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CAUT Bulletin Archives

March 1997

CAUT Welcomes Federal PSE Initiatives

Federal Budget 1997

CAUT President William Bruneau has welcomed the initiatives in the federal budget dealing with university research, student aid and charitable giving. However, Dr. Bruneau also called on the government to consider these positive steps as part of a long-term road map to restore the much battered finances of Canada’s universities and colleges.

"In fact," he said, "it is important for the federal government to create a five-year plan based on these measures to ensure that Canada has world-class and competitive universities and colleges and that these institutions are accessible to all students with the ability and desire to attend regardless of their financial means."

University research

"In particular," Dr. Bruneau said, "we welcome the creation of the Canada Foundation for Innovation which is designed to provide $800 million over the next five years for research infrastructure in universities and associated institutions. CAUT, along with the Association of Universities and Colleges of Canada and the Canadian Consortium for Research has been pressing for this infrastructure fund since last June. It has been a major feature of CAUT’s lobbying activities."

The foundation will operate at arm’s length from the federal government, and it’s board of directors will be drawn primarily from the research and business community.

The $800 million will be guaranteed from the start, but will be paid in escalating annual instalments. Both the capital and the accrued interest will be available to fund research infrastructure projects. The funds provided by the foundation will be targetted toward key needs in the areas of health, environment, science and engineering. "Science," according to Finance Department officials, includes "sciences humaines." However, how that will play out remains to be seen.

The legislation creating the foundation will be passed as part of the budget resolutions and is expected to be rather general. The significant decisions will be made when the agreement is drafted between the federal government and the foundation over its operating activities and when the board itself adopts its own operating procedures.

"It will be very important," said Dr. Bruneau, "for CAUT and the academic community to be involved in this process."

The board of directors of the foundation will have flexibility in determining the extent of the foundation’s contribution to individual projects. Contributions by the foundation will not exceed 50 per cent of total eligible project costs. On this basis, the government expects its $800 million to leverage more than matching funds from the partnerships among public research institutions and a wide range of contributors — the private sector, the voluntary sector, individual Canadians and provincial governments.

Dr. John Evans, the newly-named president of the foundation, said at a press conference that he expected many of the applications would be from consortia of researchers and that this would allow smaller universities to participate.

Dr. Bruneau also welcomed the renewal of the government’s commitment to the Networks of Centres of Excellence. CAUT had also lobbied for the continuation of this program. The level of funding will be $47 million a year, funded through a combination of existing resources and reallocation of $19 million from Industry Canada and the granting councils.

The 1997 budget also announced that the National Research Council’s Industrial Research Assistance Program is being maintained at $96 million annually. This national network of about 250 industrially experienced scientists, many connected with universities, supplies technical assistance and advice to small and medium-sized enterprises in all regions of the country.

Charitable Giving

The budget proposes to increase support for charitable giving by reducing the income inclusion rate on capital gains from 75 per cent to 37 ½ per cent.

The purpose of the change in regulations governing charitable giving was to bring Canadian law closer to that of the United States which encourages donations of appreciated stocks to charitable institutions. The Finance Department claimed in its papers that this change now put Canadian charities on an equal footing with those in the United States.

Gordon Floyd, of the Canadian Centre for Philanthropy, said that while the change was a step in the right direction it still did not provide for full capital gains exemption as in the United States.

However, Dr. Bruneau said it "will certainly assist universities and colleges in their fund-raising."

Student aid

Dr. Bruneau supported new budget measures designed to assist students and their parents. The most important of these is the decision to increase the period after graduation during which the federal government will pay the interest on student loans from 18 to 30 months for students in need. Combined with the six months’ grace period, available to all students, students in financial need will have up to three years of help in managing their loans.

Other tax measures that will help Canadian students and their families include:

  • an immediate increase in the education credit, designed to cover living costs while studying, to $150 per month ($200 in 1998) from the present $100;
  • extending the tuition credit to include all mandatory fees imposed by post-secondary institutions for educational purposes. This extension will not cover fees levied by student bodies;
  • allowing unused education and tuition credits to be carried forward and applied against future income;
  • raising the annual contribution limit for Registered Education Savings Plans (RESPs) from $2,000 to $4,000 (parents will also be allowed to transfer unused RESP income into their RRSP — provided there is contribution room — if their children do not pursue higher education. If there is not room, the RESP can be cashed out but with a penalty which was not announced in the budget.); and
  • making the education credit normally available only to full-time students available to disabled students who attend part-time because of their disability.

A road map for the future?

The finance minister opened the door to a long-term approach to student assistance by inviting further negotiations about the serious question of high student indebtedness. CAUT takes the position that student assistance still leaves too many students with financial problems during their period of study and leaves many with heavy debts after successful completion of their degrees. These have reached the level of $17,000 and will soon be over $20,000.

Tax changes, while significant to middle income families, do not deal with students who pay no taxes because of their poverty, although the carry forward provisions may be helpful to some.

CAUT is part of a national coalition including the Association of Universities and Colleges of Canada, the student aid officers, and the national student organizations (Canadian Federation of Students and Canadian Alliance of Student Associations) which has called on the government to consider a package of reforms to the student aid system including grants for single parents and needy students as well as a concerted effort to ameliorate the indebtedness issue.

"In addition," said Dr. Bruneau, "future plans will have to address the need for funds for researchers themselves. Research facilities without researchers cannot be part of the government’s plans." CAUT will continue to lobby for more funds, particularly for independent researchers, through the federal granting councils.

"We also think," he said, "that the government’s plans for the future must provide assistance for the humanities and for the fine arts programs of universities and colleges which is noticeably absent from this budget."

Industry Minister John Manley said at a press conference after Paul Martin’s budget speech that he hoped the budgets of the granting councils could be addressed when the federal budget is balanced. Current projections indicate that will happen in 1998.

"A five-year plan is necessary," Dr. Bruneau said, "in order to offset the serious problems caused by the cuts to post-secondary education in the federal transfer payments to the provinces and in the budgets of the federal granting agencies." The cut in the Canada Health and Social Transfer payment amounts to $3.5 billion (cash) for 1996/97.

"A five-year plan also means," he said, "that the government does not have to address every problem and solve every issue in one year, but provides for an orderly solution to the problems of higher education in Canada over time."

Source: Budget 1997 — Building the Future for Canadians. Budget plan tabled in the House of Commons by the Honourable Paul Martin, Minister of Finance, Feb. 18, 1997.