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That academics should not be penalized for disagreeing with government policies is, I would think, a relatively uncontroversial statement. However, legislator Lu's claim that academic participation in street protests is a violation of civil service neutrality points to an interesting, and in this article, unexamined conflict of interest.
Just as the proverbial fish don't notice the water they are swimming in, so too academics - especially social science academics - tend not to be aware of just how deeply and narrowly politicized they are. That they can insist upon "academic freedom" from politics even whilst operating largely at the sufferance of the State is indicative of this tendency. One would not expect, for example, to find an academic interpret his findings by openly questioning - let alone refuting - the necessity of his own institution's research grant. It may happen from time to time, but as an "apostate" from the social sciences myself, I am convinced that it is far from the norm.
Given that inherent conflict of interest, it follows that there are very strong incentives for academics to rationalize their dependence upon the State. Thus, academics whose political thought relies on the tenets of one of the many varieties of socialist ideology, in which State sponsorship of certain endeavors is seen as a "corrective" to the "failures" of the market, will tend not to even think about it. When the political contingency of their funding is once more made salient to them, as for instance by the remarks of a KMT legislator, then it is not surprising that academics are prone to interpret such remarks as highly political "authoritarian threats", even though it is their own funding that is "political" in the first place, and it is their own premises that remain uncontested.
Whilst the question of whether social science should be funded by the State is indeed a political question, social scientists are arguably the least qualified people to answer it.
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