Agency, which will receive Can$430 million on top of its previous budget, and Can$300 million annually thereafter.

The Canada Foundation for Innovation will receive an extra $200 million over this period. The foundation provides money for research infrastructure to hospitals, universities and research institutions.

Some Can$240 million is allocated to setting up the CIHR, which will use networks to link all elements of the country's health-care system, providing a national focus for health research. The National Research Council, the three main federal research funding councils and the National Health Research and Development Program will be given an extra $150 million to back CIHR objectives.

Other extra spending includes Can$60 million to improve researchers' access to computers, Can$150 million to help companies market innovative products, and Can$50 million for the Business Development Bank to finance knowledge-based and export-orientated companies.

An extra Can$90 million will be allocated to the Networks of Centres of Excellence, which facilitate knowledge transfer among universities and the private sector.

As a result of the extra funding, the overall budget of the Medical Research Council (MRC) will grow in the next financial year to Can$302.5 million, an increase of 11.4 per cent over this year. The 2000/2001 budget will be Can$373.8 million, an increase over the current year of 37.7 per cent, and the 2001/2002 budget Can$484.1million, a massive 78.4 per cent increase over this year.

Reaction to the budget has been generally favourable. MRC president Henry Friesen hailed the creation of the CIHR as “historic”. He said the government's largesse meant that the ever-widening gap between Canada and the United States “has taken a dramatically different course”.

But critics said the overall increases for the health-care system would only bring its funding level back to where it had been three years previously, when the Liberal government started cost-cutting to eliminate the country's economic deficit.

Business people criticized the absence of corporate tax relief. Michael Wilson, executive director of the Fraser Institute, a Vancouver think-tank, said the lack of cuts to capital gains tax would have a serious impact on start-up companies.

See also: Japan on target to double science spend ...