Mr. Speaker, I will be sharing my time with the member for Vancouver South.
It is a pleasure to rise today to speak in response to the budget speech. I would first like to congratulate the minister and all the assistants who laid the foundation for this budget. It was a job well done. I think it has been well received across the country.
When I consider all the nuances of the budget, it is the human component that to me is the most significant. Addressing child poverty, support for the disabled, youth employment initiatives, health care reform and pension adjustments are just a few. It is my wish today to discuss post secondary education as the focus of my comments.
We live in a world where knowledge and education are the keys to long term industrial success. They ensure that a country's industries can apply innovation to seize new opportunities in global markets and they provide workers with the skills employers need.
The number clearly indicate this. In Manitoba, my home province, in 1995 only 4..8 per cent of students who dropped out of high school have found jobs, compared to 71.9 per cent who stayed in school, graduated and found employment.
Post secondary graduates fared even better. About 80 per cent of Manitobans with a post-secondary certificate or diploma or university degree were actively involved in the labour force. This pattern is virtually the same across the country.
It is for this reason that the government has increased federal support for post-secondary education by $137 million in 1997, reaching $275 million annually when the changes have all matured.
This funding is targeted to provide assistance for students and their families, including workers upgrading their skills to help them cope with the rising costs of post-secondary education, students facing higher debt loads after graduation, and parents saving for their children's educational future.
I should note that these issues build on the $80 million increase in direct federal tax assistance for post-secondary education that was provided in the budget one year ago and they are complemented by the creation of the Canada Foundation for Innovation which will ensure that post-secondary students have access to better facilities and equipment to prepare for the knowledge based economy of the 21st century. For this the government is making up front investments of $800 million.
I will get to the foundation in a moment, but first let me discuss the government's plans to increase access to higher education.
Specifically, the budget proposes several measures. First, the amount used to establish the education credit will immediately rise to $150 per month from $100 and to $200 per month for 1998 and subsequent years.
As tuition fees increase, the amount of assistance provided by the tuition fee credit increases automatically. However, as a parent of three daughters who are all attending university, and as an aside all three were in university in one academic year, I know that students also have to pay a number of mandatory fees on top of their tuition. The budget proposes to extend the tuition tax credit to cover additional mandatory fees imposed by universities to cover these costs of higher education.
Second, students or their parents may not have enough tax payable in a given year to fully benefit from the tuition and education credits. To ensure that all students can use those credits fully, students will now be able to carry forward all unused portions of these credits and to be applied against any future income.
At a time when university and college classrooms are filled with more and more mature students, it is important to note that this measure will also benefit workers who have decided to return to school after a short period in the workforce.
To demonstrate the effect of these budget measures I will give a simple example. By 1998 a student in full time attendance at a post-secondary institution faced with tuition fees of $2,800 and an additional fee of $300 will receive over $1,200 in combined federal and provincial tax assistance per year. This is no small amount. In fact, it represents an increase of more than 30 per cent from the $900 of assistance available to the student in 1995.
The 1997 budget also announced an important change to the Canada student loans program. Students are expected to start repaying their loan six months after graduation. But students facing hardship are allowed to defer making payments on these loans for up to 18 months. The federal government pays the interest accruing on the student loan during this period.
Recently a coalition of groups representing the post-secondary educational community agreed that while this system provides considerable help, changes needed to be made and they issued a proposal which pointed out among other things that some students are unfortunately left unable to meet these obligations. I supported this coalition in their call for change, as did other members of Parliament.
It is clear today that our government listened to what Canadians were telling it and subsequently agreed. As a result, the budget proposed to extend to 30 months from 18 months the period of time during which students are allowed to defer making payments. Combined with the initial six months after graduation when no payments are required, this means that students will have up to three years to deal with their financial debt load. This measure will come into effect on August 1, 1997. It is projected that it will provide an additional $20 million a year in assistance to students.
In addition, the federal government is ready to pursue with interested provinces, lenders and other groups a new repayment option that would offer students another choice. Students would be able to choose between current repayment arrangements and an income contingent repayment schedule. By tailoring payments to individual circumstances, the debt would be made more manageable.
We are also acting to improve incentives for parents to save for their children's education. Parents with young children are increasingly worried about whether or not they will be able to afford the rising costs of their children's education.
Registered education savings plans, or RESPs, exist to provide parents with incentives to save for their children's education. The full benefits of these tax sheltered plans are reaped by parents who start saving when their children are quite young.
The budget proposes that annual contribution limits to RESPs be doubled to $4,000. This will assist parents who are not able to start saving for their children's education when they are young and therefore have fewer years to make contributions.
Under RESP provisions, all RESP income must go for educational purposes and the family loses the investment income in their plan if their child does not pursue post-secondary education. Since this can discourage parents from starting an RESP, two measures are proposed to address this problem.
Individuals winding up an RESP will now be allowed to transfer all or part of this deferred income to RRSPs, provided they still have room in their RRSP accounts. Alternatively, individuals without available RRSP room or who do not wish to make RRSP contributions will be allowed to receive investment income directly, subject to an appropriate charge. This charge will ensure that assistance is not provided to those who might use RESPs for tax
shelter purposes which are unrelated to either education or retirement savings.
The government is proposing the creation of the Canada foundation for innovation. I would suggest that this is perhaps the crown jewel in terms of educational opportunities in this country. This new independent body operating at arm's length from the government is designed to help renew facilities and equipment, research infrastructure if you will, at Canadian post-secondary institutions associated with research institutions and hospitals.
Through this foundation we are saying to our young students that we want them to pursue their research career here in Canada. It is important for us to have a workforce with the capacity to put new technologies into practice. People who understand developments in science and technology are indispensable.
The foundation will help support innovative capital projects in the areas of health, the environment, science and engineering. Funded through an up front investment of $800 million by the federal government, it will provide an annual average of $180 million over the next five years. It will operate on the basis of partnerships with the private sector, universities and colleges, volunteer organizations and provinces to the extent they wish to participate.
In closing, I quote the hon. Minister of Finance who in his speech said: "What government does with scarce resources shows what its values are-"