Finance Committee on Oct. 24th, 2006

[The Chair, Conservative, Brian Pallister]

Good morning, ladies and gentlemen, and welcome. We appreciate you coming today. We appreciate you being part of the pre-budget consultations of the finance committee.

I thank you in advance for the work you've done in preparing your briefs, which you presented to us already. As you're aware, you are confined to five minutes on topics each of which would merit, of course, many hours. I will ask you to confine your comments to the five minutes so we can allow for an exchange with committee members after your presentations are completed.

I'll give you an indication when you have one minute remaining, then less, and then I will mercilessly cut you off in your comments so we can move to the next presentation.

Thanks again for coming forward. I'm looking forward to your presentations this morning. We will begin with Chris Parsons, from the Canadian Federation of Students. Welcome, Chris, and five minutes are for you.

[Chris Parsons, National Executive Representative, Canadian Federation of Students]

Thank you. Good morning. My name is Chris Parsons and I'm the Nova Scotia national executive representative of the Canadian Federation of Students.

I want to thank the committee for this opportunity to present. I only have a few minutes today, so I would like to focus my remarks on a few key areas.

Canadians have long seen post-secondary education as a vehicle for social opportunity and yet low- and modest-income Canadians continue to be denied that opportunity because of costs. Tuition fees in Nova Scotia are at a staggering average of more than $6,500 per year, and the average student debt in the province has risen to more than $7,000 in just five short years, to reach more than $28,000, on average, for an undergraduate degree.

Statistics Canada reports that students from families with incomes in the lowest quartile are half as likely to participate in university as those students from families in the top earnings quartile. If Canada is going to reduce economic inequalities among provinces, as well as the inequalities among individuals in those provinces, and increase its competitiveness internationally, the Government of Canada must make affordable post-secondary education a priority.

The adoption of Bill C-48 was an excellent step forward to begin working to make post-secondary education in Nova Scotia more affordable; however, almost two years after its adoption, students have yet to see a penny of tuition fee relief. While the Conservative government reconfirmed its commitment to providing additional funding for post-secondary education, it significantly cut the money available and changed the focus from tuition fee reductions to infrastructure. While we agree that infrastructure is a problem in our province, its support should not come at the cost of continuing to neglect access. After all, it won't matter what sort of condition our buildings are in if no one can afford to study in them.

Additional funding for post-secondary education should not be a one-time investment. We recommend that the federal government, in cooperation with the provinces, create a dedicated post-secondary cash transfer payment for the purpose of reducing tuition fees and improving equality at universities and colleges. This transfer formed part of the Conservative platform in the last federal election; however, there is no commitment to increasing funding. The federal government should return spending levels to at least 1993 levels in real dollars. By most estimates, transfers currently fall short of 1993 levels by at least 20% on a per capita basis.

In addition, this transfer should be guided by legislation or other binding forms of agreement that would establish conditions for the transfer and commit the provinces to upholding principles similar to those of the Canada Health Act.

In 1998 the federal government made an important commitment to reducing student debt and improving access to post-secondary education when it introduced the Canada Millennium Scholarship Foundation, and $2.5 billion should have gone a long way to achieving those goals. Regrettably, the arm's-length foundation model of student financial assistance has proven to be a total and absolute failure. In Nova Scotia our provincial government simply replaced its own financial commitments with millennium scholarship money, meaning that students were no better off.

This fact alone is reason enough not to renew the foundation; however, the foundation's organizational culture makes the situation even worse. Its administrative costs have increased over 500% in the last six years, and literally millions of dollars have been funnelled into the Educational Policy Institute, an American outfit run by two former employees of the foundation. Many of those contracts were awarded without competition. The foundation is a case study in unaccountability and wasted Canadian tax dollars. Students need non-repayable grants. That's not the issue. The issue is how the Government of Canada administers grants, and the record is clear. The foundation has failed in doing this, and there is a better way.

Therefore, we recommend that the federal government wind down the Millennium Scholarship Foundation and fund a national system of needs-based grants. Systems are already in place through Human Resources and Social Development Canada to administer grants through an accountable means, ensuring that students actually get the assistance they need.

Many students relied, as I did, on full-time jobs throughout the summer to help pay the cost of education. Unfortunately, because of recent cuts to the summer career placement program, many students may find themselves without employment. In the round of service cutbacks announced earlier this month, the Treasury Board saw fit to make a 50% funding cut to the summer career placement program. Not only do students with no prior career experience desperately need this program to gain work experience in their fields, but more importantly they need the program to pay the bills. Tuition fees are higher today than at any point in our province's history, even when accounting for inflation. Cutting a summer employment program for students will guarantee that many students will need to go deeper into debt and acquire more loans. We hope this committee can reverse the Treasury Board's job reduction strategy.

Due to time constraints, I am unfortunately unable to speak to all of our recommendations. However, you have been provided with our brief, and I'd be happy to answer any questions you may have.

Thank you for the opportunity to speak to you about some of our concerns this morning.

[The Chair, Conservative, Brian Pallister]

Thank you for a fine presentation, Chris.

We'll continue with Ian Johnson, who is here from the Nova Scotia Government and General Employees Union.

Welcome, Ian. It's over to you.

[Ian Johnson, Policy Analyst/Researcher, Nova Scotia Government and General Employees Union]

Thank you, Mr. Chair, and good morning.

I'm here on behalf of our president, Joan Jessome, who is unable to attend. I appreciate the opportunity to speak to you this morning.

We're following a letter that was sent by my friend Chris Parsons on behalf of our Post-Secondary Education Coalition, which includes the Canadian Federation of Students; us; the Association of Nova Scotia University Teachers; and the Canadian Union of Public Employees, Local 3912.

I'm here just to present a few opening remarks for your consideration before the discussion begins, and I think you have our submission from earlier on.

In general, we support the right of all Canadians to participate in public education and training, including post-secondary education. Unfortunately, we don't see a great deal of progress being made either nationally or provincially toward the achievement of this principle. If anything, we seem to be moving backwards.

In our view, there should be little doubt about the importance and even the centrality of post-secondary education for the pre-budget consultation theme of the committee, Canada's place in a competitive world. For all the stated objectives in your media release of June 27, post-secondary education must play a central role.

As we've outlined in our submission, we see a critical situation developing for post-secondary education in this province, and probably across the country. That includes decreasing affordability and accessibility, diminishing teaching and staff resources, and crumbling infrastructure, all leading to a reduced quality of education and, worse still, a possible collapse of the system as a whole. In fact, even as reported today in media outlets here, enrollment is down more than it has been in five years in this province, in Nova Scotia universities.

At the same time, we're disappointed and frustrated—and my friend just talked about this—with what has happened to Bill C-48, passed by the last Parliament in May 2005, and, going with that, Bill 207, also passed by the Nova Scotia legislature in May of last year. At first we were pleased with the passage of both bills, with Bill C-48 allowing up to $1.5 billion in additional funding per year for two years in supporting training programs and enhancing access to post-secondary education, and we were pleased with the passage of the companion bill in Nova Scotia that required that the funding, when it was made available, would reduce post-secondary education tuition fees and provide needs-based grants to post-secondary students.

We understand that if it had been provided earlier, this funding would have been enough to reduce tuition fees by more than $300 for every student enrolled in university this fall. It would also have been more than enough to reinstate the needs-based grants program that had been cut more than a decade ago by the then Liberal provincial government. Since then, however, we've seen buck-passing from one level of government to the next.

We're especially concerned that in the Harper government's first budget, the federal government “confirmed” the $1 billion to support urgent investments in post-secondary education infrastructure. In turn, this change by the Harper government led the MacDonald government here in Nova Scotia, in its budget measures legislation, to change the whole intent of Bill C-48 and Bill 207.

The amendments the provincial government brought forward allowed the funding that was to be provided for tuition reduction and needs-based grants to be made available for other purposes that are different from or even inconsistent with the purposes set out by both the Nova Scotia government and the Government of Canada. In other words, the provincial bill effectively scrapped Bill 207 in order to bow to the whims of what the federal government seemed to be saying.

Even after the federal government announced on September 26 that it was sending the money to Nova Scotia under Bill C-48, amounting to $28.8 million over two years for Nova Scotia, and even after it was apparently clarified that this funding could be used to reduce tuition fees, improve access to apprenticeships, and establish needs-based grants, the provincial government still hasn't decided how it's going to use these funds. The end result to date is that not a single student in Nova Scotia has been helped, even though the money was committed over a year and a half ago.

We ask the committee to accept the recommendations that we put forward in our submission: that the government ensure that the funding under Bill C-48 be used to improve access, as originally intended; that the government move to provide a per student allocation of funding for post-secondary education instead of a per capita allocation; that there be a separate dedicated funding transfer to provinces for post-secondary education established in this budget year; and that there be a national post-secondary education act to develop national objective standards and mechanisms, similar to what's done in health care with the Canada Health Act. And I'll just skip down to the last one, which I think is important: that the federal government establish a national department of education to better coordinate the provision of post-secondary education and ensure that all Canadians have a right to post-secondary education.

Thank you very much. I look forward to your questions and comments.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Johnson. We do force you to put a lot of good content into five minutes, don't we? Thank you. That was well done.

Spencer Keys is here on behalf of the Alliance of Nova Scotia Student Associations.

Welcome. Over to you.

[Spencer Keys, Executive Director, Alliance of Nova Scotia Student Associations]

Thank you very much, Mr. Chair.

I'd like to thank the committee for the opportunity to speak here today.

The Alliance of Nova Scotia Student Associations is a Nova Scotia-specific student lobby organization. We represent 33,000 university students here, from Dalhousie, Acadia, St. Francis Xavier, and Saint Mary's Universities.

We want to speak on a couple of what we feel are specific Nova Scotia issues here today, but first, a little bit of a background from our perspective.

Obviously the costs of education in Nova Scotia are extremely high, and Chris has done a pretty effective job of telling you about that. We certainly know that one in four students with debt in Nova Scotia have a debt level exceeding $40,000. We also have the highest percentage of students in debt of any jurisdiction in the country, at 48%. So it's a very significant problem here in Nova Scotia. We think this raises some very significant economic development issues.

The first, we feel, is risk aversion--that is, when students graduate with that amount of debt, they're not really in a position to be creating a small business, to be going into a risky job, or anything like that, that could actually enhance the economy of Nova Scotia. They have to play it safe because they have a significant debt level that they have to try to service. We think that's generally bad for the economy.

The second is regional immigration--that is, Nova Scotian students are leaving after they graduate because they need to find places with more stable jobs. They go to Ontario, or they go to Alberta. We're really concerned about the effect this is going to have in the long term in Nova Scotia. I'd be happy to talk more about that during the question period.

We have some issues that we want to raise. The first issue is federal funding distribution. We also believe there needs to be a dedicated education transfer. We believe this needs to be done on a per student basis, and there is a very compelling reason for that. Nova Scotia is the second highest importer of students. The first highest would be Alberta. A couple of years ago, 4,769 students were imported into Nova Scotia. That creates a structural deficit of about $25 million that Nova Scotia is paying to educate students from elsewhere--we put it in the brief as $40 million, but after getting some better information from the ministry we've revised that number to $25 million. That structural deficit is something that needs to be dealt with. So it provides some fairness in the system to be distributing this money on a per student basis.

We obviously also believe there needs to be a Canada education transfer, supported by some sort of agreement or legislation, or what have you, much the same as Chris says. We think there needs to be a minimum of $4 billion put into that program. There is already about $1.8 billion in the system, depending on what estimate you look at, but there's about an extra $2.2 billion needed.

Thirdly, I want to talk a little bit about the Millennium Scholarship Foundation. We do disagree with the Canadian Federation of Students on this one. We think it is worth replacing or renewing the organization, primarily because it provides stability. There is certainly no political interference when you go and endow money in that nature.

We think an endowment structure is more or less a good thing. Of course, there are questions about accountability, and while I don't really feel like getting into a debate about any particular thing that the millennium scholarships may or may not have done, we definitely think that if there is some sort of a replacement foundation created, having an eye to effective accountability for that program would obviously be a good thing. At the same time, they have site-based budgeting, which we generally think is good. They're able to create their own incentives by having control over their own money. This means they can actually go and spend the time to put grant money where it's needed.

Yes, it has created some problems in Nova Scotia. Right now, it's worth about $9.1 million of debt reduction and other forms of assistance in Nova Scotia. If that disappears, then that money is more or less just going to disappear from Nova Scotia altogether. The Nova Scotia government hasn't really provided for any money to replace it. And yes, we're very concerned about what that's going to do to accessibility within Nova Scotia. So there needs to be something that follows up with that.

Those are three very basic things. Again, we'll be more than happy to get into this in a bit more detail during the question period.

Thank you for your time.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Keys. We appreciate your presentation.

We now move on to Jane Warren, from the Brain Injury Association of Nova Scotia.

Welcome. It's over to you.

[Jane Warren, Brain Injury Association of Nova Scotia]

There are two topics I would like to discuss today, and I welcome everybody to listen.

Topic number one on the web page was, what specific federal tax and/or program spending measures should be implemented?

Program spending on brain injury rehabilitation will ensure that those disabled with a brain injury are as healthy as possible. It means they are not unemployed and are not suffering from undue stress and depression due to a lack of rehabilitation and a lack of retraining that is necessary for them to rejoin the country as productive members of society. Warehousing people, who could be gainfully employed, in nursing homes or jails is not in this country's best interests.

A previous study by the Ontario Brain Injury Association found that there are over 46,000 people who suffer brain injuries each year in this country. An overwhelming majority of those people either never return to work or remain underemployed for the rest of their lives.

An extra 23,000 potential employees per year, to take 50% of that number, would benefit Canada's employers immeasurably. A reduction in the number of people on social assistance as well, both for federal CPP disability and the provincial disability assistance programs, would also provide the country with more freed-up dollars, plus there would be increased economic activity, spending, etc., by those new wage earners.

The other topic I would like to mention is number three: What specific federal tax and/or program spending measures should be implemented to ensure that our nation has the infrastructure required by its citizens and businesses?

A national brain injury act, akin to the acquired brain injury act in Australia, would provide Canada's citizens with the infrastructure that survivors and their families or caregivers need.

If a spouse or a child suffers a brain injury, assuming it's a two-wage-earner family, then one of those persons must quit his or her job to care for the survivor. If it was the spouse who was injured, then both earners are out of the job market.

There are currently brain injury associations in most or all of the provinces, along with the fledgling national association, the Brain Injury Association of Canada. Because of the different ways in which each province classifies brain injury, there is no consistency among the provinces in rehabilitation or in core funding.

A brain injury is a physical disability. It can result in physical and/or mental and/or cognitive deficits, repercussions, and disabilities. Some provinces categorize brain injury as a mental disability. Some provinces see it as a mental or a physical disability, depending on what the effects of it are, while others do not classify it as a disability at all.

Nova Scotia falls into the latter category. In Nova Scotia, for provincial disability assistance, a brain-injured person is either classified as mentally challenged or mentally ill. There is nothing in the act that says they are brain injured.

Nova Scotia's provincial Brain Injury Association receives no operational core funding money from any government. It instead relies entirely on public donations, with the occasional project-specific grant. They provide the only brain injury rehabilitation in this province.

A petition was read in the House of Commons in February 2005 asking that a question about brain injury be added to the next national census in order to provide a national database to correct this classification inconsistency.

Brain injury is surely a federal matter. Treatment of the brain injured in this country violates the Charter of Rights because of discrimination against one particular disability. The Canada Health Act says treatment should be universal across the country, as well as being accessible to all and portable from province to province. This is not the case with brain injury rehabilitation.

Federal impetus is needed to provide a clearly defined continuum of care for brain injury nationally, using Australia's acquired brain injury act as a model.

Two, standardize medical protocols across this country regarding brain injury.

Three, provincial brain injury associations need stable operational core funding.

A national, federally funded re-education program for brain injury survivors is necessary.

[The Chair, Conservative, Brian Pallister]

Thank you, Ms. Warren.

We have to move on to the next presentation, but there will be time for questions, and you'll get a chance to put your last two points in; don't worry.

We'll continue now with the representative from the Independent Media Arts Alliance, Jennifer Dorner.

Welcome, Jennifer. It's over to you.

[Jennifer Dorner, National Director, Independent Media Arts Alliance]

Thank you very much.

Good morning, Chairman and members of the committee.

I'll start by saying that I'm an artist, and I'm also the national director of the Independent Media Arts Alliance. I'll start by thanking the Standing Committee on Finance for this opportunity to present on behalf of our members and the diverse communities we represent.

The IMAA is a national network of 84 non-profit independent film, video, and new media production, distribution, and presentation organizations representing over 12,000 artists and cultural workers across Canada. The IMAA was formed in 1981 and since then has worked to improve the means and access for independents at every stage, from funding to production, distribution, and exhibition.

First and foremost, I would like to acknowledge the federal government for recognizing the value and importance of the arts in Canada through the investment in the Canada Council for the Arts appearing in the 2006 federal budget. This was an encouraging first step towards accomplishing the many vital goals for the arts and cultural sector. Still, we wish to call attention to the need for longer-term sustainable fiscal investments in the arts, and we urge the federal government to make this a public policy priority.

The $50 million pledged in the federal budget for the Canada Council will bring much needed aid to the cultural sector; however, it does not go far enough to relieve the pressures faced by the artist-run not-for-profit organizations and independent artists. We would like to underline the importance these individuals and organizations have within our communities.

Our centres operate in the bigger cities, such as Toronto and Montreal, but also in the rural and more isolated regions, such as Yellowknife and Nain, Labrador. In all cases, our centres have an open door policy inviting all members of the community to participate, to learn, and to create, to tell stories using film, video, and new media. By new media, we're talking about art that uses new technology, such as the Internet, cell phones, or electronic installations.

As these technologies are becoming so prevalent in our culture, the growth in the media arts is tremendous. More and more artists are working in film, video, and new media. Our youth are exposed to and familiarized by television, the Internet, video and film, and other technologies long before most other forms of visual communication or artistic production. In view of this, many young artists are moving to this medium of visual expression.

There are more and more students graduating from colleges and universities with arts degrees, many of whom are majoring in media arts. This places an increase on the demand for access to cultural funding. Since 1998, applications to the Canada Council have increased by 50% for arts organizations and 30% for individual artists.

The recent increase to the Canada Council does not match this growth. Each year thousands of eligible artists and arts organizations are turned down for support, resulting in an enormous loss of creative potential for Canada. It is critical that public funding keep pace with this growth and the number of artists in Canada.

In addition, there's a dramatic increase in the number of media arts organizations and festivals working in distribution, exhibition, dissemination, and production. These are exhilarating times, but these organizations struggle to keep pace with the changing technologies. Standards are constantly changing; this dramatically affects the ability of independent film, video, and new media artists to access festivals, distributors, and broadcasters.

We also recommend that the Government of Canada make cultural funding statutory spending.

Arts organizations are the backbone of the independent art milieu and provide a multitude of services to artists and to our communities. These include access to equipment, resources, and training, dissemination and exhibition opportunities, as well as helping to create a healthy, thriving arts community. Many organizations are struggling to mount their exhibitions, shows, tours, productions, and festivals. They're often underfunded, short-staffed, and unable to pay adequate artist fees.

The struggles facing many arts organizations are directly due to the lack of core stable funding. By instituting that a portion of the federal budget become statutory funding, the government would be making a significant move towards sharing a commitment to and investment in the arts in Canada.

In addition, we recommend that the government increase capital support for arts groups seeking to purchase their spaces, and institute a program for guaranteeing mortgages for arts and cultural organizations. Many arts groups and organizations establish themselves in the less expensive areas of cities and towns, seeking affordable spaces in vacated formerly industrial buildings, only to see the neighbourhood become popular and rents increase, so they must move again.

It is critical that arts organizations be sustainable over the long term and that they are given the opportunity to establish themselves within their communities. Many centres expend a large portion of their limited funding on renting in downtown locations in order to be visible in their communities and to bring into play various outreach, youth, and educational programs.

[The Chair, Conservative, Brian Pallister]

Thank you, Ms. Dorner. We must move on, but I'm sure you'll be questioned by committee members as well.

And thank you, Ms. Warren, for assisting me in the messaging. I appreciate that.

We'll continue now with Dalhousie University, School of Social Work. Jeanne Fay, senior lecturer, is here. Welcome to you. We'll hear your presentation now.

[Jeanne Fay, Senior Lecturer, School of Social Work, Dalhousie University]

Good morning, and thank you for this opportunity.

I'm going to talk about poverty. What I want to say first of all is that poverty is not an economic reality, although our market economy seems to require that 20%, plus or minus, of Canadian citizens live in poverty at any one time.

Who makes up that 20% depends, in part, on the exclusionary forces of race, gender, class, and ability. For example, we all know that the child poverty rate hovers--at this point it's a bit lower than it was--at 17.6%. In spite of the strides made with the old age pension and the guaranteed income supplement, senior women are still at about 19%.

Now we get into the rates that are totally unacceptable, not that the others are not. Single-parent women continue to be at the rate of about 49%. Among aboriginal and first nations people, the rate is 43%. Among racialized groups--and by that I mean African, indigenous African Canadians, as well as immigrants of colour--the rate is about 36%. And among persons with disabilities, the poverty rate is around 31%.

As I said, we at the School of Social Work see these rates as totally unacceptable in a country that prides itself on being one of the best in the world. And I think we are, but we have a lot of work to do. In the last fifteen years or so, however, governments have all but abandoned the welfare state that used to protect those who could not compete in the regular labour market or who were temporarily unable to do so.

When we look at the economic and social exclusion caused by poverty for some five million Canadians at the same time as the government retains a significant surplus, we believe it should be distributed to create a just and equitable society.

People in poverty, as well as many people who are well-to-do, face many social and individual problems--divorce or separation, living in rural areas, lack of education and skills, addiction, and violence. But well-to-do people rarely fall into poverty as a result of these social and individual problems, so we need to look deeper for the causes.

This is where it's our position that poverty is a political issue. In other words, it results from and can be changed by government policy. I'll just mention what we see as three or four of the main causes of poverty.

First and foremost is the CHST, which does not require adequacy of social programs or accountability by the provinces. As a result of this, we now have wholly inadequate social income assistance rates, from a low of 19% of the Stats Canada low-income cutoffs to a high of 64%. This is looking across the country.

We have an inadequate EI program. We have a severe lack of affordable and social housing in this country. We have the high cost of prescription drugs that hits people. There's a myth out there that everyone who is poor is covered by some sort of pharmacare program, and that's just not the case.

We continue to have, unfortunately, discrimination in the education system and in the job market against aboriginal peoples, African Canadians, immigrants of colour, and persons with disabilities.

We have seen, since the 1970s, a steady decrease in corporate taxes.

All of these causes result from government policy or from failure to intervene in poverty-creating situations.

To eliminate poverty, Canada needs a national strategy that will set targets and create mechanisms to meet these targets. I believe you've heard in Ottawa from the National Council of Welfare and others who have recommended the same.

We're making fourteen recommendations. I'll mention a few.

Improve CHST funding to increase social assistance rates. Increase EI. Increase the national child benefit. Institute the day care program, and implement affordable and social housing. Implement the Kelowna accord, including an aboriginal anti-poverty strategy. We need national pharmacare and home care. We need to develop a national disability and accommodation program, as Jane said, and we need to expand educational support, as both of the gentlemen from the student groups mentioned.

[The Chair, Conservative, Brian Pallister]

I'm sorry, but we must move on now. We appreciate your presentation very much.

We'll move to Katherine Schultz now, who is here on behalf of the University of Prince Edward Island. Welcome. Over to you.

[Dr. Katherine Schultz, Vice-President, Research and Development, University of Prince Edward Island]

Thank you, Mr. Chair and members of the committee.

I was going to take the opportunity today to speak with you on innovation and productivity from the point of view of both a university and a region where universities are key to R and D performance. Here, unlike in the rest of Canada, universities perform 65% of the research and development, while industry performs about one-third of the national average, at 18%. I'm also speaking from the point of view of a province in which we are making great strides in moving forward on this agenda, and of a university that is successful in its outreach to industry and in its generation of new ideas.

There are really five areas that I would like to focus on this morning. The first is that of innovative ideas, which we see as key to the whole area of productivity and of transferring new information into industry and business. At the present time, we have an excellent and world-recognized system of peer review of research proposals through requests for funding by the tri-council--that's NSERC, CIHR, and SSHRC--but across those councils, up to 50% of the proposals that have been recommended by this peer review process for funding are not funded because of insufficient funds. One of the key outcomes of this is lost opportunity costs. People have invested in preparing these proposals, and they've been judged on a national and international scale to be innovative, appropriate, and worth funding, but they're not funded. So I would encourage and see that increased funding to the councils as a key part of the innovation agenda.

I would also say that we need to maximize our innovation ideas and the use of them through infrastructure platforms. These would include, among other things, the indirect cost of research funding programs, which are key to allowing research in universities to self-fund, rather than to draw on the other areas of funding that come into the university, primarily tuition. The Canada Foundation for Innovation also plays a key role in supporting research and innovation across Canada. We should encourage the refunding and extension of that platform.

Also, I think in this area, linkages with industry, which are supported by these infrastructure platforms, are also key. Our key vehicle there is the Atlantic Innovation Fund. The University of Prince Edward Island at present leads seven AIF proposals, each of which is linked with industry and is charged with innovation and transfer of information and ideas.

I would also recognize that a key area for all of Canada is entrepreneurial challenge. I would encourage the establishment of Canada entrepreneurship chairs in universities, which could focus on developing excellence in, for example, design and product development, market research, business management of early stage companies, and best practices in the development and functioning of angel capital networks. It's information that we need, and it's expertise we need to develop. This could be further enhanced by providing fellowships and exchanges at all levels of trainees, undergraduate and graduate students, postgraduate researchers, and at the research levels that allow exchange between entrepreneurial enterprises and universities, with a focus on the development of entrepreneurial skills.

I also think it's important to continue to provide capital for the development of research. Innovative ideas are only a small part of the equation. Those need to be developed and proven before they can move forward. So it is key to keep the levels of funding to the existing programs, like NSERC's I2I program, CRC's proof of principle, and NRC's IRAP program.

I would also suggest that it would be useful to have a program for buying back university equity from early stage spinoffs that the university has invested in, in order that this funding could then be reallocated and reused for new spinoffs.

Finally, I, with many of my colleagues across the country, both in universities and in business, would encourage a review of the scientific research and experimental development tax credits, a program that's been in existence for twenty years and could be enhanced with some improvements.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Ms. Schultz.

And thank you all for some very stimulating presentations. I appreciate that.

We will move immediately to questions, five-minute rounds.

Mr. Savage.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Chair.

First of all, I'll say how I pleased I am that the finance committee and my colleagues have had a chance to come to Nova Scotia. I tried to show you a little taste of Halifax last night. Unfortunately, we didn't get to the wonderful community of Dartmouth—Cole Harbour. Next time we'll try to have the meetings over there, but it's very nice to have you guys here, and I thank the witnesses for taking the time to appear.

Since we have a number of folks--students and university--I'd like to talk about the dedicated transfer, because we have heard about that as we've gone across the country. It's certainly my view that the number one issue, not only for social justice reasons but for economic reasons, is that we have to maximize the human capital of Canadians.

We know that although enrolments have not been going down overall across Canada, low-income Canadians, aboriginal Canadians, and persons with disabilities have dropped off and are not taking advantage of getting into university, because they can't afford to go, in large part. We have to do something about that. So the dedicated transfer comes up quite often. We often hear that the federal government has abdicated its role in post-secondary. It's not exactly the case. In fact, the government's own document that came out with the budget says:

While the total share of federal support has remained relatively constant over time (at about 25% of overall expenditures...), the mix of federal instruments has changed. Today, a larger proportion of support is provided through direct measures than through transfers to provinces and territories.

So the federal contribution to post-secondary is what it was back before the cuts, but the transfers to the universities are down. So the issue is, if we're going to have a dedicated transfer, does that mean we're going to ask the government...? Spencer, I think you indicated $4 billion in the current spending is put into your estimate and the direct transfer is $1.8 billion a year. Without arguing over the numbers, it's a significant amount of money. How do we ensure, if we go to a dedicated transfer, that support to the universities, both in terms of research, which has reversed the brain drain, and some of the stuff Ms. Schultz talked about--but whether it's the millennium scholarship, Chris or Ian, or whether it's some other mechanism, does the federal government still have a role to play in directly assisting students?

I'd like to start with you two and perhaps anybody else who wants to get in on it. How do we do a dedicated transfer but ensure that we don't let down both the universities and students directly?

[Chris Parsons]

The main way you can ensure that universities do receive the money directly is through the implementation of legislation, something very similar to the Canada Health Act, only in regard to post-secondary education. I think it's also important to realize that if the federal government were to come to the table and offer to restore the funding in full, at least $2.2 billion per year is what the Canadian Association of University Teachers, the federation, and other groups have all recognized is in fact the number. If they were to come to the provinces with that $2.2 billion--when you come to the table with that much money, the provinces will make concessions and will agree to ensure that money does go to universities. It's a sizeable sum of money and I think they will compromise. For example, the council of the federation has agreed that it would come to that compromise.

As for assisting students directly, the most efficient way to assist students directly is to ensure that tuition fees are reduced, as tuition fees continue to be the number one barrier to access education. As well, a system of needs-based grants could be implemented directly through existing infrastructure, particularly with the Canada student loans program, which is very good at identifying financial need. A system of needs-based grants could be directly implemented using the money that's previously been spent on the Canada Millennium Scholarship Foundation. This would be more effective and would be a revenue-neutral solution to student aid.

[Spencer Keys]

I would have to echo many of those comments. As well, this would be an opportunity to establish some sort of a national vision for how we actually do post-secondary education in Canada. It's rather horrific that we don't have one if we're trying to be a competitive economy.

Having an accord, an act, whatever.... There are a lot of phrases that go around for what this agreement should look like. But having such a thing would obviously be very beneficial. I think within that there should be some clearly stated goals. A goal, for instance, that we would certainly support would be an idea of what percentage students should be paying of the total cost of education in Canada. Right now, it's very different, depending on the jurisdiction. You have some places that are reasonably low, such as Quebec and Newfoundland. You have places, of course, in Nova Scotia that are very high. Of the total cost of education, 42.6% is what students pay here, whereas for even university administrators, many would say that 30% is probably the top. What we want to see is an actual accounting for value. That's what I would mean by looking at the percentage students are paying. The question is, what are they getting back for the money they're putting in?

[The Chair, Conservative, Brian Pallister]

Mr. Keys, I must cut you off there.

Thank you, Mr. Savage.

We continue now with Mr. Paquette.

Welcome, Mr. Paquette. You have five minutes.

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Thank you for your presentations. It is interesting to be here in Halifax, a city I quite like.

I would like to continue speaking about the field of post-secondary education, because three of the organizations from the labour and student organizations here are all going in about the same direction.

The national higher education act poses a slight problem for me. First of all, since education is under exclusive provincial jurisdiction, I do not see why there would be a federal act, and further, a federal Department of Education.

Next, reference is often made to the Canadian Health Act. This act did not prevent the federal government form unilaterally cutting transfers for health. In the 1990s, Mr. Martindid not hesitate to do so. Now, we are slowly getting back to the 25% suggested by the Romanow Commission report, but we still aren't there.

Would it not be better to have a Canadian act to ensure a certain level of funding for post-secondary education? I am interested in your recommendation that funding be made per student and not according to the proportion of the population represented by the province.

Actually, shouldn't the federal government's primary obligation be to take its financial responsibility rather than create new standards that do not always take into consideration the specific reality of the Atlantic Provinces, of Quebec, which has a very particular education system, of Ontario, of the Western provinces, of British Columbia? This is not its primary responsibility.

My question is for the three witnesses.

[The Chair, Conservative, Brian Pallister]

Mr. Johnson, please.

[Ian Johnson]

Thank you very much for your question.

There are several possible answers to that. I was involved personally in lobbying for the Canada Health Act, so I have some familiarity with how that works. You're right that there were problems in what happened under the Martin government in particular and the establishment of the CHST. But we're trying to say here--and we've seen it in other areas such as social programming--that if we don't have dedicated transfers, it's even easier for the federal government to move to cut back on funding for whatever reason.

We're saying collectively that post-secondary education is just too important at this point not to have dedicated funding and national legislation to go with that. Part of that--as you have suggested and the three people here have recommended--is the importance in this region of per student allocation, given the number of people we're dealing with here and the number of people coming in. So if there is to be dedicated funding, it should be done on the basis of per student allocation. That would certainly assist universities and students in this region.

It's a matter of establishing legislation and then developing the funding mechanism to go with it, which we've done in health care and can continue to do.

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to address Ms. Fay.

If there are three transfers: one for health, one for post-secondary education and the last for social programs, are you not afraid that social programs will be pushed aside?

Is there not a risk, since education and health are still primary issues for any society that wants to move ahead? On the other hand, social programs, including social assistance, often go to segments of the population that have almost no chance of making themselves heard, contrary to students and unions, that are a pleasure to work with, by the way.

[Jeanne Fay]

I think that has happened. We're fully in support of dedicated transfers for the other social programs. There's no question that social programs for people in poverty are not popular politically; therefore, they're the most difficult for MPs to sell to their constituents. However, if we don't look at poverty in this country in a real and dedicated way--if I can say that--we are going to continue to see high rates of poverty among the groups I mentioned.

We used to have the Canada Assistance Plan. It was not perfect, but it certainly was an example of the federal government protecting social programs to some extent and requiring provinces to spend money for programs in a certain way.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Paquette.

We must move on now to Mr. Wallace. It's your five minutes, sir.