House of Commons Hansard #74 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was chair.
The Acting Speaker Conservative Andrew Scheer
I would ask all hon. members, as we do every week, if they need to carry on conversations with other hon. members or with various ministers, that they take advantage of the lobbies on either side of the House so the House can get down to private members' business.
It being 6:30 p.m., the House will now proceed to the consideration of private member's business as listed on today's order paper.
The House resumed from June 21 consideration of the motion that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), be read the second time and referred to a committee.
Joe Preston Conservative Elgin—Middlesex—London, ON
Mr. Speaker, it is a privilege to engage in debate today with my fellow colleagues on Bill C-253, sponsored by the hon. member for Pickering—Scarborough East.
The bill proposes two major changes to registered education savings plans, or RESPs, that would affect contributions made in 2006 and future tax years.
We all agree that post-secondary education is important for the future of our children and for the future of this country. A well-educated workforce is a critical factor to improving Canada's productivity and raising our standard of living. In a knowledge based economy, our young people must have the skills to compete successfully in an increasingly sophisticated labour market.
More than half of the new jobs created today require post-secondary education. We can only expect education requirements to increase over time. We want our children to have access to post-secondary education and we want that education to be second to none.
The bill before the House today proposes an increase in support for post-secondary education by providing additional tax preferences for RESP savings. However, I believe this bill is not the best way to promote post-secondary education.
First, I will give a brief overview of the considerable support the Government of Canada provides for post-secondary education; second, I will explain the significant support that is already provided for education saving; and third, I will explain why measures proposed in the bill presented by the hon. member for Pickering—Scarborough East would not be cost effective ways to support post-secondary education.
The Government of Canada provides significant support for post-secondary education. In addition to transfers to the provinces, the Government of Canada provides over $5 billion annually in direct support to post-secondary education. Of this amount, $1.7 billion is provided to educational institutions for research to help ensure our brightest researchers stay in Canada and contribute to maintaining Canada's edge in innovation. Also, $1.8 billion is provided in grants, scholarships and loans to improve access to post-secondary education for low income students and rewarding those who attain academic excellence. We also provide $1.7 billion in tax relief to students and their families in recognition of the cost of post-secondary education through measures such as the tuition tax credit and the education tax credit.
This government's commitment to post-secondary education was evidenced in the 2006 budget presented in the House on May 2, 2006. The budget follows through on our platform commitments by proposing to create a textbook tax credit. The credit will be provided of $65 per month for full time study or $20 per month for part time study.
This government also recognizes that post-secondary students need to be supported in their hard work in the pursuit of academic excellence.
Income Tax ActPrivate Members' Business
Dan McTeague
It is a pittance. It is one textbook.
Joe Preston Conservative Elgin—Middlesex—London, ON
I am glad to hear that the member opposite agrees with me.
Budget 2006 discards the previous $3,000 partial exemption and proposes to make all scholarships and bursaries received by students enrolled in post-secondary studies completely exempt from tax.
Budget 2006 also proposes to improve access to student loans by reducing the parental contribution required for students from middle income families for the purpose of student loans. It is estimated that this change will enable 30,000 students to gain access to assistance and 25,000 to have access to increased loans.
The government will also provide a one-time payment of $1 billion into the post-secondary education infrastructure trust, providing that the 2005-06 surplus is in excess of $2 billion. The trust will support critical and urgent infrastructure and equipment in colleges and universities.
Budget 2006 also included funding for research and development and measures in support of apprenticeships and trades.
Let me turn to the assistance that is already provided for education saving. RESPs are given preferential tax treatment to help parents save for their children's post-secondary education. Up to $4,000 can be contributed to an RESP in a year for each beneficiary to a lifetime maximum of $42,000 per beneficiary. Funds invested in the plan grow tax free until they are withdrawn. Contributions are not deductible, but can be withdrawn tax free. Investment income earned in the plan is taxed in the hands of the students when withdrawn for post-secondary education. In short, the tax benefits in an RESP come from two sources: the deferral of the tax would be investment income and the fact that this income is taxed at a low rate because students generally pay little or no tax.
In addition to the tax preferences I just described, RESP savings qualify for the Canada education savings grant, or CESG, which makes saving in an RESP even more attractive. Under this program, which is aimed at encouraging saving for post-secondary education, the government provides a 20% grant on the first $2,000 in RESP savings for each beneficiary in a year.
To illustrate how this works, assume a parent contributes $2,000 to an RESP for his or her child, the contribution would earn $400 in CESG and the income on both the contribution and the CESG would grow tax free until the funds were withdrawn to cover the cost of the child attending college or university.
Further, because it is more difficult for low and middle income families to save for a child's post-secondary education, the Canada education savings grant provides a higher grant rate on the first $500 in contributions by these families. Depending on family income, the grant rate could be as high as 40%.
In addition, since 2004, the Canada learning bond kick-starts education savings for children born after 2003 and who are in families entitled to the national child benefit supplement. Up to $2,000 in total Canada learning bond grants could be paid in a child's RESP by age 16. These measures were adopted with our support.
In fact, the current RESP limit, saving $2,000 annually into a child's RESP, means that almost $75,000 could be available for that child's post-secondary education by age 18, and about $95,000 would be available if the parent contributed $4,000 annually until the $42,000 lifetime limit was reached.
The combination of the generous tax treatment of the RESP and the CESG that tops up private savings has provided powerful incentives for parents to save for their children's post-secondary education. At the of 2005, these plans held almost $18 billion in savings for future post-secondary education, seven times their value nine years ago.
Since 1998, $2.7 billion in Canada's education saving grants have provided for over 2.2 million children. Over $440 million in grants was paid into RESPs under the program in 2005. In addition, the tax deferral provided by RESPs represents about $130 million per year in forgone revenue for the Government of Canada and about half that amount to the provinces.
In total, the Government of Canada devotes over $570 million annually to tax relief and grants to help parents save for their children's post-secondary education. I believe nobody would dispute that the current RESP regime has been extremely successful at promoting savings for post-secondary education.
Let us consider the impact of the measures under Bill C-253.
First, the bill proposes to provide a deduction for contributions to RESPs made in 2006 and future tax years, with contributions withdrawn being taxed in the contributors hands rather than tax free as is currently the case.
Second, contribution limits would be raised to be the same as those applying for registered retirement savings plans, or RRSPs, that is 18% of the earned income up to $18,000 for 2006.
The bill is supposed to encourage parents to save more for their children's post-secondary education, but I suggest that the measure proposed in the bill would be ineffective and would be expensive.
For these reasons and many others, I am unable to support the bill and invite my colleagues to do the same.
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
Mr. Speaker, I am pleased to rise and speak to a subject of ever-increasing concern here in Ottawa and in the eyes of the population. Post-secondary education, and particularly its accessibility, is a very topical issue.
The Bloc Québécois is in favour of the principle of this bill because it is an improvement over the current provisions of the Income Tax Act, which governs the registered education savings plan—RESP—program.
To summarize the bill briefly, a registered education savings plan is created from contributions out of after-tax income. Such contributions do not entitle contributors to a tax deduction, as is the case for contributions to a registered retirement savings plan or RRSP, but the investment income that is earned on the contributions accumulates in the RESP and is tax-free. The investment income is taxed only when it is withdrawn from the RESP. If the savings are withdrawn to finance the beneficiary’s post-secondary education, the investment income will end up in the hands of this beneficiary.
The problem is that not everyone can afford to make contributions to a registered education savings plan, since a substantial income is necessary in order to do so. People prefer to contribute to an RRSP rather than an RESP.
This bill, if passed, will make it possible for parents and families to benefit from a tax deduction, as they do with an RRSP.
Putting such a measure in place would come with a cost, of course, but it would foster the growth of our society and have an undeniably positive impact on its development.
Bill C-253 has numerous shortcomings. It nevertheless remains that it is an improvement as far as the RESP program is concerned.
During the first reading of this bill, my colleague from Jeanne-Le Ber identified the bill’s chief shortcomings in his speech. I would like to do a quick review of the RESP program and the advantages for society of passing such a bill.
Although the registered education savings plan program has been around for 30 years, the federal government has given it special attention of late. In 1998, the federal government created the Canada Education Savings Grant, the CESG. This is a grant of a maximum of 20% of the contribution made, which provides the beneficiary with an extra $400. This means that, when a parent or grandparent contributes $2000, $400 will be added to the RESP of a child under the age of 18.
Bill C-253 is a continuation of the improvements that began a few years ago. According to the statistics for 2002, the participation rate for the registered education savings plan was only 6% in Quebec; that is right, I said 6%, while it was about 10% in Ontario and in British Columbia.
At present, a large number of parents and grandparents do not contribute to a registered education savings plan because it does not constitute a deduction from an individual’s taxable income. In addition, some people do not have the financial resources to do so.
Therefore, people prefer to put their money into registered retirement savings plans. However, it is a good bet that more people would like to benefit from a RESP if there were an income tax deduction similar to the deduction for RRSPs.
What the bill seeks to do is to target an often-neglected group of taxpayers, who are already asked to make more than their share of sacrifices in our society. I am talking about the middle class; the class that includes the largest number of Canadian citizens. What this bill offers is greater accessibility to post-secondary education.
The education of our children and our grandchildren is often a cause for worry and concern not only for parents, but also for the expanded family, the grandparents, aunts and uncles. Many of them fear that they will not be able to pay the increasingly higher costs of post-secondary education. The introduction of an incentive for the contributor and the beneficiary represents an investment by the government in today’s young people and gives hope to a great many young parents, young families and grandparents.
On the other hand, if the beneficiary does not pursue post-secondary studies and no other beneficiary is designated, the contributor can receive the income from the investment under certain conditions. The funds could be transferred to a registered retirement savings plan without penalty, up to a maximum of $50,000 if the individual’s RRSP contribution ceiling allows. Otherwise, a 20% income tax deduction would be made on the withdrawal and the amount that could not be transferred to an RRSP would have to be added to the individual’s income for the year. We are talking here about only the accumulated investment income within a registered education savings plan because the capital is not subject to income tax.
It is certain that the adoption of such a bill could be very costly for taxpayers because, at present, those who contribute to a registered education savings plan are not able to deduct that contribution from their income. Therefore, those households with higher incomes will benefit even more from such a measure and low-income families will see little or no advantage. However, no program is perfect and Bill C-253 represents an excellent incentive to parents and families.
In summary, I would say that this bill would enable an individual making a contribution to an RESP to deduct that contribution from income, which is almost identical to the practice for an RRSP. In closing, I want to congratulate the member for his bill and thank him for his interest in the education of our children and our grandchildren.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, I am pleased to have the opportunity to join in this debate on Bill C-253, a private member's bill put forward by the member for Pickering—Scarborough East to adapt and change the RESP contribution program.
Unlike my colleagues from the Bloc and my colleague from the Conservative Party who has spoken, I am going to put on the record remarks of deep concern about this particular private member's bill. I am sure it will come as no surprise to the member for Pickering—Scarborough East that while we appreciate his work in this area, we feel that his efforts are misplaced and the focus of the bill is misplaced. Through this bill we will not necessarily accomplish what I believe he wants and what we all want, which is greater access to post-secondary education for our young people. That is clearly a burning desire from all of us.
We hear daily from constituents and from young people across this land how much they want to go to university or college to pursue their educational dreams and aspirations only to learn that the obstacles sometimes are so great as to prevent them from fulfilling those dreams. Here are the questions we have to ask today. Does this bill advance the public agenda in that regard? Does it make it easier for our young people to access post-secondary education? Do the costs outweigh the benefits or not?
That is why I rise today with deep concerns about this particular bill. We have just finished a whole series of pre-budget consultations. We heard from numerous groups involved in education, students, teachers, researchers and administrators. In each and every case the demand from the education community, and from families who are concerned about opportunities for their children, was for increased responsibility and roles on the part of the federal government in the post-secondary education system.
Each and every one of those representatives called upon the government to redress the serious problems that befell our system when the Liberals cut the heck out of education back in 1995 with their infamous federal budget. They basically set us back an entire decade with their regressive and extreme views in terms of dealing with the fiscal challenges of the day. We are still trying to recover from that period. It is not helpful to have another patchwork approach to a very serious systemic issue.
All we have had over the last decade is one band-aid after another. That has been the Liberal approach to education in this country. First the Liberals cut the heck out of the system, then they promised when they had a surplus, they would deal with it and put the money back. What did they do instead? They gave huge tax breaks to corporations and put all the surplus available against the debt. Nothing was done in terms of dealing with the systemic problems facing access to post-secondary education.
This bill is another band-aid on top of a band-aid. This is like trying to fix up a patch that is already on a system that is bleeding and hurting. This is not serving the country.
I do not need to tell the House how difficult it is these days for students to access university given the rising costs of tuition. The evidence is all around us.
Mr. Speaker, it would certainly help if you could bring some order to this chamber. It is very hard to hear oneself think when there is that kind of nattering going on in the Liberal benches.
The Acting Speaker Conservative Andrew Scheer
Order, please. I think the member for Winnipeg North makes a good point. It is often difficult to hear members, especially those who sit down at that end of the chamber. It is difficult for the Chair to hear her comments when so many people are carrying on side conversations. If anybody needs to converse, please take advantage of the lobbies on either side of the chamber.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Thank you Mr. Speaker, I was having trouble hearing myself think. I know I was saying a few things that are agitating the Liberals, but I hope they might appreciate that there are different views on this issue. We are not speaking against the RESP per se, except that it is a time of limited resources and I will concede that point.
We heard from the Liberal finance critic many times about limited choices and limited resources. Therefore, there are choices that we have to make and I will concede that we have to make some hard choices.
I want to ensure that the dollars we spend go the furthest. I want to ensure that whatever we do is opening the doors wider for students from all backgrounds. I know from this proposal that we are going to see a huge loss of public revenue that could be spent elsewhere.
In fact, right now we spend about $135 million as a result of foregone revenue with the RESPs. With this proposal, we will lose much more than that, at least $460 million in the first year. That is a lot of money that serves a very small group of people and is confined to not middle income earners, as my colleague from the Bloc has suggested, but is restricted to benefiting largely those at the high end of the income scale.
It would probably be useful for the House to know what a couple of the organizations told us during our pre-budget consultations with respect to the general matter of education tax measures.
I would like to quote from a reputable organization, the Canadian Association of Student Financial Aid Administrators. These are people who deal daily with the problems students are facing. They deal daily with trying to find ways to ensure that access is there for students of all backgrounds for post-secondary education. They concur with all of us when we say that probably the most important thing we can do as parliamentarians in a competitive world is develop a skilled and educated workforce and a post-secondary education is the primary means of achieving this objective. This organization tells us:
Since 1998 the federal government has spent increasingly on student assistance through fiscal measures introduced to the tax system...scholarship and bursary exemptions, credits for tuition fees and an allowance for each month of full time enrolment, as well as contributions to Registered Education Savings Plans.
--these tax credits are distributed almost entirely without reference to need. Several studies suggest that families from higher income ranges benefit disproportionately...they do little to assist high need students and underrepresented groups, for example, students from low income families, students with disabilities, aboriginal students, adult learners to enter our post-secondary education system.
This organization goes on to say:
We believe that means tested student financial assistance that is accessible through a simplified application process, that delivers funds at the time that expenses are to be incurred represents the most effective use of taxpayers dollars.
I think that is a point that has to be considered in this debate. I would further point to a brief presented to our finance committee by the Canadian Federation of Students which also exemplifies the problems we have in pursuing a tax credit approach to education as opposed to an investment in our post-secondary institutions to ensure greater access. The Canadian Federation of Students brief states:
Since the mid-1990s, the federal government has increasingly looked to tax expenditures as a substitute for directly allocated student financial assistance. In total, federal tax expenditures for post-secondary students have grown from $566 million in 1996 to more than $1.46 billion in 2005. This represents a 213% increase in real dollars and more than the total amount the federal government will spend on upfront grants this year.
It goes on to say that, in fact, this approach has virtually benefited those at the high end of the income scale and contributed to the growing barriers that low income people face in trying to access post-secondary education. The problem is about choices. It is about where do people put their money, how do they get the best bang for their buck.
While this RESP is something that could be part of an overall package, if one has to make choices in the context of a time when we are still recovering from the gutting of our post-secondary education transfer system and down to a federal share of a single digit, we have to do something much more significant and meaningful than tinkering with this band-aid approach.
I would suggest that we put this on hold and get down to the real issue at hand which is access for all students to post-secondary education.
Bryon Wilfert Liberal Richmond Hill, ON
Mr. Speaker, I am pleased to speak to this bill tonight and congratulate my colleague from Pickering—Scarborough East for this initiative. I think it is very important. As a former educator I can say how important this is to students across the country.
I heard earlier about the gutting of transfers to the provinces with regard to post-secondary education. I might point out to members in the House that in 1993 the Liberals inherited a $42.5 billion deficit, of which 33% of the money was borrowed. When we were transferring money, we were transferring borrowed money. It was not real money.
So, to suggest that we gutted the system, we in fact got our fiscal house in order, so that we could now do the kind of program that the hon. member who just spoke would like to see. What is the proposal this evening? It is basically to help young people and their families better save for an education.
We know that two out of every three jobs require more than a high school education. Tuition fees have continued to double. Tuition is the responsibility of the provinces not the Government of Canada. We know that it has gone from around $2,000 six years ago and by 2012 we are looking at about $12,000, and never mind the books and residence costs, et cetera. Then we are talking tens of thousands of dollars.
The hon. member for Pickering—Scarborough East has proposed to build on a Liberal initiative, which of course is the issue of the registered education savings plan. At the moment it is not deductible. I am assuming that all members in the House have constituents who pay taxes. When we pay taxes, we would like to see some benefits.
Unlike an RRSP, a registered retirement savings plan, currently under the registered education savings plan, we cannot deduct, there is no tax benefit. Imagine a family that saves $100 to put into a program that the hon. member has put before the House. If one does that 12 times in a year, there would be $1,200 which would be tax deductible. Individuals would get a break and that would be an incentive for the family, whether it is the parents, grandparents or whatever, or the student.
Having worked with students over the years, they do not earn a lot of money at summer jobs. They do their best, but it is not going to cover all of the bills. How do we fix that problem? The hon. member is proposing that we have a tax deduction.
We are not going to solve all the ills or all the problems of a post-secondary education, but we want to be on the leading edge of technology. If we want to be a knowledge based economy, we must have the people in universities and colleges to learn. They cannot learn unless they obviously have the money to go. This is really important.
We hear educators talk about the proposal as an important step in advancing educational opportunity. We hear unions talking about the importance of advancing this for educational opportunities for young people. We are investing in young people and if I have an opportunity to put $100 a month or a $1,000 or whatever it is, and I am going to get a tax break, that is an incentive.
However, it also builds and it does not mean that it is going to be the be-all and end-all. There are going to be other ways that people are obviously going to deal with it, whether they have a summer job or whatever it happens to be, but the important part is that this is going to stimulate people in that regard.
The prosperity of the country is based on knowledge and on higher education. We are very fortunate that we have an excellent post-secondary system across the country. In fact, our college system in the province of Ontario was modelled in Vietnam. The Vietnamese modelled the college system in the province of Ontario because they saw that it was an important level that they did not have. We have a great system here. We need to motivate people.
If we are going to deal with skill shortages, which we do have in this country, one of the things we must do is invest in young people. Again, this program will do that and I think it is very important when we are talking about our competitiveness with other countries around the world. We need a highly skilled, motivated workforce. We want to ensure that we have continued economic prosperity and this bill will assist in efforts to obtain those funds.
I do not think the member for Pickering—Scarborough East said that this would cure all the ills around post-secondary education, but I believe his bill should be before a committee for review in order to have a good discussion about the points that all members have raised. There have been good points from all sides but the bill needs to be studied and to move forward.
At the moment only 27% of Canadians actually have RESPs, only 27%, so 73% of Canadians do not have them. This again is an incentive for people, which is extremely important. Twenty-seven per cent is a very low figure. Making contributions tax deductible, as this bill proposes, would give that initiative to families. It would be another opportunity to move this agenda forward. I know we in the House all believe that the betterment of young people is important and we want to make sure they have the kinds of opportunities and education that the generations before them did not necessarily have.
It is a way of addressing some of the educational costs. Yes, there are other issues in terms of transfer payments to the provinces which I am sure the government looked at, as the Liberal government did. Again we have to make sure when we transfer money to the provinces that the funds are earmarked for the purpose for which they are being sent. If they are sent simply in bulk form to deal with health, post-secondary education, social programs, et cetera, and it is administered by the provinces, there is no guarantee the money will get to where it should have gone.
When this bill comes to a vote, I think all members in the House will look at the situation in their own ridings. I know that other members have been visited in their offices by young people who have talked about the massive debt that often occurs after they leave university. There are some students who cannot even go to university because their families cannot afford it and they wish they had some kind of vehicle to help them. This is what this bill addresses.
Employers are demanding post-secondary graduates. It is not enough to have a bachelor of arts degree these days. Employers are demanding masters of arts degrees and MBAs. If students cannot afford to get a bachelor of arts degree, where are we going to be against the emerging economies in the world? Where are we going to be against Japan? Where are we going to be against the European Union and the Chinas of the world in devoting that kind of energy? We need to make sure.
For me it is a motherhood and apple pie issue. How could people not want to support something which may advance education in this country? At least send the bill to a committee to look at. The hon. member has put a lot of thought and effort into this bill. He sees the same problem that I see, that even though people have the ability, they cannot go to university.
It was the previous Liberal government that brought in the millennium scholarships, which made a huge difference to students in my riding. Unfortunately, certain provinces clawed back. The hon. member knows about the clawback that occurred, including in the province of Ontario, under the previous Conservative government.
Bryon Wilfert Liberal Richmond Hill, ON
And the NDP voted against it my friend reminds me.
This is not a cure-all but it is a very important tool in assisting students and we need to look at that. I am sure the government will be looking at other issues with regard to transfers, but at the end of the day I would not want a student to come into my office and say that we had an opportunity to help but we did not do it because of some issue about not solving all the problems of the world. Let us look at it.
When I was on the finance committee as parliamentary secretary these were the kinds of initiatives that were important to look at because they advanced a big agenda. The most important agenda that I think members in the House support is the knowledge agenda.
I again want to thank the member for Pickering—Scarborough East. I urge colleagues to look at this issue very carefully when it comes up for a vote.
Yasmin Ratansi Liberal Don Valley East, ON
Mr. Speaker, I am pleased to speak to Bill C-253, An Act to amend the Income Tax Act sponsored by my colleague, the hon. member for Pickering—Scarborough East. I am also pleased by the Speaker's announcement today that the bill can proceed in its present form in spite of previous concerns that it might have exceeded the jurisdiction of private members' business. The purpose of the bill is to allow contributions to registered education savings plans, RESPs, to be tax deductible similar to the way Canadians already deduct contributions to registered retirement savings plans, RRSPs.
I need to digress a little. Today has been a rather difficult day for Canadian investors. Contrary to what Conservatives told Canadians prior to the last election, the finance minister announced that he has decided to flip-flop on the income trust issue and slap a tax on the distribution. Within two hours of trading today Canadian investors lost $25 billion in retirement savings affecting virtually all sectors of the economy and unfortunately creating a sudden and bleak future for hundreds of thousands of pensioners.
That being said, I wish to return to the proposal brought forth in Bill C-253. I believe this proposed legislation warrants further consideration. I believe it is important to support this bill at second reading so that it can be referred to committee for an in-depth analysis. The reason is simple. We acknowledge that the cost of post-secondary education is becoming extremely expensive for average Canadian families, especially those with more than one child to educate.
Students are graduating with an excessive amount of debt and many say they simply cannot afford an education. This is a troubling situation especially since our future productivity is dependent on the next generation of students. Currently Canada has the highest participation rate in post-secondary education among the OECD countries, but that ranking is in severe jeopardy if the federal government does nothing to change the situation.
Bill C-253 would encourage more parents to participate in the registered education savings plan because they would see the fruits of this program at the end of every tax year. As we heard from my hon. colleague, only 27% of parents participate, so the bill would encourage more participation. This would be beneficial to Canada because we would have a more educated population and hence a more productive population.
In addition, the savings that are incurred from this tax deduction could be reinvested into an RESP in order to assist families with the goal of maximizing their annual RESP contribution. At present the maximum annual contribution is $4,000 a year with a lifetime limit of $42,000 per beneficiary. These investments grow tax free until a child needs money for tuition. While it is true that Bill C-253 would shift the tax burden from the parents to the child beneficiary, the annual income of a full time student is quite low and any tax liability would be offset by other tax credits while students are still in school.
Currently students emerge from universities with a huge debt. This bill would ensure that students emerged from their education with a much lower student debt. Consider that by 2010 a four year degree program could cost in excess of $100,000. It becomes quite clear that long term planning is required on the part of the students and parents, but also the federal government. This would ensure that post-secondary education does not become a luxury only those families with money can afford.
It is also quite clear that an RESP worth $42,000 would offset a significant portion of the cost of a proper education.
I note with interest that the author, the MP for Pickering—Scarborough East, has considered measures to prevent RESPs from abuse. Bill C-253 proposes severe tax penalties for those who would attempt to take advantage of an RESP's simple tax shelter without any serious regard for the potential beneficiary. In the event that a beneficiary has no intention of going to school, the accumulated income would be subject to a 20% tax on top of the regular tax normally payable on such investments. That I call accountability.
Roughly 50% of college and university graduates graduate with a debt. The average debt amounts to $20,000, making it very difficult for young people to get a headstart in life.
I ask for the support of all members in this House so that serious thought can be given to helping all Canadians access post-secondary education regardless of their economic circumstances.
The Acting Speaker Conservative Royal Galipeau
The last speaker will be the mover of the motion, a five minute rebuttal.
Dan McTeague Liberal Pickering—Scarborough East, ON
Mr. Speaker, I want to thank all colleagues for participating in this debate. I know there are many issues that cannot be resolved in the few minutes that are given to me, but let me provide a very brief outline.
Let me decipher the position of the House leader over the past couple of months. First, thank you for your ruling earlier today, Mr. Speaker, in which you made it abundantly clear that this bill in no way violates or requires a ways and means motion in order to give rise to the vote which will take place, I presume, at some point next week. What is most important is that the roadblock of the ways and means position seems to be the legitimate reason the government opposed this bill. Mr. Speaker, since that roadblock has been clearly taken away by you in your infinite wisdom, I would offer to the government that it incorporate this bill as its own and begin the process to meet the challenge of students who so clearly need the help of this Parliament and to come up with innovative ways to ensure that young people have access to higher education.
It is very clear to all Canadians, any Canadian who pays taxes, any Canadian who is concerned about the future, that the prosperity of this nation very much depends on a skilled and adaptable workforce.
Right now, as opposed to reaching out and giving everybody who wants an education an opportunity to get that education, we hear naysaying from some corners. We heard the member for Winnipeg North who chastised the bill because it is an attempt to try to cover more people who desperately need an opportunity to get that access to higher education. Whether it be a skill in the workforce, whether it be a craft, whether it be taking up a trade, or whether it be to move on to post-secondary education, we know that this cycle of education will continue in years to come. For people to have the opportunity to access education and thereby maintain the health, wealth and prosperity of this nation depends on our ability to provide instruments that are at our hand without denying the government the cash it needs to continue working on the nation's priorities.
To look at the issue of post-secondary education in the abstract, there are a number of programs out there, but we need to do more. When only 27% of students are being provided an education through an RESP, it clearly demonstrates that almost three-quarters of Canadians are not.
I do not think any of us in this House want to take a position here that suggests that today, in the year 2006, education only becomes the purview of the rich.
Students are talking to each one of us as members of Parliament and our provincial colleagues as to the amount of debt they are incurring. Students talk to us about the need to ensure that we rebuild the system, about the need for a piece of legislation that would provide an opportunity for them to continuously access education in a world in which there is increasing competition, not just in terms of trade, but in terms of resources.
It is extremely important. Given all these factors, but above all when we see in my province of Ontario the tuition freeze that has just been lifted, we now have a situation that is unacceptable to all Canadians. We need to look at the rapid rise in the cost of education.
Universities want to compete on an international level. They can only do so with higher tuition fees. The government can move to cap these things, but these are band-aid solutions. We in this chamber have to find the creativity to provide people an opportunity to access education.
In my riding, and I am sure the riding of Winnipeg North and ridings right across this country, every one of us as members of Parliament has an obligation to look deeper so that when someone is paying a tax, they may actually be put in a position where they are able to benefit from it.
This legislation is really calling for Parliament to think bigger. This legislation is asking the finance committee and parliamentarians not to navel gaze about what has happened in the past but to understand what the OECD has said with respect to rising tuition costs for students and to listen to what students are saying. However we decide to make it possible for students to get access to higher education, Parliament has a higher obligation to respond to the need.
This is not by any means the only solution, but it is an important step forward to recognize that the federal government plays an important role in the lives of students in ensuring the viability and the safeguarding of our education system. We must ensure that young people, and all people, have access to education. The instruments are there. The income tax system is probably the easiest way to do this. Most Canadians pay income taxes and they would have a great opportunity to help their children in the future.
As my final words on this, I would encourage the government and all members of Parliament to look beyond the rhetoric and to look to what their constituents need. Clearly, on RESPs, tax deductible is the way to go.
The Acting Speaker Conservative Royal Galipeau
The motion is adopted. Accordingly, the bill stands referred to the Standing Committee on Finance.
Ken Epp Conservative Edmonton—Sherwood Park, AB
Mr. Speaker, I rise on a point of order. I think you may have gotten ahead of yourself. We were waiting for you to ask for the yeas and nays. You did not get to that stage. You just declared it carried. We were saying no.
The Acting Speaker Conservative Royal Galipeau
I appreciate the good advice from the member for Edmonton—Sherwood Park. However, the Speaker did not hear any nos. I did not hear any nos, and then I heard a suggestion, on division.
Let us turn back the clock and read this again.
Is it the pleasure of the House to adopt the motion?
Income Tax ActPrivate Members' Business
Some hon. members
Agreed.
No.
The Acting Speaker Conservative Royal Galipeau
All those in favour of the motion will please say yea.