The $2.5 billion supplement to the Canada Health and Social Transfer (CHST) announced in February's federal budget does almost nothing to address problems created by seven years of budget cuts and may not even translate into any increased funding for post-secondary education, CAUT is warning.

"What appears to be extra money is really a smokescreen to hide unprecedented tax cuts that will prevent the government from maintaining Canada's public health and education systems," said CAUT president Bill Graham.

"This is only a one-time increase that does not address the ongoing crisis in funding, and the amount of money being offered does not come anywhere near to reversing past cuts. It won't even cover inflation."

Graham noted the extra CHST funds, if allocated along their historical proportions and actually spent, might mean an increase of about $100 million for post-secondary education per year. Ottawa has already cut cash transfers from education by an estimated $1.6 billion since 1993.

Even with the extra funding, he said, there is no guarantee that the money would find its way to Canada's colleges and universities.

"The problem is the CHST is a fundamentally flawed funding mechanism. Where or how and even if the extra money is spent, let alone spent on post-secondary education, is left largely to the provinces. In many cases, the extra cash will likely be used to finance provincial tax cuts."

Graham added that in place of the CHST which is an unconditional block fund for health care, post-secondary education, and social services, the federal government should provide three separate funding envelopes with specific conditions attached to ensure greater accountability.

"Ottawa needs to reconsider not just the level of funding, but also the mechanism and rules by which those funds are dispensed," he said.

The announcement of $900 million in new funding for the Canada Foundation for Innovation and $360 million for the 21st Century Research Chairs was also greeted with skepticism and concern, particularly with no additional support announced for the three granting councils.

Humanities and Social Sciences Federation of Canada president Louise Forsyth said the government continues to take an ad hoc approach to funding Canada's largest research community.
"Despite claiming to promote leading edge research and innovation in universities, Ottawa has tied the hands of 25,000 researchers in the humanities and social sciences," she said.

Student groups also expressed their frustration with the budget, saying the government missed an important opportunity to fix the funding crisis in post-secondary education by squandering the surplus on tax cuts. "It's outrageous that this government is cutting taxes for the wealthy while many poor and middle income Canadians are graduating from university $30,000 and $40,000 in debt," said Michael Conlon, chairperson of the Canadian Federation of Students.

Many critics took aim at the massive five-year, $60 billion tax cut outlined in the budget that includes the full re-indexation of the tax system, an increase in the thresholds of the top two tax brackets, a 3 per cent cut in the middle income tax bracket, an increase in the basic personal amount, the elimination of the 5 per cent high income surtax, and more generous treatment of income from capital gains and stock options.

"These tax cuts are irresponsible and short-sighted," said Conlon. "The elimination of the high income surtax will cost $650 million, or more than twice the increase for post-secondary education."

The Budget Plan 2000 is available free at www.fin.gc.ca. Additional CAUT reaction and commentary can be found at www.caut.ca.