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The Canadian Association of University Teachers (CAUT) welcomes the opportunity to present its views on the 2008 Federal Budget to the Standing Committee on Finance. Founded in 1951, CAUT today represents more than 57,000 university and college teachers, academic librarians, researchers, and professional and general staff at more than 100 institutions in every province in Canada. We are committed to improving the accessibility and quality of post-secondary education and to defending academic freedom.

This year, the Committee is asking Canadians for advice on ways to ensure that the taxes, fees and other charges collected by governments meets the needs of all Canadians, and promotes prosperity and productivity. With respect to post-secondary education, CAUT is concerned that tax cuts enacted in recent years have restricted the ability of the federal government to adequately invest in universities and colleges. In turn, this has precipitated a sharp increase in user fees, primarily in the form of drastically higher tuition. We believe this shift from publicly-funded to privately-funded post-secondary education threatens affordability and accessibility at precisely the same time as public investment in universities and colleges is widely viewed as key to the future economic, social and cultural development of the nation.

In summary, we respectfully submit the following recommendations to the Committee:

Recommendation 1: That over the next five years the proposed post-secondary education fund be raised to and maintained at 0.5% of GDP.

Recommendation 2: That the CST be repealed and that the federal government, working with the provinces, introduce separate stand-alone funds for social services and post-secondary education. We recommend that a newly established Post-Secondary Education Transfer be governed by a Post-Secondary Education Act, modeled on the Canada Health Act, that outlines clear responsibilities and expectations for the federal and provincial governments, establishes pan-Canadian guidelines and principles, enacts enforcement mechanisms and determines long-term and stable funding formulae.

Recommendation 3: That the Canada Education Savings Grant and Canada Learning Bond programs, along with the Canada Millennium Scholarship Foundation, be converted to a fully needs-based grants program that provides assistance to eligible students in all years of their program.

Recommendation 4: That the federal government substantially increase the income threshold for determining eligibility for student loan interest relief and increase the maximum amount of debt reduction for borrowers experiencing difficulty in meeting their loan payments.

Recommendation 5: That the federal government provide full financial assistance on a non-taxable basis to all qualified First Nations people who wish to pursue a university or college education.

Recommendation 6: That the federal government increase unrestricted research funding available through the three granting agencies. We recommend that unrestricted grants available through the Social Sciences and Humanities Research Council be doubled. In addition, funding for unrestricted grants through the Natural Sciences and Engineering Research Council and theCanadian Institutes for Health Research should be increased by 15% each.

A major factor in the funding cuts to post-secondary education over the past decade has been the reduced level of cash transfers from the federal government to the provinces. In 1996, with the introduction of the Canada Health and Social Transfer (CHST), cash transfers to the provinces for post-secondary education, health and social assistance were reduced by nearly $7 billion.

In the last budget, the federal government moved to restore some of this funding. However, cash transfers for post-secondary education still remain well below previous levels when inflation and population growth are considered. In 2008-09, the share of CST funding devoted to post-secondary education will be increased by $800 million to $3.2 billion. While a significant increase, it nevertheless falls more than $1.2 billion short of what would be needed just to restore funding to 1992-93 levels, adjusting for inflation and population growth. In subsequent years, the CST will increase by 3 percent, a figure the government claims is roughly in line with inflation and population growth. While this is an improvement over the current situation in which there is no automatic escalator built into the CST, the rate of increase is quite modest and in fact falls below the 3.3 percent projections for growth in the CST anticipated for planning purposes in the 2005 budget.

Moreover, the increased funding and the new escalator fall short of the needs identified by the provinces. In April 2006, the Council of the Federation accepted the recommendation of the Advisory Panel on the Fiscal Imbalance that CST transfers needed to be increased by $4.9 billion. Using the federal government’s assumptions about the allocation of funding within the CST, that would translate into an additional $1.2 billion for post-secondary education in the current year. Moreover, the Advisory Panel also recommended that the escalator be set at 4.5 percent to more accurately match real spending projections.

The funding gap between what was offered in the last budget and what the provinces actually need to fix the fiscal imbalance in post-secondary education will be $600 million in 2008-09. That imbalance grows to over $1 billion by 2013-14. On a cumulative basis, the total gap over this period is $6.2 billion. That represents a significant shortfall in the ability of the provinces to invest in an affordable, accessible and high quality post-secondary education system.

The federal government can and must do more to fix the funding imbalance. To ensure that cash transfers are provided on a more stable and predictable manner, we recommend that funding levels be tied to growth in the economy. Specifically, federal cash transfers should be raised to and maintained at 0.5% of GDP, a level of federal funding consistent with that in the late 1970s and early 1980s, and allocated to the provinces on a per capita basis.

Recommendation 1: That over the next five years the proposed post-secondary education fund be raised to and maintained at 0.5% of GDP.

Achieving this level of funding would require a significant financial commitment on the part of the federal government. To raise federal cash transfers to 0.5% of GDP would require an immediate boost in funding of more than $4 billion. Given the economic, social and cultural benefits generated by Canada’s colleges and universities, however, an investment of one half of one percent of our national wealth in is both reasonable and necessary.

Meanwhile, the ability of the federal government to address the under-funding of Canada’s universities and colleges is hampered by fundamental flaws in the way it provides cash transfers to the provinces in support of post-secondary education. The current Canada Social Transfer is an unconditional block fund. Where or how and even if the money is spent, let alone spent on post-secondary education, is left entirely to the provinces. This contrasts with the funding of health care, provided through a separate funding envelope – the Canada Health Transfer – and governed by national standards as provided in the Canada Health Act.

Recommendation 2: That the CST be replaced by separate stand-alone funds for social services and post-secondary education. A newly established Post-Secondary Education Transfer be governed by a Post-Secondary Education Act, modeled on the Canada Health Act, that outlines clear responsibilities and expectations for the federal and provincial/territorial governments, establishes pan-Canadian guidelines and principles, enacts enforcement mechanisms and determines long-term and stable funding formulae.

The reduction in public funding of universities and colleges has led to unprecedented increases in tuition fees . Average fees for undergraduate students across Canada have ballooned by nearly 200% since 1990/91 — from $1,464 to $4,347.Students entering professional programs have witnessed even steeper fee increases. Between 1990 and 2005, fees for law, medicine and dentistry skyrocketed by 366%, 502% and 619% respectively.

The sharp increase in tuition fees has increased student debt and undermined equal access to post-secondary education. According to Statistics Canada, those in the top quarter of income are twice as likely to go to university as those in the bottom quarter of income. In rural communities the gap is even more pronounced, with the wealthier 5.6 times more likely to go on to university.

To date, the federal government’s response to rising fees and debt has been shamefully inadequate. In the last federal budget, for instance, the government raised the lifetime limit on Registered Education Savings Plans (RESPs) and increased the maximum annual Canada Education Savings Grant payable from $400 to $500. These measures do nothing to assist students who are in need today, nor do they provide any meaningful assistance to future students in need since most modest-income families are financially unable to make RESP contributions. According to Statistics Canada, fewer than 19% of eligible families earning less than $30,000 a year have been able to contribute to an RESP.

A far better strategy would be to convert these and other programs such as the Canada Learning Bond and the Millennium Scholarship Foundation into one fully needs-based grant program. This would provide immediate benefits for economically disadvantaged students and help lower student debt loads.

Recommendation 3: That the Canada Education Savings Grant and Canada Learning Bond programs, along with the Canada Millennium Scholarship Foundation, be converted to a fully needs-based grants program that provides assistance to eligible students in all years of their program.

The issue of the Millennium Scholarship Foundation is particularly pressing given that its mandate is due to expire in 2009. We believe the federal government must act now to develop a plan to distribute the funds that otherwise would have been allocated to the Foundation to augment the Canada Access Grant program.

CAUT remains concerned about the rapid escalation in student debt. What is urgently required is for the federal and provincial governments to more adequately fund universities and colleges so that tuition fees can be lowered. In the meantime, students experiencing difficulties repaying their loans must be offered more adequate assistance.

Recommendation 4: That the federal government substantially increase the income threshold for determining eligibility for student loan interest relief and increase the maximum amount of debt reduction for borrowers experiencing difficulty in meeting their loan payments.

Finally, it is important to note that rising fees have placed an increased burden on Canada’s Aboriginal students. Funding provided to band councils to financially support Aboriginal students has been frozen at the same time that tuition fees have skyrocketed. The result has been that thousands of qualified Aboriginal students remain on long waiting lists to get the funding they need to pursue a post-secondary education. It is time for the federal government to honour its commitments by recognizing that education is a treaty right.

Recommendation 5: That the federal government provide full financial assistance on a non-taxable basis to all qualified First Nations people who wish to pursue a university or college education.

The federal government has substantially increased research funding in recent years. Much of this, however, has come with strings attached, requiring researchers to seek out “co-funders”. The intention has been to build stronger ties between industry and university researchers and to promote the greater commercialization of research. In practice, however, these arrangements can often undermine the quality and integrity of research conducted at Canada’s universities and colleges.

Industrial sponsorship can bias research in ways that do not serve the public interest. Co-funding arrangements often mean that researchers are encouraged to undertake studies on the basis of whether they can get industry funding, not whether the studies are scientifically important. In the area of medical research, for instance, that means more research on drugs and devices that hold promise of profit, and less research into the causes and prevention of disease or into effective treatments for diseases common in developing countries where the prospect of profit is minimal.

Financial ties to industry can also unduly influence the outcome of research. In a now famous study of the matter, Stelfox and his colleagues, using the example of research on calcium channel antagonists for treating cardiovascular disorders, revealed that researchers were much more likely to report positive findings for the drug under investigation if they had a financial relationship with the manufacturers of these drugs or received support from others in the pharmaceutical industry.1 Others have since confirmed Selfox and his colleagues’ findings.

A narrow focus on commercialization ignores that the most innovative and valuable research to date often began with no anticipated commercial outcome, but rather was guided by what knowledgeable scientists thought would be interesting to pursue. We encourage the government to increase the amount of unrestricted grants available through the federal granting agencies. This will help protect the integrity and independence of academic research and ensure that proposals are assessed first and foremost on their academic merit.

In the last budget, the federal government allocated $105 million to support seven “centres of excellence in commercialization and research.” While these centres are undoubtedly deserving of funding, we are extremely concerned that the federal government has allocated funding directly, rather than following the traditional peer-review process where the scientific community judges the value of research projections.

Finally, we remain deeply troubled by the serious under-funding of the Social Sciences and Humanities Research Council. More than half of all faculty and graduate students work and study in the social sciences and humanities, and yet SSHRC funding remains well below that of the other granting councils. In practice, this means that SSHRC cannot offer the same range of programs as NSERC and CIHR.

Recommendation 6: That the federal government increase unrestricted research funding available through the three granting agencies. We recommend that unrestricted grants available through the Social Sciences and Humanities Research Council be doubled. In addition, funding for unrestricted grants through the Natural Sciences and Engineering Research Council and theCanadian Institutes for Health Research should be increased by 15% each.

The federal government has played a decisive role in funding post-secondary education since the 1950's, when inconsistent and low levels of provincial funding for post-secondary education made it clear there had to be a federal as well as a provincial role. Today, the federal government needs to retain the fiscal capacity needed to provide adequate funding in an accountable and transparent manner. Without this, Canada’s universities and colleges are in serious jeopardy. Accessibility and quality will erode further, and our ability as a nation to reap the social, cultural and economic benefits of education will be increasingly compromised.

This document is respectfully submitted on behalf of the Canadian Association of University Teachers

Greg Allain                                             James L. Turk
President                                               Executive Director


1. H.T. Stelfox, G. Chua, K. O’Rourke, and A.S. Detsky, “Conflict of interest in the debate over calcium channel antagonists,” New England Journal of Medicine, 1998; pp. 101-105

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