FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, April 27, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I call the meeting to order. As you know, the order of reference to the committee is Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998. This afternoon we're looking at two specific parts, parts 1 and 8.

We have the pleasure to have with us as our first witness this afternoon, representing the Canadian Owners and Pilots Association, Mr. Kevin Psutka, executive vice-president.

As I'm sure you already know, you have approximately ten minutes to make your presentation, and thereafter we will enter into a question-and-answer session. Welcome. You may begin.

Mr. Kevin Psutka (Executive Vice-President, Canadian Owners and Pilots Association): Thank you, Mr. Chairman.

The Canadian Owners and Pilots Association appreciates the opportunity to present the views of the general aviation community regarding the elimination of the air transportation tax. COPA is the largest pilot association in Canada, representing some 17,000 pilots and aircraft owners, who are mostly private citizens.

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The Civil Air Navigation Services Commercialization Act, which was Bill C-20, provided for the planned elimination of the air transportation tax in conjunction with the introduction of fees for large aircraft by NAV CANADA. The net result is cost neutral for the large air carriers and their passengers. This is fair, and we therefore support the revision of part 8 of Bill C-36, where the air transportation tax is finally eliminated. But this only addresses one segment of the aviation community.

I would like to speak to you about the majority of the aviation community: flying smaller aircraft, vital for connecting this vast country together; feeding the large air carriers with passengers and freight; supplying our remote communities; training our future airline pilots; and providing personal transportation and recreation. I would like to speak to you about what would be fair for the general aviation community.

To put that group in perspective, of 28,000 aircraft in Canada, the elimination of the air transportation tax and the recently introduced NAV CANADA fees affects only the operations of large aircraft, about 1,100 of the total. These aircraft primarily use only 26 large airports out of a total of 726 certified airports.

There are 26,900 smaller aircraft, and virtually all of them are privately owned. Of the 62,500 pilots in Canada, 41,400 of them are non-commercial pilots. I hope you can appreciate that the 26,900 small aircraft operating primarily from the smaller airports are a significant and important segment of aviation in Canada.

The vast majority of the aviation community is not yet subject to a NAV CANADA fee for its services. NAV CANADA intends to introduce a fee for these aircraft on November 1, 1998. The problem is that at this moment there is no provision for offsetting the new fee with any reduction of taxes on aviation.

In 1979, COPA passed a resolution that supported the introduction of an excise tax on aviation gasoline, now 11¢ per litre, as long as it was used for aeronautical purposes. We have always considered a portion of this tax as our contribution to support the operation of the air navigation system.

In recent years there have been tremendous savings resulting from changes in the government's responsibility for and participation in aviation. Here are the government's own words from the report Transportation in Canada 1996, specifically acknowledging that there have been major reductions in spending on transport, and aviation in particular:

Federal government spending on transport declined by more than 30 per cent between 1991/92 and 1996/97, as a result of reductions in subsidies, increases in revenues and commercialization of air navigation services and airports.

They go further to say:

Departmental and total spending fell sharply during 1996 as a result of radical changes to the department's role in recent years. Operation of major airports has been gradually transferred to local agencies or other levels of government, the Canadian Coast Guard was transferred to the Department of Fisheries and Oceans in 1995, and ownership and operation of air navigation services was transferred to the private, not-for-profit corporation NAV CANADA in 1996.

These savings continue to grow as the government completes its transfer of airports to local airport authorities. In addition, Transport Canada has transitioned to a user-pay system by substantially increasing fees and introducing new fees for the services it continues to provide. It is reasonable and fair, therefore, in light of these savings and user-pay initiatives, that the government should acknowledge its substantial reduction in spending by reducing the taxes it collects from aviation users. This would pave the way for the introduction of an equivalent fee by NAV CANADA, a cost-neutral approach for the aviation community.

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COPA made representations to the Standing Committee on Transport and the Standing Senate Committee on Transport and Communications in 1996, during the development of the act. I have included these submissions with my written submission today, so I will not repeat the points here, except to emphasize that in those submissions COPA expected the same fair treatment for non-commercial users as was provided for the large air carriers and their passengers by elimination of the air transportation tax. The vehicle for the fair treatment for small aircraft owners and pilots is the reduction of the excise tax on aviation fuel.

NAV CANADA has delayed introducing fees for small aircraft because they recognize, through consultations with our association as well as provincial aviation councils, that the varied nature of this sector's operations and its sensitivity to cost increases requires a different approach. NAV CANADA has agreed with our position that fair treatment of this sector of aviation should involve a reduction of the fuel excise tax commensurate with the introduction of an equivalent fee by NAV CANADA. NAV CANADA has formally asked the finance minister to reduce the fuel excise tax.

The many aviation councils and associations in Canada support the view that a reduction in the fuel excise tax is fair and necessary in order to avoid additional costs for the general aviation sector. I have included with my written submission a copy of the letter recently sent to the finance minister, jointly signed by the councils and associations representing virtually all of the small aircraft owners and operators in Canada. The importance of the general aviation sector, its sensitivity to cost increases, and the effect of cost increases on the community that general aviation serves are emphasized in this letter.

On behalf of the aviation councils of Canada, I ask that you consider the fair treatment of the important general aviation sector. I ask that you read the written material and then use your good judgment and influence to convince the Minister of Finance to make a responsible decision in support of a reduction of the excise tax on aviation fuel.

Thank you.

The Chairman: Thank you very much, Mr. Psutka.

We'll now proceed to the question-and-answer session, starting with Mr. Harris.

Mr. Dick Harris (Prince George—Bulkley Valley, Ref.): Thank you, Mr. Chairman.

Mr. Psutka, thank you for your presentation. I just want to get clarification. The air transportation tax is being reduced at this time to sort of counter the NAV CANADA air navigation service fee. Is that for large carriers?

Mr. Kevin Psutka: That's correct, yes.

Mr. Dick Harris: Eventually the ATT is going to be eliminated totally for large carriers and that will be offset by the fee. So it's a neutral thing, right?

Mr. Kevin Psutka: Yes, that's correct.

Mr. Dick Harris: Do small aircraft owners pay that ATT tax as well?

Mr. Kevin Psutka: No. It's strictly the passengers on the large air carriers who pay the air transportation tax as part of their ticket price.

Mr. Dick Harris: So in fact the large aircraft then aren't getting a special break on taxes over smaller aircraft, are they?

Mr. Kevin Psutka: I guess the best way to answer that is to look at how the tax on fuel is administered. There is a 4¢-per-litre tax on turbine fuel or the fuel that all of these large air carriers use. The smaller aircraft, particularly the small private ones and the smaller aircraft that fly commercially, are in the vast majority powered by piston aircraft engines. They're subject to an 11¢-per-litre fuel excise tax. So the differential, about 7¢ per litre between the turbine fuel and the gasoline, represents what we think is the difference between what the large airlines are paying via the air transportation tax and what the other people pay via the 7¢-per-litre differential.

Mr. Dick Harris: Do the combined large airlines use as much fuel as the combined small aircraft?

Mr. Kevin Psutka: They use a considerable amount more than the smaller aircraft.

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Mr. Dick Harris: So I guess it's not really too bad that they should get a little bit of a break in the taxes if they're using a considerable amount more.

I'm not a fan of taxes. I'm just trying to weigh the difference here. You're suggesting that the government eliminate the excise tax on fuel to small aircraft.

Mr. Kevin Psutka: Yes.

Mr. Dick Harris: What portion of the cost is that again?

Mr. Kevin Psutka: What portion of which costs?

Mr. Dick Harris: What is the excise tax on—

Mr. Kevin Psutka: The excise tax on aviation fuel is 11¢ a litre.

Mr. Dick Harris: Considering the fuel used by small aircraft, how much would that cost the country? How much would it amount to if they eliminated that?

Mr. Kevin Psutka: It comes in the area of $10 million to $15 million. When the air transportation tax was in full place—it was partially taken off in March of this year and the rest of it will come off in November—generated $600 million, which was then turned around and spent on supporting the air navigation system. That puts it in perspective.

Mr. Dick Harris: As I said before, I don't like taxes, but if they eliminated this, how would they make it up?

Mr. Kevin Psutka: The principle here, which was primary in the development of the privatization of the air navigation system, was that it was primarily aimed at the large air carriers. It was a system that was set up for the large air carriers, and the act that was put in place catered to the large air carriers. So one of the fundamental principles of the act is this cost-neutral transition from government support or government taxation to a user-pay-based air navigation system.

Mr. Dick Harris: So if they deleted the excise tax from fuel, are you going to end up paying that to NAV CANADA for—

Mr. Kevin Psutka: Yes, very much so. We're in consultation with NAV CANADA now and there are essentially four options on the table on how we would pay that fee. The preferred one from industry is to put a fuel levy, or whatever you call it—not a tax but some sort of a levy on fuel—that the companies would collect for NAV CANADA. So as the excise tax is reduced, the NAV CANADA fee comes on again cost neutral.

Mr. Dick Harris: So in the same way that the larger aircraft are getting a reduction in the ATT to elimination, their NAV CANADA fee is going up.

Mr. Kevin Psutka: Yes.

Mr. Dick Harris: So it's a saw-off. Here you're looking for a reduction in the excise taxes because you're going to have a NAV CANADA fee. You won't end up paying any less but just to a different source. And you don't want to end up paying more; that's why you want the—

Mr. Kevin Psutka: That's correct. I'd just like to emphasize that we're not looking for a free ride. What we're looking for is to avoid what we would consider double taxation by having the tax stay on and a new fee. There's no question NAV CANADA is going to have a fee for smaller aircraft November 1. It's a question of how much it's going to be, and of course our sensitivity to that depends on how much the excise tax is reduced.

Mr. Dick Harris: Sounds fair.

[Translation]

The Chairman: Mr. Rocheleau.

Mr. Yves Rocheleau (Trois-Rivières, BQ): Thank you for your testimony. I have a supplementary question. When you talk about compensation and tax reductions, have you any idea of the amounts this might involve for you and for the government?

[English]

Mr. Kevin Psutka: As far as we can estimate, the reduction of the fuel excise tax would generate in savings for the community somewhere in the order of $10 million to $15 million per year, and the NAV CANADA fees that we are negotiating with them now are in that same neighbourhood. In fact, the latest round is about $12 million, but it's difficult to get an exact number on that. It's in the neighbourhood anyway.

[Translation]

Mr. Yves Rocheleau: Is that due to the fact that NAV CANADA was privatized? In your opinion, did that privatization have positive affects or does it cause you more problems than anything else?

[English]

Mr. Kevin Psutka: Are you referring to the privatization of the air navigation system?

Mr. Yves Rocheleau: Yes.

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Mr. Kevin Psutka: No. The aviation industry unanimously supported the transition from a government-run air navigation system to a privatized one because we believe it can be run more efficiently, and in fact we're already starting to see signs of progress there.

A good example is the air transportation tax. As I said before, it generated about $600 million a year in taxes. The most recent reports from NAV CANADA indicate that when the air transportation tax is finally eliminated this fall, the equivalent fee that will be in place through NAV CANADA will be about 15% lower than the air transportation tax would have been at the same time. So they're already seeing some substantial savings from the transition to the privatized air navigation system.

We expect to see the same sort of treatment and progress being made for the small aircraft sector in terms of the fees it will be charged. If that is in addition to the excise taxes we now pay, it doesn't matter what that number will be—$12 million, $15 million or $5 million—it's still going to be an additional burden on this sector of aviation, which the large sector was not subject to in the transition. It was cost neutral. In fact, it's cost beneficial already for them, for the transition.

The Chairman: Thank you very much, Mr. Psutka.

Final question to Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you.

I listened to what you had to say, but I was also scanning through some other stuff, and I wanted to get an idea of dimension.

First of all, are we talking about comparables when we talk about large aircraft carriers and small aircraft in terms of their role in the aviation industry and their use of NAV CANADA resources?

Mr. Kevin Psutka: That is another issue with us in terms of costing the use of the air navigation system by the smaller groups.

One of the main reasons NAV CANADA did not introduce a fee for smaller aircraft at the beginning was that it was recognized that this is not a homogeneous group. It's made up very much of varied operations, everything from private citizens flying from dirt airstrips to regional air carriers flying passengers and freight in small airplanes. It's very difficult to get a handle on what actual use they have of the system as opposed to the large air carriers, which by definition have to fly under instrument flight rules, in a very controlled manner, from A to B, and in a scheduled fashion. It's very easy to calculate what they use of the system. In our case it's the complete gamut.

Mr. Paul Szabo: In the health care system they have a concept called resource intensity weight. It basically tries to assess how much of the technical resources are in demand for a particular procedure. Some are very automatic and there's not a lot of risk; they're kind of routine of nature. Others are more intense in terms of their demands on the system. Does that have anything to do with either NAV CANADA's ability or the risk or work that NAV CANADA has to do in terms of providing services to the small aircraft users versus the commercial?

Mr. Kevin Psutka: I don't think the parallel can really be drawn here, because the system is set up for the large air carriers. The smaller ones use whatever is there. Very little of the system is provided specifically for the small carriers. Furthermore, it's very discretionary on the small air carriers' use of the system. A private pilot, for example, does not have to use any of the system at all in order to fly safely, so I don't know if we could look at it from the direction you suggested.

Mr. Paul Szabo: Okay. I have one last question then. It's suggested here that the operating revenues of NAV CANADA, etc., on a per aircraft basis could range from $250 to $750 per year. How significant is that? The suggestion here is that it could be the last straw. I'm wondering whether or not, if we get down to a point where even $750 per year is the difference between being in business or not being in business or having a plane and not having a plane, there are more problems than simply the fee.

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Mr. Kevin Psutka: There definitely are. I should draw some parallels with the larger sector of aviation. In the many years since the deregulation of airlines in this country, the passengers using that service have seen a substantial decrease in the cost of flying. You get deals now on flying that were unheard of ten or fifteen years ago, whereas in the same time period, general aviation—I'm talking about private and small commercial—has seen steady increases in the cost of flying.

If you look at the number of pilot's licences that are in force now, for example, as an indicator of where it's going, in a ten-year period from 1985 to 1995 we saw a decrease in licences from somewhere in the range of 73,000 to 75,000 to where it is now, which is about 54,000 or 55,000. We've seen the number of aircraft decline from somewhere in the range of 40,000 or 45,000 to where they are right now, which is 28,000. That's directly a result of the increased costs of aviation. Every little bit more cuts that many more out of it.

Mr. Paul Szabo: Thank you, Mr. Chairman.

The Chairman: Thank you very much, Mr. Szabo.

Mr. Psutka, thank you very much for your thoughtful presentation. It's been quite helpful, and I'm sure we'll keep your perspective on this issue in mind as we try to improve Bill C-36.

Mr. Kevin Psutka: Thank you very much for your time.

The Chairman: The next presentation will be made by la Fédération des cégeps.

Kindly come forward.

[Translation]

You will have 10 minutes for your presentation, which will be followed by a question period.

Mr. Réginald Lavertu (Past President, Member of the Administrative Council of the Fédération des cégeps; Executive Director, Rosemont College): Mr. Chairman of the Standing Committee on Finance, ladies and gentlemen members of the House of Commons, good day and thank you for having invited us to take part in this consultation on Bill C-36.

Allow me to introduce the person accompanying me. He is Mr. Jacques Fortin, Director of Student and Community Affairs at the Lévis-Lauzon cegep. We are here on behalf of the Fédération des cégeps, whose mission is to promote the development of college education; the 48 cegeps, colleges for general and vocational education in Quebec, are members of the Federation and it is their official voice.

In a few minutes, I will give you an overview of the brief we prepared on Bill C-36, the bill creating the Millennium Scholarship Foundation. We feel that this is an extremely important issue about which we have already expressed our deep concern. Afterwards, my colleague and myself will be at your disposal to answer any questions you might have.

I think it is important first of all to describe the cegep network to you, as it has no equivalent outside Quebec. The cegep is an original institution of higher learning where both university prep courses and technical training are dispensed. Students register in one or the other of these two sectors and take certain general knowledge courses together, which allows them to acquire the same basic skills, whether they are headed for the job market or intend to continue their education. That is one of the characteristic feature of this model.

The creation of the cegep network some 30 years ago was part of a vast movement undertaken in Quebec to modernize our education system; Quebec felt it had some catching up to do with other Canadian provinces and several other countries. These choices have served us well. The presence of cegeps in all regions of Quebec has indeed increased the population's access to higher education in a spectacular way. The number of students registered for general courses in cegeps has almost quadrupled in 30 years.

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At the same time, the technical training given by cegeps is one of the successes of the Quebec education system and has made an essential contribution to Quebec's economic development. The technicians, men and women, trained in our cegeps make up a very high quality group of workers that is much appreciated by employers. The placement rate of these graduates is very high, which explains the increasing attraction this training has for our young people.

We are proud of these successes. However, there's still much to do. We must of course continue our efforts to broaden access to post-secondary studies. We feel we must also focus on increasing scholastic success and the rate of graduates, still not sufficient in our opinion. This challenge should prove stimulating. We must unfortunately rise to it in a context of great budgetary austerity which has over the past few years in education brought about some very significant constraints that directly threaten the quality of the training provided.

Which leads me, Mr. Chairman, ladies and gentlemen members of Parliament, to the meat of the issue. I want to explain why we are opposed to Bill C-36 as it has been drafted.

Obviously, we think it very commendable that the federal government wants to mark our entry into the third millennium by increasing access to higher education. That is an objective we share. However, we consider that the provisions and means chosen to implement that goal through Bill C-36 are not adapted to Quebec's situation. We are not the only ones opposed to this bill. Our opposition is shared, I remind you, by a large number of stakeholders in the field of education in Quebec: representatives from universities and school boards, union representatives and people who work in these networks and even—and this is very significant—by cegep and university student representatives.

Why this opposition? Bill C-36 does not take into account in any way what Quebec has accomplished over the past 30 years in the area of financial assistance to students, free education, access to higher education and helping to limit student debt. Quebec created its own system of loans and bursaries in the 1960s which led it to opt out, with compensation, as early as 1964, from the Canadian Student Loans Program, a program all of the other provinces still participate in.

This Quebec student loan regime is one of the best in Canada and one of the best among the industrialized countries. To substantiate that statement one only has to consider the proportion of Quebec's gross domestic product allocated to financial assistance, as compared to elsewhere. In Quebec, that proportion is 0.45% as opposed to 0.38% in Ontario and 0.36% in Australia. According to the conclusions drawn by a working group created by the Quebec Ministry of Education in 1994, the maximum yearly assistance granted to students is superior in Quebec to that granted elsewhere, the student debt load is lower, and the rate of reimbursement is very good. I must also remind you that tuition fees in Quebec universities are lower than anywhere else in North America.

As it is currently defined in the bill, thus, the Millennium Scholarship Foundation would represent a duplication of the efforts, orientations, objectives and implementation of the Quebec program to provide financial assistance to students. That duplication would be all the more unacceptable to us as considerable sums are at stake and Quebec's institutions of higher learning are, as I said earlier, extremely strapped for resources.

I should add straightaway that even if the situation of Quebec's students is better than elsewhere this does not mean that financial assistance to students in Quebec covers all of the costs involved in higher education or that our students have no financial difficulties whatsoever. A recent survey of the socioeconomic conditions of cegep students showed that to the contrary a proportion of them are experiencing significant difficulties, a proportion which remains too high. That is the case for 25% of students. The study even showed that 10% of students have difficulty meeting their basic needs in the area of food, clothing and shelter. Thus, there are no doubt still improvements to be made to the Quebec student financial assistance regime and our colleges are very much aware of that issue.

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That fact has only served to confirm Bill C-36's inappropriate nature in our eyes. There is no provision which would allow Quebec to allocate the resources earmarked for it by the Millennium Scholarship Foundation to its own needs and priorities. At most, the bill leaves the door open to the possibility of our agreeing on the definition of financial needs and merit, and on the production of lists of potential recipients of millennium scholarships.

Now, the merit concept is not one of the basic principles of the Quebec student financial aid system. To the contrary, the system is based on a principle of equity, which is that no one should be denied access to higher education because of insufficient financial resources.

In light of that, the Fédération des cégeps would like to see Bill C-36 amended to allow for specific agreements with the provinces. This would allow Quebec to receive its fair share of the funds that will be entrusted to the Foundation and to invest them in its own higher education system, to improve its loans and bursaries system among other things. That share should be set in accordance with the proportion of young people between the ages of 18 and 24 that make up its population as compared to the same age group throughout Canada. The calculation should also take into account what Quebec has invested over the past 30 years to provide free college education, to maintain university tuition fees at a level that is much lower than in other provinces and to provide financial assistance to the most disadvantaged students.

Higher education in Quebec has suffered greatly in the course of the past few years from the budget constraints that were imposed on it and that derived, among other things, from reductions in federal transfer payments to the provinces. Over the last six years the cegep network has had to deal with $209 million in cuts and to this we must add a new $ 56.5 million cut that will take effect next year. These cuts have already had disastrous effects on direct services provided to students, as the services have now been cut to the bare bone. In light of the fact that cegeps play an essential role in helping to guide students toward their careers, is it acceptable that the number of guidance counsellors has been slashed by 40% over the past three years? Students must wait four weeks before they can consult one of those professionals.

Cegeps have lost 30% of their individual counsellors, 25% of their laboratory work technicians and 40% of their guidance counsellors. There is no more money for libraries, for the maintenance of computers and computer equipment, nor for information and communications technology. Cegeps are extremely strapped for resources and, let me repeat this, the quality of education is directly threatened by this pass.

We are convinced that the sums that are to be entrusted to the Foundation would be better used in the structures and programs that already exist in the Quebec post-secondary education network. We dearly hope that the bilateral negotiations undertaken by the federal and Quebec governments will lead to solutions that will be acceptable to all. We think it is possible, with a little imagination, to route the federal contribution to Quebec while ensuring the visibility of the Canadian origin of these funds, and while respecting provincial jurisdiction in the area of education. We are asking Canadian parliamentarians, of course, to support those negotiations.

Thank you for your attention. My colleague and myself are at your disposal for questions.

The Chairman: Thank you, Mr. Lavertu.

[English]

We're going to start with Mr. Harris, followed by Mr. Crête.

Mr. Dick Harris: Thank you, and thank you for your presentation, although I would like to point out that you probably lost 50% of the impact of your presentation because we received it—I received it—only in French. I would strongly suggest that if you want to include all members, whether they are bilingual or not, it might be a good idea to provide an English copy as well, sir, because I have to rely on what you've just said. I don't have the back-up in English.

You mentioned that Quebec has been suffering under cutbacks in transfer funding for education. I just wanted to let you know that you're not alone in that. In fact, British Columbia and all the other provinces have been suffering under cutbacks in transfer payments for education as well.

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While I do not fully support the millennium fund in the way it's being set up, I wanted to point out that if it were to be divided up, it should go back into the transfer payments in support of education, to all provinces on a formula that has pre-existed, dependent on the economies of the provinces.

I really don't have any questions for you. I simply wanted to make those points and thank you for your presentation.

The Chairman: Thank you, Mr. Harris.

[Translation]

Mr. Crête.

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): I'm sure the committee will want to have the brief translated as this is normally the rule when a text is presented in only one of the two official languages, so that Mr. Harris may read it.

[English]

Mr. Dick Harris: Mr. Chairman, I just make a point. I don't think it's the responsibility of the committee to do the translation. It should fall to the responsibility of the presenters, I would think, whether they are presenting from an English point of view to French or a French point of view to English. I don't see that the presenter should put the burden and expense of translation on the committee.

The Chairman: This point keeps coming up. Presenters do the best they can. Sometimes it's not possible for them to get the brief translated in either English or French.

Mr. Dick Harris: We had the same situation this morning and I was unable to read the brief.

The Chairman: Sometimes Mr. Crête has the same situation as well.

Mr. Dick Harris: That's exactly right, and I think we should correct it.

[Translation]

Mr. Paul Crête: Mr. Lavertu, Mr. Fortin, thank you for your presentation. Your brief discusses two themes of particular interest to me and I would like some further explanations. You said that the financial assistance program was one of the components of the Quebec education system and included both the funding of the network of institutions and financial assistance. This system of loans and bursaries that has been developed means that there is less student indebtedness and that the province has been able to make significant investments in the institutions over a number of years to maintain the network's operation.

I would like you to emphasize the fact that in light of the cuts, money from the Foundation would not entirely meet the investment needs you have identified for the coming years. That would not be your first choice. That is not what you would like to do.

You also referred to ongoing negotiations between the governments of Quebec and Canada, negotiations which were undertaken following a visit by Mr. Chrétien to Mr. Bouchard, at the latter's suggestion. In your opinion, what would be acceptable to the Quebec cegep network, institutions I have had the pleasure of knowing pretty well?

Mr. Réginald Lavertu: Thank you for bringing out the distinct nature of Quebec's financial assistance program which is a part of its education system as a whole. The choices made in Quebec in the course of the past few years have resulted in a situation wherein, as all the analyses show, its financial assistance program is more generous than most of the others that exist.

Since this system is part of a funding envelope that is also used to fund services, the problem posed by the arrival of the Foundation in that context is that there would be a duplication of choices that have already been made in Quebec, when Quebec is perhaps no longer at that particular point. As we stated in our brief, there is room for improvement to the Quebec financial assistance system. But we feel quite certain that those improvements are not at the same level as those needed in the other provinces.

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We have a completely free college education system, our university tuition fees are the lowest of any of the Canadian provinces and the level of student debt is also the lowest of any province in Canada.

Sir, I would say that what is being proposed, for Quebec, is a solution in search of a problem. We do have some serious problems with regard to funding the system and we are seeking financial solutions which we could put in place if Quebec could obtain its fair share of the sums allocated to the Millennium Scholarships, which also answers your second question.

An acceptable result would be one which would allow the Quebec post-secondary education system to avoid this duplication of its efforts and avoid wasting money through the interventions of the federal government. It would also be a system that would allow for the respect of Quebec priorities.

Mr. Paul Crête: For the information of the committee I would like you to list the cuts the system has had to deal with, by using some fairly concrete examples. Among other things, you referred to certain types of positions that have been affected by the cuts. Could you give us an overview of the situation? Have you assessed the share of funds that the Fédération des cégeps would receive if Quebec share of the Millennium Scholarship funds were granted to the province? What would be the impact of that for the cegeps in outlying areas, in Montreal or in other large cities?

Mr. Réginald Lavertu: The examples I gave earlier are current. Next year there will be a further $ 56.5 million cut to be added to the $ 209 million cuts we have already endured in the course of the past few years. At the end of next year there will probably be even fewer guidance counsellors than there are at this time. The number of individual counsellors and other professionals who work in colleges to help students to better organize their educational choices and to find their way and succeed in their studies will also be reduced. There has already been a considerable decline which will no doubt continue next year.

If the funds in question could immediately be granted we could already reduce the cuts forecast for next year and begin to reinvest funds according to our priorities, which are today to improve access to higher education, of course, but also to increase the rate of scholastic success. We must begin again to invest in student guidance. This is the type of choice we would no doubt make in the course of the next few years if we could be granted the sums that would otherwise go to improving a financial assistance program that is already among the best in the world.

The Fédération des cegeps carried out a study, the results of which have just been published. It shows that 10% of our students have problems meeting their basic food, shelter and clothing needs. Some way has to be found so that the system can help those students, but not through the Millennium Scholarships measures piggybacked on to what already exists in Quebec. That is a choice that is not in accordance with priorities in Quebec.

Mr. Paul Crête: In each college there is usually someone who is responsible for financial assistance and who is, in a way, the link between the student and the Quebec system. What additional work would be required if with the arrival of the Millennium Scholarships we had to take different criteria into account, particularly the notion of merit? Could you flesh out your answer?

Mr. Réginald Lavertu: That would mean dual management of the system. At this time the persons who are responsible for the financial assistance system in our colleges must manage all of the student files in their college. In a college such as my own, with 3,500 students, some 60% of students ask for financial assistance. Thus, the person responsible—since there is only one person— manages about 2,000 files. Another bursary system, such as the Millennium Scholarships, would require another layer of management. The verifications would not necessarily be the same, nor the communication of various data. The whole system would be duplicated.

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Mr. Paul Crête: But practically speaking, if the notion of merit were integrated into a scholarship system, you would have to obtain proof such as report cards, results obtained or various other similar elements. People would have to fill out a completely different form from the one that exists currently for loans and bursaries.

Mr. Jacques Fortin (Fédération des cégeps; Director of Community and Student Affairs, Lévis-Lauzon Cegep): For your information, there is already a range of about 20 types of forms for the various situations that students may find themselves in in the Quebec system. Another system of bursaries for merit would complicate things further. One has only to remember the special management required by the Canadian student Loans Program a few years ago.

Mr. Paul Crête: How long ago was that?

Mr. Jacques Fortin: The last grants were awarded two or three years ago.

The Chairman: Thank you, Mr. Fortin, Mr. Crête.

[English]

Mrs. Redman.

By the way, earlier this day, I failed to recognize you on the last question. I apologize for that.

Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you. Should I ask that question now?

The Chairman: Yes, you can. It's probably the same one, right?

Mrs. Karen Redman: May I ask the question?

The Chairman: Yes, absolutely.

Mrs. Karen Redman: Thank you.

Thank you for your presentation. Earlier this morning, we listened to some student groups. One of the fears they had was the fact that we were looking at, through the millennium fund, extending bursaries to part-time students. They saw that as quite problematic. I would just like to hear what your response would be to that.

[Translation]

Mr. Jacques Fortin: Are you talking about grants that would be awarded to part-time students in that context?

Mr. Paul Crête: Yes, by the Foundation.

Mr. Jacques Fortin: I received no information in that regard. Currently, the Quebec system does not grant any loans or bursaries to part-time students. Part-time students can more easily hold down a job because of their greater availability, which allows them to better meet their needs than a regular student whose schedule is filled up by his courses and who must meet much greater study requirements.

[English]

Mrs. Karen Redman: If I could just continue for a moment, one of the things I think this past budget has demonstrated is that this government has a commitment to lifelong learning. Look at the opportunity to use RESPs and RRSPs so that people who are downsized or find themselves having to make a career change later in life can avail themselves of education when they may have a family and other commitments.

I'd like to explore this a little bit. Are CEGEPs just available to a certain age group when we talk about the kind of funding Quebec now has in place? Is it just available to people who are residents in the province of Quebec?

[Translation]

Mr. Jacques Fortin: No, students from all age groups have access to cegeps. To be admitted, you must have completed high school or obtained a diploma deemed equivalent. Cegeps receive an adult clientele that is at least as numerous as students who come from the so-called regular stream, who follow a more linear path after their high school studies.

You were also referring to residents from other provinces of Canada or to students who are not residents of Quebec. Quebec has reciprocity agreements according to which it offers students from several countries around the world and from its neighbouring provinces the same conditions it offers its resident students. The doors of Quebec cegeps are open to students from all parts of the world.

[English]

Mrs. Karen Redman: Thank you.

The Chairman: Are there any further questions?

[Translation]

Mr. Crête.

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Mr. Paul Crête: Would you prefer to see financial assistance go to low income students, especially those who live in outlying regions and must move to go to college, or to see bursaries granted according to merit, as the Foundation is proposing to do? As a college network, would you prefer to see the Foundation grant bursaries on a merit basis or would you prefer to receive full compensation? I would like you to describe a little, if you will, the situation of students who are dispersed here and there throughout the regions. Would you like to see financial assistance go to all of the students in outlying regions who may have particular needs, rather than to see grants awarded according to merit? What would be the impact of each of those measures?

Mr. Jacques Fortin: There is a network of 48 colleges that offer different programs. Since all programs are not offered in all colleges, some students, whether they are from the Gaspé or the North Shore, are forced to move, to find housing in another area and practically to build a new life for themselves in order to continue their education.

For your information, according to calculations of the financial assistance program, a student needs approximately $7,000 to $8,000 for one school year and that is if he or she manages to work during the summer and to save money to pay for his or her shelter and other costs related to studies, which is possible for most students in Quebec. So, those are the expenditures involved.

Although grants based on merit may seem interesting there are still, as the study carried out by the Fédération des cegeps has shown, students who have trouble making ends meet and who are going without essentials, either in the area of food or shelter, to be able to continue studying, to work and obtain a diploma in order to get a job some day like all other citizens and pay taxes. In my opinion, that is the group of students we have to encourage.

Mr. Réginald Lavertu: The merit principle is not one of the criteria used in granting financial assistance in Quebec. We have accessibility criteria devised to allow those with insufficient resources to have access to higher learning as well. Later, at higher levels in the educational system, there are merit-based bursaries, many of them.

Allow me to emphasize also that there are merit bursaries for students in all colleges. Colleges collect funds from businesses and when diplomas are handed out, or in a separate ceremony at the end of the year, they award scholarships based on merit to dozens of their students to mark their exceptional performance. However, I don't think such a principle is needed when students are coming into the system.

The Chairman: Mr. Lavertu and Mr. Fortin,

[English]

thank you very much for your input. Certainly you presented a valuable perspective on this issue. On behalf of the committee, once again, thank you very much.

For committee members, this concludes the witness list for this afternoon's meeting, number 73. We will meet again tomorrow, Tuesday, April 28, 1998, from 9 a.m. to 1.30 p.m., in room 362E of the East Block, where we will deal with parts 1, 9, 11, and 13 of Bill C-36.

The meeting is adjourned.