Just seven years later, much has changed. U of T, like Canada's three other major research institutions, has benefitted greatly from the so-called "innovation agenda" — a succession of substantial spending initiatives and policy shifts by Ottawa, as well as the provincial governments in Ontario and Quebec, aimed at boosting Canada's R&D capacity. "Unbelievably welcome" is how Munroe-Blum describes such measures.

But she doesn't shy away from noting some of the ironies and perversities that have emerged in this new policy environment. Take, for example, the issue of the indirect cost of research — a hot-button topic among academics, but one that attracts scant attention among even the most informed voters.

Studies in Canada, the United States and Europe indicate that as much as 30-40% of the value of a research grant is required to finance infrastructure costs indirectly related to that research — everything from managing university libraries to maintaining lab equipment such as fume hoods and operating animal facilities. In Canada, unlike the United States and much of Europe, federal research grants don't cover such expenses, which means they come out of a university's general operating budget.

Here's the rub: With hundreds of millions of research dollars available through programs such as the Canadian Foundation for Innovation, academics at institutions such as U of T are racing to secure major new contracts, the indirect costs of which are borne by universities, whose administrators — still fighting the lingering effects of core funding cuts from federal and provincial governments — pass along part of these expenses to their students in the form of higher tuition fees. "A double-edged sword," says Dr. Munroe-Blum. "It is an undermining of this very important investment of these new programs."

Such problems underscore the fact the recent push to invigorate Canada's productivity levels by pumping money into academic research isn't a straightforward proposition. Among economists, there is a strong consensus that productivity is directly linked to technological innovation and the existence of a well-educated labour force that includes large numbers of scientists and engineers.

There's also a long-standing recognition that the productivity gap is related to the fact Canada's R&D expenditures — about 1.6% of the GDP — significantly lag those of its major trading partners, a state of affairs the Liberal government last fall vowed to change within 15 years. Interestingly, a recent OECD study shows Canadian university researchers are far more dependent on industry funding than their counterparts in countries such as Japan and the United States, evidence that Canadian governments have fallen behind in providing the wherewithal for basic research.

Robert Giroux, president of the Association of Universities and Colleges of Canada, told a Commons committee this spring that Ottawa has recognized the role post-secondary education plays in spurring innovation in the economy. "However," he added, "to ensure that Canadian universities can contribute fully to the innovation agenda, we have to resolve the current funding crisis facing universities."

He pointed to the fact the average federal research grant in the United States is three times larger than in Canada. Canadian universities also have a $3.2-billion backlog in deferred maintenance, a third of which is considered urgent. And according to the AUCC, total government funding for post-secondary education in Canada is still 13% below 1993 levels, whereas U.S. institutions have seen a 20% increase over the same period. Canada, Dr. Munroe-Blum adds, also has a poor track record when it comes to investing in international research ventures, increasingly seen as a major venue for cutting-edge scientific work.

But some critics argue that productivity gains have more to do with macro-economic factors, such as tax systems that encourage private sector investment in R&D, and exchange rates. They question the recent conventional wisdom that federally sponsored research automatically spurs this particular measure of economic vitality. "Government-sponsored R&D doesn't have any observable link with productivity growth," says C.D. Howe economist Bill Robson.

Why? Some academics, such as U of T economist Angelo Melino, point to the fact that some of the new research money has arrived with a political agenda attached — for example, so-called "directed" funding that has been targetted by federal research councils for so-called New Economy topics. In his view, this is an example of the proverbial cart leading the horse, and comes at a time when young academics — those who are most likely to look elsewhere — are having an increasingly difficult time securing their first research grants.

Such examples underscore that the close connection between post-secondary education and productivity growth is based on a range of policy areas, only some of which have to do with research dollars.

Others include the number of scientists and engineers graduating with advanced degrees. In this regard, steadily rising tuition fees are clearly a concern, say student groups and university faculty associations, because student debt loads pose a daunting financial deterrent for many young people considering higher education. Recent federal measures to encourage parents to save for their children's higher education won't begin to produce results for at least another decade, while recent decisions by many provincial governments to deregulate tuition have triggered sharp fee hikes for specialized degrees, such as medicine.