Mr. Speaker, the purpose of this enactment is to allow a person who pays interest on a student loan to deduct from income, for the purposes of determining the tax payable, the full amount of the interest for 10 years after the first payment of interest was due. If the student does not use the full deduction in any year it may be transferred to the person, if any, who guaranteed or co-signed the loan initially.
It covers loans made under the Canada Student Loans Act, the Canada Student Financial Assistance Act and certain other loans for the same purpose not made under the government loan program for students if they meet the prescribed conditions.
The total cost of this new tax measure may amount to some $800 million. The 17% tax credit included in the measure will cost about $130 million. It would be a major step in helping students. Canadian society in general is certainly better off if we produce more university graduates. A well educated young population that has marketable skills benefits the individual and the country.
Canada's academic community is as good as that of any country. In many areas we are better. However, Canadian students have been under enormous pressure to bear more of the costs of their education. The total amount of federal-provincial student loans jumped from $875 million in 1990 to over $2.1 billion in 1994, a 144% increase in just four years.
As education is an investment, it should not be treated any differently than other capital investments that receive tax credits. Allowing student loan deductibility will relieve some of the pressure resulting from increasing student loan debts, even though student fees are only a fraction, perhaps just 10%, of the full cost.
Tax relief in the form of student loan interest deductibility will reduce student loan default rates. Tax relief for students may result in more opportunity for young people to apply to university and community college.
The Liberals have cut $7 billion from transfers to the provinces for health care and post-secondary education and are replacing it with $325 million a year from the millennium scholarship fund and $120 million per year from three other grant programs. The fund will not ease existing student debts. A grant of $3,000 to 6% of students will not help in a meaningful way, except in a political way, as it will be given by a Liberal government. Therefore, students are supposed to be grateful and vote Liberal.
The bill was introduced before the February 1998 budget. What is proposed in Bill C-316 goes further than the announcements contained in the 1998 budget, however. Considering the brain drain that afflicts certain sectors of our economy, such as computer science and medicine, this measure could be seen as a way of keeping recent graduates in Canada. This would protect Canada's human capital.
A Reform government would help all students by increasing transfers to the provinces for education, giving broad based tax relief, creating an income contingent repayment program and allowing interest deductibility.
We oppose the call for free, universally available undergraduate university attendance at this point. Some of the unrealistic student lobby groups have asserted that it is their right to have free university. They have also added that they want 100% grants. However, the country just cannot afford it at the present time.
There was also the operation of personal responsibility to contribute at least a fraction of the great subsidized benefit which university students receive.
There are many ways to ensure that demonstrated academic talent is supported and encouraged. Finances alone should not be a barrier. Therefore, loans, bursaries, scholarships and payment plans attached to income tax forms to truly address the ability to pay is the way to go at the present point in the nation's finances.
The bill is a good idea and should be supported not just by Reformers, but by all members of the House.