A federal budget that further cements the Harper government's stance on research and development is fuelling a growing debate over what science is for and the best way to support it.

"Science powers commerce," Mr. Harper has said – a catch phrase that is reflected in the details of the 2013 budget.

But many worry that the budget's emphasis on applied research and commercial outcomes is weakening the country's scientific capability in the long term.

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Proponents of industry-targeted funding say it focuses national expertise and improves Canada's ability to compete globally. The trend is international, as other nations seek to maximize their returns on scientific investment. Yet stagnant support for basic research at Canadian universities comes with risks, policy experts warn. It means Canada could begin to lose its intellectual capacity to absorb new developments from abroad that can turn into applied research at home. And basic research is the training ground for a scientifically skilled work force.

"The assumption is that universities are there to create intellectual property," said Adam Holbrook, associate director of the Centre for Policy Research on Science and Technology at Simon Fraser University. "Really, the role of the universities is to create human capital."

Scott Findlay, a biologist at University of Ottawa and founding member of Evidence for Democracy, a group that advocates for science-based decision making within the federal government, said that of the new money directed towards scientific activity in the budget – for example, $37-million annually for academic research partnerships with industry – most is explicitly linked to commercialization. "It's unbalanced," he said.

"Under Mr. Harper, the government seems to be moving away from investing in basic research and putting more resources into the end of the innovation cycle," said Dr. Findlay

"Basic research really is what creates the scientific capital out of which applied research, practical things, commercial things, arise," said James Turk, executive director of the Canadian Association of University Teachers, based in Ottawa.

The association has charted the flow of federal research dollars through the government's granting councils. It finds that after factoring for inflation, base-level funding for research has decreased by 7.5 per cent since 2007. And while the funding pool is diminishing, a larger share of it is targeted funding that may be linked to a particular commercial sector or political goal.

"What you see is this trend to use universities as surrogates for industrial research," said Paul Dufour, a science policy adviser and principal at PaulicyWorks, based in Gatineau, Que.

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University administrators have been more positive about the budget because, as the government moves to rein in the deficit, they say the impact on their institutions could have been worse.

"They're not only not cutting us, they give us a little bit of money here, a little bit there," says Amit Chakma, president of the University of Western Ontario, who also heads the U15 group of Canada's most research-intensive universities.

Dr. Chakma said that austerity budgets of the early 1990's brought more painful consequences for Canadian scientists than anything in the current budget. Then, as the country's fiscal situation improved, the Chrétien government later made major investments in research – a pattern the Mr. Harper could emulate as the economy recovers, he said.

Yet many policy experts say the debate over basic versus applied research obscures the fact that the government needs a more coherent science strategy now – one that builds across the innovation cycle, from pure blue sky research to cutting edge industrial development.

"You actually need both," said Doug Wallace, Canada Excellence Research Chair in Ocean Science and Technology at Dalhousie University. "The problem is that the gap between the two is too large."

Dr. Wallace, who worked in Germany for many years before coming to Dalhousie, noted the importance of institutions like Germany's Fraunhofer Institute, which receives funding both from public and private sources and focuses on problem-solving research, filling the the middle ground between academic institutions and industry.

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"We've not had that in Canada," said Richard Hawkins, Canada Research Chair in Science Technology and Innovation Policy at the University of Calgary. "There's been a disconnect between knowledge production and the capacity to pick it up and run with it."

Dr. Hawkins said a positive sign in the budget is the government's effort to shift the National Research Council (NRC) toward collaborative research and development involving businesses and universities, following from a recommendation in the 2011 Jenkins report on innovation in Canada.