Mr. Speaker, to debate the motion thoroughly, we should take a moment to reflect upon what we expect from higher education.
Canadians understand that we face tougher competition here at home and around the world. Knowledge based industries are becoming more important. We hear more about concepts like distance education and lifelong learning.
The pace of change is accelerating. Knowledge intensive industries like telecommunications, environmental services, computer technology and biotechnology will provide economic growth now and into the future.
The working world has changed dramatically. Canadians can now expect to change jobs several times in a working career, as the hon. member just said. No one can count on lifetime secure positions with a single employer.
We know that a majority of jobs now being created will require at least 16 years of schooling. Higher education and continuous retraining will be necessary to remain competitive in the marketplace of the future.
While Canadians are being told to acquire more education, tuition fees have been rising and changes to the family structure and the economic environment have been making it difficult for some people to return to school to complete their studies.
Therefore, we take the hon. member's motion to consider the advisability of income contingent repayment quite seriously. Under ICR loan repayments would be adjusted to incomes. Graduates could begin their working lives knowing their student loan debts would not overwhelm their incomes. Such systems could reach potential students who are now deterred by the prospect of large, fixed loan repayments after they leave school.
As the member may know, the federal and provincial governments have discussed these concepts in the past. We will continue to examine them. An ICR student loan system deserves careful consideration. The potential cost implications will be a factor in our assessment because the federal government must reduce spending in all areas in order to address the deficit. The matter is as clear to the hon. leader of the Reform Party as it is to me. Cost will not be the only factor.
The member's motion is an opportunity to elaborate on the discussion of income contingent repayment in the social security reform discussion paper. Every year the provinces receive a higher proportion of their post-secondary education funding as a result of the transfer of tax points. The overall transfer of funds from the federal government is not increasing. This means that while the tax point transfer increases provincial revenues, revenues that are supposed to be used to support educational institutions, the direct cash component of the transfer is declining.
The provinces in the coming years will retain the tax points and they will steadily increase in value as the economy grows. The federal government is asking the provinces to consider shifting the current cash transfers into expanded loans and grants to students. The result would be a permanent $2 billion loan fund for sustainable student aid.
The resource would continue to grow in the future and extend its benefits to succeeding generations of Canadians. This is not the blind and brutal cost cutting that some opponents of social security review fear. Designed properly and carefully administered, we could put in place a resource that would help educate generations of students.
As a proposal for change the hon. member's motion is one more voice calling for creative ways to help every Canadian with ability and the desire to attend college or university. We have already taken measures to increase and enhance student
assistance and to help students make the school to work transition.
We have high expectations of our graduates. We want them to maintain a prominent place for Canada among the advanced countries of the world. Considering our expectations, providing student aid to those in need is more than a commitment to fairness and equality; it is an investment in people. The amount and the conditions of that investment in student loans reflect the confidence we have in their abilities.
We need a climate that encourages both entrepreneurs and investors. We need a highly skilled and adaptable workforce to keep pace with the competition in high tech industries around the world. Now Canadians want clear direction to guide their individual decisions on education and training.
This generation of decision makers must give all Canadians realistic choices because now more than ever we need everyone's skills and capabilities mobilized to build our common future. In creating opportunities the government put its commitment to education and training on the record. We are keeping our promises.
For 30 years the Canada student loans program has reduced financial obstacles to post-secondary education for over two million students. The new measures we introduced this past spring will make education more accessible to students with disabilities. Those students will help build larger, better educated and a more representative workforce.
Other reforms reach out to a growing constituency of part time students by increasing their loan limit from $2,500 to $4,000. Under the new financing arrangement part time students will pay only the interest on their loans while they are still in school. Single parents will face fewer obstacles to their education. The new needs assessment acknowledges the reality of child care and transportation expenses as well as tuition and books.
To address their present under-representation, women in engineering, mathematics and science programs at the doctoral level will be eligible for special opportunity grants of up to $3,000 per year.
The Canada Student Financial Assistance Act reforms are designed to help those who need better access to post-secondary education. Today more than 900,000 full time and more than half a million part time students are pursuing a higher education. They do not just represent an investment in our future, they are the future.
The new Canada Student Financial Assistance Act also enables the federal government to join provinces in pilot studies of income contingent replacement systems. The hon. member opposite might recall that we wrote this specific provision into the Canada Student Loans Act so we could investigate its usefulness.
Income contingent replacement has some very attractive features. It can be designed to meet different categories of need while students are still in school. After finishing school, the graduate who finds employment can pay off the loan at a rate that by definition is affordable.
The student's risk is reduced because the loan would adjust to an unexpectedly low income. We have heard the term offloading from some students who oppose the ICR assistance, because they believe people will graduate with huge debtloads. ICR assistance can be deigned to protect the very small number of students who necessarily take on a high level of debt.
Just as we have made provision for large debts in the Canada Students Financial Assistance Act, we could design a system that eased the burden for these situations. For the average student, the extra burden is estimated at about $2,000 a year. To put that in perspective, two years after graduation, the person with a post-secondary education is making 25 per cent more than someone with only a high school diploma.
If students take out a loan to finance their education, they are the best judges of how much debt they can assume. If they are wrong about their future earnings, they are only required to repay what they can afford.
In effect, borrowers are protected from the risk of being unable to pay and their borrowing relates to their ability to pay rather than that of their parents. We do not intend to bury our students under a mountain of debt, far from it. We will support their efforts to get the education they want. We want them to go on and hold jobs and create jobs. When that happens, the student loans system benefits all of us.
The hon. member's motion and the new Canada Student Financial Assistance Act both address the aim of meeting the challenge of allocating education costs fairly between governments and students.
Some groups oppose an ICR while others believe there will be benefits. The Association of Universities and Colleges has proposed an ICR type system. The Association of Community Colleges is generally in favour. Some student associations are interested in the concept. I note that some institutions have concern with the proposals in the social security review with respect to EPF transfers.
We are in dialogue with these institutions and welcome their active participation in the social security review. Their ideas and support are extremely important for all Canadians.
There are no exact models elsewhere in the world that tell us how ICR would work in Canada, in the Canadian environment. We must evaluate the idea in the Canadian context. We want to know if we can build a comprehensive system to help
students in need without putting a greater burden on the taxpayer.
Social programs save money by putting resources where they belong, training and employment skills for those who need them and protection for those people who need help.
The current system is not doing a good job. It keeps some Canadians in poverty and dependence. Any new system must help people learn the skills, develop the skills they need to get back on their feet.
We hope that the social security review will bring to light more interesting and creative concepts. It is safe to assume we will need flexible and responsive systems to meet the training requirements of the Canadian workforce.
In the final analysis, Canadians want a system that works. We know that success in advanced technologies is the key to a prosperous and caring society. The key to future success is advanced education. Canadians must share in the benefits and costs of academic success.
We expect many more Canadians will enroll in our colleges and universities. Young and old alike will want the skills that keep them employed in well paying and challenging jobs. The social security review will examine anything that could contribute to this success. Together as partners, we can manage our educational resources to meet the needs of every student. When our students succeed their achievements benefit all of us.
The hon. member's motion has illuminated one possible response to the need for fair and effective student loans. Through this debate within the context of the social security review and elsewhere we will continue to seek out, listen to and investigate every possible means by which Canadians can build prosperous and productive futures through training and education.