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-