Finance Committee on Sept. 27th, 2006

[John McKay, Liberal, Scarborough—Guildwood, ON]

How many families would there be with an income over $30,000?

[Eileen Klinkig]

Approximately 15% to 20% are over $30,000.

[John McKay, Liberal, Scarborough—Guildwood, ON]

In terms of overall numbers, it is a pretty insignificant number of families that would actually benefit from this initiative.

[Eileen Klinkig]

That's right. However, the low-income families would benefit.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Exactly. You're actually getting the benefit to the people who need it the most, which is intelligent economic theory, as opposed to this current government's theory.

Ms. Morris, you say in your executive summary, “In the 2006 federal budget, the government set out to improve the prosperity of Canadians by dealing with the challenge of increasing Canada’s productivity and competitiveness.” Then you list three or four items that generously total about $200 million. I don't quite see how you can make that statement and then at the end of your presentation say that we need investing at international competitive levels, federal research, that you want the indirect cost for university research upped to 40%, etc. The two statements don't live in the same universe. In the last budget you got nothing, and this government shows no interest in actually dealing with this issue.

Give me some reason for hope here. If you only got about $120 million to $200 million in the last budget when they were flush with cash, why do you think you're going to get anything in the next round?

[Claire Morris]

Mr. Chairman, in fact, in last year's budget, as I indicated in my statement, we did receive $100 million: $40 million to the direct costs of research, $40 million to the indirect costs, and another $20 million to the Canadian Foundation for Innovation. The important thing for us was the recognition of the importance of university research as a major contributor to Canada's competitiveness and productivity. No, it's never everything that we want, but it was a major contribution.

The point I would like to make is that the shortfall, and you will have seen in our brief that we've identified that it is the most critical for the universities.... We have set a target of reaching 40% of indirect costs as being the real cost of supporting research inside the universities. We are still at an average of only 26%, and this is an area that really does have to be shored up.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You got chump change in the last budget.

[The Chair, Conservative, Brian Pallister]

The next questioner will be Mr. St-Cyr.

You have five minutes.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you for taking the time to be with us today.

My first question is for Mr. Alaku. I read your recommendations, and I would like you to tell us what the impact on your community would be if these recommendations are implemented.

One can easily imagine the social impact they would have if people had more money to buy food and meet their basic needs. Do you think the impact would be the same across all your communities?

[Adamie Alaku]

It would benefit a lot more if it became a refundable tax benefit, instead of a deduction, because as Eileen says, a lot of our people don't have much education, and they hold the low-end jobs in every job market.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I see. Thank you.

I also have a question for Mr. Turk from the Canadian Association of University Teachers, who is asking for an increase in education transfers.

Earlier, other groups asked that 1995 funding levels be restored, taking into account inflation and higher student enrollments, for a total of $4.9 billion. Is your organization also asking for the same amount?

[James Turk]

It's very difficult to estimate what it will need precisely, because with the creation of the Canadian health and social transfer, the CHST, everything was lumped together, and one can only estimate what percentage was allocated for post-secondary education.

As I tried to mention in my presentation, we're recommending that the federal government fund post-secondary education based on the capacity of the economy. That's why we think it should be a percentage of the gross domestic product, the wealth created, and we figure one-half of one penny of every dollar created by the economy is an appropriate level of funding. To get to that level would require more than a $4 billion increase in funding.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I see.

As far as transfers are concerned, I don't really know whether you're talking about national programs or requirements, similar to what used to be done for health care.

Like most stakeholders in Quebec, the Bloc Québécois is vehemently opposed to any strings being attached to these education transfers, since education is a provincial responsibility, and particularly since the Canada Health Act, which does force the provinces to meet certain conditions, has never prevented the government -- it's important to point this out -- from making drastic cuts in education transfers.

So, would you like to see national standards put in place or do you feel that the provinces' jurisdiction should be respected and that the choices should be left to them in that regard?

[James Turk]

I don't know if you'll be happy with my answer.

My answer would be “both” in the sense that, on the one hand, as you know, when the British North America Act was created, there was no post-secondary education. So the description of education as a provincial jurisdiction was in the context primarily of elementary school. Since that time, there has been the evolution of post-secondary education, and clearly post-secondary education in some dimensions is very much a national market. Students transfer from one province to another. Faculty move across from Laval to UBC, to the University of Alberta, to the Université de Montréal. There's a lot of movement in that sense. So at some level there's a national aspect to post-secondary education and, as well, very much a provincial aspect.

We recognize that the growth of our post-secondary education system happened only after the federal government started making significant contributions. Secondly, as the federal government cut back in its contributions, our system has suffered. Some provinces, such as Quebec, have really held the line to make their system accessible to students by keeping tuition low. Others have seen student tuition as a way to make up for absent government funding.

Our proposal comes out of a notion that the federal government is not in fact going to increase the level of funding necessary without some assurance that the provinces will actually spend that money on post-secondary education, but it has to be very much a joint federal-provincial determination of what the guidelines are. As well, we're quite clear in our draft post-secondary education act that the right of Quebec has to be recognized in the same way as we recognize the right of Quebec in terms of our national pension system and other matters. But in the absence of some assurance for the provinces that the federal government will transfer this money, and without some assurance for the federal government that the money will actually be spent, there is not going to be that kind of money; we've seen that over 20 years.

[The Chair, Conservative, Brian Pallister]

Merci beaucoup.

We must move on to Mr. Del Mastro. It's your opportunity, Mr. Del Mastro, for five minutes.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair, and thank you, everyone, for your presentations.

I'm going to try to get three questions in, so I'll ask for some fairly succinct answers.

Mr. Shaw, you had a number of what I think were very good comments with regard to staying the course with respect to investment into apprenticeship programs and hands-on training. Personally, I think this is a road to filling some of our skilled trade shortages. It's also a good way to help get people out of low-income jobs. Maybe you could comment a bit on that.

[Dr. William A. Shaw]

Thank you so much.

One of the organizations we work with is Women Building Futures. I can tell you first-hand that, in fact, if you take some low-income individuals or people who are on social rolls and bring them into the trades to fulfill the skills shortage, it works. We've certainly done things with our mobile education units in places like Conklin, where we've taken people who are on the social roll and now they're working for companies like Shell Canada.

So there is a track record. We need to make that investment, and you'll certainly see the revenues come back.

[Dean Del Mastro, Conservative, Peterborough, ON]

Ms. Maloney, you made a comment that I think is very apropos, which is to abandon the theory that one form of post-secondary education is superior to another. I think that's very important. I think we kind of have a theory that tells students, forget about where your interests lie; this is the best, and these others are all substandard post-secondary forms of education.

Maybe you could tell us a little bit about how we as a government could help you reinforce that.

[Sharon Maloney]

First of all, it's a question of attitudes that are not just government attitudes. We have attitudes with parents, we have attitudes with students, and we have attitudes with respect to people who are in the working community.

One of the things certainly the government could do to address this is to support and acknowledge programs that are directed towards the kinds of institutions that I am representing here, and to speak to the issue that one size does not fit all. We are not going to be able to be competitive on a national basis if we don't recognize this.

So when you're hearing from my member here, Mr. Shaw, talking about investing in programs that will leverage the training of apprentices, when we're talking about building infrastructure for schools like polytechnics, those kinds of concrete approaches need to be endorsed, because they will be the outcomes that actually reflect the change in attitude--and likewise with regard to research and the type of research that we're supporting or not supporting currently, and specifically with relation to applied research.

I think those areas would actually show that there is a change in attitudes, matched by actual actions.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Turk, you made a comment that there should be designated funding from the federal government to the provinces. I agree with you. I also think it's a good idea to do it as a percentage of GDP. I haven't had anybody recommend this so far. I think it's a good idea and a way the government should look at going.

My mother is a former financial aid officer at a university, so I have a little experience with this. You mentioned that ability, not wealth, should determine who goes to university. I think there's a number of uncontested qualifiers that haven't worked in the past, whereby somebody has been determined to be wealthy and therefore not qualified for a grant. Maybe we could talk about the benefits. In budget 2006, we opened up the student loan program and made it much easier for people to get student loans. Maybe you could comment on the effect of this on enrollment.

[James Turk]

One of the difficulties is that universities and colleges have few options when there's a cut-back in federal or provincial funding. Raising tuition and student fees is one such option. About the only thing governments can control is the level of tuition, which is why we focus on it.

Various governments have attacked this through student loans and the student loan program. This is a mixed blessing. It means that the net cost for those students who have to borrow will be dramatically higher than the cost for those who can pay up-front. It also means that for some students, especially those who come from poorer families without a history of dealing with large amounts of money, there's a certain debt aversion. We know that a lot of students choose not to take loans, even though they're available. Then there's the large number of people who are considered middle class and don't qualify. Mr. Rae's report in Ontario said the level at which you cease to qualify was over $35,000. That creates real difficulty. I think we need to look at needs-based grants to supplement student loans.

[The Chair, Conservative, Brian Pallister]

I really hope you're not going to take this personally, but I have to cut you off again.

We've going to move on to Madam Wasylycia-Leis for five minutes.

Madam, please proceed.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I have another question for Jim Turk, who has offered valuable advice to us over the years.

I want to ask this general question. We've been hearing from the Conservatives, prominent business organizations, and even some Liberals that we should be focused on paying off the debt. The Conservatives are proud of the record they set yesterday by putting $13 billion against the debt. They believe we should give more tax breaks to corporations because it will trickle down to all of us. They suggest that if we don't do this we're holding our kids at ransom. If we do this, what happens to our kids and our future?

[James Turk]

There's a legitimate concern about economic debt. All parties have addressed this in one way or another and debated the question among themselves.

There's been insufficient attention to what I would call social debt. As we deny access to post-secondary education, which is necessary in order to advance, we're creating a different kind of debt. Our message, which I suspect other witnesses would share, is that investment in post-secondary education—and I'm talking about the whole range, not just universities but also colleges, literacy training, apprenticeship programs—is an investment that will pay off.

You don't make money in the future, you don't have a stable economic arrangement as an individual, family, or a country, unless you make investments for the future. There hasn't been sufficient attention to the investment value of supporting post-secondary education for students who have the ability and can participate, whether in apprenticeship programs, colleges, or universities. The mania of focusing only on the economic debt pits those two against each other. I think there's another way of viewing this. Those who are concerned about the economic debt can also realize their objectives by recognizing the investment in post-secondary education.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

At this point, I want to go to Claire Morris on the issue of indirect costs. I think it may be misinterpreted. You heard John McKay say that we've already put in as much as anyone has a right to expect. You seem to be saying that a lot of the research done by universities is a benefit to the country. For example, you cite the participation of the University of Laval and the University of Manitoba in the Arctic Net Centre of Excellence, which has a lot to do with climate change and the impact on the north and on Inuit communities. In another example, the Liberal government in the past cut back drastically on things like research into drugs, saying, don't worry, the universities can do it.

What you're saying, and I'd like some clarification, is that this is important work for the country, and that the government has an obligation to help meet the indirect costs.