Recalibrating Canadian universities to meet the Mark (Carney)

As part of his single mandate letter to all ministers,  Prime Minister Carney emphasized the delivery of a strong economy as the Canadian government’s central organizing principle. It is time for university leadership to better understand how higher education contributes to the economy and to build pragmatic solutions. 

For years, Canadian University presidents exhorted governments to invest more in research to power innovation and economic growth. In a 2017 opinion piece, the presidents of three universities highlighted the stories of the remarkable research of Geoffrey Hinton in artificial intelligence (AI), Bernard Belleau in developing a HIV/AIDS treatment and in creating BioChem Pharma, and Michael Smith on site-directed mutagenesis. While groundbreaking and contributing to Canadian research prowess, the innovations in all these cases left the country, contributing to foreign rather than Canadian economic growth. Dr. Hinton left for the U.S. and, when he returned, continued to provide Google with his patents. BioChem Pharma licensed its product to GlaxoSmithKline at the preclinical stage, leaving most of the development (and the economic benefits) to its foreign licensee. Further, Dr. Belleau and his colleagues sold BioChem Pharma to Shire Pharmaceuticals in 2000 for $13 billion, a windfall to its shareholders with little benefit to Canada. As for Dr. Smith, while he brought to Canada the prestige of the Nobel Prize in chemistry, he left the development of his research to the U.S. with the of what is now Zymo Research and patents held by collaborators at the California Institute of Technology.  

If these are the best examples of government funds into university research, they demonstrate an economic failure despite great research success. The Carney government recognized as much in its 2025 budget where it imposed an across-the-board two per cent cut to funding agencies. While the budget set aside $140 million a year over eight years to attract or repatriate foreign-based researchers through the Impact  Research Chairs, most university research faces a cut in what is already a meagre research budget compared to competitor countries. 

The university presidents are not entirely wrong: Canadian post-secondary institutions are global research leaders. As economist Don Drummond recently noted ,“the Canadian post-secondary education sector accounts for double the portion of overall R&D than in the overall OECD.” However, research strength alone does not automatically translate into economic growth. Ultimately, innovation and economic growth are driven by the private sector, both for-profit and not-for-profit, rather than by post-secondary institutions directly. 

Instead of pushing a failed equation of research funding with innovation and economic growth, university leaders need to go “back to basics.” They need to recognize that post-secondary institutions contribute to innovation in specific ways: by passing on knowledge and skills to students, by partnering with the private-sector, and by building knowledge infrastructure to support innovation. Leaning into these fundamentals creates a message worth funding. 

A significant challenge is that Canadian firms are comparatively poor at adopting technology that render their workforces more productive. One difficulty is that universities do not train graduates on cutting-edgetechnology, except in some elite labs focused on research where students have greater access to expensive tools. When they enter the workforce, they do not bring skills on how to use new technology, decreasing the interest of firms willing to invest in technology that will better support the organization. While universities may provide a first-class education, they do not sufficiently develop the technical skills to drive a productive workforce. 

As the examples of Dr. Hinton, BioChem Pharma, and Dr. Smith illustrate, universities have focused too heavily on persuading firms to commercialize research ideas, rather than on building the innovation ecosystems that drive domestic innovation. Universities ought to merge their technology transfer units – responsible for selling or licensing university research – with their partnerships units to develop local ecosystems. The Montreal Neurological Institute-Hospital demonstrated the promise of this approach when, in 2016, it moved away from patenting to build partnerships and saw a significant rise in corporate funding and recruitment. Similarly, the University of Toronto’s labs in the Structural Genomics Consortium (SGC) attract partners and funding through consortium-based collaboration rather than patents or licensing. One project, the Critical  Assessment of Computational Hit-finding Experiments (CACHE) competition, has the SGC testing molecules predicted by AI firms to accelerate drug discovery. 

Given that Canada has too few resources to squander, universities must play a role in bringing those resources together to support innovation. An important resource – especially in the era of AI – is building large data sets. These datasets are essential to training AI. Conscience, a Canadian non-profit focused on enabling drug discovery and development in areas where open sharing and collaboration are key to advancement and where market solutions are limited, is supporting universities in managing this transition by assisting in the construction and hosting of large datasets and of supporting spin-offs in regulatory and business development. 

The hand-waving of the past has left a sour taste with policymakers. To demonstrate the real importance of universities in supporting Canadian innovation and growth, university leadership needs to change direction by focusing on training students, building consortia, and making data available to firms. By doing this, they can better convince governments to fund their infrastructure, direct research funding to partnerships and actually be the hub of local innovation ecosystems.