Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 4 - Evidence - Meeting of December 9, 2004
OTTAWA, Thursday, December 9, 2004
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-5, to provide financial assistance for post-secondary education savings, met this day at 11:03 a.m. to give consideration to the bill.
Senator Jerahmiel S. Grafstein (Chairman) in the chair.
[English]
The Chairman: Before we begin, I wish to thank my colleague Senator Angus, who chaired yesterday's session, while I was fighting the battering winds in Sofia, Bulgaria, on behalf of democracy and freedom.
Senator Angus: We were fighting freezing rain.
The Chairman: While I was fighting international battles, our colleagues were fighting domestic battles.
I welcome our listening audience from across Canada.
Let me wish today's witnesses to this committee. We would ask you, if you could, to limit your comments to five minutes, given our time constraints. If there is any information you would like to present to us — and we do have some written briefs — we will look at all written briefs in detail, but forgive us for the time restrains we put on you and indirectly on the senators in terms of their questioning. I am sure questions from senators will be very pertinent and very pointed, because we are under a tremendous time frame to consider this bill, if we can, before Parliament rises, we expect, in the near future. While this is a chamber of second sober thought, our thoughts have to be very sober and very quick.
First, I should like to welcome our first witness, Mr. David Robinson.
Mr. David Robinson, Associate Executive Director, Canadian Association of University Teachers: I wish to thank the committee for this opportunity to present our views on Bill C-5, the proposed Canada Education Savings Act. Founded in 1981, the Canadian Association of University Teachers, CAUT, represents nearly 37,000 university and college teachers, academic librarians, researchers and staff at institutions in every province in Canada.
We are committed to improving the accessibilities and quality of post-secondary education in Canada. We are very pleased that, in this bill, the government recognizes that there are serious financial barriers confronting more and more students and their families. As tuition fees have skyrocketed, rising nearly threefold since 1990, we see an increasingly unfair burden placed on low-and middle-income families.
To illustrate this, consider that, in 1990, the 20 per cent of Canadian households with the lowest income would have to spend about 10 per cent of their after-tax income to pay for one year of undergraduate arts tuition. By 2002, this had risen to 17 per cent. The richest 20 per cent of households, by contrast, saw their tuition costs rise from 2 per cent to just 3 per cent of after-tax income over the same time. That is 17 per cent for low-income families, and 3 per cent for high-income households. I cannot think of a better example we have of the regressive nature of user fees in this case.
Clearly, there is an urgent need to address this inequity. We must ensure that financial barriers do not prevent any qualified Canadian from pursuing a college or university education. Unfortunately, in our view, the Canada Learning Bond and the enhanced Canada Education Savings Grants — CESG — as proposed in Bill C-5, though perhaps well intentioned, will do little to assist students from low- and middle-income families. The learning bonds, as they are proposed, will provide $500 to children born to families eligible for the national child benefit — roughly, those whose incomes are less than $35,000 a year. Additional contributions of a $100 will accrue for each year a child remains eligible, to a maximum of $2,000.
Assuming a 3.5 per cent real annual rate of return, the total value of the bond, by the time a child reaches 18, would be $3,000 in current dollars. That amount of money is not even enough to cover one year of tuition in most provinces today, let alone living costs and expenses. The bonds do nothing to provide assistance to those students, and would-be students, who need it now, not 18 years from now.
I would argue that it is also unlikely the bonds will live up to the intention of encouraging more low- and modest-income families to make contributions to RESPs. We already know that less than 20 per cent of eligible families with incomes under $30,000 have any RESP contributions, and they are very modest. This is despite the existence of a generous 20 per cent top-up that currently exists. The simple truth is that it is not a lack of motivation that keeps these families from saving, it is a lack of financial resources. That is why the proposal in Bill C-5 to increase the savings grant matching rate for low- and middle-income contributors will do little, in our view, to remedy matters.
Moreover, the additional matching rate applies only to the first $500 of contributions and is thus very modest. For a family earning less than $35,000 a year, assuming they could scrape together the funds to make a contribution in the first place, the maximum amount of enhanced grant is just $100. For families earning above $35,000 but less than $70,000, it is $50 per year. It is also important to note that, in the drafting of the bill, the maximum lifetime grant remains $7,200, so for all intents and purposes the maximum yearly grant remains $400 for all families, rich and poor alike.
We believe the Canada Education Savings Grant is an example of a badly flawed social policy tool. It has rewarded those who have the disposable income to save rather than targeting those most in need. Consider that families earning under $50,000 a year claim less than 20 per cent of the Canada Education Savings Grants. Surely, this is not the way to provide assistance to students in need.
The resources we commit to the savings grants are not trivial. Nearly $400 million was spent on the Canada Education Savings Grants in 2003-04. This is money that could have provided free tuition to nearly one in five university students in Canada. A far better plan, in our view, to help students and their families now and to ensure that the government gets the biggest bang for its buck would be to convert the learning bond and savings grant program into a fully needs-based grant program. This would provide immediate benefits for economically disadvantaged students and help to lower the unacceptable debt loads students are forced to carry.
The government has taken some steps towards this with the introduction of first-year grants in the last budget, but these grants, however, cover no more than half of tuition, to a maximum of $3,000. This is woefully inadequate. To be more effective, these grants need to be increased in value and made available throughout all years of a student's program.
More broadly, we believe it is time the federal government and the provinces did more to address the underlying problem of rising fees, and that is the inadequate level of core operating funding for universities and colleges. Anything else we do is simply tinkering around the edges of the real problem. If higher education really is the key to our future, as politicians of every stripe seem to say, and if more than 75 per cent of new jobs require a post-secondary education degree, as the minister has said, then broadening access by lowering fees has to be a national priority. That means all political priorities in the federal and provincial governments have to stop finger pointing and bickering about who is to blame and begin cooperating to find real long-term solutions.
The Chairman: We will hear next from Ms. Robson-Haddow from SEDI.
Ms. Jennifer Robson-Haddow, Manager, Policy Research and Development, Social and Enterprise Development Innovations: Good morning, honourable senators.
Senator Angus: On a point of order, is it fair to ask, at this point, if we are to hear all the witnesses before we question them, whether they are all largely on the same wave length?
Ms. Robson-Haddow: Not entirely. We all offer different perspectives on the bill.
Senator Angus: Are some of you in favour of the bill?
Mr. Lewis: Yes.
The Chairman: It is balanced. We will hear varying views and have opportunities to ask questions. Let us proceed, and then we will take it from there.
Ms. Robson-Haddow: It is a pleasure to be able to speak with you this morning. Social and Enterprise Development Innovations — SEDI — is a national charitable organization dedicated to enabling poor, unemployed and underemployed people to become self-sufficient. We take a variety of approaches to our work, such as policy development, program management, information exchange, and research. We work hand in hand with non-profit organizations and have worked in hundreds of communities assisting thousands of low-income Canadians in virtually every province and territory in this country. Our position today is informed by nearly seven years of leadership in the international savings and asset-building field.
It is SEDI's view that the Canada Learning Bond and SESG enhancements contained in this bill have been too narrowly contextualized as strictly measures to finance post-secondary education. Rather, Bill C-5 offers a way to begin to address the disturbing imbalance in the benefits provided for children's education savings in this country. This is part of a larger and disturbing pattern of imbalance in the benefits provided for asset accumulation to more fluent Canadians. In 2004, the federal government will spend roughly $24 billion to support personal savings and individual asset building, the vast majority of which will go to wealthy Canadians. The annual expenditures planned under this legislation are small by comparison, but we believe they are a worthwhile start for the children of low-income families.
Bill C-5 is important for three reasons: First, it is the first time that a Canadian government has acknowledged both that poverty is an issue of savings and assets as well as income and services, and that assets are as important for low- income Canadians as they are for middle- and upper-income Canadians. Second, we believe that the bill will provide a much-needed cash incentive to encourage children from low-income families to pursue post-secondary education. Third, it will propel Canada to the forefront of a growing number of countries that are developing very similar asset- building policies, including the United Kingdom, the United States and Australia.
Assets matter, and not just to those who already have them. Poverty is about more than income; it is also about opportunities to save and invest in a better future. The decision whether to participate in higher education or even whether to complete high school can be significantly influenced by the presence of savings and assets early on. When provided the right support and incentives, low-income Canadians can and do save. For example, we know from research at Statistics Canada that 46 per cent of families with incomes of $15,000 to $26,000 are already saving for their children's education, most of the time without the benefit of the current CESG. Some 3,500 low-income Canadians in communities across Canada are saving an average of $55 per month for higher education and training, through a national demonstration project that SEDI is running called learn$ave. In talking directly with low-income Canadians, including some of the very poorest, about asset building, one of the most common responses SEDI has had is from low-income parents, who say that they want assistance to help with their savings for their children's education.
SEDI believes that this bill is a starting point and that it has many valuable attributes that are worth building upon. First, it is an example of progressive universalism. All Canadian children are entitled to some assistance through the basic CESG, but children of low- and modest-income families are entitled to a bit more. It provides financial incentives that offer real value to low-income families with children, rather than relying on tax credits. It starts at birth, maximizing opportunity to benefit from effects of compound interest and early childhood interventions. It uses and improves upon an existing infrastructure and encourages provinces to respond through changes to social assistance regulations, as in Ontario, or by setting up parallel programs, as in Alberta. It is a recognition of the significant role of assets in economic and social inclusion and participation.
We offer four issues for consideration by the committee. First, we expect that the government will view this as a down payment and will continue to enhance the value of the bond and CESG, as resources permit. One option for consideration might be to expand the eligibility for the bond to children receiving the Canada Child Tax Benefit in addition to those receiving the National Child Benefit.
Second, in addition to the addition of clause 7.1 on part-time studies made by the House of Commons committee, which we welcome, we would also welcome future opportunities to improve the flexibility of the education savings system in Canada — for example, allowing the full transferability of bond and grant monies amongst siblings within eligible families, just as wealthier families are permitted to transfer RESP balances, or second, to consider opportunities to roll unused savings into a range of other asset-building accounts so that other avenues to self- sufficiency may become more accessible to children of low-income families.
Third, we remind the committee that there will be a need for federal and provincial cooperation in the implementation of this program. That said, we are optimistic and note that Quebec, Ontario, British Columbia, Nova Scotia, Alberta and Manitoba have all variously signalled their interest in the broader idea of asset building, and some have already taken steps to cooperate with this federal initiative.
Fourth, the discussion of Bill C-5 highlights the need for investment and financial capability. We understand that the government has already committed to a broad outreach and awareness campaign, and we are supportive of the new clause 3.1 that makes this explicit. We hope the government will include a range of measures so that low-income families can have the same access to financial capability as it relates to education savings as do higher-income families.
We further hope that the strategy will make use of the expertise and capacity of the community sector to deliver the services that disadvantaged Canadians need and rely upon. Like other government programs, the likelihood of participating in the bond and the CESG increases significantly if you know about it. Only a third of low-income families who were asked were aware of the CESG. More than awareness, subscribers need to have the knowledge, skill, confidence and capability required to make use of the learning bond and RESP systems. Some parliamentarians have raised concerns about the administration costs, and we would urge you to consider the far greater costs of failing to deliver the information and services so that disadvantaged Canadians can take advantage of the programs created by this bill.
I thank the members of the committee for their time this morning and welcome an opportunity to answer your questions later.
The Chairman: Our final witness is Mr. Lewis. Welcome, and thank you for your document. We have a copy of it.
Mr. Peter Lewis, Vice-President, Canadian Scholarship Trust Foundation: I am here today as a representative of the Canadian Scholarship Trust Foundation. CST Foundation was established in 1960, and our purpose was to lower barriers to higher education. We did that in 1961 when we launched an education sayings plan, which was the forerunner to what has become the RESP. Today, we manage over $1.8 billion in assets in RESPs for over 200,000 Canadian families. A statistic I am even more proud of is the fact that over our history we have returned more than $1 billion to help more than 100,000 Canadian children get their higher education.
I am not only here today as a representative of the foundation; I am also here as a father. I have six children, and I expect all of my children to go on to higher education, and they know that I expect that. I believe they understand that every opportunity is there for them to do that.
However, far too many children across this country enter secondary education having lost a set of expectations that they can go on. Far too many children drop out of secondary education because they do not understand the value of a higher education to them. For these children, the answer is not found solely in better financial aid programs; the answer is not found solely in lower tuition. The issue is complex, and there is no single solution. However, part of the solution is to find a way to instill in these children a sense of expectation, a sense that they, in fact, can pursue a higher education.
We believe in the value of RESPs because we know from our experience that they work. Every year, we provide funds to tens of thousands of students from across this country, and every year I get letters from students and parents that say that having a savings program made a difference in making their post-secondary education possible.
Research certainly provides some indication of the importance of education savings. About 74 per cent of children with education savings go on to higher education versus 50 per cent who do not. From our experience, over 80 per cent of children with our plans go on to some form of higher education.
Does the existence of a savings program encourage them to go on, or are families who are likely to encourage post-secondary education more likely to be savers? I think it is the latter. Those families predisposed to encourage higher education are also predisposed to save. I believe if we can get more families to start a savings program, it will increase the probability that they will be predisposed to encourage education in their home.
I believe firmly that the benefits of RESPs go far beyond a financial benefit. There are four things that we see as distinct benefits. First, it is a way for parents to communicate their expectations to their children in a concrete way. Parental expectations are tremendously important in terms of children going on, and setting up a savings program sets that expectation for the child.
A second benefit of RESPs is that they help align a child's vision towards higher education from an early age. Waiting until a child is in grade 11 or 12 or secondary 5 to start talking to them about post-secondary education is too late. We need to start early on to help them believe that they can attain higher education.
A third benefit is that an RESP helps to underscore the value of education for that child. Children understand that where parents place their money has a value. If they see the family investing for their education, they understand that their family values that higher education.
The fourth benefit, the one that most people focus on, is the financial benefit. It is clear that there is a financial benefit to having an RESP. However, most RESPs will not cover the full cost of education. They do help narrow the gap and reduce reliance on other forms of financial aid. The simple reality is that too many Canadian families are not saving today for higher education.
Research indicates that 50 per cent of families are not saving for higher education. Even more of a concern is that 26 per cent of families with incomes under $25,000 are saving versus 70 per cent of families with incomes over $85,000. The question is why they are not saving. When you ask that question, the number one reason is the obvious one: They simply do not have the money to save. Others claim they have other priorities. The issue of awareness is of concern, particularly among low-income families.
As an RESP promoter, we wholeheartedly endorse Bill C-5. We believe it squarely addresses the issues that are preventing families from starting education savings plans.
We view four elements of the bill as important. First, it is targeted. The funds are going into the hands of the families who need them, the low- and moderate-income families. Second, it encourages setting up a savings plan, which allows us as promoters to encourage the ongoing savings pattern and thereby set the expectation level for the child. Third, it invites provincial governments to join in this partnership with parents to encourage savings. Fourth, we believe it is important that it places some focus on children in care, a segment that has been largely overlooked in the RESP industry.
We recognize that critics of the legislation will suggest that it is not enough and that it does not address the urgent needs in today's post-secondary education system — and we acknowledge that there are urgent needs. However, I would suggest that the critics fail to see the legislation for what it is. It is a visionary strategy designed to change the dialogue around the kitchen table. It is designed to encourage families to engage in the planning process for higher education from an early age.
We strongly believe in the value of RESPs and wholeheartedly endorse this legislation. We commend the government for taking this visionary approach to tackle this issue, and we are confident that it will benefit future generations of Canadians.
Thank you for the opportunity to speak to you today. I look forward to responding to any questions you may have.
Senator Angus: I wish to ask you, Ms. Robson-Haddow and Mr. Lewis, to comment on Mr. Robinson's arguments. In a nutshell, he is saying that the idea is a good one, that it is the right direction to be going in, but that it is so small that it will not do any good at all. We are talking about an annual income of $35,000; we are talking about people who can barely afford to subsist let alone put $10 a month into the plan after the $500 is deposited. It sounds to me like Mr. Robinson has a valid point. Would it not make some sense to tell the government to open up its purse a little more here?
Ms. Robson-Haddow: If I understood, your question is this: First, is the amount adequate and, second, will low-income families even be able to make any deposits to these accounts after the initial amount goes in? Those are very fair and valid concerns.
On the first point, whether the amount is adequate, certainly not, no. We would view this, we hope, as an initial down payment and that, as resources become available, the government will increase both the eligibility for the bond as well as providing additional amounts to it. We see this as being just the starting point for a future system here.
Second, regarding the concern about whether low-income earners will have enough disposable income to make deposits, first, we must bear in mind that a number of low-income parents are currently saving, and they are doing it without the government's help. The proposals contained in this bill will certainly be a welcome addition for those families.
Can all low-income families save? I do not think we know the answer to that question. Certainly, there are some people who are living in extraordinary situations of deprivation and disadvantage who may find it difficult to make some deposits. I do not think this is the magic bullet solution to end poverty and all barriers to post-secondary education for all Canadians. It is a starting point. It will help a significant number of children in low- and modest-income families, and we will look forward to seeing what the government does in the future in terms of providing additional top-ups.
Senator Angus: Mr. Robinson not only said that it is not enough money, but he offered another solution, namely, that if the government will be making this wonderful initial step forward it is here and now that matters. If you wish to add something, please do; otherwise, perhaps Mr. Lewis could include that in his answer. With six children, you have the right to answer both sides of the question.
Mr. Lewis: The question of whether it is enough, obviously, if this were the only thing the government was doing then it is not enough.
Our view is that this is a piece of the puzzle, a piece of the solution. There are some other measures that are being taken to deal with students in the system today, which we hope will be enhanced over the next 18 years as well. However, it is not designed specifically. The focus sometimes has been too much on the financial aspect of this. You say that the dollar amount is too small to make a meaningful difference, and you are right, $3,000 will not make a meaningful difference in 18 years from now. However, the more important exercise in my mind is to create the expectation level and to engage the family in the planning process from an early stage. That is the real value of this proposal.
Our view is that this is a piece of the puzzle, a piece of the equation, not the entire solution. Would we like to see more money? Certainly, it would be great to see the dollar amounts increase over time, but it is an important part of a visionary approach to dealing with this issue.
Mr. Robinson: My scepticism is based in large part on the evidence of what we have so far. We already have a Canada Education Savings Grant in place that provides a very generous 20 per cent top-up of investments. Given what you are getting on the stock market these days, that is a pretty good immediate return. Yet, we have seen the evidence that there are large numbers of middle- and low-income Canadians who are not making contributions. It is not just an information issue. I do not think it is a lack of motivation. They have the same aspirations of their kids going on to post-secondary education as higher income earners. The problem is the lack of financing.
We do have an immediate problem in terms of tuition fees, particularly when we look at professional programs. For example, law school at Queen's University now is $10,000 a year. Medical school at the University of Western Ontario is $12,000 per annum, and dentistry at the University of Saskatchewan is $32,000 a year. These are outrageous amounts of money to pay. Until we address the underlying problem of what is driving tuition fees up, we will be tinkering around the edge. We will throw some money into this program, tuition fees will rise faster than the growth of this, and we will be back here — hopefully some of us will be back here — in 18 years saying maybe we made a mistake 18 years ago when we introduced this program.
The Chairman: Some of us may be back here, but not all of us.
Senator Angus: In terms of creating a savings culture, which is the other side of the coin, do you not think there is some merit to what the minister said yesterday? Let us all agree that it would be the thin edge of the wedge were this bill to pass and that, yes, it is minimal in terms of dollars and cents. To get it, you have to go through some steps — you have to apply, you have to get an RESP and do this and that — but then there is a culture established and it might evolve. I think that is what you folks are saying. That makes a lot of sense to me. Do you reject that out of hand?
Mr. Robinson: There is some evidence in the asset-based social policy approach that, in some cases, it does have a positive impact. In other instances, I get nervous about it. It falls back on a notion of Victorian poverty as being some kind of moral failing — that is, if the poor only did not spend money on “X” but started saving, they would not be poor anymore. I get very nervous when we start going down that particular road.
There are a number of factors that influence poverty. It is more than people not having assets. There are a number of issues involved around poverty. I would not look for, as someone mentioned earlier, a magic bullet solution to that issue.
[Translation]
Senator Massicotte: My first question is for Ms. Robson-Haddow. On page 2 of your presentation, in the second paragraph of your second recommendation, you refer to a greater flexibility in exchange.
[English]
You state: “...unused savings into a range of other asset-building accounts.”
[Translation]
What exactly do you mean by that? Is it possible to dip into an education fund or a residential mortgage?
[English]
Ms. Robson-Haddow: I am afraid my French is not adequate enough to be able to fully respond, although I wish I could.
There are a number of different possibilities that are possible to imagine. Currently, for example, RESPs or accumulated income payments within RESPs could be rolled by the subscriber into an RRSP. The RRSP system already allows for certain withdrawals for first-time home purchase and lifelong learning. Those are certainly worthwhile options.
Currently, in the demonstration project I referred to — learn$ave — and in some of our other work at SEDI, the other options that we are encouraging in terms of savings uses and that low-income Canadian are telling us they want are not only affordable home purchase but also access to affordable housing. A number of Canadians, for example, need assistance to save for the costs of moving into the private rental market. Micro-enterprise development is another option. Then there are a number of other asset purchases that could be imagined.
By way of contrast, I would like to note that, in the United Kingdom, there is a measure called the Child Trust Fund, which matures at age 18 and then is completely unrestricted. There are no restrictions on how the asset might be spent in that country.
[Translation]
Senator Massicotte: My second question is for Mr. Robinson. Mr. Lewis remarked that cultural factors may have a greater impact than financial ones on attendance at the post-secondary level. In Quebec, tuition fees are the lowest in Canada. In the US, they are very high. However, Quebec has the highest drop-out rate in Canada. The cultural influence may be more important than the financial side. I would like to call upon your expertise in the matter. What is the financial prospect? Lots of people with low incomes are still able to save money. What is the importance of the financial criterion as opposed to culture in the way in which we raise our children?
[English]
Mr. Robinson: I am not denying that there is an important cultural aspect, if you want to call it that. I am not sure if it is missing; I am not sure if we are addressing the appropriate problem here.
The evidence that we have seen, as I mentioned earlier, is that for the post-secondary aspirations of parents — and there is a StatsCan survey that looked at this — there was virtually no difference between low- and middle-income Canadians who had the aspirations for their children to go on and higher income folks.
Are the financial barriers the only barrier to post-secondary education participation? Obviously not. There are a number of other issues. I would argue, however, that all things being equal, at the end of the day, if it is going to cost me $32,000 to become a dentist and I do not have $32,000 I will not go. Regardless of the kind of cultural incentives I have, what kind of motivations I have, what my parents told me, it is not going to happen.
We do need to focus on the financial aspect. I think the government has tried to do that in this bill, but it misses the mark. We can get a bigger bang for our buck by redirecting this into a needs-based grant program that is a progressive system that identifies the students who need it and that allows them to go on and gets rid of that financial barrier. Then we can deal with the other barriers.
Senator Meighen: Senator Massicotte touched on the area that I was interested in. Just before getting to that, Mr. Robinson, I will address the question to you, because I may have missed it. As so often happens in these instances, we get a bill — there are very few bills that are perfect. Often, we run into other problems — for example, omnibus bills. There are often all kinds of things in an omnibus bill, some of which you like, other parts of which you do not like. So what are you to do?
I am asking you, what would you have us do?
You were the harshest critic of this bill. You may have said it in your remarks and I missed it, but if the worst happened and we could not get the bill improved along the lines that you suggesting, would you have us support it in its present form?
Mr. Robinson: I cannot speak for what your final decision will be.
Senator Meighen: Just give me your view.
Mr. Robinson: If I was sitting on the other side of the table, I probably would not support this particular bill. Coming back to what I said earlier, there are many more effective ways to deal with this problem that are both visionary and simplistic and do not get us into the problems that we have seen so far, based on the evidence we have already seen with the Canada Education Savings Grant and RESPs.
In my opinion, a needs-based grant approach is the best way, and there is a lot of evidence around the world of how that works as well.
Senator Meighen: A quarter loaf, in this instance, is not better than no loaf at all?
Mr. Robinson: If you are asking me as a taxpayer —
Senator Massicotte: Take it or leave it.
Mr. Robinson: Take it or leave it. I would like to see my tax dollars spent in a much more efficient way.
Senator Meighen: Sorry to focus on you, Mr. Robinson, but you alluded to something that raised a question in my mind. You made a very strong plea for lowering fees. Senator Massicotte touched on that and mentioned that there are other jurisdictions where fees are much higher. As you may be aware, Nova Scotia, where I am not from, but I believe my facts are correct, has among the highest fees in Canada; however, it also enjoys the highest rate of attendance at post-secondary institutions. One could question in that light whether the level of fees has a direct relationship to the degree of participation.
If we agree on the principle that no qualified student should be prevented from attending post-secondary institutions by reason of money, what is the best way to achieve that? You have suggested lowering fees. Let me throw out another suggestion, which would be that we work towards the universities and colleges charging a reasonable fee in relation to the services they provide but at the same time student aid be augmented to such an extent that no qualified applicant is turned down. That, to me, seems a better approach because it kills two birds with one stone: One, the problem of university revenues; and second, the problem of student ability to pay the fees.
Mr. Robinson: On the issue of participation rates, the example of Nova Scotia is interesting. There are two components to access: One, do you have the money to go? Two, is there a place to go? In Nova Scotia, there are many institutions. There is both a supply as well as a demand.
Also, students in Nova Scotia are graduating with enormous debt loads. That is a serious issue, too. That speaks to your second point. If we increase fees and allow more student financial assistance, I assume you meant in the form of loans, then we will burden people graduating who cannot afford to pay the fees up front with enormous debt load. We will have a situation where there may be two people sharing the same desk, one who is wealthy enough to pay for their fees, and another who will be $100,000 in debt. That is an enormous burden to place on somebody.
What I have suggested here is why not have a progressive needs-based grant system in place that would be the financial assistance that you are talking about, a progressive system that would ensure that we cannot say financial barriers exist. Even if we have very generous student financial assistance, the debt aversion may be something that turns people away from university or college as well.
Senator Meighen: Not all student aid is in the form of loans. I agree with you that ending up with a huge loan is not that much better — it is better than not going. If you end up becoming a dentist, I suspect you will be able to pay off your loan in due course.
Senator Massicotte: What you are proposing is lower tuition fees. However, given that participants at universities are predominantly from the middle-income class, it is very regressive. You are basically subsidizing those people who can afford it. I think only 30 per cent of those students who are participating are on a needs basis. In Quebec, only 40 per cent are getting assistance, which means we are subsidizing one part of our society.
Mr. Robinson: I would disagree somewhat. I would assume that people from rich families also pay taxes. If we have a progressive tax system, that is the way you deal with that issue.
I do not think we could have the same argument around health care. We could not say that only people who use the health care system should pay for it. I do not think we would go that route.
I would urge us to think more about post-secondary education. Getting a post-secondary education degree today is probably as important as getting a high school diploma was 30 or 40 years ago. We made a decision as a country at one point that getting a high school diploma was so important that it should be universally accessible and free for everyone. We need to expand the argument a bit: Is getting a post-secondary degree so important today that it should be universally accessible?
Senator Tkachuk: I was involved in student politics; we had this argument a long time ago. I do not know if things have changed much.
The Chairman: The numbers have changed.
Senator Tkachuk: The numbers have changed. We just received the bill yesterday. It is a bit rushed, and I have no idea why.
I believe I heard that approximately 18 to 20 per cent of the cost of university is paid for by tuition fees. Can someone help me out here? Are you the experts? I think that number is right. That is what the minister's experts were saying yesterday.
Mr. Robinson: That is not true.
Senator Angus: What is it?
Mr. Robinson: If you look at overall revenues, it is probably about 18 per cent. If you look at operating revenues, which is where tuition fees go, it can range from 30 to 60 per cent. It is not 18 per cent. It is overall revenues, but students do not pay for research. So that is including research funding, private grants and donations, tuition fees and government grants. If you look just at the operating revenues, which is where tuition fees go, it is probably around 30 per cent in most institutions, well over half in others.
Senator Tkachuk: Is that about the same as it was about 40 years ago?
Mr. Robinson: No. I wish.
Senator Tkachuk: When I went to university they used the same number, 18 to 20 per cent.
Mr. Robinson: If you look at overall revenues, just as recently as the late 1980s it was around 10 per cent or 11 per cent. It has doubled.
Senator Tkachuk: We have heard that 26 per cent of families who earn $35,000 or less are saving for their children's education. There has been evidence that with respect to people who earn this income and less many things were prohibiting them from saving. One of them was a culture of saving. The minister talked about that yesterday.
Why is it that 26 per cent have this culture and the other 75 per cent do not?
Ms. Robson-Haddow: There is a lot in that question. There are a number of factors. The decision of whether to deposit money into a savings account is as much influenced by a whole host of personal factors as it is about institutional factors. The way we operate social and tax policy in Canada right now, we actively discourage low-income families from saving. We set up all kinds of barriers, whether they want to save for their children's education or other purposes. We claw it back from their social assistance payments; we penalize their savings in terms of child care subsidies; and we structure our savings incentives through the tax system so that only if you have a significant tax liability do you get any benefit from your savings. It is remarkable that that 26 per cent do save.
I have some other figures with regard to education savings: 36 per cent of those with incomes of $15,000 or less and 27 per cent of those with incomes of just under $26,000 are currently saving for their children's education. It is actually quite remarkable that these families are saving. They are saving in spite of policy, not because of policy. Bill C-5 is a great opportunity to be able to give some value back to deliver some asset-building support to those families.
Senator Tkachuk: Would raising the personal exemption from $8,000 to $12,000 or $15,000, reducing EI premiums, or lowering income tax rates so that people have more disposable income not allow many low-income families to save money? It seems that they do save money, but your answer indicates that many tax provisions prevent them. Would this not be a better solution, so that they could decide how much to save and where to save, rather than depending on government grants?
Ms. Robson-Haddow: There are a variety of ways to increase the disposable income of low-income families. There are some reasonable questions about whether increasing the basic personal exemption would do that for low-income families. Some research was just published by the National Anti-Poverty Organization that indicates that middle- income families would get the majority of the benefit from that. I am not an expert on tax policy, so I do not want to go further on that.
As a parent of two children aged two and under, I can tell you that by and large we save through enforced savings. We save through employer-sponsored pension plans and through automatic debits into RESPs.
There are very real institutional factors that affect the way people save. Simply increasing personal income may not be sufficient. I think you must create financial incentives and an enabling policy environment, which is not only about tax policy but also about looking at social assistance regulations at the provincial level. This bill has created some momentum around that. That is a multifaceted question.
Senator Tkachuk: You are saying that we should take the money away from the people so that we can incent them to behave in the way we want them to behave?
Ms. Robson-Haddow: No, it is always voluntary. We all participate in savings programs voluntarily, and I would never, in any circumstances, advocate forced savings for any Canadian. Participation in RESPs is voluntary and must remain that way.
[Translation]
Senator Plamondon: Bill C-7 is an excellent tool for education. You have six children, I have seven, in addition to 11 grandchildren. So I can see both the difficulties and the advantages to be found in this bill. However, it is incomplete in that it does not deal with the immediate problem or the problem 15 years from now. How much will $100 be worth in 15 years, no one can tell but all we have to do is look 15 years back and compare that with what we can buy for $100. It also takes for granted that most families will be able to send their children to university.
When we talk about post-secondary education, university comes to mind. Having been a member of the board of directors of financial services for a good part of my career, I know that people who sell insurance or financial services, trades people with technical training, such as plumbers, make an important contribution to the community and yet they have not attended university. We are putting a seal of excellence on an aspect that does not represent society as a whole.
I asked the minister what would happen if people did not go to university. He told me that in that case, they would take back the money and people would only have the interest. So it is a tool for education.
In high schools at the present time, extracurricular activities cost a lot of money. How can an average family, made up of two adults and two children, earning $25,000 gross a year, how can such a family determine its priorities when it comes to spending for children when they ask to take part in hockey, soccer, skating et cetera or any other type of extracurricular activity so they can be part of the group?
We could amend this bill to specify that the term “post-secondary education” includes all educational programs leading to a job. We could also have certificates for university studies. Certificates in the financial sector do not necessarily require a university diploma.
[English]
The Chairman: To rephrase the question sharply, is it limited to post-secondary education or not? I believe the answer to that is that it is not limited to post-secondary education in the general sense. It includes trade schools and other institutions beyond university. I believe that those are the facts and I think there is general agreement around that.
Mr. Lewis: That is correct. It is any post-secondary program that qualifies under the Income Tax Act, which is a very broad definition that includes trade programs. One of the amendments to the bill, which we think is important, is to expand it beyond full-time studies to include part-time studies. It is defined in a very flexible way.
[Translation]
Senator Plamondon: Let me add a comment. This bill was submitted to us yesterday, it appears urgent and we do not have much time to make up our minds. However, I am afraid that this bill is a smokescreen that prevents us from coming to grips with the real problems relating to university, including the expenses paid by students to attend university or any other place of post-secondary education.
[English]
Mr. Lewis: Again, our position is that this is not the entire solution, but we strongly believe it is an important piece of the puzzle and a long-term strategy that will produce benefits down the road.
The Chairman: When we talk about a savings culture, I go back to my own experience. I worked my way through university, but I had help from not only family but also friends. It was a collective effort. As I understand this bill, it goes back to the idea of a saving culture. It includes not only immediate beneficiaries and their caregivers but also family members and friends. It is much broader than the context of only parents.
As Senator Angus and the minister put it yesterday, it is starting a savings culture in the country for education, a culture that we do not have other than through limited private means such as the scholarship fund. By the way, I was a participant in that fund. It did not provide all the funds I needed, but it was very useful.
Could the witnesses speak about the idea of expanding a savings culture for education in our society?
Mr. Robinson: I certainly understand the intent. However, as I said earlier, based on our experience with developing the so-called savings culture in education, by any objective measure it has been an abject failure.
Ms. Robson-Haddow: As I have said in our presentation today, in our view, poverty is about more than just income. It is also about opportunities to save and build assets, in addition to getting the services one needs.
In this country, social policy has not adequately examined the way to encourage all Canadians to save and build assets. We have done it in a haphazard way. As a result, most of the benefit goes to people already wealthy.
It is also important to note there is a long-term strategy in this bill. The decision about whether to go on to post- secondary education — university, trade school, college or a diploma program — is made well before the final years of high school. It is made back at grade 8, perhaps even earlier. We know that the presence of savings and assets has an extremely powerful effect on that, to some degree more powerful than the grades obtained in school or whether your parents went to school. We see this as a start of the broader issue of asset building in Canada.
The Chairman: Mr. Lewis will have a last word.
Mr. Lewis: This is a tool to help change the dialogue around the family table and to help engage the family in thinking about and planning for higher education from an early age. By doing that, we believe you will create a culture, not just of saving, which is an important culture, but of expectancy towards going on to higher education. The dollars will help, but the sense of expectation and ability to attain that higher education will be set through the early years of the child's development. When a student reaches secondary education, there will be a clear vision as to where to go and the ability to do that.
The Chairman: I wish to thank the witnesses for their cooperation on such short notice.
I welcome our next group of witnesses. I want to thank you for a showing up on such short notice.
I urge senators who have questions to keep their comments and their questions as precise as possible.
Senator Angus: Mr. Chair, would you establish that these gentlemen were all in the room during the previous witnesses' evidence, and we listening carefully to the testimony.
The Chairman: I appreciate that clarification so that we do not have to go over the same grounds.
Mr. Hutchinson please be short and precise.
Mr. Braden Hutchinson, Vice-President, Rideau River Residence Association: I wish to thank the committee for allowing me to make this presentation.
I will recap the testimony I gave at the House of Commons standing committee. I stated there that the bill was woefully in inadequate for low-income families who are facing rising tuition fees and costs, especially if they come from outside of a location that has a post-secondary institution.
Rural students are only one sixth as likely to go to post-secondary education as those from urban locations. Students from low-income families who live in urban locations are only one half as likely to attend post-secondary institutions. It is clear that those students who are lucky enough to make it through the door do value their education, because three quarters of those students are concerned about having enough money to finish their education.
Keeping this in mind, $3,000 over 15 years is nothing short of an insult. The so-called incentives in this bill to encourage families to save for their children's future fail to take into account the reality that many low-income and fixed-income families cannot afford to put money into RESPs. Furthermore, the bill does nothing to resolve the crisis in education, which includes skyrocketing tuition, massive underfunding and decreased assets at a time when 75 per cent of jobs, according to Statistics Canada, will require some form of post-secondary education. It is equally disturbing that this bill has progressed this far considering that the government put it through the House after listening to several witnesses at the standing committee of which only one provided a sound endorsement of it.
Let me provide comments from witnesses who appeared before the committee in the other place. Sylvie Lévesque, from the Federation of Single Parents and Blended Family Association, stated that although Bill C-5 is well- intentioned, increasing the Canada Education Savings Grant to promote access to low-income families will still leave too many Canadians out. Richard Shillington, a social policy researcher said the following: “This is money that is going to come out of your food budget in order to get the paperwork in hand for $500 that is going into a bank account you cannot touch.” Christiane Gagnon from the Bloc Québécois, an M.P. whose party later supported the bill, stated: “These measures will not necessarily benefit low-income families.” Peter Nares from Social and Enterprise Development Innovations stated in that committee in regards to this bill: “Is it perfect? No, but it is a start.”
A start is not what Canadians need. It is not good enough for Canada right now. What we need is a solution.
The government has ignored the overwhelming message of groups representing both low-income Canadians and students. I am sceptical that this is only the first piece of the puzzle. This will be it, if we allow this bill through. The education system needs help now, not 15 years from now. We need a dedicated post-secondary education transfer. We do not need more RESPs but a reduction of tuition fees and a national system of needs based grants. No amount in this bill increases access for post-secondary education. Worst of all, the enormous costs of $420 million per year means that this bill is poised to become the next gun registry.
The Senate has the opportunity to succeed were the House of Commons has failed — that is, to listen to Canadians. Our MPs have chosen to ignore the pleas for assistance from students and low-income Canadians. I ask you to send a message to those MPs who supported this bill by sending this bill back to the House with the message that the Senate of Canada will not accept aimless expenditures that create no real benefit for Canadians in place of real social policy that is aimed at creating a strong Canada for the 21st century.
You are our last hope. I encourage you to listen. If you will not listen to me, then please listen to a former prime minister, who once wrote: “Yet, if this society does not evolve an entirely new set of values, if it is not determined to plan its development for the good of all rather than for the luxury of the few, and if every citizen fails to consider himself as the co-insurer of his fellow citizen, it is vain to hope that Canada will ever reach freedom from fear and freedom from want.
Thank you very much.
The Chairman: Our next witness is Mr. Kusie.
Mr. James Kusie, National Director, Canadian Alliance of Student Associations: As the national director representing 19 universities and colleges across Canada, with over 300,000 students, I would like to thank the committee for the opportunity to discuss post-secondary education in Canada with you, and specifically Bill C-5.
CASA's members, many of whom you had opportunity to meet two weeks ago in Ottawa, believe that we can provide real solutions to these problems. CASA envisions a Canada where all Canadians, regardless of social or economic background, are free to pursue their dreams and obtain a post-secondary education without facing barriers.
Unfortunately, access to affordable and quality post-secondary education in Canada is in jeopardy. Tuition in Canada has almost tripled over the last decade. Students with loans now graduate with over $30,000 of debt after interest.
The student financial aid system in Canada is clearly not adequately assisting students in funding their education. Unfortunately, Canadians are not saving enough for their children's education either. Statistics Canada found that only 26 per cent of low-income Canadians are saving money for their children's education in contrast to the more than 70 per cent of high-income Canadians who are.
[Translation]
First of all, it appears that a majority of low-income families in Canada do not have advantages and receive no benefit from the Canada Education Savings Grant Program.
[English]
RESPs were designed to encourage Canadians to save for their children's education with Canada Education Savings Grant top-ups, yet only 11 per cent of low-income Canadians use these vehicles. This bill proposes to increase CESG contributions to RESPs from lower- and middle-income Canadians. CASA recognizes the social, psychological and economic benefits of early childhood educational savings, especially on those children who are economically disadvantaged. However, we strongly believe that student financial assistance should be targeted to those requiring it most, those who, without assistance, would not be able to obtain a post-secondary education.
This bill also establishes a Canada Learning Bond. We remain sceptical that the learning bond will encourage low-income families to save or improve access to the system in the future. The learning bond does nothing to help today's students afford post-secondary education. If a child born next year qualifies for a learning bond, they can expect to have $3,000 to contribute to their post-secondary studies. Even in today's world, $3,000 is not a significant sum, as tuition costs alone are an average of $4,200 a year. When we consider that estimates by Bank of Montreal Financial Group and TD Canada Trust put the cost of a university undergraduate degree in 18 years between $96,000 and $130,000, the future is grim.
[Translation]
In view of the high costs, it is difficult to see how a financially disadvantaged person would feel able to pursue post-secondary education.
[English]
The government suggests that a family could contribute $4 per week into their RESP, increasing the predicted yield at maturity to about $11,000. Although this seems like a significant amount, in 18 years this will not sufficiently cover tuition for a single semester. If current tuition trends continue, a low-income family would have to save at least $270 per month, per child, to afford an education in 18 years. That is a feat daunting even for wealthier Canadians.
Low-income Canadians cannot afford to save the necessary funds to pay for their children's education while putting food on the table. This bond is like giving a low-income family a Mercedes Benz plus $500 and expecting them to finance the rest of car. It will not happen.
[Translation]
It is our view that direct government subsidies for a full educational cycle will prove to be efficient in improving the accessibility rate of post-secondary programs. Moreover, such a strategy would have an immediate effect on the post-secondary system with the Canada Education Savings Grants. The results we are discussing will not be apparent for almost 20 years.
[English]
The learning bond will cost taxpayers approximately $410 million at maturity. In the last federal budget, much to our pleasure, the government announced a new, low-income grant for up to $3,000 or half of tuition. While we applaud the creation of this grant, we do not feel it is a significant enough incentive.
If the government expanded this grant to cover 100 per cent of tuition for four years of study, it would cost $240 million per year, a little over half of the cost of Bill C-5. Such a grant would vastly improve accessibility to post-secondary education in a way that the proposals in Bill C-5 could never come close.
In March, TD Economics referred to Canada's student financial assistance regime as a “bewildering hodgepodge of programs that do not effectively target funding at lower-income groups.” I say quote because of the debate the Senate got into yesterday.
The Chairman: I want to be fair to you but you are starting to bite into other people's times.
Mr. Kusie: In conclusion, we believe that upfront grants that cover the full period of a student's stay do more to address accessibility in the system.
Thank you very much for your time.
The Chairman: Many senators have had the benefit of your evidence in the other place as well.
The next witness is Mr. Soule. Do you have a colleague with you?
Mr. Soule: No, he is not with me.
The Chairman: Mr. Kusie, introduce your colleague, please.
Mr. Kusie: His name is Toby White; he is our government relations officer.
Mr. George Soule, National Chairperson, Canadian Federation of Students: I would like to thank the committee for the opportunity to present on behalf of more than 75 student unions, with a combined membership of over half a million students at public universities and colleges across the country.
When we presented before the Human Resources and Skills Development Standing Committee, we were asked several times if, as a result of Bill C-5, any Canadian student would be worse off. The answer is, no. However, it is our belief that social policy should be held to a higher standard.
Government-sponsored savings vehicles for low-, middle- and high-income earners are fundamentally flawed. They are the wrong solution to a real problem. The problem of financial barriers must be solved by reducing the barriers themselves, not through a patchwork of half programs and afterthoughts.
In addition to the Canadian Federation of Students, the RESPs and the learning bond are opposed by numerous groups, including the Canadian Association of University Teachers, the Canadian Council on Social Development, the National Anti-Poverty Organization, the National Organization for Immigrants and Visible Minority Women of Canada, Low-Income Families Together — a Toronto organization — la Fédération étudiante universitaire du Québec, and the C.D. Howe Institute. In fact, outside of the RESP providers, I do not know of any organizations that have been calling for an increased emphasis on government-funded savings plans.
What is more common is the call for their conversion into needs-based grants. The learning bond is financially inadequate, and the rapidly increasing costs of colleges and universities in most jurisdictions will render it an exercise in tokenism. Until spiralling tuition fees are brought under control, the federal government is throwing away an open- ended, unaccountable subsidy to the provinces, with little hope of achieving policy objectives.
As with most social policy developed by well-paid economists, the learning bond imposes an upper middle-class philosophy of personal investment onto people with a different reality. In other words, the problem of low RESP uptake from the working poor has nothing to do with low motivation or an inadequate understanding of the world of registered savings plans. For families struggling to get by, the very existence of RESPs is evidence that their government has failed them, that access to post-secondary education is about lifelong monetary commitment that they are simply unable to make.
The RESP program and its new food stamp cousin, the learning bond, are an invention of those who have already enjoyed the dividends of savings and do not take into consideration the problems of modest-income Canadians. RESPs and learning bonds reward provinces who have divested from universities and colleges by letting them off the hook. Savings-based access to education reframes the question of affording high tuition fees as a question about the individual and their savings history rather than our collective resources as Canadians and collective responsibility to make education affordable for all.
Conversely, the government-sponsored education vehicles promote uneven spending in the regions because Canadians in regions where forward-looking governments have kept tuition fees low, such as Quebec, will have less incentive to save. On the whole, Quebecers will see below-average federal spending in this area.
Lifetime savings vehicles are a needless bureaucracy with weighty administrative costs. Money spent on RESP savings grants and learning bonds is better spent on needs-based grants through existing systems that the provinces have accepted, such as the Canada Student Loan Program. By privatizing more of the costs of post-secondary education, the federal government has created a thriving cottage industry at the expense of real access to college and university. RESP providers are the true winners of this regressive social policy. They claim that their goal is to increase access, but we all know that is nonsense. They are only interested in making a buck. This is a profitable industry. If not, they would not be there at all. Worse, the RESP industry has come under fire from more than one provincial securities commission.
I believe that the reliance on individual savings for education should be put in the context of other Canadian social programs. Health care is the crown jewel of Canadian social programs — because what you see is what you get. Canadians understand the value of unfettered access to a doctor and paying for that access through a progressive taxation system. That principle of universal access is what makes Canada's system the envy of the world.
I guarantee you that that would not be the case if access to a doctor depended on navigating sky-high user fees through a competitive savings industry, subsidized and unsubsidized loans, partial loan forgiveness, complicated tax credits and meagre regional systems of grants. Yet, this is precisely where successive governments without any vision for affordable higher education have taken us.
Now, I am afraid the proponents of the learning bond are proposing that we can undo vast social and economic inequities by breaking imagined bad savings habits of working Canadians. The real solution is staring us right in the face. We must restore transfer payments to the provinces for post-secondary education and implement a real system of needs-based grants.
Earlier this week, one of your colleagues, honourable Senator Hubley, rose to call for a universal publicly funded system of post-secondary education in Canada and the need for federal legislation setting out the mission, role and responsibilities of the government with respect to post-secondary education. It is only by implementing such a comprehensive national strategy and ensuring quality and accessibility to post-secondary education that the federal government will be able to begin to close the access gap that exists between low- and high-income Canadians.
Thank you again for the opportunity, and I look forward to the discussion.
The Chairman: Again, I apologize, but the clock is pressing us to move quickly here. I would ask senators to be as short and as pointed as possible. We understand the arguments here. They have been well presented and argued.
[Translation]
Senator Massicotte: I think the presentation is very interesting and opens an interesting debate. But I am trying to get a better grasp of your recommendations; it may be I have not understood correctly. We all agree on the need for secondary education. We agree with your notion of “needs based” that is related to the particular needs of a given family. At the same time, you also criticize the fact that tuition fees are very high and you talk about a universal system.
I am trying to understand what the solution would be because “universal” would mean that everyone goes to university or benefits from post-secondary education. It is clear in Quebec or the United States, for example, that the decision to go to university or not is motivated by cultural, family or other reasons than by financial considerations, in many cases it is a matter of family or individual values.
So if it is a needs-based system, then it should not be applied at the university level but it should be aimed at helping people who are in need. And as you know, as far as university is concerned, only 30 to 40 per cent of people apply for aid. They are high-income families. How can we manage this?
The basic observation is that many people do not go to university or to a post-secondary institution for cultural or other reasons. I cannot understand why it would be universal if it is based on need. How can we deal with this cultural problem at the root? Perhaps Mr. Soule could answer first, then Mr. Kusie.
Mr. Soule: The difference between the notion of needs based and intervention at the university level, is that the principle of scholarships based on need is a good starting point.
[English]
If we look at the first step introduced in the last federal budget of the needs-based grants, it acknowledges that the cost of education is the primary barrier to students accessing post-secondary education. When we implement a system of grants like this, where we have skyrocketing tuition fees, it ensures that at least low-income Canadians have accessibility.
In terms of a universal system, that is the grander vision — it is the same way we look at health care — the idea that all Canadians, when they start off, can see that the doors are open to post secondary education. It is ability and desire to attend post-secondary education that factors into whether they go on, and not their ability to pay. That is the important issue. Some people choose not to enrol in post-secondary education institutions, and that is their decision. The point here is that it should be their decision, and not one restricted by their financial situation.
Mr. Kusie: Students from low-income backgrounds are two and one half time less likely to attend college or university than their counterparts in high-income families. We are looking at system of needs-based grants to go to these students. We recognize the intentions behind the bill, and we think the government had honourable intentions with the bill to help low-income families save. However, it is more than that. It is it not just a matter of finances that factors into students from low-income families going on to post-secondary education. You could give them all the money in the world, but if the culture is not there, they will not wake up one day and say, “I will go to university because the money is there for me to do so.”
It is a cultural thing, and that is one thing that the bill is trying to address. However, the incentives, financially, have to be a lot greater. For just over half of what this proposed legislation will cost, access for one in five students to get into the system could be significantly improved. According to the statistics, enrolment is at an all-time high. Who is sitting in those seats? By and large part, it is the students that can afford it, not low-income students.
CASA has been lobbying for nine and a half years for an accord in post-secondary education, where the provinces and the federal government have a national dialogue on this. Senator Hubley, last night, put it correctly when she said that things have changed in our country. In the early 1900s, the country had a debate about public education. Kindergarten to grade 12 was considered public education and was given universal access. I would argue with you that an undergraduate degree today is the high school degree of 20 years ago. We need a debate about where this country is going.
The federal government has set some high standards vis-à-vis what Canada wants to achieve in terms of being one of the top five countries in R & D in the next 10 years and wanting to increase our numbers of masters and Ph.D. students by 50 per cent in the same time frame. Those are very big agendas to fill. If we do not provide students with the necessary financial supports to get into the system, we will not be able to meet those standards.
The Chairman: I think we understand the arguments now. Can I move to another questioner? We are limiting, again. We are impeaching on each other's time and it is not fair.
I would ask the remaining senators to please be precise in their questions and the witnesses to be equally precise in their answers. The arguments are well displayed and we want to see if we can amplify that.
Senator Tkachuk: I agree with Mr. Hutchinson — and maybe all of you are saying this. Bill C-5 is a vehicle to be able to say on the hustings that the problem of access to education has been addressed. I am sure it was much like the farmer with the long gun and the archer after Bill C-68, when the federal government was looking for some easy way to address the problem of crime.
Just a couple of background pieces of information, because for some reason the government is eager to pass this quickly, and we are not being given a lot of time too look at this carefully, which I think we should, and use this as an excuse to study what is happening with access to education.
What is the average cost of an undergraduate degree in Canada today for a student who does not come from the city but who comes from a small town like I did and pay rent?
Mr. Hutchinson: The Rideau River Residence Association represents students at Carleton University who live in residence. Many of them come from out of town. A student is looking at $15,000, approximately, for tuition, housing and books. That does not even feed you. That is a lot of money.
As I said, only one sixth of students from rural backgrounds make it that far. I question how $3,000 is supposed to help anyone from those areas attend post-secondary education.
Senator Tkachuk: What would the average cost be to a professional college, like dentistry, medicine, law, pharmacy?
Mr. Kusie: CASA built a cost calculator on our website based on the last 20 years of trends. If a student were to begin to study medicine tomorrow — and that is an eight-year program — and attend an out-of-town college, the cost would be in the neighbourhood of $250,000.
Senator Harb: What you are telling us is that we have a split personality in a sense on this issue, for a couple of reasons. First, you are saying that we have a health care system with universal access as a social policy on the one hand but that on the other hand when it comes to post-secondary education we have a needs-based system, with one grant here, some assistance there, and a loan there. You are saying that it is time for us to sit down and have a serious discussion to determine where it is we want to go. Will the two converge at some point in time or go in different directions?
We are dealing with a specific bill here. Have you done any analysis to determine the possible outcome of introducing a universal system whereby access to post-secondary education would be free, like access to medicare would be free? Have you done a cost analysis whereby you took into consideration student loan administration costs, bad loans, the costs we pay in terms of administering those loans versus the costs of making it free for all? Second, in your view, would you see the bill before us as one that can be saved, even though you indicated that it could easily become critically ill, or is it clinically dead? Is there any possibility that this committee could salvage this bill to create a win-win situation?
Mr. Soule: I would like to answer both questions with one answer. In the first year it is estimated that spending for the learning bond will be $100 million. That $100 million could eliminate tuition fees for 25,000 students. Obviously, access to education would be opened up with the learning bond.
I would say that this bill is dead. However, the thought process behind it and the government's commitment to put $100million next year into improving access to post-secondary education are good. It put $60million into the low-income grant that has just begun. That area could certainly benefit greatly from $100 million.
We could look at eliminating the cap, at opening up to 100 per cent of tuition fees and at additional years of study. The initiative is a good one, but $100 million could be used to improve access to post-secondary education. This bill is not the answer.
Mr. Kusie: If you give universal access and eliminate tuition fees, students still have to deal with living costs, such as food and accommodation. There are other costs associated with post-secondary education. Students would still need a financial aid program to cover those costs. There are still many other barriers that prevent students from going to university.
Can the bill be saved? In its current form, I do not think it can be saved. As I told the House committee, I do not want to come back to any committee of the government in 20 years, as a parent, and say I sat here 20 years ago and told you quite frankly that this would not work and yet here we are debating it again.
The Chairman: As a reminder, in 1966 they said that about medicare, and here we are.
Mr. Toby White, Government Relations Officer, Canadian Alliance of Student Associations: I have a quick comment to add. In a world where the government had unlimited resources, we might not be sitting here today asking you to defeat this bill. We are concerned about meeting with the Minister of Finance and asking for money for an effective, sound grants program only to have the Finance Department tell us that it just spent $400 million on improving access to post-secondary education. That is what this bill will cost at maturity. We can envision, for half of that amount, having an effective, sound national grants program. It is a matter of sound public policy, and that is what we are asking you to look at in your consideration of this bill.
Mr. Hutchinson: I have a brief addition to that. I did a little background work in respect of this bill. To make these grant levels meaningful, you would be looking at probably doubling or more the expenditure estimated in the bill. As has been pointed out by other witnesses today, that money could be better spent elsewhere than is proposed by this bill.
[Translation]
Senator Hervieux-Payette: By way of introductory remarks, let me tell you a little bit about my experience. I was a low-income student. At the time I had three young children. I was not entitled to tax deductions for my education because my husband was working. I obtained a university education when I was living as a member of a low-income family. So I am familiar with the situation.
At the present time, there are two young women whom I mentored. They are both from modest-income or welfare families. One of them completed a master's at Columbia University and the other is a member of the Bar of Quebec, Ontario and the State of New York.
[English]
They worked a great deal and with much courage. I want to convey that we are not trying to solve all of the problems of post-secondary institutions with this bill. I say this as a former student, as a mother and as a grandmother. We have daycare now, which is part of finding a new way to change the culture and help children attend university. Students must want to attend university. If they have never before seen a book before attending their first school, it is difficult for them to think of going forward. We put billions of dollars into education. Of course, we have the head start program also to support low-income families. We have a series of measures and this measure is not meant to supplement existing students.
[Translation]
This program is not a supplement to the present education program under which parents, grandparents and friends may invest their savings in an educational fund that stays within the family.
I am the former chair of a school board. At the time, we had programs encouraging children to deposit their small savings in a bank account so that they would learn to save. This measure is not part of a policy costing billions of dollars. It is simply a way of helping people save. People earning under $35,000 a year are not destined to remain in this income category for the rest of their life. However, for people whose situation stays static for 10 or 15 years, this program does provide some hope.
That is why I intend to give my support to the bill we have before us. Of course, it does not settle all the problems. But the problem of student debt is not the issue we are dealing with today. We are talking about providing an education.
I do not understand why you would be opposed to a complementary measure allowing low-income families who do not have this particular culture, as Senator Massicotte pointed out, to sustain this ambition for a university education.
Whether we are talking about $100 or $500, the important thing is to start doing something as soon as the child is born to set aside money for a later education. For what possible reason could you be opposed to such a measure?
[English]
The Chairman: I ask that each response be limited to 30 seconds, although this is an important question.
Mr. Soule: We need to move away from the discussion on the culture of savings for education and recognize that education is a social good and that it should be funded through a progressive system of taxation to ensure access for everyone. From a young age, regardless of family income, people need to know that post-secondary education is accessible financially. They need to know that they will be able to attend, because tuition fees are exorbitant and sky-rocketing further. It is not a matter of creating a culture of investing to pay for the social good, rather, it is a matter of knowing that university is accessible.
Mr. Kusie: If tuition costs continue to increase — they have tripled over the last 10 years — and the incentives remain the same, then you will not be giving students and parents anything in 18 years' time. It amounts to $10,000; and a degree costs $130,000. The incentives are not great enough looking 18 years into the future for the program to work. In a day and age in government where every public dollar spent is scrutinized, it is prudent for us to look at where this money is going and how we can most effectively spend it on the most important fundamental social program that this country has — education.
Senator Plamondon: We were told that Bill C-5 was only part of a puzzle. It worries me that I do not know which parts of that puzzle are missing. What are those other parts?
Mr. Kusie: In the RESP program, currently, 11 per cent of the users are from low-income families. That has to be changed. Children eligible for the program are the ones eligible for the national child benefit. Most families often do not think of saving for education when their children are born. For one thing, you need a Social Insurance Number to start a RESP. Most families simply do not think about that.
There is a backhand to these government programs that must be thought through in terms of how best to proceed. I do not think that, given the numbers, this will help, even if families become aware that they can access this.
The Chairman: Mr. Kusie you are doing well in this rhetorical class we are conducting. Mr. Soule, do you have an add-on or amplification?
Mr. Soule: I would say that the puzzle to improving access in this country is complex. We are working with Senator Hubley, and I would encourage not passing this bill, ensuring, however, that money goes to funding accessibility to post-secondary education by conducting a solid investigation, with Senator Hubley's lead, to find out what the crisis is and how we can solve it.
Senator Moore: I am not sure if this is a question or more of a comment. I do not know if the students are aware of what has been going on in the Senate. For the past couple of years, I, along with other senators, have spoken out about a number of the issues that have been raised today. We now have an inquiry in the Senate with regard to the entire matter of post-secondary education funding. I would think that it would be most appropriate, once that inquiry is concluded, for the matter to go to one of our standing committees for a full review. There are billions of dollars being spent in Canada annually on post-secondary education. There are a number of programs, a myriad of programs, and it is time that we did a total review of the whole matter. It might result in conclusions that some of you are suggesting today. It might be a variation of them. Every so often, another problem comes up. We are dealing with it in a piecemeal manner. We should be addressing the whole thing in a total review.
The Chairman: Is there a question within that, or are you commenting?
Senator Tkachuk: Mr. Chairman, why are we in such a rush?
The Chairman: Because of the clock.
Senator Tkachuk: These are interesting witnesses. They are here on their own, as volunteers, if we want to talk for another 15 minutes.
The Chairman: Perhaps there will be an opportunity to talk to them after the committee meeting. However, I am trying to meet the time frame that was established by the committee a day or so ago.
Senator Moore: I know that Mr. Kusie is somewhat familiar with my efforts. Do you have any comments about that?
Mr. Kusie: We met with Senator Hubley last week regarding her inquiry. We are extremely supportive of it. The Senate has a great amount of power in this regard. The Senate did study post-secondary education in 1996 or 1997. Times have changed in the last eight years, and they have changed greatly. I hope that all senators will get behind this inquiry because it is something that crosses all party boundaries and is something that we all have a great stake in.
I have a 16 year old sister. I want her to attend a post-secondary institution, but the way it is going, she has some tough decisions to make. My parents cannot afford to get her through. So get behind Senator Hubley, please.
Mr. Hutchinson: We talk about the puzzle of post-secondary education here, and I would like to suggest that it should not be a puzzle. What we should not be looking for here is a bunch of pieces to awkwardly stick together in order to create some piecemeal system that does not help anybody. What we need to do is get rid of this bill, get this off the table, and say, no, we will not continue to go along with the same strategy. Instead, we will look at things all over, everything, and ensure that we are spending our money and any new money put into the system in an effective manner.
The Chairman: I appreciate your patience with our time constraints. We have heard the debate. It is an interesting debate. As Senator Moore points out, there is a study in another committee that might be commenced. When we complete the first phase of the study dealing with charitable giving, we hope that will assist. There are many pieces of the puzzle that are coming together. Maybe it is time to have a review of the spending in another committee. That is an excellent suggestion. Thank you for your time and patience.
Senators, is it agreed that we move to clause-by-clause consideration of Bill C-5? Do I have a motion to that effect?
Senator Hervieux-Payette: I so move.
Senator Massicotte: Is this in camera?
The Chairman: It is in public, without the cameras. We have a motion. All those in favour?
Hon. Senators: Agreed.
Senator Tkachuk: Who supported the bill in the other place?
The Chairman: All parties supported it, with the exception of the Bloc and the NDP. There is a rationale for this bill — that is, there is provision for the federal government to administer the programs for the provinces, and Alberta has passed this legislation to implement the program. We are trying to get it through now so that the federal government can implement the provincial legislation to harmonize it.
Senator Moore: In this calendar year?
The Chairman: Yes.
Senator Tkachuk: Let us put it another way. What would happen if we were to continue to debate this issue when we come back and the bill passes in April 2005? What is the big deal?
The Chairman: Implementation. The regulations and the implementation getting up and getting started is what is important.
Senator Tkachuk: I do not understand. If the regulations are ready now and there were an amendment for April 1, what would the difference be? I am just asking the question.
Senator Hervieux-Payette: If you have a baby in March, like my assistant, she might not be eligible.
Senator Tkachuk: Of course she will be eligible, that is foolish.
The Chairman: We have already agreed to go to clause-by-clause.
If you want a short response to that — if there is an official here who would like to come forward and respond to it, then please do so.
Please be brief about this. This should have been well understood by all senators yesterday. Please be brief.
Ms. Lenor Burton, Director General, Learning and Literacy, Human Resources and Skills Development Canada: There are two reasons we hope this bill will have passage this calendar year. We do not deliver these programs, the Canada Learning Bond and the Canada Education Savings Grant, ourselves. We have a partnership with the private sector. The front line in the delivery of this program is the RESP promoters. They have told us unequivocally that they will need, at a minimum, six months to do their systems upgrade and train their staff, before they will be in a position to accept a Canada Learning Bond into an RESP account.
The first pressure is that the Government of Canada wants to see children, who are born this year, eligible for the Canada learning bond, to have it in their RESP account as soon as possible.
The earliest, if we pass it this calendar year, we could even hope to implement would be in the summer of 2005. As we delay, we will delay the implementation.
The Chairman: I think we understand the argument.
Senator Moore: What is the second part?
Ms. Burton: The second part is an agreement. The Prime Minister agreed to administer Alberta's Centennial Education Savings Plan on behalf of Alberta. This is Premier Klein's legacy celebration of Alberta's centennial. They want to deliver as soon as possible in 2005.
Senator Tkachuk: What does that have to do with this bill?
Ms. Burton: This bill gives the minister authority to enter into agreement with Alberta, and it gives us the authority to exchange private information.
Senator Tkachuk: What would happen without this bill?
Ms. Burton: Without this bill, we would not be able to deliver for Alberta.
Senator Tkachuk: You would not be able to administer the program for Alberta if it passed on April 1st?
Ms. Burton: If it passed on April 1st, it would delay implementation for Alberta.
Senator Tkachuk: Until what time, the fall?
Ms. Burton: Perhaps.
Senator Tkachuk: Mr. Chairman, we are told that something is important for January 1, but as we are finding out the only thing that matters is that instead of June it would be July, or instead of July it could be August. Nothing happens that is serious here.
The Chairman: There is.
Senator Tkachuk: I have not heard anything yet.
The Chairman: If you read the bill, you will lose a child's year.
Senator Tkachuk: I do not understand.
Senator Gustafson: One year that does nothing for a child.
Senator Tkachuk: We could make an amendment to make it retroactive for one year, too, and that would solve that problem.
Senator Hervieux-Payette: If it gets sent back to the House, that will means another delay.
Senator Tkachuk: Senator Hervieux-Payette, we received this bill yesterday. We dealt with it; it was in the House and we cooperated. We heard some very interesting young folks today. We heard very persuasive and powerful testimony. It is incumbent upon us not to ignore their testimony, which is what it will look like we are doing.
Some Hon. Senators: Not at all.
The Chairman: I do not think so.
Senator Robichaud: The testimony was positive.
The Chairman: Honourable senators, Senator Tkachuk has made a point. Others want to respond to it, and then we will proceed with our clause-by-clause consideration.
Please, no comments, just responses.
Senator Plamondon: I want to say that I am in favour of voting for it now, because any improvement does not address the issue. Even if we change the numbers, it would not address the whole issue of indebtedness and of the puzzle. We should pass the bill, and then consider studying the matter of post-secondary education as a whole, to provide answers for the young people who came here. It is not in amending this kind of bill that we will address this situation.
Senator Hervieux-Payette: The students.
Senator Plamondon: That is all of the puzzle.
The Chairman: I take it that there is nodding in agreement. Senator Robichaud, do you have anything to add to that? You are nodding in agreement.
We have heard the arguments. This is not the end. This is the beginning, as Senator Plamondon points out. We have not had a holistic view of the entire situation.
Let us move to the next motion. We have agreed to go to clause-by-clause consideration of the bill.
Before we do that, let me thank you, Ms. Burton, for the information you provided to us.
Unless the committee decides otherwise, the normal procedure is to postpone consideration of the long title and the short title contained in clause 1. Shall the committee proceed in the normal way?
Hon. Senators: Agreed.
The Chairman: Contrary minded?
Senator Tkachuk: On division. I am opposed to it.
The Chairman: On division.
For ease of convenience, shall clause 2 carry?
Some Hon. Senators: Carry.
Senator Tkachuk: On division, all the way through.
The Chairman: Shall clause 3 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 3.1 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 4 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 5 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 6 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 7 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clauses 8, 9 and 9.1 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 10 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clauses 11, 12, 13 and 14 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clauses 15 through to 20 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clauses 21 through 23 carry?
Some Hon. Senators: Carry.
The Chairman: Shall clause 1,which contains the short title carry?
Some Hon. Senators: Carry.
The Chairman: Shall the title carry?
Some Hon. Senators: Carry.
The Chairman: Is it agreed that this bill be adopted, without amendment?
Some Hon. Senators: Agreed.
Senator Tkachuk: On division.
The Chairman: Does the committee wish to append any observations?
Senator Plamondon: Yes, that it does not address the issue of what was heard here.
The Chairman: There is a proposal that we add a comment that the bill does not deal with the issues presented by the witnesses. Is there agreement to that?
Senator Massicotte: I would go further. In other words, not only does the bill not address the issues but we should recommend that the appropriate Senate committee proceed to study the matter.
The Chairman: Let me just seek some advice here, because this is new to me.
It is appropriate for us to make an observation, but not a recommendation.
Can we agree, as an observation, that Senators Massicotte and Plamondon's observation be that the appropriate Senate committee deal with the question of education spending as a whole?
Senator Massicotte: Why only us two? Can we not all make that observation?
Senator Angus: I agree.
The Chairman: Can we mark that as a unanimous observation?
Is it agreed that the bill be reported with the observation at the next sitting of the Senate?
Hon. Senators: Agreed.
The Chairman: Let us proceed with our other business here. I have purposely kept you from eating so that we can conduct this business, but I have not been very successful in moving you along. I want to thank you for your cooperation.
The committee continued in camera.