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There's a popular myth about universities as ivory towers full of fat-cat academics and loopy students asking unanswerable questions. Their willful irrelevance is a waste of taxpayers' money, so the critics say; get them out of the public trough and doing things Canadian business can really use. I call it a Zombie idea. It's dangerous, because it has infected some decision-makers. And it's hard to kill, because there is some truth, and therefore some life in it.

On this latter point, recall that federal and provincial governments sharply increased their spending on research starting in the 1990s. We owe a debt to the university leaders who advocated for those increases. But, in making the case, they expected an economic bonanza – just a hop and a skip from the lab bench to new multinational superstar companies. Everyone forgot that the private sector – not universities – ultimately drives commercialization. Failure to meet those expectations has helped feed the research Zombie, increasing the clamour for applied research with a short-term orientation.

In fact this Zombie has already had an effect on research funding. The data in the first accompanying graph, Fettered and Unfettered Research, show the funding patterns for the Natural Sciences and Engineering Research Council of Canada over the last 30 years.

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You can see the pronounced trend. Converting the proportions into real dollars, about $230-million of federal funding has moved from unfettered to fettered research at the University of Toronto over the past five years alone, roughly consistent with a pattern stretching back almost a generation. In other words, we are already engaged with partners. We are already engaged in match-funded, industry-facing research with an applied orientation. This is a national trend, driven by funding decisions over many years.

But did anyone notice that our innovation and competitiveness indicators improved over this period? I didn't. In fact, the real problem was never the type of research that universities were doing – we had the wrong diagnosis, and the wrong prescription. It was business-related R&D spending that lagged, which is why the Jenkins Panel (on which I was privileged to serve) was convened by the Minister of State for Science and Technology, to examine how to stimulate business spending on innovation.

This funding ecosystem, combined with many disincentives to excellence, makes it harder for us to reach the top tier of the podium. Perhaps this is why Canada has had no home-grown Nobel laureates for 20 years. The research Zombie masters would have you believe that it doesn't matter. Nobel, Schnobel – let's level down in the best Canadian tradition and go for the bronze. But there are very good reasons why great basic, disruptive, fundamental research matters.

The first is that the success of home-grown Nobel laureates – not imports – raises aspirations for everyone. Their scholarship inspires and attracts others to follow. Put another way, a country where world-shaking discoveries are made routinely is a country that will always be able to compete by attracting the best and brightest to its shores.

The second is that great scholars doing fundamental research are often inspiring teachers. Ray Jawardhana, for example, is a star-gazer, hunting for Earth-like planets. What's the value of that? You can't turn that into a product or service tomorrow. But Professor Jawardhana's work raises fundamental questions about humanity's place in the cosmos. He and countless other colleagues spend their lives asking questions that stretch young minds and change expectations. We want – and we need – a generation of young Canadians for whom the sky itself is not the limit.

And here is a third reason why serious fundamental research matters. In my field, medical research, countless discoveries with no immediate application turned out to be the foundations for life-changing and live-saving innovations in clinical care. You can't predict this in advance. We need to remember that the distinction between fundamental and applied research is misleading. As Nobel laureate Sir George Porter famously pointed out, there is applied research and yet-to-be-applied research.

Geoffrey Hinton's research into machine learning algorithms and deep neural networks is a brilliant case in point. It has led to unexpected advances in computer vision, speech-recognition, data mining, and – astonishingly – real-time language translation that is now used by Google and Microsoft.

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There is another facet here. One needs excellence in research and scholarship across disciplines because no one can predict how disciplines will collide. So much of the best innovation is convergent.

Here is just one fascinating example. Lorna MacDonald teaches performance, opera, and vocal pedagogy in U of T's Faculty of Music – a very strong program, internationally renowned. At the same time, Professor MacDonald collaborates with the clinicians at the Hospital for Sick Children on cochlear implants, laryngology, speech-language pathology, and pediatric voice and hearing care.

In closing, I offer both a warning and a note of optimism. First, the warning. The second graphic, Measuring Up in Global Rankings, presents composites of rankings across multiple league tables involving Canada's research-intensive universities.

The data suggest that not enough of our best research universities are figuring strongly on the world stage. And some of them are at serious risk of losing ground. In one jurisdiction after another – China, Brazil, Singapore, France, Germany, the U.S. and the U.K. – major targeted investments have been made to ensure that the strongest research universities are able to compete globally.

Earlier this month, the Times Higher Education group released their rankings of university reputations. These results are based on a survey of thousands of professors worldwide. McGill and the University of British Columbia went from 31st from 25th place. Toronto held steady at 16th. (The third graphic, Canadian Universities in World Rankings, shows these comparative rankings)

Let me share the warning from Phil Baty, the editor of the Times Higher Education rankings and a veteran observer of universities worldwide. Mr. Baty said that the decline was a direct result of Canada's "highly egalitarian approach." He put it precisely: "Countries around the world are picking winners and investing heavily in them, so they are coming up the ranks while Canada is slipping."

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Sobering as it is, Mr. Baty's concise formulation does not address what for me is the most important asset of all – and the asset that will be devalued the most if the Zombies win. I am referring, of course, to young talent. The resources that matter most aren't in the ground or offshore. The resources that will win the day for Canada are the inquiring, agile, and creative minds of the next generation.

I continue to believe that, given the right education and opportunities, with a full suite of institutions with different missions, including research universities that can compete on the global stage, the next generation of Canadians will make great discoveries, develop transformative technologies, imagine more successful societies, ask hard questions, and lead with verve and vision. I also have faith that, in the years ahead, if we make the right choices, the Zombies will disappear – and our young people will secure a bright future for this great country.

David Naylor is the president of the University of Toronto. This article is abridged from a speech to the Empire Club earlier this month.

Higher Learning looks at the trends, experiments and debates behind the education headlines.

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