CAUT | ACPPU
Canadian Association of University Teachers
Issues & Campaigns
Statement to Conservative Members of the Finance Committee Regarding Budget 2009
January 8, 2009
We meet today as a growing consensus is emerging that the Canadian economy, and indeed the global economy as a whole, is entering the most serious downturn in generations. The financial crisis that has spread throughout the world is now being felt in the real economy. Economic growth is retracting rapidly, job losses are mounting, pensions are being eroded, and more and more businesses and households are facing bankruptcy.
Most governments around the world have responded aggressively to the deepening crisis. After buttressing financial markets and rescuing flagship financial institutions from failure, countries are now implementing ambitious fiscal stimulus packages to support the real economy. While the Canadian government had been noticeably slow to respond, we are pleased that today there is a widespread recognition — one that cuts across party and ideological lines — that the next federal budget must provide substantial stimulus to ease the severity of the current recession.
The debate now seems to be what form fiscal stimulus should take. We believe that direct federal spending on priority areas that in the short term create jobs and in the long term build Canada’s productive capacity should be the centerpiece of this government’s fiscal stimulus package.
There is little evidence that tax cuts at this moment will provide the needed economic boost. Given the high levels of consumer debt and declining consumer confidence, there are good reasons to be concerned that tax cuts will simply be used to reduce debt rather than be spent on goods and services or invested strategically in the real economy. Facing the rapidly deteriorating state of the economy, the best course of action is direct government spending measures that provide jobs for Canadians who need them and that invest in the future economic and social development of the country. Investments in infrastructure, public services, and in people are vital.
In this regard, we believe a key priority of the budget must be on boosting Canada’s research and development capacity. As we have learned from previous economic crises, firms and nations that maintain and increase their investments in research and development during bad times emerge stronger and more competitive when the good times return. Consequently, we believe that the government should include in its stimulus package a significant new investment in university research. These investments provide not only a long-term benefit, but also immediate stimulus in the form of equipment purchase and job creation.
However, we also need to re-think how university research funding has been allocated in recent years. In the last budget, the federal government provided an additional $80 million per year for the three granting councils, but the funding was targeted for priorities identified by the government — priorities that exclude the majority of researchers in many disciplines. While this new funding was welcomed by the academic community, it is nevertheless disturbing that the government chose to target what research areas and what projects would receive the new money. CAUT believes this research funding should be provided to the base budgets of the granting councils so that research proposals can be assessed on their scientific merit as judged by peer review in the research community. This is the soundest basis for ensuring that research money is well spent.
A second priority must be investments in the knowledge and skills of people. Governments around the world are recognizing the long-term importance of investing in the education and training of their citizens. Today, as we confront the serious economic challenges before us, these investments are more important than ever.
In this respect, we believe the federal government must do more to support Canada’s universities and colleges so that they can widen access and improve quality. The reality is that public funding of universities and colleges has dropped sharply over the past two decades. In 1990, government operating grants made up 80% of total university operating revenues. By 2007, that had fallen to just 57%.
In the 2006 budget, the federal government announced a restoration of some of the federal funding cuts enacted over previous years. This was an important step forward, but federal 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 $3.2 billion. While this represents a significant increase over the previous year, 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. The result is that we will continue to see substantially higher tuition fees, increases in student debt levels, larger class sizes, reduced course offerings, and higher student/teacher ratios.
We have learned from previous economic recessions that we will see more and more Canadians turning to college and university for re-training, upgrading, and pursuing degree programs. This will put new enrolment pressures on colleges and universities. As Canada enters a period of economic downturn and employment insecurity, new investments in post-secondary education are essential. Increased federal funding for post-secondary education would provide more opportunities for individual Canadians, enhance Canada’s skills and knowledge advantage, and provide badly needed jobs and economic stimulus for communities across Canada.
Finally, the federal government must do more to expand access to post-secondary education and training. Inadequate public funding of universities and colleges has led to substantial increases in tuition fees. Unadjusted for inflation, average fees for undergraduate students across Canada have ballooned by more than 260% since 1990/91 – from $1,270 to $4,628. Students entering professional programs have witnessed even steeper fee increases. Since 1990, fees for law, medicine and dentistry skyrocketed by 420%, 626% and 767% respectively. The sharp increase in tuition fees has increased student debt and undermined equal access to post-secondary education.
In the last federal budget, the government took the important step of creating a consolidated Canada Student Grant Program that will be fully implemented this year. CAUT has long supported the integration of all federal grants into one program. However, it is disappointing that the level of assistance provided to low-income students will be just $2,000 per year, not enough to cover even half the cost of tuition in most provinces. As well, there will be little change in the total amount of financial support available to students collectively. We believe the federal government can and must do more to ensure that more adequate funding is provided to academically qualified students in need. This would provide direct relief to households struggling with the high cost of education.
In conclusion, the current economic crisis we face requires measures that provide both immediate stimulus and also provide long-term benefits that will strengthen our economy and our society. Key investments in research and education and training are absolutely vital in our view, not only for their immediate impact in stimulating the economy, but also for building the long-term economic and social security of all Canadians.
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