INST Committee Report

CHAPTER ONE: AN OVERVIEW OF THE FEDERAL GRANTING AGENCIES AND THE CANADA RESEARCH CHAIRS PROGRAM

Research and development (R&D) may lead to innovation.² Even if R&D fails to deliver innovation in the short term, it adds to the general body of knowledge and can point to other, often more promising, lines of enquiry that may lead to innovation in the longer term. Innovation is acknowledged to be a basic building block of economic growth. In fact, according to the Organisation for Economic Co-operation and Development, innovation and technological change have become the principal drivers of growth in advanced economies.³ The results of R&D may also lead to other (e.g., social, environmental or medical) advances that may not lead directly to wealth creation but improve the quality of life of the world’s citizens.

Governments around the world provide support for R&D. A large body of economic literature⁴ exists to explain the rationale behind the investment by government in R&D. According to contemporary economic theory, the benefits of R&D extend beyond the performers of the R&D themselves (or “spill over”) to other sectors of the economy. Econometric analyses suggest that the social rates of return to R&D investments can be up to five times higher than private rates of return, and that social rates of return on basic R&D are higher than those on applied R&D. The value of the benefits from investments in R&D is not completely appropriable by the R&D performers, and in a market economy, “inappropriability” of value leads to underproduction (i.e., the market fails to allocate an efficient quantity of resources to R&D). Governments support R&D to compensate for the market’s socially sub-optimal investment in R&D, and to rectify shortcomings in the government’s ability to provide rights to the R&D performer for appropriations resulting from those investments. Government support for R&D can take several forms including the provision of grants, prizes, tax incentives and an intellectual property rights regime.

The Government of Canada spent $6.85 billion (or 4.4% of the federal government’s total budget) on science⁵ and technology (S&T) activities for fiscal year 2000-2001. Of this amount, $4.21 billion was spent on the intramural performance and extramural funding of R&D.⁶ For fiscal year 2001-2002, estimates indicate that the government spent $7.39 billion on S&T activities (4.5% of its total budget), of which $4.65 billion was on R&D funding. Canada’s Gross Domestic Expenditures on R&D (GERD)⁷ in 2001 ($20.871 billion⁸) were estimated to be about 1.9% of its GDP. In 2001, the percentage of the GERD financed by the federal government was estimated to be approximately 18%⁹ or about 0.35% of the GDP. In 1999, the last year for which comparative international figures are available, Canada’s GERD as a percentage of its GDP (1.77%) lagged behind that of all other G-7 countries with the exception of Italy.¹⁰ The three granting agencies, the Natural Sciences and Engineering Research Council (NSERC), the Social Sciences and Humanities Research Council (SSHRC), and the Canadian Institutes of Health Research (CIHR),¹¹ as well as the Canada Foundation for Innovation, are the major federal government funders of R&D performed in Canadian universities.¹²

The Federal Granting Agencies

Budgets and Agency Objectives

In fiscal year 2000-01, slightly more than $1 billion flowed through the three federal granting agencies — NSERC, SSHRC and CIHR — to fund university-based research, to train highly qualified personnel and to foster research partnerships among academia, government institutions and the private sector. By 2002-03, projected base budgets for the three agencies are expected to total $1.28 billion. Over the last 10 years, funding to the three agencies has increased substantially, with the largest percentage increase going to CIHR, which has seen its budget more than double over that period
(see Table 1).

Table 1. Base Budgets for the Three Federal Granting Agencies
(NSERC, SSHRC and CIHR) ¹³

The Natural Sciences and Engineering Research Council of Canada is the national instrument for making strategic investments in Canada’s capabilities in S&T. Its mission is to invest in people, discovery and innovation to build a strong Canadian economy and to improve the quality of life for all Canadians. The agency achieves its mission by awarding scholarships and research grants through peer-reviewed competition and by building partnerships among universities, colleges, governments and the private sector. NSERC supports nearly 16,000 students and fellows in their advanced studies and funds more than 9,700 researchers. In addition, over 500 companies participate in some of NSERC’s programs.

The Social Sciences and Humanities Research Council of Canada is Canada’s federal funding agency for university-based research and graduate training in the social sciences and humanities. SSHRC’s goal is to help build the human knowledge and skills Canada needs to improve the quality of its social, economic and cultural life. The agency offers grants for basic and applied research by Canadian university-based researchers and scholars. It also offers fellowships for research training at the doctoral and postdoctoral levels, and grants to support the publication and dissemination of research findings. Additionally, it is involved in a range of efforts to help integrate social sciences and humanities research expertise into the process of social and economic policy‑making.

The Canadian Institutes of Health Research is Canada’s federal agency for health research. Its objective is to excel, according to internationally accepted standards of scientific excellence, in the creation of new knowledge and its translation into improved health for Canadians, more effective health services and products and a strengthened health care system. The CIHR concept involves a multi-disciplinary approach, organized through a framework of 13 “virtual” institutes, each one dedicated to a specific area of focus, linking and supporting researchers pursuing common goals. An Act of Parliament created CIHR in 2000, replacing the former Medical Research Council.

Peer Review

With some modifications, all three granting agencies use a similar peer-review process for making funding recommendations and allocating limited research funds. In peer review, experts from a particular field of study assess the quality of (depending on the context) research proposals, scholarly manuscripts, or other bodies of work in that field or in related fields. “Non-peers” (e.g., administrative staff or potential end-users of the research results) may also be members of peer review committees. The results of the evaluation may be used to determine, among other things, whether a researcher is granted funding, a manuscript is published in a scholarly journal, or a professor receives tenure. The first recorded use of peer review as a mechanism to assess the quality of scientific contributions is associated with the founding of the Philosophical Transactions of the Royal Society in 1665.¹⁵ The formal use of peer review as a mechanism for the allocation of central government research funds has its origins in the middle of the 20th century when structured government programs for the support of R&D were established in many countries.¹⁶

Peer review has been used by the Canadian federal granting agencies to determine the allocation of research funds since the agencies’ creation (NSERC in 1978, CIHR in 2000 (replacing the Medical Research Council, created in 1965), and SSHRC in 1977). The quality of each proposal is judged according to selection criteria that are established by the agencies (usually after consultation with members of the community). The selection criteria generally include some combination of the quality of the proposal and the investigator(s), and the past achievements of the applicant(s). In some cases, the short-term socio-economic relevance of the proposed work, often in particular “target” or “strategic” areas, is also evaluated. Depending on the program in question, peer review may be conducted by a panel of experts set up by the agency, by external reviewers, or by some combination of both methods.

The experts who sit on the selection panels or committees are chosen according to guidelines set up by the granting agencies. These guidelines are intended to ensure that the committees are proportionally balanced in terms of gender, regional, institutional and “sectoral” (university, government or industry) representation, and in language abilities. At CIHR, for its strategic or “thematic” funding areas, members who are not researchers are also included on committees:

… [O]ther experience and expertise can add important additional dimensions and perspectives to the review of applications. For example, we include community members on committees that review proposals in the area of Aboriginal people’s health. [Mark Bisby, CIHR, 39:15:35]

Success rates vary among agencies and among programs at each agency, but the demand for funding outstrips the amount of funds available at each agency:

While about 70% of the 5,000 proposals that are reviewed each year are considered worthy of funding, the budget that is available allows only about 30% to be funded. The CIHR’s rating scale, which goes from 0 to 5, currently requires about a 4, or an excellent rating, on the rating scale for a proposal to be sure of being funded. [Mark Bisby, CIHR, 39:15:30]

For their major funding programs, each agency has a different philosophy in how limited funds are allocated. At NSERC, a large proportion (about 80%) of applicants to its Discovery Grants Program (approximately $255 million, or 49% of NSERC’s grants and scholarships budget in fiscal year 2000-01) is funded, but the size of the grant is relatively small, averaging about $37,000 per year over a four-year period for the
2001 competition. At SSHRC a relatively small proportion, approximately 40%, of applicants to the Standard Research Grants Program (approximately $39.3 million or 31% of SSHRC’s grants and scholarships budget in 2000-01) is funded and the average research grant is just under $25,000 per year over three years. At CIHR, the success rate is relatively small, about 30%, in its Operating Grants Program (approximately $207.5 million or 58% of CIHR’s grants and awards budget in 2000-01), but the grant size is relatively large, averaging $100,000 per year for a three- to five-year period.

The agencies argue that peer review is the most efficient way of allocating research funds in light of the limited monies available for research funding:

Like many agencies around the world, we believe peer review is the best way of selecting the highest quality applications from thousands of competing proposals. [Elizabeth Boston, NSERC, 39:15:40]

First of all, in Canada, peer review is already more than 40 years old and it is a process that is recognized all over the world. Given meagre resources, it remains the best system to distribute public funds. However, it is a system that first and foremost ensures a high degree of excellence in subsidized research. It is the most independent, the most transparent and the most objective granting process. [Ned Ellis, SSHRC, 39:15:40]

The Canada Research Chairs Program

Budget and Program Goals

In its 2000 budget, the Government of Canada provided $900 million to support the establishment of 2000 Canada Research Chairs in universities across the country by 2005. About 400 new Chairs, recruited from both inside and outside Canada, will be named in each year.

The main goals of the Canada Research Chairs Program (CRCP) are to enable Canadian universities, together with their affiliated research institutes and hospitals, to achieve the highest levels of research excellence and to become world-class research centres in the global, knowledge-based economy. The Program’s goals are to be achieved through the creation of Chairs in the natural sciences, engineering, health sciences, social sciences and humanities. The Program’s emphasis is on investment in basic and applied research at Canada’s universities.

Under the Program, there are two types of Chair: (1) seven-year renewable “Tier I” Chairs targeted at experienced researchers who are acknowledged by their peers as world leaders in their own fields (each Chair is worth $200,000 annually); and (2) five-year “Tier II” Chairs, renewable once, targeted at researchers who are acknowledged by their peers as having the potential to lead in their fields (each worth $100,000 annually).

The CRCP is governed by a Steering Committee comprising the presidents of NSERC, CIHR, SSHRC and the Canada Foundation for Innovation, as well as the Deputy Minister of Industry Canada.

Allocation of Chairs

Each eligible¹⁷ university receives a predetermined allocation of Chairs per year. The allocation is proportional to the amount of eligible grant funding a university has received from the three federal granting agencies, including funds received by any affiliated research institutes and hospitals, over a three-year period. A three-year “moving average” is used to calculate the allocation, so that the number of Chairs allocated is adjusted annually to reflect changes in granting agency funding received by each university.

A “special allocation” (6% of the 2000 Chairs) has been reserved for smaller universities, i.e., those universities that have received one per cent or less of the total of federal research granting agency funds over the three-year period. Depending on the amount of research funding they have received from the granting agencies, these smaller institutions may: 1) qualify for both a regular allocation (as above) and a special allocation; 2) qualify only for a special allocation; or 3) not be eligible in the first three years of the Program (if they received less than an average of $100,000, in total, per year from the federal granting agencies). Over the first three years of the Program, the special allocation will be distributed as follows: a) universities that have received, on average, between $100,000 and $200,000 per year from the three federal granting agencies combined will receive a special allocation of one Tier I Chair or equivalent ($200,000). This allocation was made available in the first year; or b) universities that have received, on average, at least $200,000 per year, but less than one per cent of the funding from the three granting agencies combined, will receive a special allocation of $400,000 for Tier I or Tier II Chairs. In the fourth and fifth years of the Program, there are plans to hold a competition for the Chairs remaining in the reserve. Universities eligible to compete will be those that have been awarded one percent or less of the total funding from the three research granting agencies combined.

The 1880 Chairs allocated to the larger universities are divided among discipline groups as follows: 1) for the natural sciences and engineering, 45 percent or 846 Chairs, over five years; 2) for health, 35 percent or 658 Chairs, over five years; and 3) for the social sciences and humanities, 20 percent or 376 Chairs, over five years. The percentage of Chairs allocated to a university in each of these three discipline groups is the same as the percentage of relevant research agency eligible funds that the university received over the three-year period. In terms of the distribution of Chairs by tier, for universities receiving a total allocation of one Chair, an amount of $200,000 will be set aside. For universities receiving an allocation of more than one Chair, half of the allocation will be based on Tier 1 ($200,000) and half on Tier 2 ($100,000). Small institutions that have received Chairs through a “special allocation” have some flexibility in how they allocate their Chairs (by tier and by granting agency).

Chair Selection Process

The Program requires that each participating institution submit a “Strategic Research Plan” describing how the Chairs will be deployed. Chairs are assigned to priority areas identified by universities in their plans, and are filled by individuals who meet the Program’s criteria of excellence. Appointment of the Chairs is based on nominations from Canadian universities. Appointments follow a peer-review process conducted by members of the Program’s College of Reviewers and, where necessary, the Interdisciplinary Adjudication Committee. Both the College and the Adjudication Committee are composed of some of the world’s leading experts in disciplines being funded through the Chairs Program who are nominated by the partnering federal granting agencies.

Nominations are reviewed by peers against two criteria related to the objectives of the Program: a) quality of the nominee and the proposed research program, and b) integration with the university’s Strategic Research Plan. Three experts from the College of Reviewers review each nomination. If the reviewers concur in their assessments, a recommendation to fund or not to fund is made to the Program Steering Committee. If consensus cannot be reached among the reviewers, the nomination is sent to the Interdisciplinary Adjudication Committee for further review. This Committee in turn makes its recommendation to the Program’s Steering Committee.

In terms of feedback following a decision, the CRC Secretariat provides each university with copies of the Reviewer Report Forms that are completed during the review of each nomination. In those cases where nominations are referred to the Interdisciplinary Adjudication Committee, the university also receives a summary of the committee’s recommendation. There is no appeal mechanism:

… [I]f the nomination is rejected, both the university and the nominee can review the assessments that were made and may decide to submit the application again, at which point we will send the file to three new experts in order to have a fresh look on this second review. [René Durocher, Canada Research Chairs Program, 39:16:00]

Evaluation of the Program

The first nominations for Canada Research Chairs were received in September 2000 and the first recipients of Chairs were announced in December 2000. By February 2002, of 618 nominations received, 554 nominations were approved (90% success rate). Of those Chairs approved, 532 had been accepted, with most of them (471) going to researchers already in Canadian universities.¹⁸

In terms of an evaluation of the Program, a scheduled review of the operation and structure of the Program is underway; the objective of this review is to identify any improvements that could be made to the Program. Any changes to the Program resulting from this review will be implemented in September 2002. A comprehensive evaluation will be performed in the fifth year of operation.