Mr. Chair, thank you very much for having me here. Colleagues, I'm glad to be here on such short notice. I want to thank the committee for taking the time to consider this bill.
I am joined by Mr. Peter Lewis, who is the chair of the government relations section of the RESP Dealers Association of Canada. He will also be making some comments here and perhaps provide opportunity. I am joined also by my colleague Mr. Glen Bradbury, my legislative assistant and no stranger to the Hill.
The purpose of the bill, as you know, is to amend the Income Tax Act to allow contributions to registered education savings plans to be tax deductible. This bill provides regulatory regimes similar to those for RRSPs, and it also has built-in penalties and guidelines to prevent the RESP from being used as a tax shelter, instead of having as its sole purpose the generating of funds to be used to pay educational costs.
I think all of us in this room would agree that nothing is more important to the future prosperity of our country than having a highly educated workforce, but the reality driven home to us yesterday by many students who were here is that soaring tuition costs at universities and colleges are creating concern that post-secondary education may soon be within the reach of only the wealthy. I believe many of you here will agree that such a situation would be unacceptable and would place Canada at a considerable economic disadvantage both domestically and in the international marketplace.
We know that a highly skilled workforce is paramount to Canada's future economic growth and prosperity. This bill will assist efforts to obtain more appropriate funds to address soaring education costs and enable more Canadians to attend institutions of higher learning. In addition, providing more self-generated funds from RESPs will no doubt lessen student debt upon graduation.
I must tell you that only 32% of Canadian families have RESPs to help pay for their children's education. One of the major reasons for this relatively low percentage is the financial burden it places on families to maintain an RESP. Regardless of the long-term benefit, contributing to an RESP requires after-tax monthly income, and as we well know, some families within our constituencies are simply unable to afford the minimum monthly contribution, usually $100.
Making contributions tax deductible offers families incentives and financial assistance to create and manage an RESP. In addition, making contributions tax deductible not only provides a means to help address education costs, but will also lessen post-graduation debt, which is often a debilitating financial drain, as we were witnessing yesterday. According to StatsCan, in Canada's labour market today two out of three jobs require more than a high school education. Post-secondary graduates have a higher employment rate, are less vulnerable in economic downturns, and receive higher incomes.
As I mentioned to you, a number of measures similar to those for the RSP are built into the bill to prevent the use of this as a tax shelter. We can discuss those later. I'd certainly be willing to talk about them, but there is specifically section 204.94 in part X.5 of the Income Tax Act, when it is withdrawn.
The safeguard in this bill, Mr. Chairman, is that the Income Tax Act says that under the conditions for registering the RESP, the promoter can pay if the student is enrolled as a full-time or part-time student in a qualifying educational program at a post-secondary educational institution, or the student cannot reasonably be expected to be enrolled as a full-time student due to serious medical incapacity, or the student unfortunately is deceased.
I will give you very briefly the outline, Mr. Chair. I hope there will be plenty of discussion in the next few hours or the next few minutes. I'm most concerned that we are not meeting the target and that we can do a much better job. With the coming demographic crunch of one in five Canadians being in retirement, we need to ensure that students have an opportunity to gain the skills to earn more, so that we can sustain our valuable programs and continue Canada's prosperity. That is the global reality that requires and necessitates this bold step forward.
I thank you, Mr. Chair. I look forward to your questions.