Funding, Free Riding, and the Future of Canadian Science

Ever since World War II science — that is, state funded science — and economic progress have been seen to go hand in hand. And for the most part, governments have been happy to let scientists themselves decide where much of the money goes.

But things have been changing lately, and not just in the United States, where the Trump administration has awarded itself the right to involve itself in any science award for any reason. Several countries, notably Australia and the United Kingdom, are looking to become a lot more dirigiste with their science money. And one of the thrusts of this dirigisme is that they want their money to have faster outcomes. Heck, even the Swiss National Research Agency is being told to take a 20% cut. Basic research is no longer the bell of the ball.

Joining us to talk about this today is Rob Annan. He’s the president and CEO of Genome Canada, a federally funded research agency based in Ottawa.

His agency has undergone some pretty big shifts since it was created 25 years ago, as the practice of sequencing a genome has changed from being something requiring a hundred million dollars, to something requiring not much more than a hundred dollars. And having a seat at the table with all the other science funding agencies means he has some pretty interesting insights into the way government thinks about science.

Our talk therefore ranges over some pretty basic questions on the current state of science. Does Vannevar Bush’s vision of research plus development equals growth still hold? Are ideas becoming harder to find? And how does all this affect public policy around science, especially here in Canada?

Trust me, Rob and I could have gone on talking about this a lot longer than we did. He’s always full of insight, so let’s go listen to him right now.

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The World of Higher Education Podcast
Episode 4.12 | Funding, Free Riding, and the Future of Canadian Science

Transcript

Alex Usher (AU): Rob, let’s start at the very beginning. What is science policy, and how does it relate to other public policy areas like economic policy?

Rob Annan (RA): Science policy really has two directions, and it’s important to distinguish between them.

First, we have science for policy. This is the dimension where research results and new understanding coming out of science inform policy decisions across a whole range of sectors. How does the government integrate new knowledge being produced by scientists—whether it’s for updated climate regulations, healthcare approaches, or agricultural standards? This is about using scientific evidence to make good choices.

The other dimension is policy for science. This is the governance framework that shapes how we organize research—how we fund it, how we set priorities, the institutional structures we use, the funding mechanisms. And especially these days, it’s about how we actually translate discoveries into societal benefits.

In both cases, we shouldn’t think of science policy as distinct from other areas like economic policy. In fact, it’s deeply integrated. We want the most effective approvals, innovations, and regulations across policy areas so we can be economically competitive. We don’t want our building codes based on 1920s technology; we don’t want health policy based on science from the 1800s—although these days it sometimes feels like we’re heading in that direction.

And on the policy-for-science side, we need to think about whether we’re structuring and supporting research in ways that give us the most bang for our buck when it comes to addressing big challenges in health, the environment, and the economy.

Science creates knowledge, of course—investing in science for intrinsic knowledge matters. But if we’re really looking to tackle the big challenges science can help address, then we need to continually assess whether we have the right policy for science.

AU: The very big, simple case for governments subsidizing science goes back to the end of World War II and Vannevar Bush, The Endless Frontier, and all that. Basically, the idea was: we pour money into research—mostly happening in universities, at least in Canada—and then some kind of miracle happens. What emerges is development, which creates economic growth and good-paying knowledge-economy jobs.

I guess my question is: was that model ever true? Was it ever a realistic representation of how science turns into economic growth? And if it was, is it still true today?

RA: I don’t know that it was ever entirely true, although it’s always been very compelling. That paradigm—this idea of how science works—has been around for about 80 years. And the idea is basically akin to trickle-down economics: if you give smart people money, they’ll create knowledge, and everyone will benefit.

But that model has the same problems trickle-down economics has. Yes, some benefits do diffuse through the economy, but it’s really inefficient, the time horizons are unpredictable, and clearly not everyone benefits in the same way. So there are challenges with the model itself.

But as your question implies, it’s never really been entirely true, and it certainly isn’t how transformational advances have typically happened—the ones we think of as the scientific and technological milestones of the modern age.

These weren’t just curiosity-driven research efforts magically turning into benefits. Think about what was actually happening: the Manhattan Project, NASA’s moonshot, DARPA creating the internet, the Human Genome Project. These weren’t just basic research followed by waiting for good things to happen. They were focused on very specific challenges, involved a lot of coordination, required specific outcomes, and created spillovers along the way.

And in addition to those government-driven efforts, there’s also been a big middle layer of industry research—the ecosystem of corporate R&D labs and research parks. That still continues today. Think about advances coming out of Google, Apple, Nvidia, Moderna—lots of companies pouring money into making research happen.

In Canada, the university paradigm is certainly the dominant one. There are a lot of reasons for that, and we can get into it. But that Vannevar Bush model has never really been the only way that advanced science happens.

AU: You said earlier that it’s a compelling rhetorical case. And one of the interesting things about that story—“I spend money on research and development comes out the other end”—is that it makes sense at the global level. It’s a story about science, and science is global, but funders are national.

When you try telling that story at a national level, it becomes really specious. In Canada, something like 95% of the technology we use—maybe more—is invented elsewhere. What we spend on basic research has almost no relationship to the technology that ends up being used in our economy.

And I guess I wonder whether governments understand that. As a result, do they underinvest in research because smaller countries have such an incentive to free ride?

RA: It’s a complicated question. On the one hand, if you actually look at Canada’s research output compared to global rankings, we produce somewhere around 4–5% of research output. So it’s not surprising that we’re importing 95% of our technology from elsewhere. That’s what a globally integrated trading system looks like.

In the areas I’m involved with, Canada is still seen as a positive net contributor to international science and knowledge. So I’m not too concerned about that. But I do think the concept of free riding on massive U.S. research investment is a big issue—especially at the applied research end of the spectrum.

Silicon Valley, the Boston–Cambridge life sciences hubs—these are enormous engines, and we certainly benefit from the knowledge spillovers coming from those American investments.

But the free riding isn’t just a moral concern. There are real strategic issues here. If we’re importing technology—especially from the U.S.—we’re not developing our own capabilities. We’re not building our own tacit knowledge, our skilled workforce, or the industrial ecosystems that come from working at the technology frontier.

We’ve been sending our best students and our most promising startups to the U.S. for generations because that’s where the ecosystem is. The brain drain we’ve always worried about isn’t a bug—it’s a feature of the free-riding dynamic.

Things are changing, though. We’re all about to find out what happens when this massive engine of U.S. research funding stops being so reliable. And it’s not just Canada that’s been free riding—global research has been driven in large part by huge U.S. investments.

Free riding assumes we’ll continue to have access to the technologies, the knowledge, the databases the U.S. produces. But we’re entering an era where the U.S. sees these as sovereign assets. And if we’re not in a position to control our own genomic databases, our own AI infrastructure, and so on, we’re going to be strategically vulnerable.

AU: Over the last few months, I’ve seen a number of countries turning toward what I’d call a more utilitarian organization of science. And it’s pretty clear that events in the U.S. are driving this—either as a model or a cautionary tale. Australia and the UK are talking more and more about getting their higher education institutions to specialize in research areas because they think bigger is better. New Zealand is retreating wholesale from investing in the humanities and social sciences. So I guess my question is: is the West at some kind of turning point for research management? Are we changing the model now?

RA: Yeah, unquestionably. I think the answer is yes. And frankly, everything is changing. So it’s not surprising that we need to rethink our science policy and how our research institutions function.

The drivers for this are complex. There are economic changes happening in global systems. We’ve got misinformation—especially about science—contributing to mistrust of institutions, anti-elite sentiment, and so on. So this isn’t simply about becoming more economically productive. It’s about responding to a very different social order and re-imagining the social contract between those who develop science and research and the societies we serve.

So yes—things are changing, and things have to change.

The question is: how are we going to change? What do we do in Canada? Are we just going to copy what others are doing? Are we going to cherry-pick the best ideas? Or do we do the harder work of sitting down and working from first principles—asking what Canada needs, what makes sense for us, and what strategic imperatives should drive our policy development?

We need to change, and it’s going to be hard. Change is hard. Universities have been around for a thousand years—not because they respond to every change in the weather, but because they’re designed for stability. They will survive this.

But all of our institutions will need to think differently. They’re going to look different, function differently, maybe operate at a different scale. And we need to rethink what the research policy landscape looks like in terms of delivery. Maybe it’s not primarily through universities anymore. Maybe we need to think differently about colleges and polytechnics. We need to consider not-for-profit organizations, other levels of government, industry.

We need to be thinking about a lot of other vehicles.

AU: It seems to me there’s one other thing shaping science recently. I’m thinking of the 2020 article in the American Economic Review by Nicholas Bloom, the Stanford economist. He argued that ideas are getting harder to come by. To simplify enormously, he said it now takes a lot more time and a lot more researchers to make the same quantum of scientific progress. It just takes more than it did 20, 40, 60 years ago.

Do you think that’s true? And if so, what’s the implication for science policy? Do we just have to accept paying ever-increasing amounts for the same level of discovery?

RA: I know the paper, and it’s probably true—but I think the picture is more complex. In well-established fields, where we’ve already picked the low-hanging fruit, then yes: marginal progress requires more researchers, more resources, more time. But that’s kind of a circular argument—mature fields are mature.

In other domains, though, we’re seeing explosive, almost breathtaking progress. Where I work, I get to see the future being invented every day as it crosses my desk. Cell and gene therapies, mRNA platforms, immunotherapies that are turning cancer from a death sentence into a treatable condition—these are astonishing developments. They might not always make headlines in our Twitter–BlueSky-obsessed world, but the progress is remarkable.

And if you look beyond that into areas like quantum computing, AI, synthetic biology—a field that barely existed a decade ago is now redesigning organisms from first principles—and material science, there’s unbelievable progress happening that would have been unimaginable ten years ago.

So yes, Bloom’s argument is true in some fields, but much less so in others. And I think that’s actually an argument for why we need a more strategic focus, rather than diffuse investment across every discipline.

AU: Okay, let’s shift the talk to Canada specifically. I’ve always thought Canada was a bit of an outlier internationally in science, in that we do a very high proportion of our research in universities rather than in other types of research facilities, either public or private. And we run a very high proportion of our funding through grants to individual PIs rather than to institutions. Is that a fair assessment, and does that give us an advantage or a disadvantage in producing science?

RA: I think that’s probably fair. Canada does funnel a disproportionate share of our research funding through universities and individual PI grants. We don’t have the same sort of government lab infrastructure you see in the U.S.—we don’t have intramural NIH programs or big national labs at that scale. We have the NRC, of course, but it’s not doing work at the same level as you see in the U.S. or some other countries.

We also have a lot less direct industry R&D support than countries like Germany or South Korea. So yes, we’re more university-centric and PI-centric, and there are lots of reasons for that.

Before pointing to that as a problem, though, we should acknowledge that there are big advantages to this model. It produces high-quality education for a broad base of students. We have tens of thousands of students at our best universities who are all still learning from actual research professors. That’s amazing—and it’s not just a narrow elite who gets access to that. It helps produce a large, skilled workforce, and that definitely matters.

There are also benefits around anti-capture. Institutional incumbency doesn’t dominate in the same way. Professors—yes, some big names become established—but overall there’s more flexibility and nimbleness to follow new opportunities.

But there are disadvantages too. The PI-centred model fragments our efforts. You get a lot of brilliant individual projects, but they don’t necessarily add up to more than the sum of their parts. Some of the big challenges we face require people pulling in the same direction.

And if we’re channeling a disproportionate amount of research through universities, we’re governed by the institutional logic of universities—and there’s nothing wrong with that, that’s how they operate. But universities optimize for publications, academic prestige, tenure track positions. That’s not necessarily aligned with what Canada needs economically or in other policy areas. How do we create spinoffs, commercially useful IP? How do we address environmental concerns?

So I think we need to explore a different balance here, particularly when it comes to industry. But that opens a whole other set of policy challenges, because there’s only so much the government can do about that.

AU: Over the last decade or so, we’ve seen the emergence of funding for grand challenges—money aimed at tackling big or “wicked” problems rather than being doled out purely on a disciplinary basis. I get the impression Canada is pretty reluctant to go down this road. And by Canada, I mean the scientific community.

This was an idea that came up in David Naylor’s 2023 report on Tri-Agency funding, where he argued Canada should have a capstone agency above the Tri-Councils focused on these grand challenges. But I get the impression words like “capstone” and “challenges” are almost taboo in the research community—you’re not supposed to say you like the idea.

Why hasn’t Canada embraced this type of funding?

RA: I understand the skepticism. No one wants another layer of bureaucracy, and you can see how that could create inefficiencies. Nonetheless, I think this kind of coordinated, strategic leadership is essential. I generally agree with David Naylor and his panel’s recommendations.

The skepticism isn’t just about bureaucracy. There’s also a fear that important investments in basic research will be cannibalized by a shift toward grand challenges. And that could indeed be a concern. Universities are in tough times right now. And inertia plays a role—change is hard, and our institutions and silos are powerful. Coordination can feel like a threat rather than an opportunity.

I also think “capstone” becomes a dirty word because it implies someone swooping in, bossing everyone around, making decisions about priorities. Some people will get more resources, others will get less. That means a loss of control and influence. And that concern is totally understandable.

We do need to guard against being too subject to the political whims of the day. We need deep strategic thinking and broad engagement across the community—university researchers, community leaders, industry, policy leaders—to identify the right areas to focus on.

Overall, I’m pretty bullish on the need for change. Maybe capstone isn’t the perfect solution—the devil’s in the details—but if that’s the horse in the race, then maybe we should start riding it.

Let me give you an example from Genome Canada. We faced the same challenge. We were created 25 years ago, in a very different scientific landscape. Globally, we spent $3 billion over 15 years to sequence a single human genome. Today you can do that overnight for a couple hundred dollars. So what does that mean for an organization like ours?

Twenty-five years ago, we were funding capacity building and what was essentially basic research—excellent, foundational science. But over time, as I came into this role about six years ago, people were asking whether funding individual projects was still the right use of resources.

We made a fundamental shift to a mission-driven approach. We now know what kinds of problems genomics can solve. So rather than just funding the best individual scientific projects, we require projects to contribute to something greater than the sum of their parts—something with persistent value for the country. Something that will move the needle in areas like health, agri-food, natural resources.

We still fund a lot of research, but we now also invest heavily in engagement to identify where the challenges are, in coordination across projects, in building sovereign data assets, and in thinking about how scientific investments turn into national assets rather than just individual research outputs.

AU: Let’s think about Canadian science 20 years from now. How different do you think it will look? Will we still have the same institutions? Will the Tri-Councils still exist? Will our position in world science be stronger, or maybe weaker? I don’t know—how do you see things evolving right now?

RA: This is… I don’t know, man. This is a pretty crucial moment. I am hopeful—maybe cautiously optimistic. I was definitely encouraged by the recent federal budget. Apart from the big investment in talent attraction, there were signals suggesting the government sees research and innovation as pillars of national productivity. That really matters.

There was also language about moving toward capstone coordination and reevaluating funding models for retention and research. That suggests to me—and I know this from other conversations—that the government is continuing to think about the system as a whole. That’s encouraging. I don’t think this is a one-and-done effort from the federal government, which is good.

And of course, in Canada, we also have to think about the provinces. A lot of provinces are doing genuinely interesting things. Ontario has shifted its focus toward life sciences with real positive potential. Alberta—despite some political rhetoric getting the attention—is actually making smart decisions in its research investments. And even somewhere like PEI has quietly built a world-class biosciences cluster that could rival anywhere in the country. There’s innovation happening on the ground that doesn’t always make headlines.

As for what it’ll look like in 20 years—will we still have the Tri-Councils? I think so. Not just because of Canadian conservatism and inertia, but because they serve an important function. Funding basic research with links to student training and education is absolutely crucial. It’s one of the best parts of our university system, in my view. So I think we need to maintain that.

But I do hope our institutions start to look different. This is a wake-up moment for Canada. We can’t be complacent or comfortable anymore. The question is: are we ready to rise to the moment? Can we be sharper and more strategic? Can we address the big challenges we have? Can our science community evolve from what has been—yes, an uncertain funding environment, but also a reasonably comfortable one—to seeing ourselves as true partners and contributors to national challenges? Those challenges are economic, climate-related, health-related, social.

I’m hopeful about our ability to evolve. What I see from Canadians right now is positive. The fact that Canadians still trust science, by and large, is important these days. The question is whether we can leverage our advantages—our talent, infrastructure, resources—to make the changes necessary so that research contributes effectively.

I’m committed to doing that, and I see a lot of people around me who are too. That’s what gives me cautious optimism.

AU: Rob, thanks so much for being with us today.

RA: Thank you, Alex. This was great.

AU: And it just remains for me to thank our producers, Tiffany MacLennan, Sam Pufek, and you, our listeners and readers, for joining us. If you have any questions or comments about today’s podcast, please don’t hesitate to get in touch at podcast@higheredstrategy.com.

Join us next week when our guest is… me. Next week marks the release of the World of Higher Education Year in Review, our new annual global scan of developments in higher education. I’m really excited to tell you all about it—and Tiffany will be the one asking the questions. Hope to see you then.

*This podcast transcript was generated using an AI transcription service with limited editing. Please forgive any errors made through this service. Please note, the views and opinions expressed in each episode are those of the individual contributors, and do not necessarily reflect those of the podcast host and team, or our sponsors.