Mr. Speaker, I am pleased to have the opportunity to support Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions). I would like to commend my hon. colleague from Pickering—Scarborough East for his efforts in promoting this bill and for his dedication to expanding access to post-secondary education in Canada.
This issue is of particular importance to the many young families in my riding of Bramalea—Gore—Malton. In these families I see much joy, laughter and hope, but at the same time I see parents who are concerned for the future. They worry that the rising cost of post-secondary education will hurt their children's ability to get the training they need to succeed in the increasingly competitive global economy.
Every parent wants what is best for their children. However, the day to day costs of running a household and raising a family all too often push to the back burner the task of planning for the future. The purpose of this legislation is to make payments into registered education savings plans tax deductible in order to give Canadians an increased incentive to invest their hard-earned money in their children's post-secondary education. By doing so, the process of education planning will be made easier for Canadian families.
The current trend of sharply rising tuition fees has made planning for education after high school more important than ever before. According to the most recent numbers from Statistics Canada, the average cost of tuition at Canadian universities rose by almost 400% between 1988 and 2007. Residence, textbooks and other fees are also going up, adding to the undue financial stress felt by post-secondary students and their families. The increase in fees over the past 20 years has been far beyond the rate of inflation and is part of a trend that seems likely to continue for the foreseeable future.
The Canadian Alliance of Student Associations estimates that a four year degree and associated fees will cost approximately $77,000 for students commencing their studies in 2010. By 2020, the same degree will cost over $130,000. Incredibly, these are only the estimated costs for undergraduate programs, not for professional and graduate degrees. Students who decide to pursue a career in medicine, dentistry or law can count on paying even more in order to obtain their qualifications.
Current government grant and scholarship programs only go part of the way toward helping students cover the extraordinary cost of education after high school. Although there are a number of federal and provincial programs intended to counteract the increasing cost of post-secondary education, not all students who need help qualify for government financial assistance. Many young people are unable to attend a post-secondary institution, not because they are unwilling or academically unable, but because they are essentially forgotten under the current student assistance regime.
Under the present student aid system, there exists a middle income gap. In this gap are families with incomes high enough that their children do not qualify for need based grants and loans but not high enough to pay for their children to attend university. The middle income gap is a considerable barrier to post-secondary education for many students and could be offset by encouraging increased investment in RESPs.
Even for those who qualify for financial assistance, loans can only be considered a stop-gap measure. While federal and provincial student loans help some families cope in the short term with the rising cost of education, this increased reliance on loans as a funding mechanism is leading to an alarming level of student debt.
Statistics Canada reports that between 1999 and 2005 the amount of student debt held by Canadians rose by 15.8%. In the same period, the overall amount of debt held by individuals and families in Canada increased by an astonishing 47.5%.
Shouldering such a large amount of debt is stressful not only for individual families but also for the economy as a whole. In a society with more debt than any that came before it, parents must be given the chance to plan for the future in order to avoid saddling students with tens of thousands of dollars of debt before they even enter the workforce. Enabling young people beginning their careers and starting families to embark on their adult lives with a lower amount of debt is a worthwhile goal, one this bill can help to achieve.
Of course, care must be taken so that RESPs do not become attractive to dishonest individuals looking for an easy tax shelter. Fortunately, even with the changes proposed in the bill, adequate regulations are in place to discourage individuals from abusing the RESP system.
Education assistance payments can only be paid out in the event that the beneficiary is enrolled in a qualified program at a post-secondary institution, is unable to enrol in a post-secondary program due to medical incapacitation, or is deceased. Furthermore, in the event that the beneficiary does not attend a post-secondary institution and the subscriber withdraws accumulated income payments, a 20% penalty is levied in addition to the usual tax payable on the income. Finally, although the monthly limit on contributions has been removed, the lifetime contribution limit of $50,000 ensures that RESPs are not attractive to individuals simply looking for a tax deferral vehicle.
This bill is not intended to completely solve the problem of access to post-secondary education. Continual efforts must also be made to expand need and merit based initiatives such as the millennium scholarship program, and to increase access to government student loans. But for families who would otherwise find it difficult to commit to minimum monthly RESP contributions, this bill would make it easier to invest in their children's future.
By raising the rate of participation in RESPs, more Canadians will be able to afford the education they need for the jobs of today and the future. Registered retirement savings plans use similar tax incentives to encourage Canadians to plan for life after work. It is time to give the same advantage to families planning their children's education.
Although the government seems determined to provide the wrong kind of tax incentives for Canada's future, I hope my colleagues across the floor will join me in supporting this legislation. We have before us an opportunity to empower ordinary families. By supporting this bill, Parliament can help Canadians secure a bright and prosperous future for their sons and daughters and for the country as a whole.
In my riding of Bramalea--Gore--Malton, there are many new immigrants who cannot afford to send their children to university. If we pass this bill, all people will be pleased and at least they will have an opportunity for their children to attend university in the future.