1.         General

Government spending is up by some 11%, the largest increase in recent

memory. The most significant increase is in health spending. These increases

implement the previously announced First Ministers Accord. Other major

increases include the military, the child tax benefit, day care, and

programs for Aboriginal people.

2.         Direct Research Costs

Funding for the three granting councils is to be increased by a total of

$125m in each of the next three years. CIHR will get $55m a year, NSERC will

get $55m a year, and SSHRC will get $15m a year. This is approximately a 10%

increase each year on current base budgets.

Genome Canada has been allocated an additional $75m specifically for medical

genetics.

3.         Indirect Costs

The indirect costs program has been made a permanent program. $225 million

has been allocated for each of the next three years. The program is to be

evaluated in year three, with particular attention to the impact of the

program on the increased commercialization of research.

4.         Infrastructure

CFI has been allocated an additional $500m to support infrastructure costs

of research-intensive hospitals. The money has been allocated over the next

four years.

5.         Other Budget Provisions

There are several other important budget initiatives that relate to health

research: 1) our colleagues at the Rick Hansen Foundation will receive $15m

over seven years to support research on spinal cord injuries

(congratulations to Rick and Greg Latham who have worked hard over many

years to secure this support), 2) the graduate scholarship program is being

expanded to include 4,000 more scholarships for master's and doctoral level

students at a cost of some $100m. At present, the allocation is 60% to the

SSHRC community, 30% to the NSERC community, and 10% to the CIHR

community-we will have to work to see if we can change this allocation, 3) a

patient safety institute (medical errors, drug interactions, etc.) is being

established with $50m of funding over five years, 4) $190m has been

allocated over 5 years for regulatory reform and, in particular, to improve

the approval process for new drugs, and 5) the Canadian Health Services

Research Foundation has received $25m over ten years to develop an executive

training program.

There was no budget allocation for the proposed Health Innovation Council

(Henry Freisen, Aubrey Tingle, Public Policy Forum, et. al.). This

initiative will likely be considered in next year's budget.

DISCUSSION

The allocation for CIHR is not what we had hoped for, but it is not

unexpected given the tone of our discussions with politicians and

bureaucrats this year. However, I am advised by CIHR that a number of steps

can be taken to manage this allocation, at least in the coming year. CIHR

feels the allocation should allow for the funding of just about all the

proposals that have been rated at "4" or above. Success rates should edge up

from about 24% to about 27%. In addition, the allocation to each of the

Institutes for strategic initiatives should about double to $5m. It appears

there may be a bigger "crunch" in 2004-2005, but we have a year to work on

increasing the allocation.

Last year's budget provided affirmative action for CIHR-CIHR's increase was

about 15%, while the increases for the other granting councils was half that

amount. This year, all three granting councils received the same

proportional increases and the budget plan calls for the same approach in

years two and three. We are going to have to probe deeper to see what is

behind the decisions this year and what we have to do to make a special case

for CIHR in the future. If the granting councils are now seen to be in lock

step, we might have to promote special initiatives (as opposed to core

budget increases) as a way to secure increases for CIHR in the future.

The lower than hoped for dollars in CIHR's budget is offset somewhat by

other budget initiatives, including the scholarship program-an initiative

that was not expected. If we can work to increase the allocation of funds

from this program to CIHR, this could help to support existing and new human

resources development programs within CIHR.

The budget introduces multi-year funding for the granting councils. This is

precedent setting, entirely reasonable, and something we had pushed hard

for.

The Deputy Minister of Health is offering a detailed briefing tomorrow

afternoon. If there is anything new that comes out of this meeting, I will

be back in touch with you.