  The SPICA mid and far-infrared telescope will address fundamental issues in
our understanding of star formation and ISM physics in galaxies. A particular
hallmark of SPICA is the outstanding sensitivity enabled by the cold telescope,
optimized detectors, and wide instantaneous bandwidth throughout the mid- and
far-infrared. The spectroscopic, imaging and polarimetric observations that
SPICA will be able to collect will help in clarifying the complex physical
mechanisms which underlie the baryon cycle of galaxies. In particular: (i) The
access to a large suite of atomic and ionic fine-structure lines for large
samples of galaxies will shed light on the origin of the observed spread in
star formation rates within and between galaxies. (ii) Observations of HD
rotational lines (out to $\sim$10 Mpc) and fine structure lines such as [CII]
158 $\mu$m (out to $\sim$100 Mpc) will clarify the main reservoirs of
interstellar matter in galaxies, including phases where CO does not emit. (iii)
Far-infrared spectroscopy of dust and ice features will address uncertainties
in the mass and composition of dust in galaxies, and the contributions of
supernovae to the interstellar dust budget will be quantified by photometry and
monitoring of supernova remnants in nearby galaxies. (iv) Observations of
far-infrared cooling lines such as [OI] 63 $\mu$m from star-forming molecular
clouds in our Galaxy will evaluate the importance of shocks to dissipate
turbulent energy. The paper concludes with requirements for the telescope and
instruments, and recommendations for the observing strategy.
