Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Subcommittee on Post-Secondary education
Issue 13 - Evidence for the morning sitting
OTTAWA, Wednesday, April 16, 1997
The Subcommittee on Post-Secondary education of the Standing Senate Committee on Social Affairs, Science and Technology, met this day at 9:15 a.m. to continue its inquiry into the state of Post-Secondary education in Canada.
Senator M. Lorne Bonnell (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we should begin by welcoming Professor Stager.
Welcome, professor. If you have any opening remarks, please proceed.
Professor David Stager, University of Toronto: Mr. Chairman, thank you for giving me the opportunity to appear at your hearings. Certainly, post-secondary EDUCATION and the economics and financing of it has been a life-long interest and a primary research activity for, literally, decades. I acknowledge the time constraints, so I will try to be brief. I look forward to your questions and comments.
I have glanced through the transcripts of your proceedings, which your clerk very kindly provided to me, and that has led me to think that I should touch on two or three things that have appeared a number of times.
There are three issues particularly that should guide any policy development in higher EDUCATION. I put these in point form. I would be happy to elaborate later or, indeed, to provide you with written material at a later date.
The three issues are these: Who benefits? What determines accessibility for students? What about income redistribution, or who subsidizes whom?
Some of what I will say, I am sure, challenges what you will hear from other witnesses, but it is based on some pretty solid long-term research material that I have assembled over the years.
The graduates themselves are the major beneficiaries. The return on their investment in higher EDUCATION is high. Indeed, it is the best investment available in our economy. As recently as the last decade, the return to university graduates has been running in the order of 10 per cent to 20 per cent, depending on time, province, field of study, and so on. A 15-per-cent rate of return is a good benchmark. That can be compared with, for example, the return on mutual funds, except that, first, this is an after-tax return, and, second, it is compounded annually for a working lifetime.
I suggest that with all the attention we have seen focused on mutual funds, we have not seen anything that resembles that sort of rate of return over a very long period of time.
There are arguments that the rest of society benefits. Increasingly, that notion is being challenged. In fact, the question is whether EDUCATION leads to economic growth or whether economic growth leads to EDUCATION. That is an open issue in the research area.
The main benefits to the rest of society come through research and development, technological change, and the research activities of the universities and related institutions.
Second, with respect to accessibility, there is a notion that fees have some impact on accessibility. I suggest to you that they have very little impact. Low tuition fees as an access policy has not worked, for reasons that we can get into if you wish. The issue for students is not one of price, but of financing; not one of is it worth it, but how can I pay for it? We saw certain experiments in that regard in the past. Australia abolished fees for 15 years and that had very little -- in fact, negligible -- impact on the composition of the student body. In Quebec, there was a freeze on tuition fees, as you know, for 20 years, which had no visible impact on the participation rate, that is, no differential impact due to that particular policy. In fact, that policy has been not well-studied, unfortunately. I asked a Quebec economist why and he said the government does not want to study it because they know what the answer would be.
Ontario, for the last 30 years -- although in the last few years it has changed -- has used a low-tuition-fee policy as an access policy. Indeed, if Ontario had held its tuition fees in real terms at the level they were in 1967, when the government got control of fees -- in other words, just adjusting for inflation -- we would have had, on average, $100 million per year over 30 years to use for other student aid policies, which I suggest might have been much more effective.
Accessibility has been shown many times to depend on other factors. It is the availability of places; that is, is there some place for students to go? That has been the most powerful factor in determining participation rates. Students' parents are a major factor, as are the methods of financing -- not the cost, but the financing.
The third issue I mentioned was income redistribution or who subsidizes whom. I call this the forbidden topic. Indeed, there is very little research on it. I would encourage you in your deliberations to think about making a recommendation that this is an area in which the government should give more attention to sponsoring research so that we know, in fact, what transfers there are from the lower-income groups to the higher-income groups.
Among the few studies that have been done, each study shows that, on net, there is a transfer from the lower- to the higher-income groups. This is especially true for the tuition fee subsidy aspect of student assistance policy. It also comes into play with respect to the interest subsidies on student loans. In fact, one of the major costs in interest subsidy on student loans is with respect to the loans for second degree programs -- law, medicine, dentistry, and so on -- which are costly programs, long programs. Consequently, the interest subsidy is high and goes to students who, on average, come from above-average family incomes.
That, then, takes me to the matter of loans and to the prepared material which I have set down and which I assume has been distributed to you. I certainly will not go through it in detail, but there are two or three points which I wish to highlight for your attention. I start by talking about some of the problems there have been with current student assistance programs. These are problems that have been acknowledged for the last 30 years. The first study that I did on student aid was in 1969, and I have a tremendous sense of déjà vu in looking back at that early study.
Grants have proven not to be particularly effective in bringing in students who otherwise would not have attended. There are certainly problems with the means test for both grants and loans. The conventional loan programs that we have -- "conventional" in the sense of a fixed debt, fixed repayment -- have, of course, made it very difficult for some students at some times to repay, and you have heard about that.
The income-contingent student assistance program is one that I have studied, and spoken strongly in favour of, for several years. I would like to refer to it as a student assistance program rather than a student loan program, because there is both a loan and a grant element to it. In fact, in the material presented to you, I have referred to it as an income-contingent loan-grant plan for Canada because, in the past, the emphasis on the subsidy aspect of it has been on the forgiven debt of those graduates who ultimately are not able to repay their loan in full.
The term "forgiveness of debt" has caused some political difficulty, some conceptual problems in understanding. Quite frankly, I have picked up on more recent terminology, particularly coming from a recent consortium paper that you would have heard about from witnesses before you, and refer to this as a deferred grant. So it is really a student loan deferred grant program. I will come back to that later.
I want to skip toward the end of my material to emphasize the major advantages of an income-contingent loan-grant program because I think the advantages have been lost sight of in the rather polemical discussions of these issues in recent times.
First, to put it simply, the principle in the income-contingent plan is that students repay on the basis of their ability to pay, not on a fixed-debt basis.
Second, this removes the risk to the student and transfers the risk to the body of taxpayers. This is important because, as we know, students are just beginning a lifetime career. Many are averse to taking loans. They have uncertainty about their future, and their future income prospects. Transferring the risk to society at large makes it much easier for students to decide on a Post-Secondary education career.
Third, and I think important, is that the means test is transferred from the student's parents to the student-cum-graduate, himself or herself.
As I indicated earlier, we have had a long experience of difficulties with an appropriate means test. It is questionable, of course, in our contemporary society how to determine those means and, indeed, who the family is that is being assessed with respect to means. There is also the problem that we move from assessing the parents to assessing the students while they are students, in terms of assessing means.
By transferring it to the student-as-graduate, we have a much more equitable system in terms of looking at the student himself. We have a better measure by using the actual income tax return form to determine, at least to that extent, the ability to pay.
I want to touch briefly on why we may not have seen an income contingent loan grant program before now. I am frequently asked, "If it is such a great idea, why has it not occurred in all this time?"
The primary reason is because of our unique Canadian constitutional situation. It has appeared to most observers that this would require the cooperation of the provinces and the federal government. I have been in Ottawa many times over the past several decades talking to federal representatives, to groups representing the provinces and to representatives of individual provinces. When one party was interested, the other was not, and vice versa.
It is important to note that it would not require the cooperation of federal and provincial governments and that one province could run it all by itself. The federal government could certainly do it by itself although, given the Constitution, that would need the political, if not the financial, support of the provinces. We can return to this issue, particularly where the tax collection system fits in.
Some organizations have opposed such a program -- and I say "some" because not all have done so -- because they have seen it as a Trojan Horse to bring in higher tuition fees. The reality is that over the last 10 years especially fees have risen strongly. Yet, we do not have in place what I regard a satisfactory program for financing those direct costs to the students.
When I first worked on income contingent loans, we did a simulation model which said, "Let us assume the full range of possible fees from zero to so-called full cost." This is a program which would be suitable, regardless of the fee level, to finance a portion of the student's academic costs. However, some faculty associations opposed it in the 1970s, particularly because they feared that higher fees would mean smaller enrolments, and that smaller enrolments would mean a diminished demand for staff, et cetera. Frankly, I have not seen a well-reasoned critique from the faculty associations.
Others in the population are concerned about the level of student debt. The major attraction of the income contingent principle is that debt would be appropriate to the student's ability to pay. We can even talk about how the appropriate levels of debt might be established.
Finally, some in the population fail to distinguish between the conventional loan and this unique student assistance loan program. I have heard people say, "If a student takes a loan, why should he not have to pay it back? I took a loan and I had to pay it back." That sort of attitude does not recognize that we have a large public subsidy as part of our student assistance program. It is a question of where and how that subsidy program is applied.
With respect to some of the key elements of an income contingent loan grant program, I have presented you with written material in a sort of question and answer format to highlight some of the key elements that would need a policy decision in terms of structuring such a program. Certainly, I invite your questions or comments on any of those points. However, I want to touch on a couple of them, because they arise in these discussions. I have noted from reading the transcripts that you have already seen reference to this.
It is often said that the problem with income contingent loans is that students would be indebted for 25 or 30 years. I have also heard the term "indebted for life." It is unfortunate that this notion abounds because it is simply wrong. Twice now, I have participated in the development of simulation programs -- several years ago when we first worked on the idea and, very recently, when we developed a simulation program -- so that we could test how the program would work.
It appears to me that the great majority of students would have repaid their loans. Obviously, that depends on the amount of loans, interest rates, and all the other things. However, on the assumption of a sort of middle ground type of program, the great majority would have repaid their loans within 15 years; many would have repaid sooner. After about 16 or 17 years, the proportion who repay declines quickly. These are the persons who would then become eligible for the deferred grant program.
Frankly, there is no point in letting the repayment period run longer than about 16 years to 18 years. I say that because the interest meter is running and that becomes part of the cost, then, that the government would absorb as part of the deferred grant program. Something in the order of 15 to 20 years -- and I am thinking more like 16 or 17, depending on all the other elements -- would be the termination point of the payments. That is not very much different from what we are seeing increasingly now under the conventional loan program with the interest relief period and, for most students, the conventional 10-year period for repayment.
The funding of the deferred grant is important. Obviously, that would have to be provided for in the current budget of whatever government that undertook it, which means that there must be an estimate of future liability. At the end of my paper, I have presented some numbers which are based on the simulation model to which I have referred. I think the amounts are quite modest. There is a concern whether that future liability can be estimated accurately and whether it could be wrong.
There are two answers regarding that concern. First, the whole body of university graduates in Canada are better able to repay loans than any other group in this economy or society. Many other things would have to be attended to long before we reach the time that our university graduates, as a body, cannot repay their loans. Also, with an appropriate model, those estimates can be revised on a year-to-year basis so that adjustments can be made.
I draw your attention to some of those numbers, which are contained in the material before you, and would be happy to comment on those later.
Let me just finish up with a couple of what I call "one-liners" because they may challenge some of the material that you have. It may seem trivial, but it is important to note that Australia does not have an income contingent repayment loan plan. It is frequently cited as a country that does. I am partly responsible for that notion because, in 1989, I did a report called "Focus on Fees" for the Council of Ontario Universities in which I referred to Australia. In 1993, I had the opportunity to go to Australia to study the university and student financing there and, more particularly, its program. It has a very impressive, sophisticated graduate tax. I can enlarge upon that later, if you wish. It does not have a student loan program. New Zealand would be one model at which we could look. It is on a much smaller scale but real fees, real loans and real cash are involved. The other is the United States, which recently introduced such a scheme alongside other loan programs. The experience with that is still very limited.
The second one-liner -- and this seems completely contradictory to what one would think intuitively -- is that, on a world-wide basis, the greater the use of loans, the higher the participation rate from the potential student population. The higher the tuition fees, the greater the participation rate.
When we look at countries such as the United States, Japan and Canada, where fees and the use of loans is higher than in European countries, the participation rate is higher. The U.K. represents a case where the participation rate is low, but up until recently, there has been free tuition as a way in which students are financed through local authorities.
Once you look at it, the reason for this is pretty obvious. The governments have not necessarily a fixed sum but the notion of a certain budgetary allocation for higher EDUCATION. If that is totally allocated to rposting fees to zero, then the number of students is constrained. The major constraint on accessibility is the admission policy and the number of places. That is why Australia went to the scheme that it did, namely, in order to fund an expansion of places.
The third sort of amusing one-liner is that both the banks and many student groups are opposed to income contingent loans. Therefore, that suggests it is a very good idea.
With that, I welcome any comments or questions from your committee.
The Chairman: Thank you, Mr. Stager, for an excellent paper. Could you comment on why, in your view, so many university and college students today are declaring bankruptcy? Are they doing it simply to avoid paying their debts?
Mr. Stager: You say "so many." These things are, of course, relative. One has to look at percentages and proportion. Student numbers are greater; numbers of borrowers is greater; the number who have higher debts is greater. However, in my view, those numbers are greatly distorted. I have been hearing for at least 10 years that the average student loan is $25,000 to $30,000. I hope that, if you have not already heard, you will hear from Professor Ross Finney, an academic economist who has done a recent study on student loans. He has done a great service in putting out many figures on the actual experience with student loans.
Approximately one-half of those graduating from a four-year undergraduate program have loans. The other way of looking at it, as the optimist would say, is that half of them do not have loans. For those who do, the average loan is in the order of $10,000 to $11,000. I have tabulated in considerable detail the incomes of university graduates and it is not surprising that the great majority of them do not have any difficulty in repaying their loans.
The one concern I do have is that we do not have a good mechanism for determining the maximum debt that any student should be carrying in terms of repayability, which is what would happen in any other loan situation. One would look at the business plan, as it were, and determine whether that indebtedness is appropriate to the prospects of repaying.
I know that the time will come when we have an income contingent based plan, and when we have that we will have to gear the total indebtedness to the student's ability to pay. There is just no doubt that the graduate in the humanities will have a different future income stream than the graduate in medicine, and, of course, at different costs. We ought to be looking at that rather than having a universal amount that will be loaned.
Beyond that, I am concerned that there is not good financial counselling available to those in substantial need.
The Chairman: How do we encourage young people who do not go to university because they are afraid of taking on the debt to do so because their income potential will be increased many times, which will make the debt very small in comparison?
Mr. Stager: With respect, I take issue with the statement that many students are afraid of going to university. The percentage of the potential student population has never been higher in Canada. I think students are one of the most optimistic groups in our society, and properly so, because they recognize the very high return on that university EDUCATION, notwithstanding the exaggerated reporting about the difficulty of finding jobs currently. I am certainly sympathetic with that. I work on a global basis with unemployment numbers. I work with students in my classes. I have two daughters who have very recently come through the Ontario university system. Therefore, I have a firsthand understanding of the concerns and the difficulties they face.
Notwithstanding that, the return on that university EDUCATION, in unadjusted numbers, is in the order of $1 million over a lifetime; that is, comparing the high school graduate with the university graduate. The cost of that EDUCATION is less than $100,000, which is why we do get the numbers I mentioned, that is, a benchmark rate of return of 15 per cent or so.
Several years ago I wrote a detailed paper on the kinds of information with which students should be provided in their decision making process about Post-Secondary education. I emphasize dynamic rather than static information; dynamic information meaning a view of how circumstances change, particularly over the business cycle.
For example, students, like anyone in the economy, tend to respond to the economic numbers that they see at any given time. When earnings differentials are rising in one area, we point to that as a good area to go into, and when the earnings differential are falling, we avoid that area, rather than taking a lifetime career perspective on it.
This shows up many times, especially in studies of the professions. In the legal profession, engineering and accounting there is a wonderful following of the business cycle with people responding to those differentials. Students should be aware of what the income prospects are and of the variety of opportunities out of any given program. It has also been found that students, particularly those from the lower-income groups and from non-professional families, tend to underestimate their future income, and that is understandable because they do not have that firsthand knowledge of what to expect in a career.
We really have not provided as good information for students in making that career decision as we would for other groups making similar kinds of decisions.
The Chairman: You mentioned a paper that you wrote some time ago. Could you tell us the title of it and from where we can obtain copies of it? It sounds very interesting.
Mr. Stager: Yes. With due modesty, I would like to give you a list of the various papers I have written over time on various aspects of higher EDUCATION, economics and financing.I could give that to the clerk after this meeting. I would certainly be willing to provide any materials that might be of interest to you.
The Chairman: Thank you. That would be of great help to us.
Do students make the decision to go to university because they have a real interest in higher EDUCATION, or in a certain field, or because they see a great potential for better income when they are older, or because of the cost of the course?
Mr. Stager: There are numerous surveys at which you can look for an answer to that question. The predominant reason is in what I would call the economic zone; higher income, wider range of options, more interesting work. All of these come back to a sort of employment-income-related syndrome. Not disconnected from that, of course, is an interest in certain subject matter, and that shows through strongly, too. An interest that has been developed in secondary school in a particular subject area will lead students to want to go on to further EDUCATION.
However, numerous studies show that the predominant reason is that prospect of, in short, a better employment life, and that fits with the kind of behaviour that we see, coming back to that rate of return. Students do not, of course, sit down with calculators the night they finish their high school exams and try to decide where they should go and what they will earn. However, they do act implicitly with that kind of information, which is not surprising because it is being fed back all the time from so many sources.
It is in part for that reason that we have much longer queues of unaccommodated demand in a number of the professional fields -- medicine, dentistry, law, engineering, commerce and so on -- than in some of the fields where there is a lower future income.
Senator Forest: I was most interested in your remarks that fees are not a form of deterrent to students. After all our hearings on this subject, we, too, have come to that conclusion. Rather than diminishing or keeping fees stable, we would be better to allow them to grow to a certain proportion so that the moneys raised therefrom might be used to help those who cannot afford them.
Would you elaborate on your statement concerning income distribution? With regard to your proposal for the loan system, you have said that grants are not useful in increasing participation, yet your proposal is for a loan grant program. Will you comment, please?
Mr. Stager: I certainly do not want it thought to be on the record that fees have no impact on enrolment. In terms of the general fee level regarding the current situation in Canada, where there are similar fee structures, it would have a limited effect. Obviously, if Harvard doubled its fees and Princeton and Yale did not, there would be an effect. As long as we are in the situation which exists in Canada today, then there is minimal effect.
The Ivy League colleges were concerned about what would happen as they increased their fees. What they found is that students were more concerned about whether that increase would relate to an increase in quality. They were concerned about getting value for money. They said that they would pay the higher fee if they were assured of receiving quality EDUCATION.
I am glad you asked about income redistribution. As I said, it is the neglected topic. What we mean is that, on the one hand, taxpayers make payments to the Consolidated Revenue Fund from which payments are made to various student assistance programs. We look at that transfer and, on net, the transfer is from the lower-income groups to students who are associated with the higher-income groups. We are looking at about 10 divisions on the income scale.
Initially, the transfer was looked at on a cross-sectional basis in terms simply of the fee subsidy. Then people said that student aid should be taken into account. Even after taking into account fee subsidies, student aid subsidies and the tax expenditures through tax credits, the higher interest groups were still the net beneficiaries. This is not surprising because, disproportionately, that is from where the students are drawn, as I said earlier, because of the very strong impact of home, family, peer group and school on who goes on and who does not. If we were putting our money anywhere to change that, my bet is that we should be directing more funds to counteract or offset that strong social-cultural impact.
We also need to look at income redistribution in another way. We can look at who gets the subsidies now and who has the higher income in the future as a result of it. In that case, the transfer becomes even more regressive. That is as a result of that enhancement of income in future years.
Indeed, I think there is a major problem coming at us in the social area. As a result of the greater number of women participating in higher EDUCATION, a move which I applaud -- the participation rate among men and women is virtually equal -- and they are moving on to participate in the labour force, with the tendency for both partners to work, we are widening the income gap rather than narrowing it over time as a result of that.
This is a topic which has not been attended to very well. One reason is that the data are difficult to get. As far as I know, the most recent survey of post-secondary students in Canada was done in 1983-84. An economist from the University of Montreal conducted a study using that data for Quebec and found the same sort of results to which I have referred. He took into account the CEGEPs and the different system there.
This is one of those very high priorities for research. I was asked by the Council of Ontario Universities a few years ago to outline what would be involved in doing such a study, and I did so. Because of the difficulty and the cost to acquire data at that time, and because their agenda seemed to change, the study did not proceed.
However, I would encourage your committee to take account of that issue, the fact that all the studies indicate regressivity, but that we really have not done nearly as much work there as we have in other areas.
Senator Forest: I understood you to say that grants were not that big a help and yet this is a loan debt program which you are recommending.
Mr. Stager: That is right. Grants have become increasingly ineffective and inefficient. As I go back and read the literature and trace it through time up to four decades ago, there was more emphasis on student assistance programs that would give the student who otherwise would not go to university the opportunity to go. We even had the sense of a student pool from which to draw. A term of the time was "student wastage." The focus was on students who needed the assistance and who would not otherwise go to university. That focus has shifted to a simple income transfer. Low-income students receive a grant and the others do not. We have changed, I think without being aware of it, the focus, the rationale of our program. In that way, we have lost the sense of trying to identify students who would not go otherwise.
A number of studies, admittedly most of them from other jurisdictions than Canada, have indicated that there is a ratio of something in the order of one in four to one in ten. In other words, we are spending four times as much, or ten times as much, as we would need to get that additional student in who otherwise would not be there.
What I am talking about is a loan grant program. I think there is certainly the need, first, to assure the student that the financing is available. That is why I think the income contingent loan should be, if not universal -- and if I had my druthers it would be universal -- at least available much more widely than our current student assistance program. This would assure that the financing is there. If, in the individual case, something happens that they are not able to make repayment, then that amount will be picked up. In that sense, it is a deferred grant.
Senator Forest: I agree with the concept that students are concerned about future income and that determines, to a large extent, into which program they will enrol. I had a career at a university. I have seven children who have gone through the system, some in the humanities and some in the more lucrative professions. I have seen people with doctorates not able to get jobs. I see the arts and humanities as being very important. I am wondering what we can do to encourage students in the arts and humanities so that we will grow up with a well-balanced population, not one concerned just about the economic value of a degree.
Mr. Stager: I agree, senator. I would not suggest that, by any means, students make the decision to go for the highest income field. That is different from saying that they have a strong view about their income prospects. That is a major motivation. However, that is by comparison with not continuing past high school.
There is an important side remark to be made here, that is, in the earlier survey of university graduates, what emerged was that the group with the highest rate of job satisfaction were among the lowest income groups. I find that rather heart-warming. I think there was a sense that they knew what to expect. Perhaps, professionally, they could be philosophical about it. It indicates that students make choices because areas of study interest them, and they are rewarded in terms of exploring and discovering what they had expected or hoped to find, and that pays off in terms of their career.
I do not think that the emphasis on the economic returns has biased where students go. It may have biased more the encouragement they get from their parents: "Why don't you think about going into medicine?"
Senator Lavoie-Roux: In the third paragraph of the last page of your brief, you say they failed to recognize the theoretical and empirical evidence showing that tuition fee increases have little impact on enrolment. Do you have any studies to support this?
Mr. Stager: You may have arrived when I was talking about income redistribution and how little study there is on that. There are numerous studies on the relationship between tuition fees and enrolment. In fact, there has been done what is called meta-analysis, that is, taking all of these individual studies and trying to get a synthesis of the results.
The strong conclusion is that tuition fee has little impact on the numbers enrolled. That is not surprising. That is the empirical result, but the theoretical, the intuitive explanation, when you think about it, is fairly obvious.
First, fees are a small part of the total cost for students. There are the books, the supplies, and the room and board which need to be financed. Some students do take into account the forgone income: "Not being in the labour force, I am giving up that employment income." Fees are a small part of that total cost. If you change fees by 10 per cent, then the total cost may only be changed by 1 per cent or 2 per cent.
Second, as I said, students have predominantly, if you wish, an investment view of their EDUCATION. I know some people do not like the terminology, but they are there because of future payoff rather than current consumption. In that case, they are looking at the expected rate of return.
I did a simulation study, which I would be happy to provide, showing what would happen if we went anywhere from zero fees to triple the fees from the current level. The current level at that time, 1990, in Ontario was $2,000. It showed that you could triple the fee to $6,000, which would have only a small impact on that expected rate of return because there are so many other factors.
One of the strongest empirical outcomes is that the participation rate of full-time undergraduate university students in Ontario increased faster in the same period in which fees had their fastest rate of increase. This was during the latter part of the 1960s. Fees went to almost their all-time high in real terms in a few years.
First, the future income prospects were growing strongly. This was the growth period of the 1960s. The earnings differentials were increasing between university and high-school students. This was also the period of expansion of university places. I mention Ontario because we were looking at that part of the country, but we saw it all across Canada. The expansion of university places was important in getting students into higher EDUCATION, and not only the expansion in numbers of places but their location and spreading them around the various parts of the population. The same sort of thing happened in Quebec with respect to the University of Quebec.
Whether you look at the empirical, historical results or you reason it through intuitively, you come to the same conclusions.
Senator Lavoie-Roux: Could you give us the references in terms of studies?
Mr. Stager: Yes. As I said, I would be happy to pass on all the papers I have done, and they make reference to others. I would be most happy to communicate with your Clerk on any of those materials.
Senator Lavoie-Roux: The kind of money they will make seems to be a large consideration in terms of the kind of investment they will make when choosing a career. When did this change? When I went to university, I was hoping that afterwards I could get a job, but it never crossed my mind that if I were in philosophy I could earn so much and that if I were in medicine I could earn so much. We knew that you made more money in medicine than philosophy.
Mr. Stager: As I said, I was not suggesting that a student looked at a rank and said, "Medicine this, engineering this, and law this, and that is what I will pick." Thank goodness that does not happen or we would have problems.
I have always put it in terms of the person at high school graduation making a decision to go on, although that decision does not happen at that point. It has been shown that the decision to go beyond high school is formulated implicitly but fairly strongly along about Grades 8, 9, and 10. The die is pretty well set at that stage. Obviously, there are changes at the margin about which program, but the basic decision to go or not to go occurs at about that stage. I mentioned earlier the importance of getting information to students to help guide their decisions.
You said that when you went to university your concern was to get a job. That is the point. The students at the high school level, when asked about why they are thinking about going on or have just recently gone on, respond that it has to do with the employment area -- a more interesting job, a wider range of jobs, a better job, longer-term employment, all of those things which come back to what I call the work employment income complex or syndrome.
You have probably seen posters here and there indicating that if you think EDUCATION is expensive, consider the alternative. As a society and for individuals, that is one of the motivating factors. They know that it does not pay off to simply drop out at high school.
Senator Lavoie-Roux: The next paragraph in your brief deals with the concern about the mounting level of student debt which, unfortunately, has been greatly exaggerated and then reported by the media.
That is not what we have heard. Frankly, I feel quite concerned for them. They come out of university with $30,000 or $40,000 worth of debt. I would never have started on that course if I came out with $38,000 in debt. Why do you say it has been exaggerated? From what we heard, unless they did exaggerate, we got the feeling that student indebtedness was a major factor.
Mr. Stager: With great respect, senator, and I do mean that, we have touched on this matter. I will elaborate briefly, but I certainly would encourage you to look at the transcript as soon as it is available. I gave a fuller answer in my preceding remarks. I would be happy to give the answer again, but your colleagues may not be completely patient. I also mentioned Professor Ross Finney. Has he appeared?
Senator Lavoie-Roux: Yes.
Mr. Stager: He has excellent, recent studies on the experience with the Canada Student Loans Program with a great deal of useful data for you to consider.
It is understandable. Someone who has a particular point of view or position they want to advance will make the case as strongly as possible. The facts are not as reported so often in the press. The average indebtedness is not $25,000. Indeed, as I said, your Clerk has provided me with the transcripts of your meetings, and I found it useful to glance through them.
I noted that one of the officials from the Canada Student Loans Program said that they anticipate the average debt to be $25,000 by the next year. Although I was not surprised by anything else they said, I did note that and decided I must look into it. Frankly, I do not find it credible. I do not believe it and I would like to check with that official.
One-half of all students, in round numbers, do not have loans at all. One needs to distinguish between the average indebtedness across all students and between those students who graduate from a three- or four-year program versus those with a professional degree.
Again, Professor Finnie's data reinforces, happily, the material that I brought forth a number of years ago. The largest loans, not surprisingly, are for students who graduate from law, dentistry and medicine where there are more costly and longer programs. They also have a much greater potential for repayment. In a simulation program which I did, breaking out graduates by field of study and by gender, on average, those in the medical profession could repay a large loan, however defined, within five years.
By way of reference, this is for 1993 Canada employment income, the average male medical graduate, at age 34, had a $100,000 income. Out of an average $100,000 income, one can certainly repay a student debt of $20,000 or $30,000 over a fairly short time.
Frankly, I have a different concern. When I say this, I expect to see looks of horror. I am concerned that not enough students have borrowed or have not borrowed enough relative to their program and relative to means for repayment.
The Chairman: Thank you, Professor Stager.
We will hear now from the Canadian Federation of Students (Ontario), the Ontario Undergraduate Student Alliance, the Ontario Community College Student Parliamentary Association, and representatives of Wilfrid Laurier University Student Union.
Please proceed.
Ms Vicky Smallman, Chair, Canadian Federation of Students (Ontario): Honourable senators, our federation represents 110,000 students in the colleges and universities of Ontario at about 20 different institutions. It is difficult for us to condense everything we want to say into 10 minutes. It was difficult to condense our comments into an 11-page brief. I think I can speak for all the witnesses here when I say that we find it difficult, given the level of the crisis which we are facing in Post-Secondary education in Ontario right now, to capture it all and to give you a picture of what is happening and how it is affecting both the quality and accessibility of our EDUCATION in such a short period of time.
We condensed a 50-page paper that we prepared for our own provincial government into this 10-page brief.
The Chairman: Cut that 10-page brief down to a 10-minute talk now and do not waste any time telling us about it.
Ms Smallman: We just had to express that frustration at the difficulty of our situation. I hope you will indulge us.
Senator Forest: Rest assured, we will read the brief.
Ms Smallman: We titled our brief "Crisis in Progress -- The Attack on Accessibility of Ontario's Post-Secondary education System." Indeed, we do have a crisis in the system right now. It is a crisis which has many shapes, many facets. We have a crisis in funding which is taking place as a result of a decade of cuts from both federal and provincial governments. We have a crisis in the quality of our EDUCATION in that programs are being cancelled; courses are being cancelled. We have large class sizes.
Cuts in funding are definitely resulting in a drop in the quality of our EDUCATION at both colleges and universities. We also have a crisis in accessibility; I do have to take some issue with what Dr. Stager said. What needs to be focused on are not just participation rates, but who is participating in the post-secondary system.
Contrary to Dr. Stager's statements, we have a crisis in terms of student debt, and I will get to that a bit later. Students are presently bearing the brunt of the crisis in Post-Secondary education in Ontario but, in the long term, our province and our country as a whole will suffer from this erosion of quality and accessibility in our system and the massive amounts of debt that are being accrued by students. They will result in a loss in the economic, social and cultural health of our country.
I do not think we have to dwell at length on how bad the situation regarding cuts to funding really is. It is worse now as a result of the Harris government's unprecedented cuts to operating grants to universities and colleges, but that has been a result of the downloading of responsibility for paying for Post-Secondary education on to the provinces from the federal government. The CHST has made it very easy for governments, such as the Harris government, who do not hold Post-Secondary education in high regard, to pass on the cuts in a disproportionate way.
Unfortunately, the cuts in funding tend to be downloaded again by the universities and the colleges on to the backs of students who have been really suffering under some massive increases in tuition fees over the last few years. There is a link between the level of government funding and the tuition fees that are charged by institutions. We have to recognize that.
Dr. Stager, in some of his materials, has admitted that there is a connection between funding policies and tuition fee levels. We do not really have any other type of tuition fee policy in Ontario. What that means is that universities and colleges have been raising tuition fees to make up for a decline in funds.
Tuition fees in Ontario have risen 200 per cent since 1982-83, and 140 per cent in the last decade. The largest increases have been in recent years. Now we are getting into double digits per year. Last year, the increase was 20 per cent, the largest increase in the history of Ontario. This year, it is 10 per cent to 20 per cent, depending on your program.
We also have a trend toward the deregulation of fees. This is something that the universities and now the colleges have been requesting. What they have wanted is the ability to set tuition fee levels depending on the program. All of this is causing a certain crisis in accessibility because students are starting to make EDUCATIONal choices based on financial circumstances. The question is not just whether or not you go to university or college, and, indeed, finances do play a large role in that; the question is what do you take, can you afford to take a professional program and are you willing to risk the loans? Not all students are. I am not confident that low-income students will take the risk and amass that debt because they think they might be able to pay it back. Considering the current job crisis for young people, I think that that would be an overly optimistic view of things.
We cannot underestimate the relationship between the level of tuition fees and the ability to access Post-Secondary education. That is something upon which we elaborate in our brief.
Indebtedness is a part of that. Although tuition is not the only cost of Post-Secondary education, it certainly is the largest EDUCATION-related expense. Psychologically, it plays a big role in both the amount of the loan that a student will be willing to take out and in decisions about whether or not to continue.
While I would like to elaborate on the issue of student debt, I think we can probably wait until the question period. Our national association has presented you with a fairly good brief, and I would refer you to it, but we would be happy to answer questions about it.
Deregulation of tuition is another issue. The idea that universities and colleges can set tuition levels depending on the program and depending on some future projected income is something that we have become increasingly concerned with. I do not know if the other associations will touch on that subject as well.
We have a real problem with the idea that there should be different treatment of students depending on what program they decide to take. If Ontario does head toward a more deregulated system, it will be a test case for the rest of the country. That will result in inequities of access to certain programs. It will be a move toward a two-tiered system within our public system. We are not sure whether that is a really responsible move; it runs counter to the philosophy that many people in this country hold dear, which is that post-secondary EDUCATION should be universally accessible, that finances should not be a barrier to anyone wanting to get an EDUCATION, and that, indeed, EDUCATION is an investment, both by the individual and by the public as well.
We believe that the public does carry a certain amount of responsibility for funding Post-Secondary education. We do not really want to see a continuation of this trend towards individuals paying for the whole cost. That is not the kind of system that we would like to see. It is certainly not the kind of culture that I was brought up in, and I do not want to bring up my kids in that kind of culture, where it is completely individually driven, and where the idea is that Post-Secondary education does not have a role to play in the social and cultural health of our nation.
I urge senators to resist this type of move and to call for a reinvestment, not just in funding but in terms of policy priorities on the part of the federal government, to call for a return to some form of reason, and to see Post-Secondary education as an investment in many senses of the word, not just economically.
We did have a number of specific recommendations for the senators in terms of the role that the federal government can play. I would point in particular to a few of them.
A return to funding Post-Secondary education directly is one. Changes to the student aid system certainly are in order, and we can talk more about that later. We would also like to see the federal government working together with the provinces to establish some type of higher EDUCATION agreement, some set of common principles that we can all use to guide policy and funding for Post-Secondary education.
The Chairman: Thank you, Ms Smallman. Next, we will hear from Mr. Raptis.
Mr. George Raptis, Vice-President, Student Union, Wilfrid Laurier University, Ontario Undergraduate Student Alliance: Mr. Chairman, I will begin in French, if I may.
[Translation]
Thank you very much for seeing us today. We will be making our presentation in English, but please feel free to ask questions in English or in French. I will try to answer them as best I can.
[English]
Before we begin, Dr. Lorna Marsden, President and Vice-Chancellor of Wilfrid Laurier University and a former senator, has asked me to pass along her greetings and to reiterate the strong support for the work that you are all doing for what she says is not only the future of Post-Secondary education in Canada but also the future of Canada itself.
Mr. Rick Martin, Executive Director, Ontario Undergraduate Student Alliance: In setting out his principles for this review, Senator Bonnell stressed the importance of adequate public support for universities. The notion persists that private universities based on the American model represent an alternative to adequate public support. A few facts should help to dispel this myth.
Less than 4 per cent of American students attend schools where tuition reaches $20,000. The majority attend public universities. On average, private schools receive only 39 per cent of their funding from tuition fees. Most funding comes from endowment income and from government research grants. There is not a single, well-regarded university that relies primarily on tuition fees.
The average student at Harvard, Princeton or Yale now pays a lower proportion of the cost of instruction than students in Ontario universities pay. Those schools which charge high tuition are obliged to put a great deal of it into student aid. The average student at a private university in the U.S. now gets more than $5,000 a year in grants in addition to loans from state and federal governments. At Colombia University, the average grant last year was more than $14,000.
OUSA has never argued that university should be free. We believe that little can be said about accessibility without taking student aid into account, but with student debt loads now approaching $40,000 there is no doubt that access is seriously threatened. It is important, in this connection, to look not only at the number of people in school but also at who the people are.
Much has been said in recent years about the importance of lifelong learning and encouraging people to continue updating their skills throughout their careers. Statistics Canada has shown that there has been a steady decline in students over 30 attending university over the past 10 years. We are clearly losing this battle.
It is also important to realize that, while there has already been a very marked increase in student debt loads over the last few years, there is also a delayed impact of any tuition increase. It will take at least four years before we see debt loads from graduating students that reflect the changes to tuition that have already occurred.
Our top priority is basic reform to student aid to ensure that every qualified student can attend and to ensure that no one is asked to pay back more than he or she can afford. The current program design has many flaws. However, the main problem is the failure to distinguish between short-term and long-term need. We strongly believe that more subsidies should be targeted to students whose debt load or low income makes them necessary. Students and government have a common interest in directing subsidies to those who need them most. Despite improvements in both fairness and efficiency, income loans cannot change the fact that the more we charge in tuition the more we need to spend on student aid.
Senators have noted their concerns about infringing on provincial jurisdiction, yet rightly concluded that a federal presence in higher EDUCATION is needed. A better design and enriched student aid plan would be a perfect vehicle for improved federal support. No one could say that such a plan is too intrusive, but the government would know that funds intended for EDUCATION would not be diverted for other purposes, as has happened too often in the past. This would also help to improve student mobility across the country. As Dr. Stager has written, "universities have consistently held that protecting access is the government's role. If forced to choose, they will always try to protect quality, even at the expense of excluding many students."
In the current climate, one cannot propose any spending program without incurring a lecture about government debt. Let me assure you that today's students are well aware of government debt. We are also aware of who will have to pay the bill. We know that we have no chance of doing that without a high quality and accessible EDUCATION. The lack of support which has been shown in recent years for higher EDUCATION is, therefore, not a case of fiscal prudence but simple short-sightedness.
We are heartened by the work of this committee. We hope that it marks the beginning of a new commitment to higher EDUCATION. It has never been more needed than it is now.
Mr. Raptis: For years, universities have been encouraging support for Post-Secondary education from private and corporate sectors, given the dwindling support from provinces as well as Human Resources Development Canada. The importance of other funding sources to maintain, if not improve, the quality of research into EDUCATION has never been more important. What must be noted, however, is that the burden of Post-Secondary education funding from government should not be carried by one branch of government alone. The responsibility of a strong EDUCATION system for the future of Canada is important for all branches of government.
The unlimited benefits of Post-Secondary education to Canadian society need to be protected by related federal branches. For example, Industry Canada should be continually encouraged to fund various research incentives for post-secondary institutions. Another example would be the Department of Foreign Affairs and International Trade assisting universities in recruiting international students, as well as sponsoring student exchange programs; or Health Canada and its help in increasing investment into medical research and assisting students in achieving success in that area. These are only examples. Certainly, you can agree that supplemental investment in post-secondary EDUCATION from all areas of government is crucial for the maintenance of quality EDUCATION and research, as well as guaranteeing accessibility to those who qualify. Furthermore, a shared responsibility will assist Canadian students in helping Canada's already solid EDUCATION more on the global competitive markets.
I wanted to make a comment regarding the student debt load as mentioned by Dr. Stager, who referred to the figure of $25,000 and whether or not that is an average figure. Unfortunately, I do not have concrete proof in front of me, but I can give you one example, namely, me. By no means am I an extreme example. I have many peers at Wilfrid Laurier who have far more student debt than I do. I am in my fourth year of study now and for three of those years I had student assistance. My loans total $17,500 after three years. In dealing with the banks, as graduating students are beginning to do, we are looking at a rate of prime plus 2.5 per cent and monthly payments in some cases far greater than anyone can afford, namely, repayment schedules over 114 months or 9.5 years. Whether or not it is an average case, there are a large percentage of students who are facing these extreme debt loads. Upon my graduation, I will be facing payments of about $250 to $260 per month for about 10 years. That will have a serious impact on my standard of living after graduation.
I do not think many students know that when entering a post-secondary sphere. A lot of work must be done with respect to that area.
The Chairman: Thank you very much. Next, we will hear from the representatives of the Ontario Community College Student Parliamentary Association. Please proceed.
Mr. Steve Virtue, Central Region Vice-President, Ontario Community College Student Parliamentary Association: Mr. Chairman, thank you. I am the president of the Humber College Student Association in Etobicoke. With me today is Cynthia Hilliard, who is a former student body president.
We relish the opportunity, as we sit around the table, to express the views of a dynamic group of individuals and a group that I am not sure has been truly represented so far to date, specifically, the community college students of Ontario. We represent 140,000 students from across the province who share diversity, different from the university sector, something which I do not think can be argued.
I should like to touch upon two points that must be addressed. First, I should like to address the recent reports which state that Canada's investment in technology in trained personnel lag behind that of many other countries in the world; and, second the statement that the employability skills of those who are in the workforce must be increased. This panel, among others across the province in recent years, reinforces the fact that there must be a review of our Post-Secondary education system.
The philosophy of lifelong learning and an open, accessible EDUCATION system is vitally important to the students currently attending our colleges. All stakeholders need to embrace the idea of such an EDUCATIONal system. A seamless system will enable the colleges to remain flexible and to continue to accommodate those learners who may not be in colleges right now.
Initiatives such as the articulation agreements between secondary schools and colleges improve a student's chance to succeed. Articulation agreements between colleges and universities, for example, are becoming more popular with improved relations of overall concern with that of the student.
Barriers to credit transfer within institutions, and between institutions, continue to be of concern to students, but the trend is to remove those barriers and to focus on student success. Transferability forces the discussion of standards and raises the question of EDUCATIONal quality. A concern for the students of Ontario's colleges is that of the establishment of these standards.
OCCSPA raises the question surrounding the quality of EDUCATION. Who defines quality? What defines quality? How are the benchmarks of quality defined when there are no college standards?
It was noted by the Ontario Premier's Council on Economic Renewal that lifelong learning is the key link between our EDUCATIONal and economic strategies as we approach the 21st century.
There is a need for more EDUCATION as the economy moves from industrial-based to knowledge-based. Technologically mediated instruction is becoming increasingly more important and TMI should complement the traditional learning process, never replace it.
There are components such as classroom dynamics and one-on-one learning that students anticipate and must have in their classrooms. There is no argument that students should pay a portion of the cost of their EDUCATION. However, in light of the dramatic increases which Ms Smallman has duly noted, students fear much larger debt loads and decreases in quality of EDUCATION. Students require a new loan program that will meet their needs both beyond today and beyond 2000. Income contingent loan repayment plans, as Dr. Stager has pointed out, in principle represent the practical means of ensuring continued access to Post-Secondary education through loan flexibility.
OCCSPA feels that the government and financial institutions involved in student loans have an obligation to investigate the level of acceptable debt load. The acceptable debt level, as determined by most Canadian banks, is about 35 per cent of one's gross income. We have not determined yet the acceptable level of student debt load. There has been no significant research in that field.
Ontario college students feel that the colleges should be supported by the public so that the standards of Canadians are met. In the current economic climate, colleges are forced to explore other potential sources of revenue with which they have had only minimal success in recent years.
OCCSPA is concerned that, considering the relative youth of the college system and societal perceptions of it, colleges will not be able to compete in such a market. OCCSPA recognizes the very difficult situation that both our federal and provincial governments find themselves in, yet our association also recognizes the increased number of students and potential students in the 25 Ontario community colleges.
The colleges, with their focus on applied learning, represent an investment which the government cannot ignore. Colleges should gain recognition as an effective vehicle for economic recovery in our province. As of yet, the colleges have not received an enormous investment from taxpayers.
In the near future, decisions will be made that will affect the students in Ontario colleges. OCCSPA trusts that the government will maintain its commitment to the idea of lifelong learning, which will result in a quality of EDUCATION that is both accessible and affordable.
Like our Albertan counterparts, we urge the Senate to work with students, faculty, administrators and the provincial governments to ensure that we foster a viable Post-Secondary educational system truly worthy of our great country.
We are looking for an open dialogue. I would rather talk with you than to you. We would like to entertain any questions you may have. If you have further questions after we leave, feel free to contact us at our head office.
The Chairman: I wish to thank all the groups for their presentations.
Mr. Virtue, when the committee was in British Columbia, we learned that many college students got a university degree before going to college. Is that happening in Ontario as well?
Mr. Virtue: Absolutely. At Humber College, about 25 per cent of our first-year students are in one-year certificate programs. They are post-diploma programs through which university students are filtering back into the college system. It is a rapidly developing market. I am sure the same trend exists in British Columbia.
The Chairman: Are there many people who go to college first and then go to university?
Mr. Virtue: At the community college level, there are different dynamics. There are recent graduates from high school; there are people directly from university; and there are people who are getting back into the workforce. They may have worked for a number of years and are looking for retraining. Colleges are the best choice for retraining or upgrading skills. Unbeknownst to Mr. Martin, there is not much philosophy at the community college level, but there is some. There is a much broader EDUCATION available at the community college level than most people perceive. That is not to take away from the universities. There is certainly a dynamic of diversity between colleges and universities. I do not think anyone is saying that colleges are better or that universities are better. They should each be recognized for their strengths and their weaknesses.
The Chairman: Mr. Raptis, you mentioned that Senator Marsden sent her regards. Please relay our regards back to her.
[Translation]
Senator Lavoie-Roux: We do not often have an opportunity to put questions in French, particularly to students from the neighbouring province of Quebec. I think that all students who have appeared before us, regardless of their province of origin, were quite forceful in describing the problems represented by tuition fees and the debts they accumulate to acquire university degrees. I was quite surprised to hear Dr. Stager say that the problem was not all that serious. We have been hearing about this problem throughout Canada, in the Maritimes, in the West and in Central Canada. So if we could ask you, students, to reform colleges and universities, what would your priorities be?
[English]
If we asked students to reform colleges and universities, what would your priorities be? Also, do you have any say in the administration of colleges and universities?
Mr. Raptis: At Wilfrid Laurier we have been very fortunate. The students have many opportunities to meet with university administration on a variety of issues. Often, the university will ask students for their opinions on various issues. We have student representation on various senate subcommittees, as well as the board of governors subcommittees. The students who participate in those roles are quite active.
Much of our administration in the university is currently being turned over. Many people are retiring. A common question from the students to the hiring committees of the new administrators is with regard to the role of students. For example, it is not uncommon for students to have some involvement in the budgeting process or some sort of policy involvement. At Laurier, we are fortunate to have that type of opportunity.
With regard to some of our problems, we have many issues we would like remedied. Priorizing them depends on the students.
My priority is accessibility and encouraging various methods for students to finance their Post-Secondary education. It is true that students today are beginning to face decisions of whether or not they can attend a university that best suits their program by travelling the distance to attend that university or, for many people, whether they can afford to attend a university at all. From the university perspective, how do they maintain research and the quality of EDUCATION despite dwindling finances and despite the fact that Canada does not have the culture of private support as some of our American counterparts do? I see that as one of the main priorities in the future of post-secondary EDUCATION funding.
Senator Lavoie-Roux: If you were to reform Post-Secondary education, whether at the college or the university level, what would be your priority in terms of vision? We are aware of the debt problem.
Ms Cynthia Hilliard, Executive Director, Ontario Community College Student Parliamentary Association: I am a college graduate. I have two hospitality diplomas from Sir Sandford Fleming in Peterborough. In order to start on a discussion like this, we need some answers first, and we raise some issues in our submission.
Access and affordability are definitely priorities. There needs to be a discussion and standards set on how to define "access." In the college system, of the people who apply to college, 61 per cent accept the acceptances that are issued. We question whether that is an acceptable level of acceptances. Is that where we want to be? If it is, that is fine, but we must answer these questions.
When we talk about fees and funding, the level of funding currently in the college system has resulted in a decrease in many things, including services. Counselling and placement services are being cut back, and these are services which the students feel are vital to their success and their programs. Of course, the main goal when you go to college is to get a job after you graduate.
With services being cut, we need to look at funding. When you talk about funding, you end up in a discussion about tuition fees which result in debt load. Therefore, that discussion cannot be avoided.
We have outlined in our paper that we need a definition of the acceptable level of student debt. At what point in time do we say that graduates from the college system are no longer able to contribute to our economy as we would like to see them contribute? We are not doing that research. Frankly, we could be in a situation 10 or 15 years from now where our students are not actively contributing to the economy. We are caught in a spiral because their debt loads are so high and are out of control because no one has taken the time to do the research and the planning in order to say, "This is where we want to be. This is where we are. These will be the results of where we are going if we do not change where we are now." The funding issue is part of it.
In considering revamping the entire college system, funding is an issue. Putting funding aside and pretending that we have all the money in the world, there have to be services. We need to define exactly what services we would like. The services we are seeing being diminished in the college system would be placement and career counselling, services that need to be established.
We also need system-wide college standards for programs in order to facilitate transferability within the institution, within the college system, and within the post-secondary arena, period. That seems to be our greatest challenge. We do not have standards, so how can we easily facilitate transferability?
We need a loans program which is more responsive to students' needs or, more specifically, graduates' needs. We talk about students' needs with the loans program, but the bottom line is that it is graduates who deal with the loan afterwards. We indicate in our paper that we do not feel that student loans cover the real costs of today.
Ms Smallman mentioned that we are looking at fee deregulation. We have a huge problem with that. How will the loans program be responsive to that? As well, ancillary fees are being increased at a dramatic rate. What is happening in the college system is unbelievable as far as the different fees and the fact that they vary from college to college. There is no consistency. Is the loans program responsive to that? I would say "no."
Much research needs to be done in this area. There is no research. In Ontario, the government has passed the buck and is not doing the research. I admire what Dr. Stager has done as far as research into Post-Secondary education is concerned; however, it is a little short-sighted because it does not include the college system. Approximately 1 million people are in the college system in any given year. We have 25 colleges and 200 locations. Therefore, it is a big deal.
Senator Lavoie-Roux: After coming out of university with a degree, even in engineering or commerce, it is difficult to find a job. Doctors still seem to escape that, but I do not know how long that will last. Do you feel that our colleges and universities are making enough effort to build bridges between their own institutions and the labour market?
Ms Hilliard: Mr. Virtue could talk about that because he has more examples at the local level.
Senator Lavoie-Roux: I do not know if more effort put in that direction would help you as you come out.
Mr. Virtue: Provincially, there is no incentive for the colleges to work among themselves, or to work with the universities, or to work with the private sector, other than the fact that there is a decrease in the amount of funding. It seems to be a sort of backwards-ended administrative fiasco at times with the universities and colleges having to go out and scramble for that type of work.
Humber College has a great association with many universities across Ontario. For example, Humber has set some unprecedented standards in trying to establish links between colleges and the private sector. I cannot speak for the universities because I do not really know. We have an institute which teaches wireless telecommunications and we have some of the best technology in Canada, but it is not accessible to the average student. That is a big problem in our sector. The students come from private industry, if you can classify them as students. This is a system set up by the colleges whereby the private sector can use the facilities and have Humber College's name on it, but there is no specific student because the tuition fees are in the neighbourhood of $6,000 to $10,000. The fee-for-service programming will price the student right out of the market.
Ms Smallman: The crisis in funding has led colleges and universities both to look to the private sector for sources of funding. It is not necessarily to look to the private sector to try to improve the quality of their programs to help their students get jobs down the road; it is to get money for the institution. It is being done in a haphazard manner without considering questions of quality and accessibility and without looking at the future of the Post-Secondary education system in a long-term sense.
My answer to your previous question was that we must have a long-term view and not create priorities based on short-term crisis situations.
Institutions are sort of making deals with the devil that often benefit the corporations much more than they do the students or even the institutions themselves. Much of that is being caused by a lack of public funding. It is not helping.
Cuts in funding have also led universities and colleges to slash their placement and career counselling services, as well as the resources that are provided to students to help them find jobs afterward. Some are being offered on a fee-for-service basis, which means that students end up paying more money. It is, again, a short-term, crisis-driven vision of the role of post-secondary EDUCATION and the services provided.
Senator Forest: I appreciate Mr. Martin's point that students know who will pay for the debt and that you need a good EDUCATION to pay for it. I think that is a message we need to get out.
I think the idea of student reps on subcommittees is great. At the University of Alberta, students and graduate students are on every committee. I think students should be lobbying for that.
With respect to loans, Dr. Stager's figures may be right, but perception is the reality. If students feel they are overwhelmed by a debt load, that is a crisis for them, whether in terms of absolute dollars or not.
Professor Stager's recommendation on the loan was based on the student's ability to pay. Is that a preferable way to go? He also talked about merging the student loans from provinces and the federal government so that there is but one loan.
Ms Hilliard: They are being merged this year. With respect to the loan program, Ontario is the last to come on line. The details will be out very shortly on what that means. That is a reality.
Ms Smallman: There are two issues. There is the issue of how a loan is repaid, but there is also an issue of how much you owe. The question we all want to ask is: How much is enough? Are we not borrowing enough already?
I take issue with Dr. Stager's figures. The average loan per year in Ontario is over $6,000; it is approximately $6,400. If you average that loan amount over for four years, that is a $25,000 debt right there. That is where we get our figures. They are from the current averages. This does not even count the extra amount we will have to borrow to take into consideration the increases in tuition over the next few years.
That is just for a four-year degree. If you add a couple years of grad school, or if you, God forbid, like me decide to do a Ph.D. and are in school a long time, then you are talking about a massive amount of debt. That amount accrues over time.
The problem that the federation has identified with ICRP is that it does not incorporate interest relief. It is great if you make a lot of money because you can pay it off in a short period of time. If you are paying it off over a long period of time, such as 25 years, then it actually discriminates against those low- to middle-income people.
Senator Forrestall: Because of the interest.
Ms Smallman: Right. We would like to see something that will help people access EDUCATION from the front end and not have deferred grants that they might receive later.
We can talk about many thing in the reform of the loan system. It is a big and complex issue; there is not one panacea.
Mr. Martin: The essential principle involved in income contingent loans is valid and extremely important. Clearly, we must take some account of students' long-term income. It seems to us a basic flaw with the program that needs assessments are done only at a single moment in time. The question of how much aid and how much subsidy a student receives will depend often on some very tenuous calculations about what they can afford at the time they first apply for the loan. If you want a system that is either fair or efficient, you need to look at their circumstances over the long term. We do not see a way of doing that which does not take some account of income.
There are various ways in which a program could be sensitive to income. We would not support all of them. Ms Smallman mentioned that one version of an income-contingent plan would lead to a situation in which those with low incomes would simply have their payments stretched out over such a long period that they end up paying much more for their EDUCATION as a result. Clearly, we do not support that.
On the other hand, it is possible to set up an income contingent loan plan where that does not happen. One way of doing it -- and I am not wedded to this particular method -- comes from Australia where interest rates on payments are -- et below the rate of inflation. The longer it takes you to pay back your loan for those with low incomes, the less it will cost you in real terms. That is just one example of the kinds of things that can be done to ensure that subsidies go to the people who need them.
Senator Forest: It would not be an incentive to pay the loan back.
Mr. Martin: This is an important issue. It would be possible to set up a loan program which had perverse incentives. I can imagine a situation in which someone reached a point where, given that there were appropriate limits on how much of one's income one had to pay, someone might say, "My debt load is high enough that I will never be able to pay it all back. Therefore, I have no reason to worry if it gets any higher." I can imagine a situation in which that would happen, but there are also ways of preventing that from happening.
Senator DeWare: All across Canada we have been hearing from students about funding, programs, larger classes, programs being cancelled, mobility, national standards and student loans.
I have a question for Ms Smallman who mentioned accessibility. I would like her to expand on that.
Ms Smallman: We are seeing an increased cost to EDUCATION. It is true that enrolment has not changed. There has not been a decrease in enrolment despite an increase in fees, but there has been a decrease in the number of applications. We are seeing that access for people who we feel need EDUCATION the most is being limited because of the pure sticker shock of high tuition and massive debt. We do not see an increase in the number of aboriginal students. In Ontario, that is clear. Francophone students do not have a high participation rate mostly because their programs are being cut at l'Université Laurentienne and the Francophone colleges such as College du Vieux Montréal. Access to their programs is really having an effect.
No loan program will solve the problems for these people. The problems are at the front end.
Senator DeWare: I have to agree with you when you say "crisis" because that is what we are hearing, and something must be done to address it.
One of the banks which extends student loans came to see me the other day. They had a concern about colleges and accreditation. With our new EI bill and the government making agreements with the provinces to deal with training, they are concerned about small companies popping up all over the country wanting access to these training program and not dealing with the community colleges respectively. They are very concerned, and I am concerned as well.
I used to be Minister of Community Colleges for the province of New Brunswick, so I am aware of what he was talking about. If an accreditation system is not set up so that these people become accredited and the students are asked for a loan, who is the loser? The student is on a year-and-a-half program, and the company falls by the wayside. We know that colleges are governed by the provinces. There is a problem that really must be addressed in that area with the college program.
Everything you have said today has been recorded. We are able to access those briefs so we can go through your statements again to ensure that we are on the right track.
I should like to commend all of you because, since January, we have been hearing similar presentations. Each one brings an important issue to us. There is a crisis involving student loans. I cannot imagine coming out of university with a $40,000 debt and deciding to marry a friend from university who has a $35,000 debt.
Ms Smallman: One ought to forget about buying a house.
Senator DeWare: The bank would not loan you any money.
The Chairman: Thank you all.
Our next witness is Ms Bonnie Patterson from the Council of Ontario Universities.
Please proceed.
Ms Bonnie Patterson, President, Council of Ontario Universities: Let me introduce my colleague who has joined me today, Mr. David Lyon, who is the head of our research analysis and policy unit at the Council of Ontario Universities.
We represent publicly funded universities in the Province of Ontario. We not only conduct research and general communication programs on behalf of our institutions, but we are an advocacy and service organization for collaborative activity.
Universities must be able to provide a vibrant environment that is adequately resourced to ensure that quality and innovation remain the cornerstones of our activities. The work the committee is doing today is very important as a contribution to that goal.
I will talk about three things today. First, I will quickly review some recent developments that are important and should be front of mind; second, provide an overview of the state of Ontario universities which will help you position this province in your national agenda; and, third, speak to a strategy of action where we believe you can be very helpful.
Ontario's universities reacted very positively to the recent federal government budget which identified investments in students, in university research and university infrastructure as key priorities. Those types of investments are on exactly the right track.
The federal government found a good balance among the requirement of public support for EDUCATION, the need to reinvest in our research enterprise and the creation of incentives for students to invest in themselves. The actions to expand the value and definition of eligible EDUCATION tax credits, a more generous repayment schedule for student loans, and an increase to the contribution limits of registered EDUCATIONal savings plans are good starts and good news for our students, but let me emphasize that they are starts. We are also pleased to see that the federal government will be negotiating with the provinces toward national income-based loan repayment programs for students that can be reflective of provincial interests.
The new moneys for the creation of the Canada Foundation for Innovation along with the extension of the Canada Infrastructure Works Program are indeed positive beginnings to improve our universities' research infrastructure. This much-needed investment will pay dividends across an entire range of intellectual, social, cultural and economic outcomes of university research and teaching.
We are encouraged that not just in Canada but virtually around the world there is a reawakening to the importance of EDUCATION. We have seen it in the recent U. S. budget; we have seen it, as mentioned, in the federal budget; and we are certainly hopeful that the Government of Ontario will very soon ensure that Post-Secondary education, our universities and our students will not be left behind as this reinvestment occurs generally.
Thanks to the recent excellent report of an Ontario government-appointed advisory panel on the future directions for Post-Secondary education, we believe that Ontario now has a blueprint for making such a reinvestment.
This advisory panel's report, entitled "Excellence Accessibility Responsibility", contained 18 key recommendations for higher EDUCATION in Ontario. I will not go through them, however I will highlight the blueprints.
The Council of Ontario Universities endorses this direction as it is set out in the report. Further, we are encouraging our government to make that the framework for policy direction in the future and to work with the COU toward rapid implementation of the directions identified in the report.
Priority in implementation should be given to critically important strategic directions that were identified. That will allow publicly funded universities to make their full contribution to the social, cultural and economic development of the province, to research and innovation so critical to our national future and to technology transfer.
The four cornerstones are, first, benchmarking the provincial government grant for teaching and research to the average of the other nine provinces and to grants at comparable publicly funded universities in the United States.
Second, we want to ensure that Ontario universities have the resources to be competitive in research with comparable publicly funded universities in North America.
Third, we believe there should be continuing deregulation so that boards of governors of institutions are accountable and responsible for the decisions they make and are free to set tuition fees at levels they regard as appropriate and responsible, program by program, as laid out in the report.
Renewing students assistance is the fourth pillar, programs to address not only student debt loads, but having some kind of program where the repayment on government loans is reflective of students' income after graduation and, importantly, by instituting grants for students with special needs along the way.
We would underscore the final recommendation, to reform student aid. Federal and provincial governments must continue to see this value as an investment. The continuation of a strong, flexible and accessible student aid program is a key component of ensuring that Canada continues to promote access to our institutions, along with student mobility among its post-secondary institutions.
Student mobility is critical to broadening our students' understanding of our nation and ensuring that they can maximize their societal contribution through the pursuit of studies at institutions and in programs of their choice.
Within the context of these directions, we wish to provide a brief overview of the state of universities in Ontario so that members of the committee can understand the urgency of the situation in our province in a national context.
First, over the last year, we have been dealing with a 15-per-cent rposttion to our operating grants in Ontario. This $280 million rposttion was, according to the policy document "The Common Sense Revolution", the full cut to be levied at universities. The immediate effect of this cut was to plunge Ontario universities to tenth out of ten places among provinces on the funding scale. Ontario universities are now the worst funded institutions per capita in the country.
The Ontario Minister of EDUCATION and Training has announced a freeze in operating grants for 1997-98 at the previous year's level. This decision to freeze grants cannot be viewed as a resolution, however, but rather as a necessary first step. The level of funding we believe must be redressed in Ontario if we are to ensure that our university system, which can also boast one of the highest participation rates in the world, does not deteriorate further.
Our dismal university climate in Ontario is characterized by incurring operating deficits. We now have 15 of 17 Ontario universities in a deficit position. We have a loss of personnel at a time when enrolment expansion has been occurring. We have an erosion of research capability. We have a physical deterioration of our capital infrastructure. All of these factors contribute to undermining the strength of our universities which in turn undermines the capacity of the nation.
Related to our operating deficits, all told, our universities are having to adjust to a 25 per cent rposttion in operating grants over the last five years. Universities are attempting to adjust to this funding reality as quickly as possible and to manage it responsibly from a financial recovery point of view.
Let us be clear: We are mortgaging our future in order to meet fiscal imperatives of today. Let me highlight just a couple of areas where we see the most chronic conditions.
With respect to the loss of personnel, we know that excellence in innovation in university research, in the teaching and programs that we deliver and the services provided are the direct outcomes of high quality staff and faculty in our institutions. In recent years, funding rposttions have necessitated the introduction of early exit programs as a cost-saving measure. We are losing people at our universities and, since 1990, the full-time faculty complement of our Ontario universities has shrunk by over 1,000 people and over 1,100 people on the full-time non-academic staff side.
This loss of personnel has been incurred despite a full-time enrolment growth since 1990 of over 8,000 students. These figures do not include 1996 when we know we are literally in the hundreds of additional losses. We have many examples if you are interested.
The long-term impact of downsizing our universities is even more troublesome. Those leaving are the most experienced and best positioned to be competitive nationally and internationally. Currently, the universities have less and less capacity to attract talented faculty to replace those who have departed. The loss of our prominent academics, our scientists and so on, along with the deteriorating capacity to replace faculty can be devastating for our institutions in terms of the viability and quality of our programs.
Regarding the erosion of research capability and competitiveness, we know that research and scholarly activity form the foundation for teaching and learning. They are major contributors to our province's intellectual, cultural, social and economic development. We are concerned that that capacity to contribute is being blunted.
Our organization recently released a report -- which we have left with your clerk today -- entitled, "The Impact of Provincial Policies on University Research: A Comparative Study of Selected Canadian Provinces." It was a comparative study of selected Canadian provinces. It highlights that Ontario universities' research capacity has deteriorated because of the lack of an explicit and coordinated provincial government policy and adequate financial support for research. Moreover, our expenditure rposttions, starting back in 1992-93, have accelerated that deterioration.
The report demonstrates that British Columbia, Alberta and Quebec, as examples, have expanded their share of both federal research funding and Ph.D.s granted while Ontario's share has declined. These other provinces have fully developed and cohesive policies at the provincial level for research and Ontario has none. A deteriorating research capacity has an impact on Ontario universities' ability to attract and retain the very best faculty from an internationally competitive marketplace.
Members of the subcommittee should also note that we are not just losing faculty to the United States and Europe, but, as a province, we are losing people from our province to other provinces across this country.
Regarding the physical deterioration of our university infrastructure, in just a few words, we have little capacity to deal with the cost of deferred maintenance of our physical infrastructure. The largest proportion of our buildings in our province were built between 1960 and 1970, making the average building now close to 30 years old. We may not want to worry, in some sense, about our physical infrastructure, but the age of that infrastructure requires constant updating and regeneration.
An estimated cost of deferred maintenance that was done for us in 1993 was $522 million. That same study indicated that costs rise between $60 million and $80 million annually. Within our province, we have an allocation in the order of $15 million for deferred maintenance each year. That is a large gap, but what we can do about it?
The third element to which I would like to address my remarks today is a strategy for action. Ontario universities are heartened by the range and focus of the advisory panel's recommendation in our province. The report advises that the basic structure of Ontario's post-secondary sector is sound and that there is no need to impose a grand new design.
It goes on to say, however, that there are clear signs that the post-secondary sector is under pressure. The panel was convinced that without significant change in the way the sector is evolving and resourced, its quality and accessibility will be undermined along with institutional capability to deliver the broad range of programs and the high calibre of research and EDUCATION that will be needed in the future.
We believe they have got it right. As a framework, it is a way of moving forward. First, the panel recommends increased funding to the post-secondary sector through general operating support. The panel saw that funding for Ontario universities on a per capita basis is tenth out of ten among the provinces, and that is unacceptable. The panel recommended that it be an explicit government goal to raise the funding support to the national average over several years.
Second, the panel recommended that the government develop a comprehensive research policy for the province of Ontario, and that obviously must be complementary to what is done at the federal level.
Along with this policy is the need to fund more generously the research infrastructure of our universities. The federal government's reinvestment in infrastructure, through the extension of the Canada Infrastructure Works Program, along with a newly created Canada Foundation for Innovation, could generate very positive results for Ontario universities.
Yet we do need the commitment of our government to ensure that Ontario's universities can fully participate in these new programs and benefit from them. The full participation of Ontario is critical to the success of these federally initiated reinvestment programs. It would be counterproductive to have 40 per cent of the research capability of this country sidelined because of provincial inaction.
Third, the panel recommended that substantially greater flexibility is needed for universities to set tuition fee levels across a range of programs. We want to dispel today, here and now, a commonly held belief that tuition fee increases have offset government cuts. They have not. It is not the case. To offset the level of cuts endured by universities, we would have had to increase tuition fees yet again by 27 per cent -- not a desirable action from our perspective.
Our universities have had to adjust to an environment of fewer resources at the expense of quality and at the expense of innovation in a time when there is greater demand for access to our institutions.
Fourth, the panel recommended that the government reform student assistance in Ontario. It recommended that an income-based loan repayment plan be introduced that would be helpful to students. Moreover, it recommended that such a plan should be delivered as a joint federal-provincial student assistance plan administered through the tax system.
Specifically addressing the federal agenda for action, first let me draw your attention as senators to a federal government initiative around copyright reform. That is legislation encompassed in Bill C-32. The bill as it stands, we believe, should not be passed. We urge members of the Senate to amend the bill to remove unreasonable restrictions on a number of EDUCATION, library and broadcasting exceptions, and the restrictions on the importation of books, including used textbooks. We hold that the bill in its current form provides significantly fewer rights for Canadian learners, researchers, libraries, and educators than are enjoyed by counterparts in the United States, Australia and the United Kingdom.
The federal role in higher EDUCATION has historically been to truly cost share Post-Secondary education with the provinces. Since the elimination of EPF transfers and the introduction of the Canada Health and Social Transfers in 1996-97, the value of the federal government's support for post-secondary EDUCATION has declined even further.
Second, the federal government can help Ontario achieve funding to the national average by reinvesting in Post-Secondary education through more generous and, indeed, targeted transfers to the province. Not only can the federal government support greater expenditures on a per capita or per student basis, it can and should provide greater direct support of the research enterprise in Ontario and our national universities through its federal granting councils.
It is already an acknowledged fact that successful economies and societies of the future will be those that have strong knowledge-intensive industries. Ontario is an engine of growth and prosperity for the country, not only economically but socially and culturally. Sustainable prosperity, in all its dimensions, however, will depend on our continued ability to pursue research, basic and applied, in sciences and technology, as well as in the humanities and in the social sciences.
We applaud the federal government on its Canada Foundation for Innovation initiative and we see this as a beginning of our country's investment in the future. We urge the Senate subcommittee to ensure that this momentum is maintained and, indeed, enhanced in future federal government decisions.
Last but not least, our universities must maintain affordable access for our students. We have called, and will continue to press, for reform of the student aid plan in Ontario. The federal government can help accelerate that reform. We believe that the Ontario government sincerely wants to introduce an effective, income-contingent loans program and do it immediately, and we seek the federal government's specific commitment for a design for 1997. The Minister of Finance signalled his wish to cooperate with the provinces, and we are interested in pursuing a plan.
Enabling and encouraging students to invest in their own EDUCATION and their future is the right thing to do. Enabling and encouraging students to fulfil their financial obligations responsibly is also the right thing to do. However, our students need help, the type of help that only the federal and Ontario governments can design and deliver together, and that is the right thing to do.
There are students who will need more than student loans, and we hope that both the federal and Ontario governments can find the capacity to keep university accessible and within the reach of all students, particularly those with high needs.
We thank you for giving us the time today to make this presentation and to respond to your questions. We thank you very sincerely for taking up this incredibly important initiative.
Senator Lavoie-Roux: Thank you for your presentation. I must say, apart from having situated it in the context of the Ontario government, it is not much different from briefs we have heard from other universities.
I am a bit surprised when you say that the measures put forward in the last budget for the students are good starts and good news. They may be good news, but not for the students of today and tomorrow. They may be for the students the day after tomorrow, because for registered savings plans, you have to accumulate it on a long-term basis. The only thing that could be applied right away is giving a longer period of time to repay the loan. The rest does not do much to change the situation for students.
I am a bit worried about what kind of recommendations we can make. Universities say the governments are cutting too much, which is threatening the quality of EDUCATION and preventing accessibility to students. We have heard all those things during the months we have studied this issue. We have listened to many witnesses.
Let us forget the students for a while. Have the universities themselves done everything they can to rposte their costs? Have you collaborated as much as possible with other universities or colleges? We would all like to have more money, and I wish the government could give you more money. If it were a situation only in Ontario, I could see something being wrong, but the situation is the same all over the country. Could the federal government increase its transfer payments to the provinces to make it easier for the provinces and for the Post-Secondary education? I do not think there is much space for government to move. We all feel bad about the situation, but what realistic recommendations can we make? Perhaps my colleagues have the answers in the back of their minds, but I find it more and more difficult as I listen to more and more representations from the universities and the students.
Are you saying that you have done all your share and you cannot do any more, that it is now time for the government to act? The government keeps telling us -- and I believe it is true to a large extent -- that it is hard pressed to rposte the deficit and cut its expenses. What is the solution?
Ms Patterson: You have certainly pointed out the complexity of the situation. We see this very clearly as a partnership model. It will take all of us doing our very best in terms of best practices within our institutions and across our institutions but also some best practices from a government point of view.
One of the reasons we focused on student aid reform items was to get a context for moving forward while addressing today as well. When we think about student aid reform, we are very clearly talking about three dimensions of student aid reform: first, the part of the life cycle of students and adult learners that comes prior to study; second, the part during study; and third, the latter part, which is post-study. We have to address each of those components of the life cycle.
Many of the tax measures and reforms in the last federal budget did indeed focus on pre-study, so it is moving ahead, addressing the potential for future generations of students. In that sense, I think it is a laudatory set of decisions.
There were some modest measures and a signal for an important one for our province -- and, we believe, in time to other provinces -- which addressed the issue of students who are in programs of study. First, there are some tax issues for the students who are studying. If they have not used the tax rewards that they have, they can accumulate them and use them as they move into earned income of more substance. You can say that that is a small and fair adjustment.
The signal that the federal government will entertain arrangements with provinces for income-based loan schemes of various types is an important one for us. It is important to build hope for students as they think about investing in themselves and families think about investing in students as they think about going into institutions. Where there is no hope, the student walks away and says, "I will not enter that in the first place." Yet, we know that the nature of jobs achieved by university and college graduates and the robustness of their jobs and their earnings over a lifetime give them an advantage having pursued higher EDUCATION.
In terms of post-study, we believe that an important element will be the reform of not only the repayment program, but also, for example, the Ontario Students Assistance Program which deals with grants for the particular needs of students. We know there are differences in loan defaults between college, university and private vocational students. In some sense, we believe that the colleges and universities are doing a good job in terms of student responsiveness. However, they have some way to go.
We do not have it all right, but we need to think about those three components of the life cycle of a student in and out of EDUCATION and see what we can do best for each part of the cycle.
Are we doing what we can do in terms of rposting costs? One of the roles we play as an association is to look at opportunities for collaboration. There has been greater involvement in collaborative activity over the last few years than ever before, both administratively and from an academic programming point of view in our province. That is our commitment, namely, to find the right collaboration or partnership with the private sector, the public sector, and other members of the post-secondary sector in delivering EDUCATION. We continue to work along that path.
For example, we have set up within our province a new task force on innovation and collaboration. We are studying, in three areas, the feasibility of even further collaborative activity beyond what exits now. They are interesting areas concerning the needs assessment of students in terms of processing student aid in a more efficient and effective way. We are looking at innovations and creating virtual library access so that the $60 million of investment in serials acquisitions across all of our universities can benefit all students in the province through accessibility. We are also looking at the opportunity for digitizing library materials. There are quite a number of examples.
We have set up something called the College University Consortia Council. Over this past year, we saw more than 45 applications from colleges and universities in our own province to mount collaborative initiatives to build clear articulation programs between colleges and universities. The resources we have to do that allowed approximately 14 or 15 of those initiatives to be supported. There is clear interest and a drive to ensure that the right flexibility exists across the post-secondary sector.
I think that can occur as well from province to province. You will see initiatives -- I am sure you have heard about many -- between colleges and universities, universities and universities, colleges and colleges and across the country, not just limited by province and jurisdiction.
As colleges and universities, the challenge we face as we look at ourselves in our province is that of all the transfer recipients -- we are tenth out of ten. As we look at our transfer partners, above all, we have been hit the hardest. We are not anywhere near the national average.
Do I believe that government should still be doing something? Yes, I do. If the national average is the benchmark we are using for transfer recipients, then why not use it for colleges and universities as well?
Senator Forest: My colleague is correct in that we have heard the concerns of colleges and universities all across the country, but I believe that Ontario presents the bleakest picture. There is no doubt about that. To hear that Ontario is at the bottom of the list is a real shock to me because it used to be relatively well funded.
I am glad you see the federal initiatives as valuable first measures, head starts, or whatever, because even the federal Minister of Finance admitted that is what it was, namely, a modest first start. With the reports I am reading about the deficit and the way it is going down, I am hoping there will be more money for EDUCATION.
The Chairman: What is your question?
Senator Lavoie-Roux: She is lauding the government.
Senator Forest: No, I think it is fair game.
My question concerns Bill C-32. This morning I received a real concern from the chancellor of the university who succeeded me who said that the initial balance contained in the bill had been vastly distorted. That is a bill we will have to deal with very soon in the Senate. His assessment is that the balance -- which, as someone said, made no one happy but still seemed to be a relatively decent balance -- has now shifted in favour of the creators rather than the users. Can we have a quick answer on that?
Ms Patterson: We believe the balance has been lost. We have been very supportive previously of this initiative, as have our provincial counterparts.
I have one simple example. Think of the impact on student debt by eliminating the ability to sell used textbooks. Used textbooks alone are a life stream for many students in seeking their studies. That is a simple example, but it brings home the imbalance that is now present in the bill.
Senator DeWare: Is there a possibility that they would not allow a copy machine in a library when there is only one book available for a class of 100 students?
Senator Forest: Copying is allowed for research, is it not?
Senator Lavoie-Roux: If one can copy books, there should be copyrights on them.
Ms Patterson: It depends on the use of the materials. That is the issue.
Senator Forest: Yes, and whether or not it is for private research.
Senator DeWare: I want to speak about harmonization on the two loans. The students have agreed -- and I think we also agree -- that it is so cumbersome today that sometimes over a four-year program you have 16 different documents and about 16 different interest rates. Doing income tax is bad enough for us without coping with something like that.
We must somehow make it simpler for students all across Canada to get loans. We must look seriously at the government somehow making a bigger contribution to the students. Also, there should be a start-up incentive for students who want to go to university. Right now, it looks as if we are putting up barriers. They are our future; EDUCATION is our future. I know you agree with that because you are in the system. We seem to be falling down seriously in this country in that area, and we must deal with it.
The Association of Universities and Colleges in Canada appeared before our committee. They reflected the same things that you are reflecting today. As well, the researchers are very concerned about what has happened with research in their universities. Since they do not have adequate funds, professors who should be doing research also must share teaching duties. Also, class sizes are bigger. This has minimized their time to do proper research. They also say that today they cannot offer young Ph.D.s positions to help in universities because funds are not available. I hate to use the term "brain drain," but we are losing them to the United States and other countries. Somehow we have to put the brakes on and make a plan for where Canada will go from here.
Ms Patterson: I agree with what you have said and I will give you a couple of anecdotal examples.
At one of our institutions, we have a well-funded research chair in telecommunications, which is an evolving, burgeoning field. Three attempts have been made to attract three of the very top people into that role. Not one would come into the province. We have not been able to fill that chair. There was recently a faculty position in biotechnology, which 10 people turned down.
Where is the hope for the future?
Senator DeWare: Why are they turning down those offers?
Ms Patterson: We understand that it is not the pay rate in these particular cases; it is not the dollars to support the position. A young researcher and academic looks at their future 10 years of inquiry. What will be out there for them in 10 years to encourage them to invest in the province of Ontario now? They see more hope elsewhere and they are moving there. We are losing some of our top scientists to the United kingdom, where we have not lost people to in the past, and to private institutions in the United States. It is the hope for the future.
Senator DeWare: It is interesting that the Department of Immigration is bringing in people from offshore to fill technical positions. We should be training for those positions.
The Chairman: Thank you, Ms Patterson, for your paper. We would like to ask you more questions, but our time is up.
We will now hear from the Ontario Federation of University Faculty Associations.
Mr. Michael Piva, President, Ontario Confederation of University Faculty Associations: Thank you, Mr. Chairman. With me is Donna Gray, a professional officer on staff with the confederation. We represent 11,000 professors and academic librarians in the province of Ontario.
We welcome this opportunity to meet with you, senators, and to discuss the situation of Post-Secondary education in the province. This inquiry could not have been more timely.
We will try to address the federal responsibilities, as we see them, to Post-Secondary education in the province. Historically, these have been in three areas: to provide transfers to the province in support of post-secondary EDUCATION through the Established Programs Financing; to fund basic and applied research through both the federal granting councils and other federal programs; and to provide financial assistance to students through the Canada Student Loans Program.
There can be no doubt that the current financial crisis facing Ontario's universities and university students is, in part, a direct result of the drastic rposttions in federal funding and the elimination of dedicated Post-Secondary education funding under the Canada Health and Social Transfer, the drastic cutbacks in funding for university research, and what we view as the inadequate response by the federal government to the issue of student assistance. We believe the renewal of each of these three critical federal programs would represent a fundamental step in reparation of the damage already done to our system by decades of inadequate funding.
For too long in Ontario we have deferred maintenance of aging physical infrastructure. We have lost tenure-track faculty positions and support staff. Our student-faculty ratios have increased sharply. Our research facilities are now inadequate and often outdated.
If Canada is to position itself for the global economy of the next century, the government must begin reinvesting in those institutions which contribute directly to long-term economic growth, and we believe that foremost among those are our universities.
I will deal with three areas in turn. The first is the Established Programs Financing. There is no doubt that the federal government has cut those programs substantially. You will understand that faculty in Ontario viewed with some consternation the elimination of any reference to Post-Secondary education when the new single transfer was put into place. If you look at the effect on Ontario of the changes and the cuts in those programs and then impute the value to universities, we lost $237 million in 1997-98. In that year, that represents 13 per cent of our basic grants.
The Ontario government also had a deficit agenda, so the total cuts to our institutions in the single year 1996-97 was 16 per cent. We have been trying to absorb those cuts by downsizing, cutting salaries and deferring costs to maintenance.
In fact, Ontario universities have been treated differentially because, in a year in which total funding and basic grants were cut by 16 per cent, total cuts at the provincial level in spending were only 5 per cent, this in a period in which our enrolments have been increasing substantially.
In fact, Ontario is now last in the country. We now rank tenth of the 10 Canadian provinces, and we have been trying to cope with these cuts in a period in which we are losing further ground to other jurisdictions, particularly the United States, where funding has increased substantially over the recent past. Indeed, in 1993-94 and 1994-95, Ontario grants declined by 2 per cent while American state government grants to their public institutions increased by 8 per cent.
The report of the Advisory Panel on Future Directions of Post-Secondary EDUCATION issued in December of 1996 added yet another voice decrying the abysmal state of underfunding of Post-Secondary education in this province.
We have been unable to sustain the quality of Post-Secondary education in this province precisely because we have been cut so substantially. The panel recommended:
...that the high quality of the postsecondary system cannot be sustained in the current financial environment... Ontario must accept the principle that the total resources available to our colleges and universities must be similar to the total resources available to colleges and universities in other jurisdictions in North America.
We believe that the Post-Secondary education component of the old Established Programs Financing must be reinstituted and would constitute the first step to achieving that objective of the average funding in Canada.
The second area of concern is in research funding. Here there are two problems. Ontario has lost its share of federal council grants. Our share has declined from 42 per cent a decade ago to only 36 per cent now. The loss since 1993 has been about $41.3 million in research funding. There are three related problems involved here.
The first is a 20-per-cent cut in the overall funding to the three federal councils. The second problem is that the federal granting councils only fund the direct costs of research. Thirdly, the federal and the provincial responsibilities in the area of research are undefined and often poorly coordinated.
The first problem is clear. The 1995 federal budget planned for rposttion in support through the federal granting councils of 20 per cent by the end of this century. In real dollars, there has been a further decline because of inflation and the rising cost of infrastructure and equipment.
The second problem relates to the infrastructure costs. It was agreed in the 1980s that Ontario had to fund about 40 per cent of the total costs of federal-adjudicated research grants through indirect costs or infrastructure costs. At that point in 1986, a decision was made to establish a research infrastructure overheads envelope within the Ontario funding system. At that time, it was understood that that was only marginal in addressing the issue. The envelope at that time was $25 million, and it represented but 15 per cent of the real costs of research.
The federal argument that it contributed to the indirect costs of research through the transfers under the Established Programs Financing no longer holds. In fact, the federal decision to end the Post-Secondary education transfer has exacerbated the problem of inadequate research infrastructure. We believe that that must be addressed.
The third problem about which we are concerned is tuition and accessibility. At the time that the advisory panel was appointed in July of 1996 by the Minister of EDUCATION and Training in the Province of Ontario, Ontario was projecting increased demographic demand for university slots by 10.6 per cent over the next decade. Somehow we would have to find a way to accommodate an additional 10.6 per cent. The problem is that in real dollars tuition has increased in our province in the course of this decade by fully 58 per cent. We believe that increasing tuition fees are beginning to act as a disincentive to attend.
The Ontario Confederation of University Faculty Associations begins from the principle that access to Post-Secondary education is a right of citizenship which must be protected. In fact, this is creating barriers to access at precisely the moment when the demographic demands for universities and access to university is sharply increasing and our economic need for graduates is sharply increasing. We do not believe that this is good public policy.
Some evidence shows declining enrolments despite the clearly recognized need. There were some declines in Ontario universities, specifically in those universities which had a relatively high proportion of students from outside their local catchment areas where the increase in cost is a real variable. This year's applications for 1997-98 showed a 2.5 per cent decline in the province of Ontario. Indeed, some of our northern universities are experiencing declines in applications of up to 20 per cent. We believe that escalating tuition fees are behind this, and we believe that it is fundamentally not good public policy to create barriers to access when demand and need are increasing.
In this context, we support the recommendations of the Canadian Association of University Teachers, which appeared before you in January, to reform Canadian student assistance programs. Recent changes have taken a first step in this direction, in particular the changes extending the period in which the federal government pays interest rates on student loans from 18 to 30 months and the extension of tuition credits to cover auxiliary fees. However, those are but first steps and are already in danger of being outpaced by this sharp rise in needs.
The federal government should invest in the development of Canada's human capital by fully restoring funding to our universities and to the granting councils and by implementing meaningful student assistance reform. As the federal government develops public policy to position Canada in the global knowledge economy, reinvestment in our universities must be a cornerstone of that strategy. We encourage the Senate of Canada to show leadership in developing a vision for this country built upon an internationally competitive and accessible system of Post-Secondary education.
Senator DeWare: I thank you for your brief this morning. Of course, you are reiterating some of the things we have already heard.
If we can turn this around, how long do you feel it would take Canadian universities to get back to the level of excellence that they felt they might have been working toward? It now looks as if there will be some money available to do something in the next year or two. How long do you think it would take?
Mr. Piva: It is difficult for me to judge because the real issue is how much money would be provided. If we were to move quickly to restore 1993 levels for EPF funding to Post-Secondary education, which was the recommendation of the CAUT, I do not think it would take long. If the province of Ontario were to act quickly on the restoration of provincial grants to at least the 1995 level, again, it would not take too long.
I would phrase the question differently. Ontario had a system of excellence in Post-Secondary education that is under threat, and how quickly are we prepared to move before we impose serious damage on the system? Some damage has already been done. That is the perspective I take. The issue is this: Can we move and how fast?
Senator DeWare: How long can you stay at this level without it having an effect?
Mr. Piva: If we stay at this level, it will continue to deteriorate at a slow rate, and something must be done to reverse that. It is difficult to judge beyond that.
We cannot sustain the increases in class size that we have been sustaining without a serious detrimental impact on the quality of EDUCATION for our students.
We cannot go much longer before we begin to address the problem of faculty renewal. We have lost 1,000 faculty positions in this province during the course of absorbing the 16-per-cent cuts. Vacant positions have been left unfilled as we have encouraged early retirements and exits from the system. There is a limited amount of time that you can leave those positions vacant before serious damage is done to programs. The downsizing of our institutions has already brought some academic programs to a bare minimum for sustainability.
Senator DeWare: You said there is an increase in class size. There is an increase because you have lost faculty.
Mr. Piva: There has been both.
Senator DeWare: Demographics in our country show that Canadian baby boomers have gone through the system. Why is there an increase? It should be a decrease, should it not?
Mr. Piva: No. There are two variables. One is demographics. The more important variable in explaining what has happened is the need for post-secondary EDUCATION.
When you look at changes in the labour market and the development of a knowledge-based economy, it is clear that an overwhelming proportion of new jobs created in the Ontario economy over the last decade require post-secondary EDUCATION, and this trend will accelerate. If individuals want to have access to the kind of economy we want to sustain, they must have access. We have had an increasing rate of participation, so it is not simply demographics but also the requirement for a much higher rate of participation.
We have been able to sustain a higher rate of participation over the last decade and one-half by increasing class sizes, but sharp increases in recent years represent an acceleration of a trend that has been in place for a decade and one-half. The ratio of full-time faculty positions to full-time equivalent students has gone from roughly 13 to 1 in Ontario universities in the early 1980s to 18 to 1, and that is prior to the impact of the funding cuts in 1996-97. We increased class sizes by 50 per cent prior to the recent funding cuts. It is related not to the demographics but to the absolute requirement and need in the labour market.
Senator DeWare: It is due to upgrading and retraining. Learning is a lifetime investment today.
Senator Forest: You mentioned the need for further resources from the federal government, and certainly I would agree with that. We have heard also across the country a call for a larger federal presence on the national scene in the area of Post-Secondary education. We have tread softly around this issue because EDUCATION is the responsibility of the provinces. I would like to hear your response to the calls we received from many areas with respect to the setting up of national guidelines, accreditation and greater mobility. These all indicate that the feds have to work with the provincial council of ministers and that the federal government must take a leadership position. What would be your response to that?
Mr. Piva: As president of the Ontario Confederation of University Faculty Associations, I must comment that we do not have a policy on that issue; therefore, I cannot speak to it.
The policy of the confederation is that Post-Secondary education is a provincial jurisdiction. We do not have a policy for a constitutional change on this issue. However, having said that, we believe that the federal government's role must be critical in terms of transfers to sustain operating grants, most particularly in the area of research funding. There has never been a problem or a jurisdictional divide in our view over the issue of the need for the federal government to show leadership in funding research.
As a policy position, we believe that the real problem is the federal retreat from the three areas that we have always believed were fundamental to sustaining our system. Those include the post-secondary component of the Established Programs Financing, which has been eliminated, and then the downsizing of federal support for research funding with a 20-per-cent cut in the funds to the three federal granting councils. Those are critical.
While we welcome the new initiatives in the budget for the Canadian Foundation for Innovation, that $800 million is merely a first step in redressing the problem. We see the solution to be the federal government returning to the commitment it had a mere decade ago.
Senator Forest: I agree with that. I also sense that if there is to be a real reinvestment at the federal level, there might be a wish to see a more coordinated approach among the provinces, particularly in the area of mobility and principles, such as, for example, in the health field.
Mr. Piva: The Advisory Panel on the Future of Post-Secondary education delivered its report in December. One of its recommendations was the need to develop a provincial research policy. It pointed out that research to universities flows through a variety of mechanisms, not simply the Ministry of EDUCATION and Training. In fact, there are funds that go through other departments.
The government then hired David Smith to do a further study of that. When we met with Mr. Smith, the first thing we raised with him was the need to coordinate a provincial research policy with a federal research policy. We pointed out to him federal initiatives. For example, the Humanities and Social Sciences Federation, when it appeared before the finance committee of the House of Commons in February, put forward a proposal for Canadian crossroads research. We believe that if there is to be a viable research strategy at the provincial level, it must be coordinated with those kinds of initiatives. We would welcome those types of coordination. We see the need for them, particularly in the research field, but we would not be averse to seeing and recognizing the need for coordination elsewhere.
Up to now, I think we have made considerable progress on the issue of credit transferability from institution to institution. In fact, we need to make more progress at that. We have focused at the provincial level, but we need to coordinate nationally through the AUCC and the CAUT. There are a variety of areas where we would encourage those initiatives.
Senator Forest: We will be hearing from David Smith later this afternoon. Thank you very much.
The Chairman: I want to thank our witnesses for their excellent paper and their comments. Your views are important to us.
Honourable senators, our next panel is from the Association of Colleges of Applied Arts and Technology of Ontario.
Ms Lynda Davenport, Chair, Council of Governors, Association of Colleges of Applied Arts and Technology of Ontario: Mr. Chairman, I have not prepared a brief; I have only my dialogue.
I am a volunteer. I have been governor of a college for the past five years. There are over 400 college governors, all volunteers. As well, we engage 10,000 community volunteers on our advisory committees, and that community input is what distinguishes the colleges from other EDUCATIONal institutions in the community.
We have a 30-year history and 25 colleges. Some of this is in front of you, but just to give you a brief profile, we have 136,000 full-time students in Ontario community colleges and we have 700,000 part-time students.
What I want to talk about and share as a governor is the changing profile of students. There are opportunities emerging right now, in what we have called "post-secondary EDUCATION" in the past, to rethink what our target audience is and what it will be in the future.
We have seen some changes in the age of students. I recognize as a governor at convocation that hair is getting greyer, and it is not just mine; it is the people in front of me. We see the average age of college students now at around 26 years of age.
Over 60 per cent of college students are not directly out of high school but come from work or family experience or from university. You heard the students talking about that today. It has been quoted that anywhere from 10 per cent to as high as 25 per cent of college students today are university graduates.
The whole concept of lifelong learning is important, and we believe that colleges, as career training and skill development centres, are critical to making Canadians employable.
Colleges have shown great flexibility, innovation in programming and program delivery in the past and will be required to do more of that. There has been an invitational atmosphere to colleges that has allowed students returning to EDUCATIONal centres to feel comfortable and to be successful.
In 1995, within six months of graduation, over 80 per cent of college graduates have employment. Employment is changing. It is not necessarily full-time employment, but they are working.
Another challenge is to provide EDUCATION which is portable and transferable. Partnerships should be required of colleges and universities to ensure that the student, the learner, has access to knowledge in order to develop the career they need to become responsible citizens.
We have established prior learning assessment in the colleges which facilitates the ability of students to get some credit for work and life experience as well as previous academic and EDUCATIONal experience. We hope that there will be more of that, not just in colleges but in all EDUCATION facilities as well.
The concept of student aid then takes on some different meaning when you look at who our students are and from where they come. We believe that the future holds re-entry. Lifelong learning is now not a choice; it is a necessity for maintaining employability. Access to funds and support for students, as they come back in for career training and updating, also needs to be part of the consideration for student assistance.
We also hope that the federal government will make wise use of college EDUCATION and training facilities when there are retraining and continuing EDUCATION opportunities in the government. In demonstrating how we function, we are a partnership here; I have merely done the introduction. Other points will be shared by my colleagues.
Ms Joan Homer, Executive Director, Association of Colleges of Applied Arts and Technology of Ontario: Good afternoon. I have been an employee of the college system in Ontario for 18 years. I know you have made your travels across Canada. While we will focus on Ontario colleges, I know many of the points we will make relate to the other 180 institutions and colleges across Ontario.
My role today is to talk about partnerships. One of the strengths of the colleges are partnerships. I heard questions asked of earlier witnesses about some of the solutions we see for how Canada will face the post-secondary EDUCATION and training challenge.
One of the solutions for us is strategic partnership. We very much believe and have a record of partnering with EDUCATION, business, government and our communities. The colleges are community-based and spread throughout Ontario. Each one can show you in a very real sense the benefits of those partnerships with business. They are good for business because they create a trained workforce in a community for a business, for maintaining and attracting employability. They are good for the institution as well, for the faculty to get up to speed on the latest innovation and to spend some time in industry. They are very good for the students because they can be assured of the latest skills and technology brought to bear in their EDUCATION.
It is also good for the community because it demonstrates a very strong partnership. That is where we believe the strength lies.
We have some examples. I am sure you have read about them in the press. Bell Canada is involved with many of our colleges in terms of creative communications, distance EDUCATION, and EDUCATIONal technology. You have probably heard of Sheridan College and their partnership with Disney. These are world-class and state-of-the-art opportunities, and many of our colleges offer them. The steel industry and its partnership is a sectoral initiative.
We have become so good at what we do, if I may say so, that we are now doing business in 64 countries around the world, partnering with countries to export EDUCATION and training talent and also to working with those countries in building their own community college systems. Hungary is a perfect example.
Where do we go from here? We need some time to transform our colleges from being heavily dependent on provincial government funding to looking for new sources of revenue. One of the ways in which we are strengthening our system is through collaborative partnership. We are asking our government now to give us the time and the support for that transformation. We are asking the federal government today in your committee to give us some kind of consideration as well.
By even inviting us today, you recognize the role of the colleges in Post-Secondary education. You recognize the role of the colleges in the future of a strong economy in Canada. More invitations would be greatly appreciated. The colleges can play a leadership role, as we have been. Opportunities that recognize the role we play are very important to us. By inviting us to these kinds of hearings and special committees and to be involved, for example, in Team Canada, you give opportunities for us to show how we role-model partnerships. We think that spirit of collaboration and cooperation is very important for what is ahead for Canada, and we are grateful for the opportunity to tell you about it today.
Mr. Brian Desbiens, President, Sir Sanford Fleming College; Chair, Council of Presidents, Association of Colleges of Applied Arts and Technology of Ontario; Chair, National Presidents Network: Good afternoon. I come to you as an postator. In this small portion of time, I wish to raise a fundamental question in terms of the context for Post-Secondary education: How do we create a hopeful future for the majority of citizens in Canada?
Post-Secondary education is only one means to meet that challenge. We believe that our colleges and our universities in Ontario have contributed.
I also had the opportunity to serve on the Prime Minister's National Advisory Board on Science and Technology. I will be referencing that. My presentation in part arises from that work.
Clearly, what we want to do in Canada is create wealth. We can only reach our desired standard of living if we are able to do that. Creating wealth depends upon economic competitiveness, and economic competitiveness depends upon two fundamental issues. One element is the acquisition of knowledge and the transfer of technology in a meaningful way to business and industry but, particularly, to human resources in Canada.
The second major element is the development of our human resources. I should like to focus on that for a moment because I think there is a large social problem, which I hope the Senate committee will address. The problem I see is the distribution of work. We have many people right now in full-time work who are completely over-stressed and over-worked. The statistics show that people are working harder, longer and are facing difficult challenges. On the opposite side of that barrier are those who are, inappropriately, unable to get into a place of meaningful work.
I had an interesting discussion with Senator Forest about her son and my son. They are bright, capable people who are not able to enter our workforce. We have this problem of matching the skills required in the new information society with the assistance necessary to provide EDUCATION, training and opportunities.
I believe we need to address this distribution-of-work issue in many ways. One of them is changing our mentality about Post-Secondary education to one of investment rather than cost rposttion. Having served the federal government, I know that the primary preoccupation over the last few years is how we get a return on the investment we have already made. We felt the investment was great but we did not get the return on it.
I suggest that we need to turn that around and look at how we invest to increase the capacity of our human resources and increase the capacity of our institutions, but we must do it in a strategic way which is focused on outcomes if we really truly want to see outcomes.
I believe, therefore, that the federal government has a role in setting goals. One of the consultations held by NABST centred on national goal-setting. The federal government moved away from that role.
One example is literacy. It is absolutely shameful that this country continues to have literacy problems. Yet we still have not set a national goal to focus attention on illiteracy in order to address it. We suffer in the post-secondary area because of remediation problems and people coming back to us. Goal-setting is absolutely essential and needed for human resources in Canada.
As the second element, the national Conference Board did set skills required for the 21st century.
However, they need to be upgraded. I can tell you we need that help to focus what skills are required for the workplace. We need to upgrade them by examining the changes in our society in this information age. Computer literacy is not one of the goals of the Conference Board, yet every program and every job -- even at our institution -- requires a platform of essential skills. I would ask the Senate to think about that.
The one recommendation I would suggest to you is that we have a national summit on work, similar to the summits we have had on the economy and on the Constitution. The solutions of the past do not fit the new age. We need to bring together the demographers, educators, government people -- all the stakeholders -- in a national forum to rethink the problem. Your Senate hearings are helpful but we need a forum and a structure in which to do that in a meaningful way. We need to understand the demographics if we are to target strategically for the future.
Having served on NABST, I also know that there is a lot of research already available to this committee. I chaired the NABST subcommittee on national standards. We talked about the need to have a national forum to discuss these issues, and we recommended that the Council of Ministers of EDUCATION of Canada be adjusted and adapted to address issues of research and development and national standards. If you have questions later, we can go into it.
Second, NABST also recommended a scholarship program, and it was instituted for a very short period of time. If we want to make a difference in science, engineering and technology, we must encourage Canadians to go into those fields. We must encourage those who are discouraged.
Let me give you an example. Fifty per cent of those scholarships went to women because they are underrepresented in science and technology and the advanced training areas. Yet that is where the jobs are in the future. By withdrawing that encouragement, we have withdrawn an incentive. I would encourage the Senate to go back and look at those programs. We have discouraged minorities who were also supported by that program.
Over one-half of science and engineering graduate students in our universities in Canada are international students. NABST recommended that we take a look at our immigration policies. We have a shortage. We have to go overseas to bring people in. We are training them here in Canada. We should encourage more Canadians to participate at the master's and doctoral level, as well as in our colleges and our employment-based, post-diploma programs.
What we need is new thinking about investing. We saw that in the last American election, where President Clinton started to talk about colleges and universities at the national level and about investing in the future. We would ask the Senate to support such a concept and a rethinking of investment, not a cost rposttion.
Mr. Tom Evans, Director, Ontario Training Office, Association of Colleges of Applied Arts and Technology of Ontario: You have heard Ms Homer's comments about the extensive partnerships our colleges are involved in, and you have heard Ms Davenport mention the profile of our students.
The federal government has played a very strategic role in the development of adult EDUCATION and labour-market training across Canada, particularly in Ontario. Prior to 1967, the federal government was mainly responsible for funding night school in the high schools for adults who were being displaced from their jobs even at that time. Since 1967, perhaps one of the most important partnerships our colleges have had has been with the federal government in the area of labour-market training.
Unfortunately, in 1988, the federal government, which was spending approximately $174 million on the direct purchase of training, took the position that it wanted to rposte that commitment. By April 1, 1998, there will be no further federal direct purchases of training within our province. This dramatic change has seriously affected the colleges and, to a certain extent, some of the school boards in our province.
We understand the positions of the various governments regarding jurisdiction under the Constitution, but we really feel there is a strong role for the federal government to play by investing in research and development and human resources needs and in following through on some of the recommendations of the National Advisory Board on Science and Technology.
While the federal government has indicated that it wishes to devolve to the provinces and territories responsibility for employment training and maintenance of the costly infrastructure in support of that, we feel that federal financial support in those two areas is critical.
We also feel that a major labour-market problem is starting to develop across the country. We have seen signs of it in Ontario. During the last three weeks, we heard through the media that there are over 81,000 jobs for which there are no qualified Canadians -- 50,000 in biotechnology and 31,000 in the software industry. The response from the federal government was that where there are qualified foreign nationals who have a bona fide job offer from a Canadian company, they will change the rules with respect to immigration to allow a speedier entry of these people into our country.
It is discouraging when you see that type of short-term, knee-jerk response to a particular problem which could have been avoided had we had proper planning for labour-market training in the first place. It becomes even more discouraging when you look at unemployment statistics -- the real ones as well as the reported ones.
Finally, I should like to recommend that the federal government review its role in EDUCATION and training through a national consultation process involving providers of EDUCATION and training in the provinces and territories and in the private sector.
Mr. Desbiens: I have been asked to offer a few recommendations from the panel around capacity-building. As I mentioned earlier, global competition will drive change. It is driving change. As colleges, we are also prepared to change. We think that is one of our major issues. However, the real problem is not the colleges. The real problem is how to meet the needs of those coming to us. We have significant growth in the number of adults coming to us who have been dislocated, either because they have dropped out of the economy due to changes occurring in industry or because they are underutilized or unable to get into industry and require significant retraining.
The second major area that cannot be forgotten is youth unemployment. The 19-per-cent rate is only part of the problem. We need to analyze the situation in a much more sophisticated way.
We would like to suggest three roles for the federal government and some specific action the government can take. First, we believe that the federal government can and ought to play a role in taking down the barriers to EDUCATIONal access in our country and in our province. The single largest problem is financial. We recommend the income-contingent loan approach, but we warn the Senate that the socio-economic character of the students in our colleges is such that it requires a unique program that will take into consideration where they come from and where they are going. An ill-conceived income-contingent loan program could discourage participation. We would ask for a financial program that will help students enter, that will help them succeed, and that will not overburden them when they leave. This goes back to what Ms Hilliard was discussing earlier today. There must be a real analysis of the appropriate debt load for students. Clearly, tuition is not the problem; it is the combination of life circumstances that must be considered.
In addition to that barrier, we must look at access. Many of the academic upgrading programs the federal government has supported have been eroded or even eliminated, and that has eliminated opportunities for access. We would ask you to consider that along with portability.
There are very few portable standards across Canada. Despite comments earlier today of some new initiatives between colleges and between colleges and universities, there are still huge barriers to portability across Canada that must be addressed. We must get rid of redundancies being created for citizens between EDUCATIONal institutions.
The second capacity is institution building. As Mr. Evans said, we have experienced a significant rposttion. I compare it to being starved children. The base transfer grant of $2 billion for health, welfare and post-secondary EDUCATION has had a dramatic effect on us. Over $200 million last year was rposted from a $1.6 billion system in one year. We do not have reserves or the ability to tax. We had to have it to the bottom line. Over 2,000 full-time staff were lost to the college system and probably double that in terms of part-time positions. We ask the Senate to think about that in terms of investing and not continuing the erosion.
In addition to that transfer grant, colleges also have experienced significant rposttions in direct purchase through your Human Resources Development offices. This is a hidden loss to us in terms of targeted programs that assist individuals who have circumstances such as those Mr. Evans spoke about. We ask you to look at that.
There are some intriguing new opportunities, and I will speak to one of them. We finished a co-determinate arrangement in a very small community where our college is working with Human Resources Development Canada. They continue to need resources to look at problems at the ground level in the their local communities, not necessarily in a global way. That is strategic targeting.
We need capacity building in terms of not only the numbers we are able to accommodate -- which are significantly greater than ever before because of the jobs required -- but also our equipment, our facilities and the infrastructure. When the government looks at an infrastructure project, please do not just look at highways. Look at the pathway to the future, which is EDUCATION. Help us develop new, innovative and cost-effective ways to do that.
The third area of capacity building goes back to the national scene. Clearly, we understand the jurisdictional issues. I have been part of that debate at the federal level. We need a structure. The CMEC appears to be the best structure that we can possibly have. The federal government needs to have a place there. The federal government must talk and work out an arrangement. I encourage you to be assertive about that in terms of human resource planning. Every nation must have human resource planning. Even though EDUCATION is the jurisdiction, it does not mean that the federal government can afford to give up its right and the responsibility for human resource planning.
We are calling on this committee to support us by obtaining a national vision through consultation with all the stakeholders, not just government-to-government. The stakeholders are out there: students, employers, educators and our political leaders. Let us create the national forum we have mentioned. Let us create capacity building through a scholarship program to encourage students -- that is, a loans program that will not discourage but will bring equity and fairness. I am speaking about an infrastructure program that will help us serve students into the future.
We would also encourage you to use the expertise of our college system, as Ms Homer has said. Unfortunately, after my term on the National Advisory Board on Science and Technology, the reappointments were all other than college people. I would ask you to think about using the expertise of our national system for boards, agencies and councils.
We also ask that you support the private sector not only in the partnerships that Ms Homer talked about earlier, but also in terms of encouraging, through tax, philanthropic contributions. Some initiatives have been taken in the last budget, but we would ask for more. One we would suggest is that industry will not create jobs, despite some of the issues currently on the table, unless there are real incentives. Real incentives must be put forward in terms of dollars. I think industry will create jobs if you rposte the benefit side. Approximately 20 per cent of the cost of a new job is in the benefit side. Using its leverage, the government could rposte that benefit side and create opportunities for industry over a two-year internship program. Certain models are being tried in small numbers by the government, but we need a large workforce plan.
Better labour-market planning is absolutely essential. We do not need laisser faire economic theory. I read about it every day in the paper. What we need is strategically planned investments by our government based on demographic and occupational sensitivity of what this country needs for the future.
The Chairman: Thank you very much for your excellent comments and food for thought.
In the past, Canada had many resources which were sold off as raw materials rather than as finished products. We have a great opportunity now to help our economy, not by raw materials, but with EDUCATION. Perhaps we can sell EDUCATION to foreign countries. Perhaps we can bring their students here to learn our trades, and so forth. I think there is a great potential for the economy of this country on the EDUCATION side.
I was in Taiwan, and every single, solitary member of their cabinet has a Ph.D. in something. They use business, universities and colleges all working together, and EDUCATION seems to be the basis of the economy. They have grown over 10 per cent every year for the last 30 years. If we grow 2 per cent, we think we are doing great. Somewhere along the line, we have to persuade the government -- provincially, federally, and so on -- that the future of our country must be based on EDUCATION. If we were to put that in the back of everyone's mind with your help, I think we could make a stab at it.
We are probably being accused by the provinces of interfering in their jurisdiction, but we are trying not to interfere. We are trying to look at the broad picture of the future for our whole country.
Senator DeWare: Thank you very much for your brief. It is excellent and we definitely will take time to read it carefully.
In our discussions across Canada, a national standard has come up over and over again. You cannot have a national standard without having a national forum. You are correct about that. In the future -- that is, if we can keep this committee moving as long as we feel it needs to do so -- that will be one of our main recommendations. That means that we must involve the ministers of EDUCATION in Canada. We are trying to stay away from provincial jurisdiction, but you cannot stay away from it. Canadian ministers of EDUCATION must be involved in whatever programs we recommend. This definitely affects the provinces.
They talked about portability and national standards for Canada. When I talk about colleges, I have a concern about the Human Resources Development Canada negotiating their training package with the provinces. In that package, are they recommending to the minister responsible for training in the province that the colleges be used? Are your colleges under a specific minister in Ontario?
Mr. Desbiens: Yes, we are under a specific minister, namely, the Minister of EDUCATION and Training.
I think we have suffered in the last decade from "Reaganomics." "Reaganomics" talked about privatization. We have been hit head-on with the concept "Let us spread it all out." We have eroded public sector institutions by doing so. All kinds of mechanisms have been protracted. We need national goals, national policy and planning, but we also need resources to be infused at local level for local solutions. We must get the middle out of the way in some ways.
Senator DeWare: I am totally in agreement with you. You probably heard me telling the students that the banking association appeared before us to discuss student loans, how to handle them and how to resolve debt load.
These banks also have a concern about training facilities starting up in the provinces because funding has been transferred and they want a piece of the action. The concern is whether they are being accredited by the province or by the department of EDUCATION. If they are not, why not? Students have to get a loan with a recommendation from the school specifying how long the course will take. If the facility fails within 14 or 18 months, what happens to the students? Bankers are concerned that these start-up training facilities are not being properly accredited. I am concerned about that as well, and you people should be very concerned because it must affect you tremendously.
I am concerned about these 81,000 jobs. The same as you, I read about that in the newspaper. I could not believe what I was reading. If these positions are open in Canada, why are we not training for them? That requires money and finding the proper people to train, but that is an issue we must address. We should not be bringing people from offshore to fill those jobs.
In New Brunswick at one time, our college system recognized the average age of our aircraft maintenance workers as 55. We recognized a very serious need. In 10 years or less they would be gone suddenly, and we were not filling that gap in our province. It is your responsibility to ensure that such voids are filled in your province.
Partnership will increasingly become the role that all provinces will have to play because we do need industry on our side if this is to work.
I wish to commend you for your brief. I think you are right on. I like the fact that you have a positive attitude rather than a negative one. Through its recommendations, this committee plans to do whatever it can to help.
Senator Forest: I too appreciated your presentation. We have heard from colleges all across Canada, and they have made a tremendous impact.
I, too, am interested in the area of partnerships. I remember a quarter of a century ago that universities in our province did not even talk to each other, let alone talk to the colleges. Then, when the colleges wanted to get on board, the universities protected their turf. We have come a long way from there, and that is a good thing.
There is a need to take some care in developing the guidelines and the platform for your partnerships with industry, especially with the universities where, in some instances, there seems to be a tendency for industry to take over the agenda with research being done strictly in their area. There is a real concern about that. I do not know whether you have experienced that here. Perhaps you are not so involved in research that it is a problem. The company with the biggest bucks gets to set the agenda. It is just a caution. Have you had difficulty with that?
Ms Homer: It is important for colleges to have program advisory committees for every program. They would be comprised of representatives from companies that hire graduates. We have had a 30-year relationship with industry, and I do not believe we have felt overpowered by industry agendas to the extent that our universities have. We are well aware of the caution of the universities. It is a valid caution with respect to academic freedom, but I do not think we have been affected by it to the extent that our university colleagues have been affected because we have a history of partnerships with industry.
Senator Forest: Do you have a code of ethics or guidelines to go along with that?
Ms Homer: Our program advisory committees work very closely and very publicly.
Mr. Desbiens: I would like to comment on the myth that the private sector will make up the difference in operating grants. We have some outstanding partnerships with the private sector. They help with capacity building in the sense of providing equipment. They help us in terms of providing opportunities for our faculty and our students. However, they come nowhere near to making up the difference in terms of general operations. That point was made earlier today, and it is important to separate them, particularly because of the concern you have mentioned. If industry gets into operating, then it is into decision making, and I think that we, as public institutions, want to keep that separated. As well, there just is not the capacity for them to make up the difference. That is why we need the reinvestment, especially if we want to have unique centres of specialization here in Canada. We can do that through partnership, but government must invest as well.
Senator Forest: The envelope of transfer payments to the provinces has been decreased, and we know that has been a real problem. Many people have suggested there should be a separate envelope for Post-Secondary education. That, in a sense, defeats the purpose of turning it back to the provinces because they wanted flexibility in health care, et cetera. Is there any indication in your province that Post-Secondary education is not getting its fair share of the envelope?
Mr. Desbiens: That is a very political question.
Senator Forest: Perhaps I should not say "your province," but is it a concern that EDUCATION is not getting its fair share?
Mr. Desbiens: Absolutely. Political decisions have been rendered. Health care spending will stay at the $17-billion level in Ontario. Post-secondary EDUCATION was cut by 15 per cent. The pressures on health are phenomenal and we must look at the gap between what is available and what is needed. However, it is insufficient and it is not equally distributed. We believe that Post-Secondary education, and colleges in particular, got hit significantly harder than other jurisdictions last year.
There is a sense that it is not being distributed fairly. I personally favour an envelope system, including health, because it is such a major issue.
Ms Davenport: The other concern related to funding is that colleges are known as the poor cousins in Ontario in the EDUCATION sector. We have a history of managing fairly wisely and astutely with limited resources. We believe that retraining is essential to the employability of the residents of Ontario in the future, but there does not seem to be a recognition of what the colleges have managed to do with what I think are rather limited resources. As a steward, not a paid employee, I think that colleges are a very good success story in what they have been able to achieve.
Senator Forest: They have been able to change a little more quickly than the universities and are not hamstrung with tenured positions.
Ms Davenport: As a governor, I see this erosion of funds. Other issues are clearly out of the realm of the federal government, but the issue of employability and ensuring that there is capacity to sustain an employable workforce will be essential because there is a subtle erosion. It is sad, but we continue to manage wisely, I believe.
Senator Forest: Your best argument about your usefulness, your value and your necessity is the fact that so many university students are going back to college. You have a pretty good argument there.
Ms Davenport: The other concern is about what happens to post-secondary students. People are concerned about their ability to get into colleges because they are competing with people who have three or four years of university. It is hard for colleges to decide who they will accept.
The Chairman: I wish to thank the representatives of the Association of Colleges of Applied Arts and Technology of Ontario for their excellent presentation.
We may be in touch with you for further details with respect to your recommendations.
The committee adjourned.