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Finance Minister Jim Flaherty answers questions on Thursday in the budget lockup. The Conservatives have doubtlessly concluded that limiting the rate of growth of transfer payments to that of the economy – which is the same as keeping them at a constant share of GDP – is probably the most restraint they can impose without incurring lasting political damage.

University leaders are rejoicing at the federal budget's research and innovation measures, which they see signalling that the government has understood the need to back a strong research culture even in hard times.

In a budget of deep cuts, university presidents were happy and relieved to see funding levels for basic research maintained alongside new investments to link schools more closely with industry.

And they welcomed the stability that comes with new multi-year funding commitments to research infrastructure, such as $500-million for the Canada Foundation for Innovation and $40-million for CANARIE, which operates an ultra-high speed fibre-optic network for researchers.

"This really helps to position Canada as a research leader," said Stephen Toope, president of the University of British Columbia. "We've got to get better connectivity so that industry sees these ideas coming out of universities and takes charge of them and runs with them and really drives innovation."

The association representing some 66,000 Canadian teachers, librarians and researchers read the tea leaves differently, however, seeing a "narrow and short-term commercial agenda." The Canadian Association of University Teachers (CAUT) was particularly frustrated that although overall funding stayed constant for the three federal granting councils – the Canadian Institutes of Health Research (CIHR), Natural Sciences and Engineering Research Council (NSERC) and Social Sciences and Humanities Research Council (SSHRC) – $37-million was redirected within the councils toward industry-academic partnerships.

"By linking research only to business interests, the government will stifle rather than promote growth and scientific advancement," said CAUT president Jim Turk.

But University of Alberta president Indira Samarasekera, who described the budget measures as "exceptional" and "an enlightened approach," countered that industry and universities often partner to do fundamental exploration.

"I think when people look at industry-related research they often make the mistake that it's purely short-term problem solving, when in fact under that umbrella is also a lot of long-term, intellectually-driven research," she said.

Colleges also joined in the jubilation, touting their existing close ties with business and industry. Robert Luke, Assistant Vice President, Applied and Institutional Research at George Brown College, called the budget "good for competitiveness and good for productivity."

"The big message here is that the federal government is focusing its innovation efforts on the private sector, and that's something that's sorely needed in this country," Dr. Luke said. "We need to be a world-leading applied research and commercialization country. That's where this budget is heading us to."