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DAVID CAMPBELL
Economically driven

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Last week Statistics Canada released its most recent data on research and development (R&D) spending in the higher education sector in Canada. R&D is primarily the spending by governments, institutions and private businesses that is designed to stimulate innovative products and services.

Most economic policy thinkers these days understand the critical link between R&D and economic success - particularly in locations where the economy is based more on brainpower than on natural resources.

By now it shouldn't be much of a surprise New Brunswick is dead last in spending in this area and by a fairly wide margin. On a per capita basis, there was $180/per capita spent on R&D in higher education in New Brunswick (2006-07). The province with the next lowest R&D figures was Saskatchewan at $216/per capita (or about 20 per cent higher than New Brunswick). By way of comparison, to get to the same per capita spending as Ontario, New Brunswick would have to see another $104 million per year spent on R&D in the higher education sector (or about a 78 per cent increase).

I say this shouldn't be much of a surprise because New Brunswick has been at the bottom for years and every provincial government I can remember has said they were going to do something about it but never really did.

Consider former premier Bernard Lord's innovation agenda unveiled in 2002. The innovation agenda set out three specific objectives: 1) join the top four provinces in innovation by increasing R&D expenditures to match their spending on a per capita basis; 2) lead Canada in at least two areas of industrial research; and 3) enhance New Brunswick's R&D infrastructure and increase R&D expenditures to meet the Canadian average of annual per capita R&D spending with a focus on industry R&D expenditures.

We are six years into this "innovation agenda" and the most recent R&D data still shows New Brunswick as last in Canada for higher education R&D. To my knowledge, New Brunswick not only doesn't lead in two areas of industrial research, it isn't even a serious contender to lead in any single area of research and development.

The Lord government had the rhetoric right. We do need to see a massive increase in R&D and preferably led by the private sector. In addition, Lord was right to say we need to focus on a few key areas rather than spread the limited funds we have available across too wide a focus.

But as has been the case in New Brunswick, the words didn't match action and we still are last in Canada and still do not have much focus to our R&D efforts.

When the New Brunswick Innovation Foundation (NBIF) was launched in 2003, it was to be a catalyst to generate a significant increase in R&D spending. Premier Lord called it a "cornerstone" of the innovation agenda.

However, I don't really blame the NBIF for the lack of R&D in New Brunswick. It has a very limited pool of resources and never really received a strong mandate from government to actually be responsible for those three lofty objectives.

In five years, the NBIF has invested a few million in R&D and a few more in venture capital. As pointed out above, the province would need a $100 million more per year to reach the level of higher education-based R&D spending per capita in Ontario. To reach the national per capita level of R&D spending in the higher education sector, New Brunswick would have to spend approximately $84 million more per year on R&D. Probably the most important role of the NBIF has been to try and raise awareness of the importance of R&D but even that hasn't generated much fruit.

And the Federal government shares some of the blame for the lack of R&D in New Brunswick. Despite the indefatigable Member of Parliament for Fredericton Andy Scott's numerous protestations over the years, the Federal government spends the least on higher education-based R&D in New Brunswick of any province in Canada. And, of course, the current government in New Brunswick has also talked at great length about the importance of R&D but to my knowledge hasn't rolled out a new R&D strategy as of August 2008.

So what is to be done? It seems to me that two broad government-led efforts would go a long way to generating more research and development in New Brunswick. Across Canada, on average, provincial governments spend 3.5 times more than New Brunswick out of their direct budgets on R&D (per capita). The first step would be to make every effort to increase provincial government spending to at least the Canadian provincial average (by my calculation that would be another $18 million more per year than is spent now). At the same time, those funds should be used to leverage other sources of R&D funding: Federal government, private businesses, higher education institutions themselves, private not-for-profit funding organizations and foreign sources. If that $18 million could be leveraged 3-4 times, we would reach our goal of joining the top tier of provinces for R&D spending.

Secondly, we need to focus. I am told that by just about everyone in the R&D business. If Moncton is to be a hub for cancer and early stage human health research, invest in it properly. If Saint John is to be leader in clinical trials, invest properly. It seems to me that a lot more could/should be done in the area of forestry research. And, of course, there is the research that could/should be done in our fledging industry sectors such as information technology security and Web-based learning. But the main thing is to get focused. New Brunswick should be known globally for its research efforts in a few specific areas.

Unlike many other provinces, New Brunswick will not be able to rely on its oil and gas to fuel its economic development over the next 20 years. If the province is to be successful, we will need to be smarter and faster and rely on our brain power. Investing in research and development is a fundamental part of this.

David Campbell is an economic development consultant based in Moncton. He writes a daily blog, It's the Economy Stupid, at www.davidwcampbell.com. His column appears Wednesdays.