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CAUT Bulletin Archives

May 2005

Ottawa to Amend 2005 Budget

Liberal-NDP deal promises more money for education

In an effort to save their struggling minority government, the Liberals announced changes in the federal budget last month to meet the New Democrats' demands for more spending on education, foreign aid and childcare.

Under the deal, the NDP will lend its support to the governing Liberals in any non-confidence vote in exchange for new spending on a range of social programs.

Included in the deal is the delay of planned corporate tax cuts and a $1.5 billion increase in federal transfers for post-secondary education over the next two years. While details of the new investment remain to be worked out, the provinces will have to agree to reduce tuition fees to be eligible for new funding.

"This budget isn't perfect," said NDP leader Jack Layton. "But it's better. And it's balanced, and it includes tax reductions for small business and it also invests in people and our environment."

Student groups applauded the deal for targeting the problem of the rising cost of a university and college education.

"The importance of this move goes far beyond the much-needed tuition fee reduction," said George Soule, national chairperson of the Canadian Federation of Students. "This step will also signal a welcomed return of the federal government into post-secondary education policymaking."

The plan to reduce tuition fees, however, was criticized by one policy analyst who warned that a reduction in fees would hurt lower-income students and put most of the money in the hands of those with above-average incomes.

"Giving a high-need student a $500 break on tuition means taking away $500 in grants and $120 in tuition credits," said Alex Usher of the Educational Policy Institute. "In other words, reducing a high-need student's tuition by $500 makes her worse off by $120. This is a policy where the low-need kids get something and the high-need kids lose something."

But Michael Conlon, a researcher with the Canadian Federation of Students, said Usher's argument doesn't stand up to scrutiny.

"The crisis Usher constructs is easily avoided with a simple administrative adjustment," Conlon said. "By maintaining the grant amount, the problem is solved."

Conlon adds that from the provincial government's perspective, a federally-funded fee reduction will result in significant savings.

"Lowering fees in turn lowers individual financial need, thereby lowering the money lent by the province," Conlon said. "The savings come in the form of administrative costs and the costs associated with covering the interest accruing on loans during the study period."