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.