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CAUT Bulletin Archives

March 1998

Martin Predicts Bright Future

Several government initiatives announced in the Feb. 24 budget speech on student aid and research funding were welcomed by CAUT President William Bruneau. He acknowledged that "they are a first step in the right direction," but "we don't see the light at the end of the tunnel. We are still seriously worried about the effects of years of massive cuts in post-secondary education funding."

Millennium Scholarships
CAUT is pleased with the federal government's $2.5 billion endowment to create the new Canada Millennium Scholarships. Legislation will be introduced to create the Canada Millennium Scholarship Foundation as an arm's-length body to manage the endowment and to award scholarships.

In his budget speech Mr. Martin declared that the goal will be to "award scholarships to individuals in a manner that avoids duplication in any province, to build on existing provincial needs assessment processes, to complement existing provincial programs and, to significantly increase access to post-secondary education everywhere in Canada for low- and middle-income students."

CAUT applauds that goal and hopes that difficulties between the federal government and certain provinces over the Millennium foundation will be ironed out. "It would be unfair for students to suffer because of political disagreement between governments," said Dr. Bruneau.

Although the Finance Minister described the role and operation of the new Foundation he did not discuss the issue of accountability. CAUT believes the Foundation, managed by a board of directors made up of private citizens, should be transparently accountable to Parliament.

The government expects the endowment will allow more than 100,000 scholarships to be awarded to full- and part-time students each year over 10 years. Awards will be available in the year 2000. Scholarships will average $3,000 a year for full-time study and individuals can receive up to $15,000 over a maximum of four academic years of study towards undergraduate degrees, diplomas or certificates.

Student Aid
CAUT, as a member of the Round Table on Student Assistance, has stressed the idea of a "package" to diminish student debt in Canada. The government's budget introduces a number of measures to help students manage their debt:

  • Tax Relief for Interest on Student Loans: Individuals will be allowed to claim a 17 per cent federal tax credit on the interest portion of payments of federal and provincial student loans. Effective for 1998, this measure is expected to cost about $130 million in 1999-2000.

  • Canada Study Grants: New grants of up to $3,000 a year to be made available to over 25,000 students in financial need who have children or other dependants. Effective for 1998, this measure is expected to cost $100 million annually.

  • Canada Student Loans Program:

(a) Interest relief: raises the income threshold used to qualify for interest relief by 9 per cent and graduates the interest relief payments based on income;
(b) Repayment period extension: extends the repayment period for students who exhaust their interest relief eligibility;
(c) Extension of interest relief: extends interest relief for a further period if the extended repayment period does not sufficiently lessen the burden;
(d) Debt reduction: reduces the loan principal for students who still remain in financial difficulties, after other relief options are exhausted.

"This package may help some students to manage student debt. However, tuition fees continue to rise, and universities face severe funding difficulties," commented President Bruneau.

"We can't forget the impact of a half-decade of savage cuts in transfer payments. We're glad the government is listering to Canadians about research funding, and support for students; but there is an immense amount of damage to make right, and this budget does not make it clear that the government will now repair that damage."

Funding for the granting councils in 1998-99 has been restored to 1994-95 levels with increases of 13.8 per cent for NSERC, 7.4 per cent for SSHRC, and 12.2 per cent for MRC. In awarding this overall increase of 13.9 per cent to granting council funding the government accepted a recommendation in "Sustaining Canada as an Innovative Society," a position paper submitted in September 1997 by CAUT and four partner organizations in the post-secondary sector.

"This budget takes a step towards providing adequate support for Canadian R&D in the global economy," said Dr. Bruneau. "CAUT and other organizations have been lobbying for increased support for many years."

However, CAUT is disconcerted the increase to SSHRC is smaller than that of the other two councils and the opposite of what was put forward in its position paper. "Such research (in the social sciences and humanities) requires the same support as other disciplines," said Professor Chad Gaffield, President of the Humanities and Social Sciences Federation of Canada.

For 1999-2001, the increases in funding are more modest (averaging less than 2.0 per cent) and despite government commitment to R&D in Canada, there still remains a large gap in funding as compared to the other G7 countries. "There is still much to be done," notes Dr. Bruneau. "We hope the government will continue to build on these initiatives in future budgets."

CPP & the Seniors Benefit
Martin claims the CPP is now secure. He says that the CPP will survive and be available to young Canadians. In the months ahead, the government intends to introduce legislation to put in place the Seniors Benefit which will replace the current system of Old Age Security and Guaranteed Income Supplement. Consultations continue with seniors and other interested groups on the details of this reform. CAUT is particularly interested in the government's introduction of the new Seniors Benefit and continues to work with the Retirement Income Coalition to improve Canada's pension system. The government has stated it will give every consideration to the valuable points raised concerning reforms first put forward in 1996.

Tax Relief
Effective July 1 the three per cent general surtax will be eliminated for those earning up to about $50,000 and reduced for those earning between $50,000 and about $65,000.

Child Care Expense Deduction
The limit on the child care expense deduction will be increased from $5,000 to $7,000 for children under age 7, and from $3,000 to $4,000 for children age 7 to 16. For a parent who earns $45,000 and who pays $14,000 to care for two preschool children, the annual amount of this measure will be $1,600.

Canada Education Savings Grant
Effective Jan. 1, 1998 the government will now give parents a Canada Education Savings Grant equal to 20 per cent on the first $2,000 in annual contributions to registered education savings plans for children up to age 18.

Tax Issues & the Future
CAUT looks positively upon the initiatives Finance Minister Paul Martin has taken in the 1998 budget concerning tax relief, benefits and pension deductions.

"The measures contained in this budget have important collective bargaining implications.

"CAUT members will be affected in various ways both now and in the near future" said Dr. Bruneau. "We will continue to lobby the government for improvements to personal income tax relief, tax-assisted benefits, and tax-sheltered pension plans."

"Our goal must be to make Canada not just a participant in the modern economy, but a world leader," Finance Minister Paul Martin said Feb. 24. In charting this new course, CAUT urges the government to accelerate its commitments to promote greater access to learning and knowledge for all Canadians.

Source: Budget 1998 -- Building Canada for the 21st Century. Budget plan tabled in the House of Commons by the Honourable Paul Martin, Minister of Finance, Feb. 24, 1998.

For further information, call 1-888-781-0000 between 8 a.m. and 10 p.m. eastern time Monday to Friday. Information is also available on the Internet at Copies of the budget papers are also available from: Distribution Centre, Department of Finance, 300 Laurier Avenue West, Ottawa, Ontario K1A 0G5; Tel: 613-995-2855; Fax: 613-996-0518.