<html><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; "><div class="Section1"><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span style="font-size: 11pt; font-family: Calibri, sans-serif; color: rgb(31, 73, 125); ">Please read this analysis on how the new budget affects higher education… note that the granting councils were cut and the money put into graduate scholarships. It is mind-boggling.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span style="font-size: 11pt; font-family: Calibri, sans-serif; color: rgb(31, 73, 125); "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span style="font-family: Tahoma, sans-serif; "> </span><span style="font-size: 12pt; "><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">The following document highlights key items announced in today’s federal budget. A more comprehensive survey of all budget measures related to higher education and university research will follow tomorrow.</span></b><b><span lang="EN-CA"><o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "><o:p> </o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">Introduction</span></b><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">Finance Minister Jim Flaherty today presented his fourth budget since the government took office in January 2006. With the country in a recession, Budget 2009 proposes a major economic stimulus package, with more than $40 billion in support of the Canadian economy over the next two years. Most of this spending is for economic stimulus measures that are “timely, targeted and temporary”. <i>Advantage Canada </i>and the government’s Science and Technology Strategy<i> </i>remain important documents of reference for the government as it looks to spend money on projects that “protect the jobs of today, while readying our economy to create the jobs of tomorrow”.</span><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "> </span><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">In this context, AUCC strongly welcomes the investments in higher education and university research infrastructure announced in the budget, specifically the knowledge infrastructure investment that relates to our pre-budget submission to Minister Flaherty. Industry Canada will manage a $2 billion infrastructure fund to support deferred maintenance, repair projects and construction at postsecondary institutions. A number of other significant announcements related to infrastructure have a university link, notably $750 million for current and future activities of the Canada Foundation for Innovation, including the launch of one or more new competitions by December 2010.</span><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "> </span><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">Mr. Flaherty's budget plan predicts a significant deficit of $33.7 billion for the 2009-10 fiscal year and $29.8 billion the following year. Against this backdrop, 21 federal departments and agencies were asked to undertake a strategic review of their expenditures. The reviews identified savings of $586 million a year that are being redirected to fund new initiatives. This exercise resulted in reductions in the granting agencies’ budgets of $17.7 million in 2009-10, followed by a decrease to $43 million in 2010-11, and to $87.2 million in 2011-12. </span><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">No additional support for the Indirect Costs Program was announced. However, additional funding of $87.5 million was announced for the Canada Graduate Scholarship program.</span><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="color: black; "> </span><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">The budget will require the support of newly-appointed Liberal leader Michael Ignatieff to pass in the House of Commons, as the Bloc Québécois and New Democratic Party have already indicated that they would oppose the budget. Mr. Ignatieff is holding a special Liberal caucus meeting tonight and will inform the House of Commons tomorrow whether Liberal party members will support the budget.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "> </span></b><span lang="EN-CA"><o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">University infrastructure<o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; ">AUCC’s pre-budget brief recommended including a targeted university infrastructure initiative to address the $2.4 billion in universities’ urgent accumulated deferred maintenance backlog as part of an effective economic stimulus package. </span><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Budget 2009 provides up to $2 billion over two years for accelerating repairs, maintenance and construction at postsecondary institutions. The funds under this initiative will be managed by Industry Canada, with 70 percent of the funding dedicated to university infrastructure and the remaining 30 percent for infrastructure at colleges.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">While many details have yet to be worked out, the budget proposes that allocation will be based on project merit and readiness and the funds will pay for up to half of project costs, leveraging an equivalent amount from other partners. Preference will be given to projects at universities that can improve the quality of research and development at the institution. Projects at colleges will strengthen their ability to deliver advanced knowledge and skills training.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">In view of the partnership funding and project readiness requirements, having projects that are vetted by the provinces will help to expedite project approval.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Canada Foundation for Innovation<o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA"><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Additional funding for the Canada Foundation for Innovation is a major component of the government's infrastructure package. Budget 2009 provides $750 million for CFI, including $150 million in additional funding for the competition currently under way, the results of which are scheduled to be announced in June.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">The CFI funding also includes $600 million for future activities of the foundation, including the launch of one or more new competitions by December 2010 in support of priority areas identified by the Minister of Industry in consultation with CFI and guided by the foundation's strategic plan, which is to be developed by CFI in collaboration with the Minister of Industry. Budget 2009 sends a strong message that the government is committed to CFI for the longer term, stating that the government will “continue providing support for leading-edge research infrastructure through the Canada Foundation for Innovation.”<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Federal granting agencies<o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Budget 2009 indicates that the base budget of the three granting agencies will be reduced over the next three years, as part of the government’s strategic review process. The combined budgets of the granting agencies will decrease by $17.7 million in 2009-10, followed by a decrease to $43 million in 2010-11, and to $87.2 million in 2011-12. By 2011-12, the decrease represents a five percent cut from the current levels of approximately $1.7 billion. This decrease means that the combined level of funding in 2011-12 of the three granting agencies will be the same as in 2007-08, not taking into account inflation.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">The granting agencies undertook the strategic review process in 2008, along with 18 other departments and agencies, in order to identify low-priority areas where savings could be achieved, so that funding could be redirected within the organization or to other government priorities. The budget states that the resulting savings are being redirected to fund new initiatives, including funding for a temporary increase in the Canada Graduate Scholarships program (see separate item).<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Details regarding which of the granting agencies’ programs and /or expenditures will be affected by these cuts will be known only as of February 3.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Institutional costs of research<o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">No new investment in the Indirect Costs Program was announced in Budget 2009. Consequently, we anticipate the budget of the program will remain at its current level of $330 million for the year 2009-10, although we will need to await confirmation of this funding level on February 3 (as per the granting agency item above). Should funding remain at the current level of $330 million in 2009-10, the overall reimbursement rate of the program will fall from its current level of 25 percent to approximately 23.5 percent in 2009-10, given that the direct costs funding base on which the allocation is made (a three-year average of granting agency funding received between 2005-06 and 2007-08) has increased. The overall reimbursement rate in 2009-10 will be the lowest since the permanent program was established in 2003. In its pre-budget submission to Finance Minister Jim Flaherty, AUCC called for a minimum additional investment of $21 million in the Indirect Costs Program, in order to maintain the current overall reimbursement rate at 25 percent in 2009-10.<o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Graduate student support<o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><b><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "> <o:p></o:p></span></b></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">As part of its effort to develop the highly skilled workforce of tomorrow, the federal government has committed to providing an additional $87.5 million over three years, starting in 2009-10, to the three federal granting agencies to expand temporarily the Canada Graduate Scholarship program. NSERC and CIHR will each receive $35 million while SSHRC will receive $17.5 million, to be focused on business-related degrees. <span style="color: black; ">The new funds will provide for an additional 500 doctoral scholarships, valued at $35,000 each per year for three years beginning in 2009–10, and an additional 1,000 master’s scholarships, valued at $17,500 each for one year, in both 2009–10 and 2010–11. The CGS program was created in Budget 2003 and currently supports 2,500 master’s and 2,500 doctoral students.<o:p></o:p></span></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; color: black; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; ">Budget 2009 also provides an additional $3.5 million over the next two years to the Industrial Research and Development Internship program. This will enable the program to offer an additional 600 graduate internships in science and business. The program was first announced in Budget 2007 and received $8.6 million worth of funding over two years to support 1,200 graduate and post-doctoral students in businesses across Canada. <o:p></o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA" style="font-size: 11pt; font-family: 'Helvetica Condensed'; "><o:p> </o:p></span></div><div style="margin-top: 0cm; margin-right: 0cm; margin-left: 0cm; margin-bottom: 0.0001pt; font-size: 10pt; font-family: 'Times New Roman', serif; "><span lang="EN-CA"><o:p> </o:p></span></div></div></body></html>