Mr. Speaker, I am pleased to rise today to lead this debate for my party.
This motion is about Canada's future. It is about the future because it is about education. Education is the key to the future for Canada's young people.
I have spent virtually all my adult life in the teaching profession. Conveying knowledge to our young people was for me a most rewarding vocation. We must ensure the future of our educational system in Canada, and part of that is ensuring that as many students as possible can take part in it.
As literacy critic for my party, I recognize what happens if people do not take advantage of our education system when they are young. If you do not learn to read and write when you are young, you are going to have to learn when you are older through the various literacy programs sponsored by communities across Canada.
Reading and writing are learned either young or old but have to be learned at some point if one wants to become a fully functioning member of society. That is why it is so important
that everyone who wishes has access to education at every level of our school system.
Years ago, back in the 1950s, 1960s and 1970s, I believe we thought we had licked the access problem for education and if we had proceeded with balanced budgets from the 1970s through until today, I suppose we could have been right. However with the advent of budgetary deficits and the recession from which we are desperately trying to emerge, access to education has been called into question.
It has been called into question by two groups, the students and by us, the politicians representing the people of Canada. Students are concerned that through the Canada student loan program they will receive insufficient funds to allow them to attend university without worry.
At the same time because of the repayment scheme attached to these loans, students are concerned they will emerge at the end of their university careers with a huge debt which they are unable to discharge in the amounts and in the time required.
The repayment problem for student loans is alarming. At present one in five borrowers is in default on their student loan. 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 never repaid and become simply bad debts. In all, we are talking about $1 billion in bad loans, money the treasury may never see.
That is why the Reform Party felt it important to look at the whole scheme of financing again; look at it with a view to making it easier to fund a student's education, making it easier for the student to repay and therefore making it easier on the country's finances because the loans would eventually be repaid, perhaps with lesser amounts, but repaid nevertheless.
Let me explain how the Reform Party's income contingent loan repayment program will work. It is designed to allow students to pay back their student loans over a period of time based on their annual income after leaving university. The concept is funded on two fundamental principles, the full use of the income tax machinery in monitoring and collecting student loans, and the implementation of an income contingency principle whereby students pay back a set percentage of their income.
Upon graduation a student would begin to pay back their student loan. There is no eight-month delay period as there is presently. The repayment of the loan however would link the repayment plan to a student's earnings or ability to pay. Precisely how much a former student pays back would vary from year to year depending on his or her salary level.
A specific amount set as a percentage of income would be paid through the tax system. If a person's income does not reach a specified minimum amount, the payment would be deferred until earnings go up. This repayment system, however, depends on the supply of accurate income statements long after the individual has left the institution of higher education.
Revenue Canada could therefore supply the necessary data automatically and cheaply through income tax statements. This would necessitate the recording of student borrowers with the tax department and the inclusion of social insurance numbers on student loan forms.
With the possession of the full details of most students changing future incomes and geographic locations, the income tax authorities could then act as the primary monitor subsequent to loan collection.
I do not believe the use of SIN numbers in this context should be objected to. The end result of a more equitable loan scheme justifies this requirement.
We in the Reform Party like the idea of income contingent loans for three basic reasons, the first being the reduced cost to the taxpayer. Under the current Canada student loans program taxpayers end up footing the bill for defaulted loans. The difference between the simple interest paid by borrowers and the accumulated interest paid by the government and the collection fees charged on defaulted loans is charged to the taxpayer.
Two, there would be greater flexibility and fairness for students under the program. Under the Canada student loan program borrowers and taxpayers are discriminated against and repayment terms are onerous and rigid. The current program discriminates against borrowers in two ways. First, it discriminates against the poor and unemployed by forcing them to pay back their loans at the same rate and at the same level as those who are gainfully employed and who can afford to pay off their loans. Second, the prospective borrowers are discriminated against on the basis of their parents' or partners' income potential through means tests.
This often means that students whose parents are well off are ineligible for student loans even if they receive no assistance from these same parents. Low income taxpayers are especially discriminated against, as they are less apt to send their children to university.
The burden falls especially on those who pay taxes but do not use post-secondary education services. By 1990 two-thirds of the adult population did not possess post-secondary credentials. In other words, under the Canada student loan plan the poor or
those without university education as the case may be have been subsidizing the rich.
The repayment plan is inflexible because it forces former students to begin repaying their loan only eight months after graduation irrespective of their income. The income contingency plan in contrast involves no burden of debt that must be repaid unconditionally. Repayment falls only on the prosperous; that is, upon those persons who graduate and earn income at or above the given level.
Three, the maintenance of high quality educational services. The government is broke. As such both federal and provincial jurisdictions are grappling with the problem of how to finance post-secondary education. The financial pressure on higher education through reduced public funding has been inevitable in an era of growing deficits, high taxation and the increasing competition of health, environment and other lobbies for a greater share of public spending.
As governments contribute less and less funding and costs increase at the same time the quality of education has and will continue to decline. The bottom line is that governments can no longer finance post-secondary education at a declining level and expect the quality of the service to remain constant.
One cannot increase tuition and other fees charged to students without making the cost of a university education more and more prohibitive under the current system. If students were to be permitted to repay their loans on an income contingent basis over a longer period of time if necessary tuition fees as a percentage of the total contribution to post-secondary financing could easily be increased. This would ensure that the quality of educational services would remain strong and that those who benefit most from the system are those who contribute their fair share.
The position taken on this subject by the academic world is heartening. Mr. Clark Lajeunesse, president of the Association of Universities and Colleges of Canada stated the current student loan program is outdated as it does not meet students' needs and it does not meet university needs either.
The income contingent repayment loan is seen by universities as allowing them to maintain accessibility and qualify by making more effective use of tuition fees.
Under the ICR program universities can be more realistic about the cost of the programs that they offer. Some fees might increase for high cost programs while other fees might decrease for low cost programs. While some student groups have expressed concern that such a method of financing education could lead to higher tuition fees, other students and student organizations have expressed support.
The Ontario Undergraduate Student Alliance believes that ICR holds promise for protecting accessibility to and the quality of post-secondary education. The most important matter for this group is not so much that costs may increase marginally but that the education received by students be worth something. The key to the ICR program for this Ontario group is that it is never an unmanageable debt load.
I believe we should now look seriously at changing the method by which university education in Canada is financed, especially the financing available for students. The proposal from the leader of the Reform Party represents a scheme which is fair and equitable to students but is also inexpensive to administer. I would urge all members of the House to support this motion.