Canada to end direct funding

November 11, 1994

A social security discussion paper issued in October by the Canadian federal government signals a big change of direction in the funding of post-secondary education.

In it, the government says it intends to stop direct funding by 1996/97 if possible. Student groups and university presidents have expressed great concern about the proposals.

Half of all higher education funding comes from the federal government through transfer payments and tax points to the provinces.

The cash contributions diminish when the money available through taxes increases.

Ottawa has predicted that the cash portion will disappear in about ten years. With economic recovery, tax points are rising and the total transfer payments will be capped as of 1996/97.

Given that fact, the government has a certain political leverage even while proposing to withdraw approximately Can$2 billion in cash transfers to the provinces each year for post-secondary education from 1996/97.

There are two scenarios in the discussion paper: letting the money run out or converting it into an income contingent repayment loan scheme for students.

One premise in the discussion paper is that Canada will face an access problem because of rising tuition and other barriers. But universities dispute this.

Full-time enrolment for 18 to 24-year-olds has gone from 18 to 32 per cent in the past decade and mature students now form 25 per cent of the student body, up from 20 per cent 10 years ago.

According to the government's own estimates, tuition fees could double by 1997.

Guy Caron, president of the Canadian Federation of Students, said such an increase would make university and college "absolutely inaccessible".

Post-secondary fees have already risen sharply over the last five years, at a much higher rate than inflation. (9.4 per cent in 1994 and 16.6 per cent in 1990).

The federation's position is diametrically opposed to that of the government. Not only does it reject the income-contingent repayment scheme, but it maintains that university tuition should be abolished.

As for compensating for the expected shortfall, spokesperson Michael Mancinelli told The THES that the government should implement a "truly progressive revenue system".

Claude Lajeunesse, president of the Association of Universities and Colleges of Canada, said the biggest problem with the discussion paper was that the proposals were formulated without the government having "any idea of the impact they could have on the system".

The Association is doing its own impact studies.

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