Mr. Speaker, I am pleased to be able to join in the debate this morning on the important subject of Canada's post-secondary education system. I commend the leader of the Reform Party for having taken the initiative to place the issue of federal support for our colleges and universities on the parliamentary agenda, as he did last spring, and for his suggestions regarding the concept of income contingent repayment or ICR of student loans.
I believe this debate is helping members of the House gain insights into the importance of higher education to our country's future and how the federal government can work with the provinces to assist our colleges and universities. Since this motion was introduced last spring, however, there have been several important developments.
First, the government moved the new Canada Student Financial Assistance Act, which is known as Bill C-28, through Parliament to receive royal assent. The new legislation, which provides the framework for reforming the Canada student loans program, will be proclaimed in 1995. The new act provides the flexibility to implement the ICR pilot projects with interested provinces. This possibility is being pursued as a means of learning more about how an ICR scheme might be designed to meet Canadian conditions.
The government has moved quickly to implement its students' assistance reforms by increasing assistance for those students who need it the most. In August of this year the full time Canada student loan limit was increased from $105 per week to $165 per week and the limit on part time loans was raised from $2,500 to $4,000.
Over the next five years the changes already announced to our existing student assistance program will provide $6 billion in loans, which is over $2 billion more than during the last five years. The reforms include not only higher loan limits but special grants for students with disabilities, part time students and women in certain fields of study at the PhD level.
In addition to the reforms already under way in the area of student assistance, the government has demonstrated its keen interest in the future of post-secondary education by informing Canadians about federal assistance to the post-secondary system and putting forward an innovative approach for discussion.
The social security green paper provides two options for the future of established programs financing arrangements for post-secondary education. Under the first, total transfers would be frozen at the 1993-94 level starting in 1996-97. The result would be that as the tax portion of the transfer grows with the economy, the cash transfers will decline correspondingly, disappearing altogether within about ten years' time.
On the other hand, if we have an opportunity, we could transfer the declining cash into a sustainable system of loans and grants. These new loans could be based on the concept of income contingent repayment. For those who enjoy relatively high income after their studies, the rate of repayment would be rapid. Those who experience periods of low income would repay only when they were in a position to do so. The repayment would adjust automatically to income, thus reflecting the ability to pay rather than the amount borrowed. Those of us in riding offices know a lot about that.
We are discussing this concept with interest groups and provinces, examining how such a system might work in Canada. The government is guided by the principle of equality and at the same time the belief that those who benefit from post-secondary education have a responsibility to pay a fair share of the costs of their education.
We believe that every Canadian has the right to an equal opportunity in the workplace and in the classroom, consistent with the ability to do the job or handle the course work. At the same time, government resources are very limited and must be directed to those who need help to help themselves. It is true that students are often needy while they are in post-secondary
education, but thereafter their employment prospects and incomes usually improve dramatically. On average, post-secondary graduates earn 40 per cent more than the general workforce over their careers.
Once graduates begin to reap the benefits of higher education it seems reasonable that they should pay back part of the costs which society has invested in them. We are proposing that students take on a greater share of the costs of their education. We are asking them to invest in themselves. This is the option we want to discuss with Canadians.
The potential advantages of income contingent repayment or ICR have been widely discussed in recent years and several countries, including Australia and New Zealand, have moved to introduce ICR schemes. Clearly, in making his original motion, the hon. member concluded that ICR could be an important tool in assisting students in financing their education.
An ICR loan program would be fairer and less risky for students. Payments would be geared to income. If a year's earnings fell below a certain level, repayment of the loan could be suspended.
ICR has the potential of making loans available to all students without the means testing used in current student loans programs. If the government was not paying the interest on the loans while the students were still in school, there would be no need to limit eligibility.
The ICR concept, as it could apply, is currently being explored. The specific design would have to be tailored to reflect the Canadian environment. The government is undertaking work in this area in consultation with various student and other interest groups and will involve the provinces fully in such consultations.
We believe that ICR loans have a role to play in helping to maintain a high quality system of post-secondary education through the provision of a sustainable source of funding.
As I have indicated, the discussion paper on social security reform suggests a new approach to how the federal government might transform its decline in cash transfers into a sustainable system of income contingent loans and grants. This represents an innovative approach to dealing with the challenges ahead. The idea is receiving considerable support and the option deserves consideration.
To successfully face the challenges of the future, Canada needs well-educated young people and citizens who will continue to learn throughout their lives. The government is seeking ways to help Canadians achieve their learning goals through improved access to higher education.
As part of our social security reforms, we must enable Canadians to develop the tools they need to become productive and self-sufficient members of society. Our objectives must remain consistent with the Canadian value of fairness and generosity to those in difficulty while recognizing that governments have limited resources. Quite simply, we must help people to help themselves.
The government is listening to Canadians. We have put post-secondary education high on our list of priorities through reforms to the existing student assistance program and proposals in the social security reform paper.
The standing committee has already started its consultations from coast to coast and many members are conducting forums on social security reform in their own constituencies.
We look forward to hearing from Canadians in all walks of life.