In budget speech 1999 the federal government announced it will spend a small amount on health, including a modest amount on research (mainly health research), but little else. There is no new funding for post-secondary education or social services under the Canada Health and Social Transfer -- not one thin dime.
In an era when Canadian society, including its universities, is still reeling from the damage done by the infamous 1995 budget, the massive cuts to post-secondary education and social services, amounting to $3.7 billion, could have been restored, but they were not.
Meanwhile, many jurisdictions south of the border -- which include most of our primary competitors for new appointments -- have been raising their appropriations for higher education. California recently increased its funding by 23 per cent. In 1996-1997 full professors in Canada's largest universities were paid 25 per cent less, on average, than their counterparts in the U.S.; and newly hired assistant professors were paid 22 per cent less, on average, than they would have earned in U.S. institutions.
The federal government is sitting pretty. The federal surplus, based on current year-to-date projections, is expected to reach an astounding $11.5 billion in fiscal 1998-1999, but the sound of this surplus will not be heard across Canada. It will be muffled once again through accounting fiddles to dampen the public's interest in expanded program spending for higher education and social services.
Finance Minister Paul Martin is predicting that a shortfall in corporate income tax revenues, changes in equalization transfers to the provinces, the agricultural assistance program, the Fisheries Adjustment and Restructuring Program, EI premium reduction, and other unidentified economic developments will all reduce the surplus to $7.2 billion. From that, he's setting aside $3 billion as a contingency fund for 1999-2000, which will automatically go to debt reduction if unused. (The $3 billion 1998-1999 contingency fund was applied to the debt.)
And, as with last year's budget, the remaining cash surplus will be hidden by applying it to spending in future years -- but charging it to the 1998 budget -- a practice the Auditor General has condemned. Last-minute allocations applied to but not spent in the current fiscal year include a $3.5 billion one-time supplement to the Canada Health and Social Transfer (for health care only), $200 million to the Canada Foundation for Innovation, $95 million for the Canadian Institute for Health Information, $35 million for the Canadian Health Services Research Foundation, and $200 million for humanitarian and international initiatives.
As a result of the surplus shuffle, program spending in Canada as a percent of the economy will fall even further from 1993-1994, when it was more than 16 per cent of GDP, to 12 per cent of GDP in 2000-2001 -- its lowest level in 50 years.
By deliberately downplaying the size of the surplus, Paul Martin is able to make it appear that he is acting "prudently," and he hopes to stifle the voices of Canadians who call for significant reinvestment in public spending on such necessities as post-secondary education and social services.
Paul Martin also is underestimating the size of the surplus in fiscal 1999-2000, which by all accounts is likely to be in excess of $10 billion.
The result will be further hardship on Canadian universities to maintain quality in the creation and dissemination of knowledge, to hire and retain the best young academics available, and to restore accessibility for students at affordable fee levels.
Pressures on our public institutions to corporatize, privatize, and vocationalize higher education will increase. The modest infusions of money into (mostly health) research is welcome, but it is not a replacement for the core funding which is so desperately needed.