Mr. Speaker, just to put everyone in context, today we are debating Bill C-17, an act to amend the Budget Implementation Act, 1997, and the Financial Administration Act.
This is the result of several announcements made by the government regarding, among others, the reinvestment of a further $750 million in the Canada foundation for innovation, in addition to the $500 million announced last October in the economic update.
In their eagerness to go to the polls, the Liberals brought down a minibudget, which turned out to be the real budget. Since there is no budget this year, this is how they are putting money into the Canada foundation for innovation.
I will talk mostly about this part of the bill and support for research in general, and less about the other measures contained in this bill, which amends several other acts to correct mistakes, as mentioned earlier, or add things that were missing or corrections that had to be made to the Financial Administration Act.
The federal government, after going through an era of major cutbacks—mainly in 1995, 1996 and 1997—has now started to reinvest in support for research. Granting councils and many other bodies were hit hard, and they had urgent needs. However, they had to wait and this had a negative impact on their ability to support research.
Similarly, cash transfers were drastically cut. As we know, transfer payments to the provinces were used to fund three different programs for health, education and social assistance. They were cost shared programs. However, the money was earmarked and we knew how much of the transfer payments went to social assistance, health and education.
Not wanting to be blamed for making $1 billion cuts in health care, $1.5 billion cuts in education and $800 cuts in welfare, the federal government decided to roll these three programs into one, which it called the Canada health and social transfer. Then it reduced the funding under this new transfer, letting the provinces decide exactly where to cut in those three areas.
The cuts were drastic. Transfer payments fell from about $17.5 billion to $18 billion to a low of $11.5 billion, which meant the provinces had to make cuts in health care and post-secondary education. Of course the latter includes a research component.
Now that the government has the financial means to do something, its first tendency is not to increase transfer payments. It did increase them slightly but mainly for health care. Everybody agrees that health care is important but the government invested very little money in post-secondary education. This is due to the fact that it chose a more visible way of investing in that area, a way which could be effective to a certain extent.
We are not disputing this but the government made this choice not for the sake of effectiveness but rather because it wanted more visibility than it would have had by simply putting more money in transfer payments so the provinces, including Quebec, could support research initiatives based on their own priorities.
We are not talking about petty cash. We are talking about substantial amounts. Of course the granting councils have seen their budgets increase. I could name each of them individually but this is not what we want to do today. However, these councils' regular core budgets are being increased.
It has been said that the government wants to double the research effort by 2010. A timetable has been established and the reinvestments are major. There is therefore a reinvestment aspect in the granting councils.
University research chairs have also been established. We are talking about several university chairs, with a lot of money. Funding for this program will be in the hundreds of millions of dollars over the next few years.
The third component is the Canada foundation for innovation also mentioned in the bill. The foundation will receive $750 million more than originally planned. It has already received more than $3 billion or has assets of over $3 billion. This is a lot of money.
Later on I will talk about some difficulties, some problems that are still unsolved. I will first talk about the first problem that we have with an organization such as the Canada foundation for innovation, without criticizing the people who work for the foundation. It is something governments tend to do, particularly the current government. The same thing happened with the millennium scholarship fund. The same is happening with the Canada foundation for innovation. The government is funding an external organization that does not have the same accountability toward parliament as the department itself.
For members of the opposition, and it should be the same for the government members, it is a bit frustrating to see such huge amounts of money being given to people who are not directly accountable. Of course they are accountable to parliamentary committees but they do not have to justify their decisions here every day.
When a minister is questioned on some contentious issue or a decision that is not in sync with the priorities of the government or of parliament, it is something that has to be dealt with outside the chamber. The minister says that it is an independent agency that carries out its duties as best it can and that the minister cannot always interfere in the operations of such agencies.
Things happen. Take, for instance, the Canada foundation for innovation. More so outside Quebec but even in several regions in Quebec, smaller universities are complaining because they do not have the same capacity as the bigger universities to get the funding and the projects they want.
We have a moral influence over the foundation. We can raise this problem and, in fact, we will do so tomorrow. The chair will be at the committee hearing and we will be able to consider the issue. Parliament put money into this foundation but not without adding some requirements as specific as the ones I just mentioned. That left us with no influence over these decisions and no influence over a minister who would have some say because the money would be spent by his department.
The corrective measures are way too slow and too complex and there is still the problem of accountability. We are talking about public funds. Taxpayer money is handed out to outsiders who have to abide by some rules, but are not subject to the same process as a minister who has to manage a department and account daily for his actions.
If this principle is that good, we will end up—and the process is well underway—handing over all government operations to outside agencies. What role will be left for parliament to play? We cannot support this, whether it is a lofty cause or not. We cannot let the government send money to an outside agency saying “Now you can manage this money as you see fit. We trust you”.
What I have left unsaid is that appointing board members is a way for the government to keep some degree of control. However, this process involves a very small group of people. Very often it involves the Prime Minister, since appointments are made by his office, or the minister himself in the best case scenario. Whatever the case may be, it still creates a situation where the minister and the Prime Minister can influence the board of directors or the senior officers of an organization.
Of course the foundation is sort of a more noble organization. The heads of the granting council are there to ensure a certain cohesion but the fact remains that it should not be independently managed. We have no problem with the department being accountable here. At any rate, when the time comes to make decisions of a more delicate nature, nobody can be sure that these people will have enough neutrality to resist pressure from those who appointed them. It is pressure at a very high level.
Pressure at another level, more appropriate pressure, namely pressure from the people and their elected representatives, is much more indirect and much more difficult to exert. That is the first problem.
For the second problem, taking the case of Quebec, which is in the process of developing a science policy, it is hard to set oneself targets, objectives and a work plan when one has control over only part of the tools. Obviously, there is also health research, but I will focus more on the education sector because this is generally where there is more investment in funding councils and the foundation. The same logic could apply to health, however.
These are matters that are essentially provincial but there is a significant portion still administered by Ottawa, or subject to made in Ottawa decisions or priorities, even if only on the amounts allocated. After that, the areas of focus need to be defined.
When the money is there, the complications of jurisdiction are not something that anyone needs. The government has stupendous financial means and uses that financial clout to become the government that plans future priorities. For many Canadians, this is fine with them. As for us in Quebec, the principal government of the people is the government of Quebec. While it does administer post-secondary education, it does not have all of the means to properly plan the development of its science policy.
Adjustments do need to be made. There is always some way of doing contortions in order to make ends meet. Our system of universities is highly efficient and so is our research. We have no complaints about the amount of funding our universities can manage to get together, for they are successful at getting the job done. They are very good. However, it becomes difficult to be consistent in this kind of situation.
These are the two main problems: accountability and the increasing inability of the provinces to influence the framing of a real scientific policy because Ottawa is using its accumulated surpluses—which came from cuts in transfers, from the EI fund, and so on—to play a planning role and to impose its own vision.
There is no doubt about that, as evidenced by the fact that the federal government is not reinvesting any significant amount of money in transfer payments for post-secondary education. It has reinvested some money in health care but very little in post-secondary education. New funding in this area is administered by the federal government or by an agency appointed by it, that is closer to it.
I cannot ignore one area of criticism that is beginning to emerge but it is constructive criticism. Now that we have said that we would prefer this not be an independent organization, the ideal situation would be to put the money back into transfer payments to the provinces so they can do that themselves, we know it will be very difficult to convince Liberal members to support us in that regard. The day will come when people will be able to settle this debate or to put more pressure so we can at least be more consistent in our actions, instead of having two governments acting separately. This will not always lead to bad results but very often it makes things more difficult. A lot of time is wasted in co-ordination.
Another thing the government must realize is that with all these investments in research chairs, the Canada foundation for innovation and granting councils, two very serious problems are emerging. Clearer directions will have to be given in the short term to correct a problem which, if we wait too long, will become even more serious and create a lot of difficulties, especially for small universities.
Let us be clear. There are not many big universities in Canada. The vast majorities of our universities are small. In Quebec, for example, the Université du Québec network is considered to be a small university by Canadian standards. We have the Université de Montréal, McGill University and maybe the Université Laval that might be called big universities.
Quite often smaller universities cannot rely on private foundations, unlike McGill University in Quebec, or on bequests left to them by some rich donors. Without such financial assistance, they have a hard time covering the indirect cost of the projects. The bigger universities have the same problem but at least they have more leeway than the smaller ones.
Since smaller universities do not have their own source revenues and cannot cut their education budget, because they do have classes to give and not only research to carry out—when they ask granting councils for a subsidy, indirect costs are incurred. From what people in the know tell me, on average, for every project, we have to add 40% for indirect costs.
Provincial programs in Quebec, for instance, pay for about a third of these indirect costs and the rest of the money has to come from elsewhere, by cutting something or making hard choices. Trying to get the money needed to do research can often penalize universities.
This applies to both the bigger universities and the smaller ones. I believe things are tougher for smaller universities because they have fewer tools and fewer choices when cuts have to be made and priorities need to be set. If we do not react quickly, the gap between the bigger universities and the smaller ones will only widen.
The other problem faced by smaller universities is that project approval is based on peer review, which is carried out by a network of peers, and they do not feel like they are really a part of the network. When these tools were brought in, they were not as ready as the big universities, which already had their waiting lists, their contact networks and so on, as well as a much stronger lobbying capacity. They feel they are at a disadvantage because of the initial commitments that were made.
This is even more true in other provinces where small universities have their own specialized areas. Some of them were successful in the first phases. We will have to remember that.
As with the chairs and all those tools, if we do not pay special attention to our small universities, they will have difficulty retaining their good researchers when the big universities or foreign universities from the States or elsewhere come to raid our researchers. This is an emerging problem that could become very serious.
Everybody recognizes that we have to make efforts to keep our researchers in the country and to make sure that our best minds are not exported but if this is true for Canada as a whole, it is also true for the small communities and for the small universities. I certainly hope the government will soon find ways to solve the problems of small universities as compared to bigger universities and of indirect research costs.
Would the best solution be to tell the provincial governments “Listen, we know that you already have formulas to compute payments. We will put money back into transfer payments so that you can better support indirect costs”? It would be one solution. There could also be automatic amounts. When the granting councils provide funding, they could immediately include with it an envelope to help with indirect costs, as do American granting councils.
There is one problem. There is a link missing in the whole research incentive operation. Considerable efforts are being made, admittedly, to increase research capacity. There is also a message that needs to be sent to the private sector. As elected officials, we have a duty and a responsibility to get that message across. Research efforts in any country must not be the sole responsibility of the government. The government must do its part but there is something a little disturbing in Canada.
I will take the case of Quebec. We have very good tax credits and many tools. The private sector has also come up with some of its own, although not as many as comparable countries. A way must be found to stimulate the spending culture, or investment in research, within private enterprises, because their ability to be competitive depends on it. It is not always solely the government's responsibility. Yes, the government must do its part. It must increase its contribution but private enterprise must not shirk its duty to conduct research and always look to the government for help.
The government will always have much of a monopoly on certain very specialized fields, even if there are economic spinoffs. This is clear because there are fewer private enterprises, or because their size does not allow them to conduct certain more fundamental research activities. Here again there must be a more direct dialogue with the private sector to ask it why it is not doing more research than it is at the present time.
Private enterprise is doing more, or trying to do more, but there is room for more to be done.
My other colleagues would perhaps like to address certain other aspects of the bill with which I am less familiar. I am more familiar with the Canadian foundation for innovation.
We will not be voting in favour of the bill for the reasons I have given. First, because allocating money to outside organizations puts them somewhat beyond the control of parliament, if not considerably beyond its control. Second, it is odious and has potential for considerable inconsistency for governments to be competing in the area of public support of research.
I cannot speak for all the provinces but I can speak of Quebec, with which I am familiar. Quebec has a science policy. Ottawa has and spends a lot of money. One does not get the impression that all this spending is necessarily aimed at efficiency alone. There is always a kind of war of visibility being waged by Ottawa and no one finds this healthy.
No one can fault reinvestment in research. That is something on which we will all agree. However, the primary motivation must be efficiency and nothing else. I have some doubts on the government's motivations in this area.
I am convinced that within these organizations, even within the government itself, there are some people whose main concern is efficiency, I am convinced that when the powers that be allocate money, the notion of visibility is foremost in their mind. It has been the case with every decision since 1995, by this government, which is slightly paranoid, thinking that people supported the yes side for this reason, because they had not noticed how effective the government was or because they had seen it as less effective than it really was. This is something we will debate again when the time comes.
With regard to the bill before us today, we will be voting against it for the reasons I mentioned earlier. I urge the government to pay attention to the problems emerging between small and big universities.
Small universities want to expand. They want to retain their scientists but indirect costs and possible raiding from other universities are a problem. And of course there is raiding from foreign universities, but we have no control over that. I am thinking about raiding on the part of our major universities if they are able to raise money faster than our smaller universities.
This is a very real problem for smaller universities. The university in Rouyn-Noranda is very effective, one of the most effective in Quebec in terms of getting funding for research. I know other universities are effective as well; also partnerships are formed.
There is something positive in all this funding issue, namely networks are being created more than ever before. Universities are forming partnerships and I am convinced they are possible in many areas, to find a niche. Universities are faced with similar situations. They can establish partnerships but they need the resources to do it and right now they do not have enough to pay indirect costs.
This is the message I wanted to send. Tomorrow, we will have the opportunity to repeat our message to the chair of the Canada foundation for innovation, who will be appearing before the committee, but for the time being we are saying to all the members of the House and to the government that we want more consistency. We also want smaller universities to have the same ability to grow as the bigger ones.
