Debates of Oct. 21st, 1994

Yukon Surface Rights Board Act

[Darrel Stinson, Reform, Okanagan—Shuswap, BC]

Mr. Speaker, I thank the hon. member for his comments. First I am sorry that the member is upset about the word native being used so many times. I use that term about myself and about my colleagues, that we are all native Canadians. I use that word a number of times in conversation with anybody in the country. We are native Canadians. I can under-

stand the member's concern because of the misconception of that.

I agree that over the last years the native population in Yukon has not been treated that well by white people. This has been an injustice. We have to be careful that we do not try to cure this by another injustice. We have to do it properly at this time. Now is the time when we have a chance to do things that will be set in motion for centuries to come hopefully.

Our concern and my concern is that we must do it properly the first time around so that we can go forward and not have to keep going to court or run into the similar problems we have today 100 years or 200 years down the road.

Our obligation in the House is to the Canadian people and the future of Canada as a whole. Let us try to do it properly this time, not like we have done it for years. I hope that answers the member's question.

[Elijah Harper, Liberal, Churchill, MB]

Mr. Speaker, I want to address the House on Bill C-55, the Yukon Surface Rights Board Act.

I would like first to make some general comments regarding how this legislation came about. We had two previous bills dealing with the Yukon land settlement, the land claims and the self-government issue. I was somewhat perturbed as to the lack of understanding by the member who just spoke in terms of the relationship that the First Nations have in the country. I think oftentimes such ignorance misleads the general public. I do not blame the member. I think it is just a lack of knowledge and lack of awareness of that information.

I have always said that the first order of business in this country should be with the first peoples, the First Nations, in Canada. After all it is the First Nations that were here to welcome many of the newcomers who are here in this country, including members who are sitting in this House.

It is through the generosity of the First Nations people that many Canadians have benefited from the lands and resources in this country. In many parts of Canada there are still outstanding claims that have to be settled with First Nations.

In my area in Manitoba we have treaties that were signed a long time ago and in parts of B.C., the territories and Yukon treaties were never entered into. As a matter of fact this land claim settlement that we have just made I think is the conclusion of the outstanding business that needed to be settled with First Nations people in Canada. It is a modern day treaty that provides the wherewithal for First Nations to be self-sufficient and self-governing.

As the member has stated, Canadians need to be aware of what commitments the federal government is making to First Nations. We need to look at what promises have been made by First Nations to this country. They have through treaties shared the land and resources with the rest of the people in this country.

The question is not asked by First Nations: "What are we committing ourselves to, to other people?" There is no hesitation at all to bind our future generations so that we can share our land and resources with the newcomers. As a matter of fact this commitment and these promises are forever. The treaties state as long as the sun shines and the grass grows and the river flows that is our commitment. We expect governments to reciprocate that kind of understanding to our people.

As the member asked, what is the government promising to First Nations in the country? We have waited well over 100 years to address these issues. We have First Nations in Yukon who have waited a long time to settle these outstanding claims.

All these years governments have reaped the resources from Yukon. Canadians have benefited from those resources but across the country today the First Nations people still lack basic human needs such as housing which many Canadian people take for granted.

As a First Nations member I have been involved in this process for a long time, trying to educate the general public about these issues as to how generous we have been as First Nations people. That is a kind of understanding that I hope hon. members across will understand, that somehow in settling this land claim we are depriving ordinary Canadians. That is not so.

If the government were to look at the past 100 years in terms of the lands and resources that it has had and how much revenue it has obtained from these lands and resources that First Nations shared in the country, it would see that it runs into billions of dollars. If the First Nations people would even obtain a small percentage of the revenues generated from the lands and resources alone there would not be any government handouts. Oftentimes First Nations people come to governments to seek help. Oftentimes it is humiliating because it appears we are beggars and are seeking handouts.

The truth of the matter is that the aboriginal people, the First Nations people, have given much already and have had very little in return. It is time that governments honoured their obligations to First Nations people in this country. We are not asking for anything more or anything for less. We are just asking governments to live up to their promises.

Another question I want to address is the hon. member's notion of self-government. The hon. member said that self-government should not be more than a municipality. That is another lack of understanding the hon. member has. In the country it was

the Queen and her officials, the sovereign country of England, who entered into treaties with First Nations in the country. Therefore, we have a nation entering into an agreement with a group of people in the country and it certainly was not a municipality. It was the First Nations.

The notion of a treaty making process is a right that the aboriginal people, the First Nation people, have had for thousands of years. A treaty making process only validates and recognizes that the First Nations have been self-governing for a very long time. That is something that needs to be understood by Canadians and by governments in the country.

We have a special and unique relationship with Canada. I do not mean that we are special in a way that we are better off than other people. No other group of people in the country has that kind of relationship with governments except the First Nations.

By signing treaties we were entering agreements with another government and did things we understood. We have been very accommodating to other governments and Canadians. It is time we begin to reap from the land the resources that we once had control over.

I am extremely pleased to speak in support of the legislation that deserves the backing of hon. members from both sides of the House. The people of Yukon are nearly unanimous in expressing the view that it is time to move forward with the settlement on the Yukon Indians land claim. Bill C-55 is the final building block in the legislative foundation.

Hon. members are well aware that the Yukon Indians' umbrella final agreement was 21 years in the making. People who were not even born when the negotiations began now have families of their own. With Parliament's endorsement of Bill C-55, the benefits of the agreement, including money, can begin to flow to these families.

The claim agreement will do nothing less than ensure an equitable and prosperous future for Yukon Indian children and youth. It will also recognize First Nation seniors for their perseverance, patience and guidance, as well as compensate them for many years of hardship.

It will give Yukon Indians of all ages a chance for a new beginning, a new partnership with governments in the management of Yukon lands and resources.

Hon. members are also aware that the umbrella final agreement was ratified by all the affected parties: the federal and territorial governments, Yukon First Nations, business interests and non-aboriginal residents of Yukon.

It is supported by the stakeholders because of the certainty of land ownership and the rights it will bring to Yukon. This certainty is essential if mineral and energy development projects are to go forward, creating jobs, income and business opportunities for all residents of Yukon.

We must acknowledge and respond to this support by moving Bill C-55 through this House as quickly as possible. To do otherwise would be reckless and irresponsible and would damage the crown's credibility among First Nations, northerners and all Canadians.

The legislation before us today will establish a new surface rights regime and a surface rights board for Yukon. The creation of the board was a key element of the umbrella final agreement and is, therefore, a legitimate commitment by the Government of Canada to all residents of Yukon.

If there is one thing that stands out about the bill it is the extent of the consultative process that has been proceeded with since its introduction to the House. Both the general public and affected interest groups in Yukon were widely consulted last year by federal officials when guidelines for Bill C-55 were being developed.

They were also consulted on a number of occasions on the wording and contents of the bill. Several groups from the mining industry participated in the legislative drafting process, including the Yukon Chamber of Mines, the Klondike Placer Miners Association, the Prospectors and Developers Association of Canada and the Mining Association of Canada.

The interests of the petroleum industry, which also has an important stake in the issue of surface rights, were well represented by the Canadian Association of Petroleum Producers. The Yukon Territorial Government also provided input as did the Council for Yukon Indians, various Yukon First Nations and the Gwitch'in Tribal Council.

Public input was solicited by sending drafting guidelines to major interest groups, including the Yukon Trappers Association, the Yukon Outfitters Association. An advertisement was also placed in Yukon newspapers announcing the availability of guidelines for review by the public.

Consultation on a first draft of the legislation began 15 months ago in June, 1993 when a draft bill was sent to all interest groups. Later that month a meeting was held with these groups in Whitehorse. Subsequent parts of the bill were distributed to groups in October and February. This was followed by additional meetings with the Council for Yukon Indians and the territorial governments in Vancouver in March and with other interest groups in Whitehorse in April.

Based on the output received at these meetings and through other channels, another part of the bill was produced and distributed this past June. Further meetings were held with different stakeholders in July, August and September, leading to more changes to the bill.

My intention here is not to provide details of every meeting that has been held on Bill C-55, but it is important for the House to recognize that the government has made an extraordinary effort to hear the concerns of stakeholders who will be affected by the creation of a new surface rights regime in Yukon.

Most concerns were met but some compromises were necessary. The bill that has been introduced is consistent with the provisions of the land claims agreement and is in the best interests of all Yukon residents in the interests of open, accessible and responsive public government.

Hon. members would be hard pressed to find any stakeholder group in Yukon that opposes the basic principles that underlie this bill. The different groups may not agree with how every i has been dotted and every t crossed, but they do agree on the need for a territorially based surface rights board that will oversee a stable, fair and responsible regime.

It is my belief that we must seize this opportunity to put this new regime in place. As I stated earlier, further delay at this time is not only unnecessary but will jeopardize the implementation of the final agreements of Yukon First Nations.

I might remind hon. members that such agreements have been already reached with four Yukon First Nations: The Vuntut Gwitch'in First Nation, the First Nation of-

[The Deputy Speaker]

The hon member's time has expired. I wonder if there might be unanimous consent to give him a moment or two more to finish.

[Some hon. members]

Agreed.

[Elijah Harper, Liberal, Churchill, MB]

Mr. Speaker, I will read my prepared statement which is about four more pages. I will try to read fast.

I would remind hon. members that such agreements have been reached with four Yukon First Nations, the Vuntut Gwit'chin First Nation, the First Nation of Nacho Nyak Dun, Champagne and Aishihik First Nations and Teslin Tlingits Council. Progress in the negotiations for final agreements with the remaining 10 First Nations are awaiting passage and proclamation of the bill and the coming into force of the Yukon First Nations land claims and self-government acts which members passed last June.

One of the primary objectives of land claim agreements is to bring about certainty of land and resource ownership. This is being achieved in Yukon and it will result in many economic and social benefits to both aboriginal and non-aboriginal residents of Yukon.

Hand in hand with this certainty of ownership comes the need for a known regime for obtaining access to private and public lands. This regime must be responsible and fair to all residents of Yukon and it must put Yukon resource industries on a level playing field with other Canadian jurisdictions.

I am very confident that Bill C-55 will establish such a regime in Yukon. It will establish a common set of rules throughout the territory. It will ensure that all stakeholders have representation on the surface rights board which will hear disputes between surface rights holders and those who want access to the subsurface resources.

It will keep these disputes out of the courts. As my colleagues have already indicated, the proposed Yukon surface rights board will be a cost effective dispute resolution mechanism compared with litigation.

The surface rights board will be an extremely important body in Yukon. It will guarantee that mining companies and others will be able to exercise their legitimate rights of access to holdings of private land as well as crown land. This will ensure that resource development projects will go ahead after many years of delay and frustration.

The board will also ensure that compensation for the use of these lands is fair and reasonable. This is particularly important for First Nations which will own the surface rights of large tracts of land for which subsurface rights have already been granted.

In addition, the surface rights board will be mandated to uphold all existing rights of access across settlement lands for the public and government.

This is on the condition that the use of these rights does not significantly alter the route. Otherwise the consent of the affected First Nations will be required. Consent will also be required for new access routes across settlement lands.

There are many reasons why the House should support Bill C-55 but in weighing all the reasons my colleagues and I have outlined today, we should not forget that most fundamentally we will be fulfilling a commitment made by the Government of Canada to Yukon First Nations and to all Yukon residents.

That commitment was to settle the Yukon First Nations land claims based on the umbrella final agreement and the creation of this board is an integral part of that process.

The government's commitment to settle outstanding land claims was clearly stated in the red book and it is a pledge we intend to act upon at every opportunity.

We have made some excellent progress and established strong momentum over the past year. Most recently, we endorsed the final agreement of the Sahtu, Dene and Metis of the Mackenzie Valley. Negotiations are proceeding well on a number of other claims.

By addressing land claims in a fair and responsible manner, the government will resolve long standing disputes with First Nations and contribute to a healing process between aboriginal and non-aboriginal people.

I would urge my hon. friends to participate actively in this healing process by supporting Bill C-55 at second reading.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, the hon. member for Churchill spoke at some length on matters not directly covered by Bill C-55. In his remarks he referred to the lack of understanding of we on this side of the House. Perhaps the problem is that we understand only too well what is going on.

The hon. member speaks of the generosity with which aboriginal people bestowed their heritage and their resources on our ancestors. This is a misleading and I think unfair interpretation of history. The native people lost their territory and resources because they were confronted with overwhelming numbers of people who possessed technological superiority.

No right-minded person would suggest the game was fair. The invaders were not adverse to double dealing, chicanery and theft, but some native tribes were not exactly angels either. The past is past.

My question for the hon. member is short and simple. He long ago joined the Canadian mainstream. Why does he continue to promote and propagate the idea that other native people should not also join the mainstream?

[Elijah Harper, Liberal, Churchill, MB]

Mr. Speaker, what we have heard in the House from the hon. member confirms what I mentioned earlier. There is obviously a lack of understanding by the member. I said that ignorance sometimes misleads the public.

If the member knew the First Nations people, we have been very kind and generous. The member should look at exactly what the treaties mean. Much of the documentation created at those treaty gatherings was done by government officials, maybe in some cases by priests who did not understand aboriginal people.

We have a very rich oral history. The member would find the treaties meant that we were to live with each other side by side, that we would respect each other and not dominate each other. That is the spirit of the treaties. The member would not find those things written in history books, but if he talked to our elders he would find how generous we have been to share the land and resources with the people.

We have never been conquered. We chose to enter treaties with your government. Today we find that many of the First Nations people live in poverty. Meanwhile other Canadian people live in better housing. The standard of living in Canada is one of the highest in the world. It is envied by many countries. But First Nations people do not enjoy that.

Like I said, all we ask for is the government to live up to its treaty promises. We do not ask for anything more or anything less.

[Jack Iyerak Anawak, Liberal, Parliamentary Secretary to Minister of Indian Affairs and Northern Development]

Mr. Speaker, I wonder if the hon. member for Churchill might elaborate a little more on the comment that was just made suggesting we should go into the mainstream of Canadian society. We do enter the Canadian mainstream society when we walk in the door to the House and Commons and to our offices each morning, but that is a when in Rome do as the Romans do practise. When we are back in our homes it is different. People do not go up to me and say: "Mr. Anawak". They say: "Hi Jack".

It is not our way to make one person any better than another, because we respect each other. I wonder if he could elaborate a little more. Yes, we do enter into the Canadian mainstream but at the same time our culture is very important to us and should be kept at all possible costs.

I realize this is not part of the debate, but considering the comments made by the member, I think it is appropriate that there be no misconceptions about how we feel as members of Parliament about entering the mainstream of Canadian society when we need to.

[The Deputy Speaker]

The hon. member for Churchill when answering might wish to use up the remaining one and half minute of the debate.

[Elijah Harper, Liberal, Churchill, MB]

Mr. Speaker, I thank the member for his question. I chose to become involved in mainstream politics because I wanted to raise many issues.

As First Nations members we were not even recognized as part of the country for a long time. The first time we were allowed to vote was in 1960 and in the province of Quebec it was 1969. Many of the laws and legislation affecting First Nations people were passed without the full consent and participation of the First Nations people.

It is hard to unravel the history and legislative policies over the last hundreds of years in that short period of time. As a matter of fact I was the first treaty Indian elected in the province of Manitoba about 11 or 12 years ago. Most of my activity in the political field has been in mainstream politics. Before that I was chief of my band.

My ambition was to become involved in mainstream politics and hopefully through my participation many other people will begin to understand First Nations people.

[The Deputy Speaker]

It being approximately 1:37 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Student Loans

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I rise on a point of order. As you are aware, since the introduction of Motion M-291, the Canada Student Loans Act has been repealed and replaced by the Canada Student Financial Assistance Act.

I would like unanimous consent to amend M-291 by striking out the words "Canada Student Loans Act" and substituting the words "Canada Student Financial Assistance Act".

[The Deputy Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

(Amendment agreed to.)

[Preston Manning, Reform, Calgary Southwest, AB]

moved:

That, in the opinion of this House, the government should consider the advisability of amending the Canada Student Financial Assistance Act to include an income contingent loan repayment system in order to:

(a) reduce the cost to taxpayers of financing post-secondary education by reducing the number and dollar amounts of loans defaulted upon, by charging accumulated interest, rather than simple interest on defaulted loans, and by reducing the number and dollar amounts of collection fees for defaulted loans;

(b) allow post-secondary students greater flexibility and fairness in financing their education through extended loan repayment period based on a fixed percentage of individual income;

(c) ensure that post-secondary institutions in Canada receive the funding necessary to maintain the high quality of services they presently provide.

Mr. Speaker, I rise today in support of this motion. Before speaking to the merits of it, I would like to give a broader reason for Parliament, not just Reformers and not just the government but all members, to send a positive signal to young people by endorsing this proposal.

All of us as parliamentarians and members of the older generation pay lip service to the value of youth and the importance of the younger generation of Canadians. But actions speak louder than words. Often the actions of Parliament and the government send a very different message. For example, the chronic and systematic overspending by governments of our generation have piled up a burden of debt and taxation which we are passing on to the younger generation.

This is a terrible legacy and unless we address it, the principal effect of this generation of politicians on the well-being of the next generation will be essentially negative rather than positive.

Therefore I feel it is important for Parliament and the leadership of the country to offer something of real value to young people, something that by its very nature sends a message that states: "Yes, we realize your importance; yes, we recognize your value to the future of the country; and, yes, we are prepared to invest in you and not just pass on our debts".

During the last federal election campaign I made two proposals on the subject of higher education which seemed to provoke a very positive response from younger people. One was the proposal to give students more control over the spending of education dollars by distributing federal cash transfers in support of education in the form of non-repayable vouchers.

The other proposal that evoked a good response was the proposal embodied in this private member's bill. It is also a proposal mentioned in the government's human resources development discussion paper and that is the proposal for an income contingent loan repayment program.

I should mention that in the national leaders' debate that was held in Ottawa during the election campaign where the questioning from the audience was very controlled, the one and only question from a younger person in that audience had to do with how students facing higher tuition and education costs are going to finance their education in the future. I suggest that this income contingent loan repayment program provides the best answer we can think of to that question.

I would like to review the current situation briefly. Everyone knows students require money to finance their education. I know something about this personally. Sandra and I have five children, three of whom are of university age. The principal sources of funding for students are these: income earned by students themselves, and many students today are carrying two jobs in addition to their education to try to make their way through; family funds, if those are available, but those are often very restricted in many families; scholarship funds which are usually tied to academic performance and other criteria; and, borrowed funds.

At present the principal federal act for securing borrowed funds for students is the Canada Student Financial Assistance Act, the old Canada student loans act. Under the provisions of that program the government guarantees loans by private lenders, namely the banks, to students with the cost of the loan being subsidized by the government as long as the student is enrolled in full time studies. The student usually begins paying the loan back about eight months after leaving school. In the event of default the lenders are reimbursed and the loan is usually sent to a collection agency under contract with the government.

The principal defects of the current system are that it provides insufficient funding for students facing rising tuition and education costs and the fact that one in five students ends up defaulting on their loans.

Reform has asked: Is there not some superior alternative? We believe it exists in this income contingent loan repayment program. Since that is a mouthful I will refer to it from here on as the ICLR program.

Simply put, this is a program designed to allow students to pay back their student loans over a period of time after graduation based on their annual income, with collection being organized through the income tax system. After graduation a student would begin to repay their student loan based on their ability to pay as determined by their earnings. Precisely how much a former student pays back each year would vary from year to year depending on income. The specific amount set as a percentage of income would be paid through the income tax system. If the student's income does not reach a specified minimum amount, the payment would be deferred until earnings increased.

This payment system depends on an accurate flow of income statements after the individual has left the institution of higher education. Revenue Canada, producing the full details of a former student's income and whereabouts through the income tax form, would be the collector of the loans. We like the idea of income contingent loan repayments for three reasons.

It would help to maintain the high quality of educational services in this country. As the finance minister pointed out in the last couple of days demands on public resources are enormous. The availability of those resources is increasingly limited. Both federal and provincial jurisdictions are wrestling with how to refinance post-secondary education.

As governments contribute less and less funding and costs increase, the quality of education will decline unless new sources of revenue are found. Lack of laboratory equipment, growing class sizes and enrolment caps are a direct result of the decreasing government contributions in the face of escalating educational costs.

Any workable resolution to the underfunding of higher education must depend on more financing from non-government sources, including increased student fees. However one cannot increase tuition and other fees to students without making the cost of a university education even more prohibitive than it is under the current system.

If however students were permitted to repay loans on an income contingent basis over a longer period of time, the burden of higher tuition fees would be more manageable. Private lenders and the federal government would also be able to provide more and larger loans at lower risk because the loans would be secured by the enhanced future earnings of the graduate and backed up by the collection powers of Revenue Canada.

Another reason for supporting this scheme is that it provides greater fairness and flexibility for students. The current student loan system has many defects, most of which result in high default rates.

Prospective borrowers are subjected to traditional means tests that take into account their parents' and their partners' income. Students whose parents are relatively well off are often ineligible for student loans even if they receive no assistance from their parents. Students are obliged to repay their loans at the same rate and at the same level after graduation, regardless of their employment and income position.

The high default rate which results from this system has two particular negative effects. It invites abuse of the system by irresponsible borrowers to the detriment of those who really need the loans. It also makes it harder to maintain public support for the student loans program because taxpayers are often left holding the bag. The income contingent plan by contrast links the payment to the ability to pay and makes repayment more certain to the benefit of both students and taxpayers.

Under the current act taxpayers pay the difference between the simple interest paid by borrowers and the accumulated interest that private lenders demand. The taxpayers subsidize interest costs while the borrower is in school. The taxpayers end up footing the bill for loans where borrowers default and pay the collection fees charged on the defaulted loan. The cost of default has become a substantial burden on the entire system. Earlier this week Peter Moon of the Globe and Mail sketched out the dimensions of this burden.

Currently about one in five borrowers default on their student loans. About two-thirds of these eventually repay but only after the federal government assumes the debt from the bank and has launched some form of collection activity. The other third, about 7 per cent of all student loans, are carried as bad debt. There is currently about $1 billion in bad loans outstanding owed by 180,000 former students. Eventually about 2 per cent of all student borrowers use bankruptcy to evade payment of their loans.

Under an income contingent system these costs would all be substantially reduced. The savings associated with minimizing collection costs in particular would be major. The government spent about $23.3 million in collection costs last year to recover about $100 million worth of debt. With a total value of defaults approaching $1 billion the potential earnings of the collection agencies is now estimated to range up to $300 million.

To sum up, Reformers advocate the adoption of an income contingent repayment system for loans for three reasons. First, it is a cost-effective, fair and flexible system for students. It enables them to invest more in education, thus helping to fund and maintain Canada's high quality system. Second, it provides fairness and flexibility for students by dispensing with traditional means tests and by allowing former students to repay their loans over a longer period of time based on their income. The third reason is that it reduces the cost to taxpayers by minimizing defaults, dispensing with interest subsidies and minimizing collection costs.

I would like to spend a moment or two comparing the Reform and Liberal government commitments to financing higher education. I often note that some of the government's best ideas are ones that have been appropriated from the Reform Party. Canadian governments have gone out of their way to ignore this type of proposal for about 40 years, as well as the experiences with it in Australia and New Zealand. However only weeks after my motion was placed on the Order Paper experimentation with ICLR appeared in Bill C-28.

During the debate on that bill, Reformers suggested that the whole system of student loans should be overhauled with a system of income contingent loan repayment. A few months later, lo and behold, the social policy discussion paper proposed just that. We do not mind when the government borrows good ideas from Reform. Our only concern is that it takes it so long to do it. We hope it does not bungle the implementation.

There is however one significant difference between ICLRs as the government is proposing and ICLRs Reformers propose. Unlike the Liberal government's proposal, Reformers do not see student loan reform as a means of offloading government debt onto students or abdicating the federal government's role in the funding of higher education.

We see income contingent loan repayment as a replacement for the current system of student loans and as a supplement to federal educational transfers. We believe the cash portion should be transferred directly to students in the form of non-repayable vouchers.

On the other hand, the government's social policy discussion paper recommends eliminating the cash portion of federal education transfers. This would reduce the EPF portion of federal education funding by over 40 per cent and students would have to meet this shortfall.

This is why students are so concerned about the government's proposals. Students are not stupid; they know the difference between a repayable loan and a non-repayable voucher. While ICLR is a valuable proposal in and of itself, students and prospective students legitimately fear that the sudden elimination of federal cash transfers will damage the quality of education, restrict access and saddle them with massive personal debt.

In conclusion, I want to say just one word about the support of the ICLR system and where it should come on the list of Parliament's spending priorities. Everyone in the Chamber knows the Reform Party has made its reputation by calling for spending reductions that would balance the federal budget within the term of this Parliament. However as indicated in our zero in three plan for eliminating the deficit which we tabled last winter, one of the few areas where Reformers do not advocate spending reduction is in the area of financial support for post-secondary education.

Make no mistake: Reform's fiscal goal is to eliminate the deficit. However post-secondary education as an investment in Canada's future is so important to us that we are prepared to make massive spending reductions in other areas in order to maintain current funding levels for education.

I suggest to the House that of all the things the government does, of all the money it spends, its one true investment in the future is its investment in the education and training of the younger generation of Canadians.

In this light, the inadequacy of the proposals put forward by the Minister of Human Resources Development in his discussion paper with respect to financing education frankly leads us to question the government's competence to set spending priorities in the exercise of social reform or deficit reduction.

I ask the House and I ask members opposite: Is $1.1 billion in federal subsidies to the CBC more important than the funding of the education of young people? I do not think so. Is $40 million in federal funding for multiculturalism more important than funding the education of young people? I do not think so. Is $50 million spent on bilingual bonuses for civil servants more important than the funding of the education of young people? I do not think so. Is $1.4 million spent on a film glorifying the murderers of Pierre Laporte more important than the funding of the education of young people? I do not think so. Is over $3 billion in federal funding for subsidies to private business more important than the funding of the education of young people? I do not think so.

In conclusion, I hope the House will support this motion to reform student loans, especially in light of the proposals in the government's social policy discussion paper. Let us send a clear signal to the young people of the country that our highest priority is their education, their knowledge and skills, and their future.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I am pleased the hon. member did eventually conclude. After saying in conclusion about three times, it was nice to see that he finally came to his conclusion.

The government believes our competitiveness and therefore our prosperity depends on the skills and talents of individual Canadians. The policy choices we make today will have important consequences for the future. Based on that belief the federal government is ensuring access to student loans and increasing the amount of money students receive under the program.

We have approached the provinces to undertake pilot projects in areas like school to work transition and learning technologies because we know Canadians will be placing more and not fewer demands on the educational system in the future. The resources we use must be carefully placed for the greatest impact. Research partnership with provincial governments will develop new ways of bringing appropriate instruction and training within the reach of all Canadians.

Members already know we have to make the most of every tax dollar. They should also bear in mind there are few better investments to make with those tax dollars than helping our people to learn, whether they are children, teenagers, people in the workforce or people who want to rejoin the working world.

It bears repeating that the government and most Canadians place a high value on post-secondary education. Canada and Canadians spend a great deal of money on higher education. Every college and university student in Canada owes the taxpayers a great deal, but the taxpayers benefit from a well educated workforce.

Our college and university graduates repay the investment in many different ways. University graduates have an unemployment rate of 5.7 per cent; the rate of those who did not finish high school is more than 16 per cent. Post-secondary graduates earn about 40 per cent more than non-graduates over their lifetimes. Last year more than three million Canadians were on some kind of income security at one point.

In a time of constraint, allocating resources becomes very difficult. There is greater need and there are more contending voices. Under these circumstances a government is obliged to listen carefully before choosing a policy.

To justify support for higher education we can point to the fact that in the last three years there were 17 per cent more jobs for university graduates and 19 per cent fewer jobs for those who had not completed high school. By the year 2000, 45 per cent of jobs will require 16 or more years of education.

With that in mind we have improved the Canada student loans program. These measures reflect the concerns raised over the years by the public, the provinces and student groups. There are many reasons for extending the benefits of student loans.

There is no question that an investment in education now will reduce social assistance costs in the future. A sound education and access to training now will help following generations of Canadians to grow up in a more secure world. We must invest in a skilled workforce now to ensure that Canada and Canadians have real choices in the future.

The work has already started. New financing arrangements under the Canada Student Financial Assistance Act will ensure income sensitive terms for borrowers as they repay their loans. Lenders will assume greater responsibility in servicing and recovering loans.

Under the reform, students in similar situations will receive similar treatment in each participating province. Some students are worried that income contingent repayment will load them with a huge burden of debt. We made our intentions plain in the new Canada Student Financial Assistance Act.

Take a look at what we did. We created four new grant categories under the student loans act. We responded to the needs of part time students, students with disabilities, single mothers and women in certain graduate programs.

We want people to get a good education. Canada gets a high return from its investment in competent and well trained graduates. At the same time the government believes that those who benefit from post-secondary education must assume their responsibilities. When we make student loans for example, we believe those students are obliged to complete their studies and then repay the loans if they are able.

In his motion the member calls for the government to consider the advisability of income contingent repayment. With all respect, the short answer is the government is already looking at income contingent repayment.

In May and June the government moved the Canada Student Financial Assistance Act, Bill C-28, through Parliament to royal assent. This act provides flexibility for ICR schemes. We are consulting with the provinces on possible pilot projects. The province of Ontario and the Department of Human Resources Development among others promoted and took part in a two-day symposium on income contingent repayment in later September. Work is underway with Statistics Canada to develop an economic model of ICR which will allow the testing out of various scenarios.

The question we must ask about ICR or any other proposal about higher education is simply will this measure benefit Canadians by bringing college and university studies within the reach of everyone who wants to attend?

The discussion of ICR is not taking place in a vacuum. As we all know, Canada's economic future will increasingly depend on our college and university graduates. The choices those students make will determine the country's ability to compete and our

potential to remain one of the best countries in the world, in my view the best.

These brief remarks can hardly do justice to the concept of income contingent repayment. What I can say to the hon. member is the government is always willing to explore new ways to do more with fewer resources. We are already taking steps to investigate income contingent repayment.

The reforms to the student loans program which are now being implemented do not represent the government's final word on ways to help Canadians finance their post-secondary studies. If there is convincing evidence that Canada would benefit from an income contingent repayment system the findings will speak for themselves.

We do welcome good ideas. As a nation we spend 2.6 per cent of the value of our entire economy on post-secondary education every year. That is a lot of money. It is also the highest percentage of any country in the world. From high school 60 per cent of Canadian students now move on to college or university. We should bear in mind in a given year two-thirds of students do not take out student loans. The majority graduated with under $5,000 in student loans.

When it comes to ICRs we have done our homework. At the same time some student associations believe that any benefits they receive from ICR loans would quickly be taken away by their provincial governments in the form of fee increases.

We all know that we cannot impose educational fee schedules on provincial governments. They have gone up in recent years. Let me make this point. Education and training are shared responsibilities. Governments can offer students a wide choice of opportunities but Canadians have an obligation to invest in themselves.

As a country we are willing to commit resources to education, but many Canadians still feel we are not getting the kind of graduates we need. We all face a new reality. When people stop learning they stop earning. We do not want to burden new graduates with huge debts. The new act makes that clear. We are working for a system that supports people who go to school, not one that penalizes their ambition.

Throughout their working lives many if not most Canadians will need to learn new skills. Before that can happen all of us must learn new attitudes as Canadians, as governments, as businesses and associations. The challenge is accessibility. Potential students may have all the ability and all the desire in the world but we cannot expect them to undertake their studies without the means to finance their education and a realistic way to repay their loans.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I too appreciate this opportunity, as the Official Opposition critic for training and youth, to state the position of our party with regard to Motion M-291 put forward by the Leader of the Reform Party

This motion, as you may recall, reads as follows: "That, in the opinion of this House, the government should consider the advisability of amending the Canada Student Loans Act to include an income contingent loan repayment system [-]"

On the face of it, the concept of repayment based on income seems to be to the students' advantage. If that were the intent, there would, of course, be very wide support for this motion on this side.

But since no clear definition of this concept exists as of yet, it can easily be used for other purposes.

As it stands, the motion tabled by the leader of the Reform Party justifies, in our view, the approach advocated by this government, that is to say to have the students defray the costs of higher education.

There is no need for me to emphasize the fact that, at more than $500 billion, our national debt is huge, but the point can easily be made that students are not to blame for this situation. It is not the doing of students pursuing higher education. I will not get into a debate on who is to blame. Let us just say that the blame does not rest only with this government. As we know, this debt has been spiralling, particularly since 1979. It started under the Liberals and continued with the Conservatives and is still growing today.

Just now, I heard the member of the governing party say something that is very wrong. He said that responsibility for higher education is shared by the federal and provincial governments. The member has misread the Constitution, which clearly states that education and higher education are a provincial responsibility. My purpose today is not to debate the Constitution, but it is still worth recalling because even members of this House seem not to know that fact.

Despite that, we know that so far the federal government has used the spending power, which is also in the Constitution, to invade this field. Since some of Quebec's taxes have been used until now to finance higher education under the federal government's authority, it was normal that we tried to obtain our share, but again, keep in mind that it is in provincial jurisdiction.

Until now, we in Quebec have used our right to opt out with financial compensation, but this is not the discussion that I want to get into today.

We believe that we must debate ICLR more thoroughly before setting up such a plan. Nevertheless, we oppose any use of ICLR if the ultimate goal is to make students pay the full cost of higher education, because tuition fees are already rising outrageously. Students' indebteness is also growing at an alarming rate, and

not just the national debt. Students' personal debt is already rising fast.

Indeed, students have great difficulty repaying their loans once they graduate. According to an article that appeared in the October 18 edition of the Globe and Mail , the federal government is now owed close to $1 billion by former students unable to repay their loans. The new financial assistance law passed on June 23 will allow us to compensate by turning to banks, whose customary generosity is well known. These banks will not hesitate to recover students' debts.

Here is another statistic: former students unable to pay for their studies make up 10 per cent of personal bankruptcy cases. What do they want to do now? They want to increase these students' debt load. Where are we heading, Mr. Speaker?

Although figures are often contradictory, according to the Committee on Human Resources, the average Canadian student owes $11,000. At first sight, this does not seem very high, but it is the average and we know that the average includes those students who do not complete their college or university studies. This means that, at least in Quebec, the $11,000 average debt would be closer to $16,000 or $17,000 for those about to receive their B.A., and some even talk about a higher figure.

They mention an average of $21,000 for students with a master's degree and $37,000 for those with a Ph.D. The Federation of Students thinks that these figures will double. We can see what kind of debt load this could lead to.

I do not think that the purpose of this motion is to help students. If we read paragraph ( a ) of the motion tabled by the leader of the Reform Party, we can see clearly that such is not the case. Its first objective is to ``reduce the cost to taxpayers of financing post-secondary education''. The goal is not to help students but to reduce the deficit. So we, of course, disagree with the motion as it now stands.

A closer look at the text of the motion gives us a better understanding of the real motives of this party which, above all, wants to cut costs. I said that in paragraph (a) , the reason was to reduce the cost to taxpayers of financing post-secondary education. Like the Liberal government, the Reform Party recommends reducing the government's financial commitments to post-secondary education. Its purpose in presenting this motion is, first of all, to reduce government spending.

Students will have to pay higher tuition fees as a result of government cutbacks. The Reform Party and the Liberal government describe income contingent loan repayment as a blessing for students, but they omit the fact that this measure comes at a time of major cuts in financing for post-secondary institutions. The blessing is rather dubious.

We are against cuts in post-secondary education. If the government wants to withdraw from an area that is an exclusively provincial jurisdiction, it should do so across the board, not just financially. The government seems to want to control more while spending less. There is a contradiction here. We agree the system for repayment of student loans should be changed, but not in the way suggested by the Leader of the Reform Party or by the Liberal government under its current social security reform.

Occasionally, references are made to countries like Sweden, Australia and New Zealand, which have introduced income contingent loan repayment systems. We know that New Zealand was forced to do so by the IMF. However, people tend to forget that the position of students and post-secondary education financing differs from one country to the next. It is therefore very difficult to apply in this country what is being done elsewhere, especially since the ICLR systems used in these countries are relatively recent and according to initial results have shown that they are not successful.

Closer to home, a pilot project in Ontario had 1,000 openings and only 75 people took advantage of this opportunity, 75 out of a potential 1,000. Why? Because, students, the Canadian Federation of Students and the Quebec Federation, all the major student federations are against the system. Why? Because it only covers loans, and there are no provisions for bursaries.

In Quebec, we have a bursary program that is very popular. Since I only have one minute left, I see the Chairman of the Human Resources Committee, and I happen to be a member of this committee which will organize wide-ranging consultations across the country. I think this is a concept that could be discussed, but I think we would need some in-depth consultation before getting it on the road.

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it gives me great pleasure today to speak on the motion of my esteemed colleague, Motion No. 291, to amend the Canada Student Loans Act to include an income contingent loan repayment system in order to reduce the cost to the taxpayers of financing post-secondary education.

Before I begin I would like to address my colleague's concern. This is not a turf war between provinces. We are bringing this motion forward for students across this country and we do not care what province they come from. I suggest that he look to

New Zealand and Australia to see two places where the motion has been brought into play and where it works.

If health is the most important thing that Canadians value then surely education is its greatest investment. A solid investment in education for the people of this country, particularly its youth, is the greatest guarantee that we can have to ensure the social and economic integrity of our society.

Canadian universities are now in a state of serious financial crisis. Administrators, faculty and students alike agree that the fiscal crisis we are now in compromises their ability to provide for the best educational opportunities for the youth of this country.

Underfunding on every campus is pervasive and the effects are extremely negative. Fat has already been removed from the system. We are now down to the bone and the bone is being chipped away.

It was not so long ago that I graduated from the University of Toronto after spending seven years there. It has not become any easier since I graduated. Underfunding for the students is still a huge problem as an example. The percentage of students borrowing from 1982 to 1990 has risen from 44 to 47 per cent but the amount they owe when they get out has also increased dramatically, from $5,400 to $8,600 for merely a bachelors degree. This is especially prevalent among those of lower socioeconomic groups.

The fact that costs are increasing is compounded by the fact that students cannot find summer jobs or part time jobs to offset their tuition fee. In effect they are caught between a rock and a hard place. On one hand they recognize that their best hope for a career and a future to become financially independent is to acquire post-secondary education. On the other hand they recognize that it is becoming increasingly more difficult to fund it but to drop out of school will commit them generally speaking to a life of low paying jobs with little potential for advancement.

Recent studies have shown that the most important factor of gaining employment is in fact some form of post-secondary education. This fiscal crisis that students have can be amplified on a macro scale to our country by the fact that we have increasing deficits that add to the debt which produces increasing interest payments that extracted from the government and enables less money to be paid for programs such as education. I know we keep on harping on this fact but we will repeat it a thousand times until the government gets into its head what needs to be done.

It is a vicious cycle that has to end. I am encouraging the Minister of Finance who has at long last admitted to the problem and has an understanding of what to do. However he does not have a plan. We do in this party. It is called the zero in three plan. Again I encourage the Minister of Finance to solicit our help in aiding him to make fair, equitable and constructive cuts to minimize the hardships for people while enabling this country to get the economic kickstart it is so desperately in need of. We have a plan. All he needs to do is ask us for it.

We in this party have also looked for ways to ensure that every qualified student gets equal access to post-secondary education and not just the rich. In response to this my colleague has again brought up what I will refer to, and he has explained, as the ICLR, a concept that our party has been advocating for years. It has widespread support among students, administrators, and educators alike across the country. It has been applauded by these groups as being fair, more effective, and more fiscally responsible than any other way of dealing with the student loan system.

Currently our system has the same loan limits and criteria and has not changed since 1984. It is behind the times; behind the times with the costs of education rising, the cost of living rising, and job availability decreasing. The loan system has become archaic and much less helpful for the student population and requires immediate revamping.

When students graduate they often find it very difficult to find employment in the job market and this is becoming increasingly more difficult with time. Real incomes are down, job prospects are down, and they cannot pay back their loans. As a result of this, 70 per cent default in the first 12 to 18 months. This does not lead to a system that is self-sustaining and self-perpetuating for future generations. It costs the taxpayers money. It is a drain and an unnecessary one at that. It detracts money from higher education.

How bad is this situation? Let us take a look. In 1992 loan defaulting became epidemic. The value of loans defaulted since 1964 is in the order of a billion dollars. That represents 180,000 students. The cost of extraction will be between $135 million and $270 million, money again removed from the educational system that could best be spent to provide for students in the trenches.

The finance minister has also proposed to convert the cash contribution of education from $2.6 billion to zero by the year 2006. This will produce a sharp rise in tuition fees and some say will double in the year 1997. The problem is becoming more critical in the very near future.

This is the most interesting fact. Most people after they receive their post-secondary education ultimately do find a job. The problem occurs in the first few years after they graduate when they are not making much money at all. Because of the inflexibility of the current loan repayment system they are forced to default. This is a tragic loss to the taxpayer and our educational system and one that is unnecessary.

That is why this ICLR system that we propose is a powerful tool to ensure greater certainty of return by tying the repayment scheme to the income of the student. It would not cost more to operate because it would operate through the existing income tax structure and would be easily managed.

With the ICLR, this would produce a system that would be self-sustaining with a much higher rate of return and much more money being kept in the educational system. It is fair and non-discriminating.

Education is indeed the hope of the future. In this world of globalization and specialization, with the rapid movement of capital across borders, economies are forced to change and change rapidly. That is why our educational system must be nimble in its ability to accommodate the needs of a rapidly changing economy.

It is estimated that a student now graduating will change his or her profession four, five or more times in the course of their lifetime. With this in mind, we will need an expanded educational system and the ICLR will produce the funding for this system by stanching the losses incurred through defaulting.

I implore the government to look ahead to the future, not five years but forty years down the line to anticipate the needs of our economy and provide for these educational opportunities now. This will require courage and foresight with this knowledge.

Our country demands a strong workforce. A workforce can only be strong if it is given the proper educational opportunities that it deserves which will cost money, money that will be harder to find. That is why Motion No. 291 is a must to support. We in this party support it. I hope people across the House and across party borders will take it in their hearts to support this motion for students all across the country.

[Barry Campbell, Liberal, St. Paul's, ON]

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.

[The Deputy Speaker]

There are approximately seven minutes left. The hon. member for Capilano-Howe Sound has approximately seven minutes. He will have three minutes in the next two-hour session.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, the Minister of Finance this week like never before cut through the traditional Liberal ideology and wishful thinking when he warned that spending cuts are needed or the country will go bankrupt.

The search for such cuts is now on. I predict confidently that the post-secondary education sector will not be spared such cuts any more than any other of the many worthy spending programs in our society except those serving the truly needy, handicapped and aged.

If this education sector joins all the other recipients of government funds in the traditional refusal to accept cuts and the government accedes to their wishes, the coming financial crisis very soon will make the recently proposed cuts seem trivial.

Under either scenario, I believe that it is in the self-interest of the higher education sector to consider methods for dealing with the coming financial difficulties.

I recommend this course of action because I am totally convinced of the economic and social merit of higher education. How could it be any other way after 30 years of university teaching, the experience of having seen first hand many generations of young people gaining knowledge and maturity that prepared them for successful careers in their lives. I do so because I am a realist and I wish to see a continued, strong higher education industry in Canada.

The financial innovation that will help this sector overcome the upcoming financial problems is found in the private member's bill for the establishment of income contingent student loans which we are here to discuss today. What are these innovative types of loans? The idea is simple. Students receive government loans that they can use to pay tuition at institutions of higher learning. The loans plus accrued interest are repaid in instalments once the borrowers have reached a specified level of income. Revenue Canada would serve as a collection agency at low cost.

Detailed legislation has to address a number of important characteristics of this system such as the maximum amount a person can borrow, the interest to be charged, the income threshold when repayment starts, the period of required amortization which determines the maximum annual income tax surcharge.

While one should never underestimate the devil that lurks in these details, enough research and practical experience with the principle of income contingent loans exist to make me confident that it is workable, efficient and equitable. The program would give students the ability to pay more of the true cost of their education. Institutions of higher learning could use this ability to recover more of their operating costs, replacing the funds lost as a result of the government's present financial problems.

Students certainly will not like having to absorb more of the cost of their own education. I would be very disappointed if they did not launch massive protests and repeat all the old chestnuts about the unfairness of it all, how it prevents those with low income parents from obtaining higher education and so on. I sympathize with these students. They have had a good deal for a long time and very few people will want to give it up when they have had such a good deal.

I enjoyed having these benefits when I was a student. The time of free lunches and good deals is over. I wish it were not so, that we could go back to the past when the taxpayer paid the full fare. No wishing will bring it back. The country is heading for bankruptcy and students will have to share in the burden of preventing this untold disaster. Do not shoot the messenger.

A few facts should be considered by those concerned about the fairness and efficiency of the proposed system. Canada devotes a large amount of resources to higher education. The direct and indirect annual costs are about $15,000 per student per year which in total are exceeded only by the costs of health care.

There are over 100 universities and other institutions of higher learning for 29 million Canadians. Nova Scotia has 32 university places per 1,000 population. Analogous figures are 21 for Ontario and 13 for British Columbia.

As a result of past investment in higher education 17 per cent of Canada's population hold university degrees. This compares very favourably with 7 per cent in France and 8 per cent in the United Kingdom.

Students should also consider the following fact about their ability to pay a larger share of the true cost of higher education. I am sorry, I have to wind down. I will have to continue next time, but the point is that the private rate of return to higher education is-

[The Deputy Speaker]

Thanks to the graciousness of the parliamentary secretary, it is proposed that we not see the clock. Is that agreed?

[Some hon. members]

Agreed.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, I really appreciate the generosity of the members opposite.

Census data show that Canadians with bachelor degrees on average earn higher incomes than Canadians with lower levels of educational attainment. The present value of these lifetime income premiums is much greater than the costs involved in obtaining the degrees. These costs consist of tuition fees at recent levels, costs of books and supplies and, quantitatively dwarfing all the other costs, the earnings forgone while in university.

The rates of return on these investments in recent decades have been about 7 to 10 per cent. This is a very good rate of return. It is capable of absorbing very substantial increases in tuition costs without becoming less than the real long run rates of return available in financial market instruments.

Students concerned about the fairness of our society's spending and taxation system should be aware that the vast bulk of university graduates come from families in the middle and higher end of the income distribution. Yet a substantial proportion of the tax revenue used to pay for their education is collected from Canadians with lower incomes. In effect, the present system forces low income earners to subsidize those with higher incomes to get their university education.

The proposed system will correct this inequity. Middle and higher income families will pay a larger share of the higher education benefits they receive. If bad luck prevents them from enjoying the benefits of higher education, these students will not have to repay.

Students concerned about the access of the poor to higher education are reminded that under the present system the poor are often excluded because they do not qualify for fixed repayment loans. Under this system, no questions are asked and they will have access without any difficulty. They have to repay only if they are able to do so.

Finally, I would like to raise a point that is not often discussed. Under the present arrangement, students choices are severely limited. Programs offered by state monopolies of higher education have been slow to react to the demands of students in a changing world. It is well known that the solution to these problems lies in the use of vouchers, that is, non-repayable certificates given to students and cashable at institutions of their choice. The Reform Party supports the use of such vouchers and the resultant empowerment of students.

The income contingent loans program moves the system closer to the ultimate goal of vouchers. It similarly empowers students to obtain study programs that they like rather than those that professors and bureaucrats think they should like. By spending their loan money in institutions of their choice, they encourage them to grow and force others to shrink. Since they spend their own repayable money, they have the proper incentives to make wise choices.

The time for income contingent loans for students in higher education has come. This proposed system offers an efficient and equitable way out of the problems created by the country's financial crisis.

I hope the government will take note of this private member's bill introduced by the Reform Party and debated today and that it will offer promptly legislation to put it into effect.

[The Deputy Speaker]

The Chair would thank the members for their co-operation and assistance to the member who just spoke.

The hour provided for the consideration of Private Members' Business has expired. Pursuant to Standing Order 93 the motion is dropped to the bottom of the order of precedence on the Order Paper.

The House stands adjourned until Monday at 11 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 2.44 p.m.)