FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, May 4, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I would like to call the meeting to order and welcome everyone back here this afternoon.

As you know, the order of the day is to review Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998.

I'd like to welcome representatives from the Ontario Community College Student Parliamentary Association, Ms. Cynthia Hilliard and Mr. Cameron Swimm. You have approximately fifteen minutes to make your presentation and thereafter we will engage in a question and answer session. We apologize for the delay, by the way. You may begin.

Mr. Cameron Swimm (President, Ontario Community College Student Parliamentary Association): Thank you. Good morning. My name is Cameron Swimm. I am the president of OCCSPA, the Ontario Community College Student Parliamentary Association.

OCCSPA is the lobbying and networking representative group for students of Ontario's colleges of applied arts and technology. I have with me today Cynthia Hilliard, the executive director for the association. We are pleased to be here to offer some comments about the Ontario college system and the budget of February 24, 1998. We also have some recommendations to make to this committee specific to Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998.

Ontario college students are not represented at the federal level. Approximately 55% of all loans issued in Canada are to Ontario college and university students, of which approximately half are to college students.

We will briefly go over some of the points we make in our submission and then entertain any questions you may have of us.

OCCSPA recognizes the very difficult fiscal situation the federal and provincial governments find themselves in. Our association also recognizes the increasing numbers of students and potential students who will demand access to Ontario's 25 colleges.

The colleges, with their focus on applied learning, represent an investment the government cannot ignore. Colleges should gain recognition as an effective vehicle for economic growth in our country.

Students today tend to be older, with some prior education or work background, and, most importantly, with specific training needs. Our colleges' demographics are changing. The average age of the college student in Ontario is 26. Only 37% of applications to Ontario's colleges are made by high school students. In 1995, mature students, those 25 years of age and older, comprised 23% of full-time college enrolment, and the numbers continue to rise.

First-year students are older than they were when the colleges first began in 1967. As students are getting older in the college system, they bring with them a completely different set of needs. The changing profile of Ontario's population calls for accommodations by our educational institutions.

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Many of our students rely on full-time and part-time employment to finance their education. Summer employment has declined since the last recession, and the jobs are not expected to return. At the same time, the cost of education has risen well beyond inflation in recent years. One out of every two students combines work and college. Fifty-three percent of the students said that they work to cover the expenses related to college.

According to information from the Ontario Ministry of Education and Training, 55.6% of college students receive financial assistance. The Ontario colleges provide access to 77% more sole-support parents and married students than the Ontario universities. There is an increasing number of university graduates who cannot find employment and attend college to complement their previous education. This reinforces the fact that the type of learning provided by the colleges is vital to the workforce. More and more a college graduate is being recognized as value added to a company.

OCCSPA is concerned about the escalating level of debt being incurred by students within the post-secondary education sector. Upon consideration of what the Ministry of Education and Training considers the cost of education, numbers taken from the Ontario student assistance program in 1996-97 indicated that college students paid between 78% and 82% of all associated education costs.

We have seen dramatic increases to tuition in the college system. In the last ten years tuition has increased 126%, and it has increased 64% in the last five years. Currently, an average college student on student assistance is graduating from a two-year college program with a debt of $14,000. This average college graduate earns $24,000 per year. We have seen the number of individuals defaulting on their student loans increase. We are seeing defaults increase as those graduating have only had access to a grantless financial aid system.

The current loan programs have a variety of restrictions, which result in many students in the Ontario college system persisting in their education despite the challenges they face with unmet need. There are approximately 3,900 students in the college system with an unmet need on average of $3,600. That totals over $14 million.

The Ontario college system accommodates approximately 800,000 part-time learners. It was noted by the Ontario Premier's Council on Economic Renewal that lifelong learning therefore is the key link between our educational and economic strategies as the 21st century approaches. Part-time students will be eligible for millennium scholarships as well as grants for students with dependants and new tax relief measures. There has been virtually no help for part-time students for several years.

The students of Ontario's community colleges want it to be known that we are desperately in need of a flexible, realistic loans program. All Canadians stand to benefit from an educated society. The government cannot relinquish its responsibility to support post-secondary education.

OCCSPA gave the federal government high praise for their new-found commitment to higher education. In its last term of office, the Liberal government drastically cut provincial transfer payments for health and education. In the budget announcement of February 24, 1998, the government began to make up for this by committing $4.7 billion in new money for higher education over the next four years. The single largest measure is the Millennium Scholarship Fund. This $2.5 billion fund will provide some 100,000 scholarships averaging $3,000 each over a period of 10 years beginning in the year 2000.

The government has said that the scholarships will be awarded on the basis of academic merit and financial need. Students are hoping need will be the main criterion. Especially in Ontario, where tuition fees are high, the money is desperately needed to help keep debt loads from getting out of hand.

Cynthia will conclude with our recommendations.

Ms. Cynthia Hilliard (Executive Director, Ontario Community College Student Parliamentary Association): Thanks, Cameron.

In addition to these comments about post-secondary education, specifically college education, OCCSPA presents the following recommendations:

Recognizing that a college and a university education are vastly different, that the realities for college students and university students are different, and the demographic make-up of these two sectors are also dramatically different, representation from both constituencies are necessary to ensure that both perspectives are present on the board.

To implement this recommendation, OCCSPA proposes that paragraph 8(2)(b) be amended to read:

six persons that must be knowledgeable and representative of student concerns, one of whom shall be a student attending a college and one of whom shall be a student attending a university, appointed by the Governor in Council on the recommendation of the Ministers

and that paragraph 8(2)(c) be amended to read:

eight persons appointed by the members, in accordance with the by-laws of the Foundation, after taking reasonable steps to consult with the provincial ministers and with representatives of post-secondary educational and learning organizations in Canada that the members consider appropriate.

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As well, we recommend that subclause 12(1) be amended to read:

There shall be 15 members of the Foundation, one of whom shall always be a student from a college and another whom shall always be a student from a university.

OCCSPA is recommending that the proposed term for student directors be three years. For many students studying in the college system, programs are no longer than three years. If the term is longer than three years, the situation will be that a student board member may be occupying this position while he or she is no longer a student. To implement this recommendation, OCCSPA proposes that subclause 9(1) be amended to read:

Subject to subsection (3), the Chairperson and the directors appointed under paragraph 8(2)(b), except for the student directors, shall be appointed to hold office during pleasure for terms of five years but, except if they cease to be directors under subsection (6), they shall continue to hold office until their successors are appointed.

We also recommend that the following paragraph be added, 9(1)(b):

Subject to subsection (3), student directors appointed under paragraph 8(2)(b) shall be appointed to hold office during pleasure for terms of three years but, except if they cease to be directors under subsection (6), they shall continue to hold office until their successors are appointed.

As well, we recommend that subclause 13(1) be amended to read:

Subject to subsection (2), the members, except for student directors, shall be appointed to hold office for terms of five years, but they may be removed from office by a special resolution of the members and, except if they cease to be members under subsection (5), they shall continue to hold office until their successors are appointed.

We have a couple of more to bring this particular recommendation in line. The first is that subclause 13(2) be amended to read:

Of the members appointed under subsections 12(2) and (4), except for student directors, one-third shall be appointed for terms of six years, one-third shall be appointed for five years and one-third shall be appointed for four years but, except if they cease to be members under subsection (5), they shall continue to hold office until their successors are appointed.

And second, we recommend that the following paragraph be added, 13(2)(b):

Student directors appointed under subsections 12(2) and (4) shall be appointed for terms of three years but, except if they cease to be members under subsection (5), they shall continue to hold office until their successors are appointed.

OCCSPA is in agreement with many comments made by other stakeholder groups that have appeared before the committee. As the Canadian Alliance of Student Associations proposed, OCCSPA believes the following amendment needs to be made, because the board must not only be knowledgeable about post-secondary education and learning in Canada and the needs of the Canadian economy; the board must be knowledgeable about student assistance. To accommodate this recommendation, OCCSPA proposes that paragraph 10(a) be amended to read:

the Board is knowledgeable about Canadian post-secondary education, learning, and student assistance, and the needs of the Canadian economy; and

The association also agrees with the Canadian Alliance of Student Associations on the point that the foundation should have the ability to grant scholarships for the purpose of student debt reduction, even after the completion of studies. To implement this recommendation, OCCSPA proposes that the following subclause be added, 28(2):

If the foundation deems it appropriate, the foundation may grant scholarships for the purpose of debt reduction, even after the completion of studies.

This final recommendation is made in light of our comments made on lifelong learning and the importance of lifelong learning.

OCCSPA feels subclause 30(2) should be amended to read:

The total number of months of study in respect of which scholarships may be granted to a person who is engaged in full-time studies is forty months. The months of study need not be consecutive.

We appreciate the task you have and the opportunity to provide you with some feedback, and we would gladly entertain any questions you may have of us.

The Chairman: Thank you very much, Ms. Hilliard and Mr. Swimm. You certainly were quite specific in your recommendations, and the committee appreciates that.

We're going to go to the question and answer session. Mr. Harris.

Mr. Dick Harris (Prince George—Bulkley Valley, Ref.): I have a couple of short questions. Thank you for coming, by the way. I really liked your presentation.

Is there a Canadian association of students for community colleges?

Ms. Cynthia Hilliard: No.

Mr. Dick Harris: There isn't? Okay.

Basically you're asking to be involved with the foundation to give representation on behalf of students in community colleges.

Ms. Cynthia Hilliard: We're asking that a college student and a university student be on the board, yes.

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Mr. Dick Harris: If I'm not mistaken, I think the university students made a similar recommendation on their behalf.

The Chairman: That's right.

Mr. Dick Harris: They wanted to be present to give input as well.

Quite frankly, I think that would be a very useful idea, because after all, you're the ones who are going to be looking to ensure that this fund, should it be passed into legislation, will be spent on the greatest need and in the most efficient way possible.

I really don't have any questions. It was a very thorough presentation. I can support that, Mr. Chairman.

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

[Translation]

Ms. Gagnon.

Ms. Christiane Gagnon (Québec, BQ): Your recommendations are very clear and they make many of the same points raised by other groups we have heard from. Many of the recommendations with respect to merit and the selection of directors are similar. People are concerned about whether their constituencies will be represented. This morning, we heard from the Canadian Association of University Teachers.

I am from Quebec, where our circumstances are somewhat special. We are not happy about the Millennium Scholarship Fund because our system of education, loans and grants program and student assistance plan are among the best. Would you agree to the idea of Quebec's receiving full compensation, since a loans and grants program and appropriate structures are already in place there? A number of federations, including the Fédération étudiante collégiale du Québec and the Fédération étudiante universitaire du Québec, appeared before the Committee and stated that they agreed with Quebec's position, namely that Quebec should be given the funds that would otherwise be allocated to the Millennium Scholarship Foundation, so that it can manage the funds as it sees fit and allocate one portion to guidance and another to scholarships. Would you be in favour of providing that compensation to Quebec?

That is a pretty large question.

[English]

Ms. Cynthia Hilliard: Our position on this is that if our recommendations are incorporated into the act, then we would be very happy with it passing as is.

[Translation]

Ms. Christiane Gagnon: If this legislation is passed, the Foundation will not be able to delegate powers to a province that might like to administer its own fund. Various groups have told us they are concerned that administering these funds will be too costly. They are also worried about the possibility of duplication and overlap in certain provinces, such as Quebec, where a system is already in place.

If the goal is to assist students in need, well the fact is that students in Quebec have smaller debts because education costs are lower as a result of the tuition fee freeze. That is why we think it's important to be able to manage the scholarship funds appropriately. Are you aware of the way Quebec's loans and grants system currently operates?

[English]

Ms. Cynthia Hilliard: Yes, and I can appreciate the comments you're making. However, we are speaking on behalf of Ontario's college students, and it's not really our place to speak for the other groups. I gather they've been in front of the committee and made those comments themselves.

[Translation]

Ms. Christiane Gagnon: It looks like the only ones with any common sense are young people, not their elders.

[English]

The Chairman: Don't feel pressured in answering questions. That's why we have question period in the House of Commons.

We're going to move to Mrs. Redman, because she has a question, I gather.

Mrs. Karen Redman (Kitchener Centre, Lib.): I do; thank you.

I really appreciated the attention you made to detail. Thank you very much.

I just wanted to zero in on the section on page five where you talk about debt reduction even after the completion of studies. Can you just flesh that out a little bit for me, please?

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Ms. Cynthis Hilliard: The easiest way to explain it is that in the college system we are experiencing a dramatic increase in defaults. This is the second year of graduates from the college system from a grantless system, and we still have two more years to go of graduates before the millenium scholarship is even put in place. We would like to see that the foundation has that option, if that's what they choose to be in. We think it's important enough that it could be mentioned in here, though I understand from the way some things could be interpreted that it doesn't preclude the foundation from making that decision. We just would like it more strongly worded.

Mrs. Karen Redman: I certainly appreciate the fact that you've zeroed in on the millenium scholarship specifically, but I think this budget was good news for education in a lot of ways, and I'm sure there are other things in there.

One of the things you seem to be hitting on is lifelong learning, and it seems to me this government has paid a lot of attention to doing things that will offer relief to people who find themselves needing to go back to school, going back to community college because of downsizing and career changes.

Ms. Cynthia Hilliard: We actually cut that out of our speech to make it shorter.

Some hon. members: Oh, oh.

Mrs. Karen Redman: If you'd like to comment now, I'm sure we would love to hear it.

The Chairman: I was wondering. It was a very focused presentation and it was very good.

Ms. Cynthia Hilliard: We cut out some parts, because it was very long.

Quite simply, we are aware of all the different things that were announced in the budget: the expanded interest relief—for those unable to meet their payments, some or all of the interest on their loans will be paid by the government for up to 30 months; an additional two years of interest relief will be added five years after graduation; and the grant they can apply for.

We feel this is a very smart approach to student aid—that student grants should be focused on those who need them most. By taking into account both the debt level and the income, we feel this government has made the program fairer and more efficient.

To go on to tax measures, if you like, we feel that students will also benefit from new tax measures. For the first time, interest paid on student loans will be tax deductible, as is now the case with business loans. Education tax credits will be increased and can be carried forward for five years so that they will help students whose current income is too low to allow them to make use of it. In addition, tax credits will be extended to part-time students.

Students are happy to see the introduction of measures to those studying part-time. Part-time students will be eligible for millenium scholarships, as well as grants for students with dependants—new tax relief measures. There has been virtually no help for part-time students for several years, and the number of students who study part-time has been dropping as a result. These new measures will really help.

We also note that the budget will reduce pressure on the provinces. Any grants students receive, including the millenium scholarships, will be deducted from student loans. Students will benefit from not having to repay this part of their aid package, and the provinces will be saving money on student loans. We feel that this should mean they will be able to invest more in debt relief measures such as those the federal government has introduced.

That's the part we cut out.

Mrs. Karen Redman: Good. I have just a final comment. I do appreciate how focused this was, but I'm also glad to hear that other part of it, because as much as the millenium scholarship was the centrepiece of the budget, it wasn't the only thing this government was trying to do to provide some relief for students.

Ms Cynthia Hilliard: Actually, what we also could leave with you is a newsletter that's been disseminated to all the students in the system. It covers what was announced by the province and your government recently.

Mrs. Karen Redman: Super. Thank you.

The Chairman: Thank you very much, Mrs. Redman.

[Translation]

Ms. Christiane Gagnon: I wasn't finished.

[English]

The Chairman: Oh—you have another question?

[Translation]

Ms. Christiane Gagnon: You seem to be delighted that part- time students will be eligible for these scholarships. My impression is that you must be basing this view on the situation in Ontario. Representatives of the Fédération des étudiants et étudiants du Québec told us they did not fully agree with the idea of part-time students being eligible for scholarships. They aren't against the principle behind the scholarships, but they feel it's important to consider the fact that students are already receiving loans. I respect your opinion, of course, if that is what you think is best for Ontario. But in Quebec, students seem to be saying this would create two different tiers or processes. Quebec already has a system of loans and grants and the millennium scholarships do not really fit Quebec's current direction.

I believe you have a different way of funding the loans and grants program in Ontario and of administering grants for part- time students. What is the difference between Ontario and Quebec in that respect?

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[English]

Ms. Cynthia Hilliard: I actually was going to say that I could comment on what's happening in Ontario. The simple fact is this past year there were changes introduced to the Ontario portion of the student loans program. Part-time students will no longer qualify at all for student loans in Ontario. All that is available to students currently is the Canada student loans portion, which has at any one time a $4,000 maximum. They haven't qualified, but now they will qualify for the special opportunity grants, and so on. So for us, having something provided for part-time students is a big deal for Ontario.

[Translation]

Ms. Christiane Gagnon: I would like to ask one last question.

[English]

The Chairman: I thought the last one was your last question.

[Translation]

Ms. Christiane Gagnon: No, I said I had two brief questions.

We all know that there have been major cuts to the CHST and that those cuts have had an impact on education, health and income security services. If it were an option, would you be in favour of scrapping the Millennium Scholarship Fund and passing that money on directly to the provinces through the Canada Health and Social Transfer, in line with the request provincial premiers made to the Prime Minister of Canada at the First Ministers' Conference, so that this money could be reinvested in education, which is what we would like to do in Quebec, based on the priorities we set?

[English]

Ms. Cynthia Hilliard: We'd like to see the money in the hands of the students, in this case. The level of debt has dramatically increased in Ontario in the college system, and if it went back into the transfer payments there's no guarantee that's where it would end up anyway, and the debt load would not decrease.

[Translation]

Ms. Christiane Gagnon: So, as far as your constituency is concerned, this is a realistic proposal.

[English]

The Chairman: Are there any further questions?

Seeing no further questions, I'd like to thank you very much on behalf of the committee for your input. I really enjoyed this presentation. I liked the focus. I'd like to join Mrs. Redman and of course the rest of the committee in congratulating you for an excellent presentation.

Ms. Cynthia Hilliard: Thank you.

Mr. Cameron Swimm: Thank you.

The Chairman: We're going to suspend for approximately one minute so that we can get the representatives from la Fédération des travailleurs et travailleuses du Québec.

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The Chairman: I'll call the meeting back to order and take this opportunity to welcome Émile Vallée and Jean-Pierre Néron.

Welcome. As you know, you have approximately 10 to 15 minutes to make your presentation, and thereafter we will enter a question and answer session, beginning with Madame Gagnon. You may begin.

[Translation]

Mr. Émile Vallée (Legal Advisor, Quebec Federation of Labour): Thank you, ladies and gentlemen. On behalf of the QFL, we would want to extend our thanks to the Committee for asking us to present our views on this important matter.

Before tackling the main issue we wish to address, allow us first to briefly introduce ourselves to those who may not be familiar with our organization. The QFL is the largest central labour body in Quebec, representing some 480,000 members who are active in every sector of the economy. In Quebec, the QFL represents the members of unions affiliated with the Canadian Labour Congress in the rest of Canada.

We would like to take a few minutes to talk about our relationship with the CLC. It will help you to understand our position. It is our way of presenting our credentials with respect to the proposal to establish the Millennium Scholarship Foundation.

As mentioned, the QFL represents Quebec members of CLC affiliates. Although our unions are part of the same organizations as in the rest of Canada and, in some cases, the United States, and have developed in a similar fashion as elsewhere, significant cultural and sociological differences came to the fore over time. For one thing, the QFL, as an umbrella organization representing Quebec workers, was given more substantial responsibilities by its members and union affiliates than other provincial affiliates. It's a little like the Quebec government's ascendancy over Quebeckers.

It goes without saying that these developments did not occur without any friction between the two central union organizations, the CLC naturally tending to reflect a pan-Canadian vision, while the QFL was more inclined to bring a Quebec perspective to the table. Common issues were dealt with on a case by case basis, according to the political circumstances, and without any general direction. They sometimes dragged on and on and ended up being settled in an atmosphere of bitterness, each believing the other was encroaching on his territory or ignoring his priorities, a little like our governments.

In 1993, the two central labour bodies agreed on a new process of accommodation and partnership. Under the new agreement, the CLC recognized that the QFL operates in a particular context, namely a trade union pluralism unique in Canada, and as part of a society with distinctive linguistic characteristics and cultural and political aspirations. It is in this context that over the years, the QFL came to play a different role from other provincial federations.

In fact, the true embodiment of the CLC in Quebec has long been the QFL. In practice, what that means is that issues that arise in Quebec which would normally be dealt with by the CLC in the rest of Canada, are dealt with by the QFL. That includes issues relating to unions' jurisdiction, union conflicts arising from requests to change allegiance, the local and regional labour councils' responsibilities, education programs, and so on.

As far as international affairs are concerned, the QFL is most active in Francophone countries and cooperates with the CLC in other decision-making bodies. The President of the QFL sits on the Executive of the CLC and has one of the two Canadian seats on the International Confederation of Free Trade Unions, the other being held by the President of the CLC.

When hearings were held last November by the Sub-committee on Trade, Trade disputes and International investment, on the Multilateral Agreement on Investment, the CLC appeared and spoke on behalf of its members, including those from Quebec. The QFL was invited to appear, but deferred to the CLC.

Furthermore, in certain areas, the two central labour bodies each take a position based on the best interests of their members. That was the case when Bill C-19 amending the Canada Labour Code was under review. The two union organizations appeared separately before the Standing Committee on Human Resources Development and the Status of the Disabled.

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Certainly, the two central labour bodies do have the same policies on most issues, but it does happen that they move in separate directions. The signature of the 1993 agreement did not really reduce opportunities for conflict, but the climate changed considerably and it is in the spirit of mutual trust and respect that discussions currently go forward between the two organizations.

We will leave it to the experts to comment on the detailed provisions of the legislation. The following are our general observations.

The plan to increase the number of scholarships fulfills a very real need amongst young people, for what we see as obvious reasons:

- The average debt for students who completed undergraduate studies in 1996-1997 was very high, ranging from $11,227 for a Quebec student to $27,700 for a student in Saskatchewan. It should be noted that after Quebec, Ontario students have the lowest debt level, at $17,181, an increase of some 53%;

- Secondly, tuition fees have increased considerably in recent years, particularly in Ontario. It should be noted that these increases came in the wake of cuts to provincial transfer payments;

- Finally, the training needs of today's young people will continue to grow, as they need to be able to respond to labour market requirements.

Furthermore, the plan to establish the Millennium Scholarship Foundation is not the only way of providing financial assistance to young students. The Canadian government could just as well have decided to increase transfer payments to the provinces, so that they could lower tuition fees and improve their own loan and grant programs.

The Millennium Scholarship Foundation initiative constitutes intervention in the field of education, which is an exclusively provincial responsibility. Some might claim that helping young people to pursue their studies cannot be considered to constitute intervention in education. But as far as we're concerned, that is just playing with words. The plan, if it is introduced as currently proposed, will affect the Quebec loans and grants program, a program that is part of the educational services provided by the government of Quebec. Also, if this initiative is a success and encourages greater numbers of young people to continue their studies, it will lead to increased demand for educational services that must be provided by the provinces.

Our initial reaction is that we are not particularly happy about the Canadian government's decision to intervene in this way in the educational sector. However, if it believes there is a serious problem that needs correction and it has the means to proceed, we would agree that it should be able to do that, given its responsibility to ensure the general welfare of all Canadians. However, that does not mean the Canadian government can do whatever it likes. We believe it should show some respect for the provinces and for the expertise they have acquired in an area they've administered for a very long time. It should also recognize that taxpayers want to see more effective coordination by their governments of the services they pay dearly to receive, rather than see them squabble. The Canadian government should consult the provinces and reach an agreement with them on the implementation of an effective program that reflects their priorities and their existing programs.

The Millennium Scholarship initiative, as currently set out in Bill C-36, clearly illustrates the Canadian government's lack of consultation and lack of familiarity with the Quebec loans and grants program and with Quebec's educational priorities. The project centers on the establishment of a foundation whose primary role will be to manage a program of grants like the one administered by the Quebec Ministry of Education. Because the Quebec program is quite comprehensive, the foundation will find itself in a difficult position: either it will follow the Quebec model, leading to costly and unnecessary duplication, or it will opt for a different model, in which case it will counter the goals of the Quebec plan and simply waste resources that Canadian and Quebec taxpayers could very well do without.

The Quebec program is the result of a consensus between the government of Quebec and organizations representing post- secondary education stakeholders. The minister responsible for its administration is accountable to the National Assembly and the people of Quebec.

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Without presuming to question the good faith of future directors of the foundation, the latter will not in fact be accountable to the taxpayers providing funding for the organization. Is it reasonable for those directors to be able to establish priorities with respect to the awarding of grants that completely ignore the priorities set by representatives of Quebec post-secondary education stakeholders and the government of Quebec? We think not.

We believe the model of consultation and dialogue developed in Quebec over the past 20 years to allow for consensus and help the government to govern better works well and should not be subject to sanctions by a group of directors who are not accountable to Quebec taxpayers. In short, the Canadian government can increase financial assistance to students if it so desires, but it should do so within the framework of currently established programs and structures. By that we mean the Quebec loans and grants program. That program has been in place for almost 40 years. In our view, it is not as generous as it should be, for lack of sufficient funds, but with a budget of almost $800 million, it serves some 150,000 students, and we are determined to held on to it.

One of the reasons for that collective pride is probably the fact that in 1964, Quebec, speaking through Mr. Lesage, had to exercise its right to opt out with compensation from the Canada Student Loans Program introduced by Mr. Pearson, who wanted a program that suited his own needs.

The QFL supports the government of Quebec's action.

The QFL is asking that you urge the government of Canada, by amending the legislation to that end, to sign an agreement with Quebec that recognizes, as Mr. Lesage and Mr. Pearson agreed to do back in 1964, Quebec's right to opt out with fair compensation. We believe it is imperative that such an agreement be signed before the legislation is passed. It is our view that should negotiations drag on, they could poison Quebec—Ottawa relations, just as the issue of transferring responsibility for manpower programs did for almost eight years.

We strongly urge the Canadian government to weigh its actions carefully with respect to the Millennium scholarship initiative. We are now seeing the emergence in Quebec of a consensus similar to the one that developed over the manpower programs issue. If the government continues to refuse to recognize Quebec's right to opt out with compensation, rather than having the Foundation pursue its activities there, it should be aware that there is likely to be an outcry, as long as the issue has not been resolved. Should that occur, the QFL would not remain on the sidelines.

We firmly believe that the people of Quebec and Canada are not interested in another fight such as the one over manpower training. Thank you.

The Chairman: Thank you, Mr. Vallée.

Ms. Gagnon.

Ms. Christiane Gagnon: Thank you. I am very pleased to have this chance to hear from you today. Maybe you will be able to convince the Committee of the consensus in Quebec with respect to the Millennium Scholarship Foundation. As you were saying, this issue is just as symbolic for Quebec as the transfer of manpower training programs. If the Committee doesn't recommend to the government that it amend the legislation, a lot of people in Quebec will be disappointed, and that will be proof that the federal government is not flexible and refuses to hear Quebec's demands. It's all well and good to pass nicely worded motions in the House of Commons about Quebec being a distinct society, but when the time comes to take concrete action in that direction, we see that things are quite the opposite of what they claim.

So, I am really pleased to hear the comments you have made today, because this gives us ammunition to try and convince the Committee to change its position. We are not even talking about the substantive issue, because many witnesses have told us about their concerns with respect to a scholarship based on merit. What we are really talking about is form rather than substance, since we are seeking the opportunity for the government of Quebec to opt out with full compensation.

I'm having some difficulty finding questions to ask, because we pretty well agree, but I would like to ask you how much that would cost. We want to help students. But even based on the goals set out in the legislation, we would not provide maximum assistance to Quebec students, because we would have to pay for the duplication that would result from having two parallel administrative structures in place there. Have you calculated how many fewer grants we would have in Quebec as a result of duplication and overlap between the two structures if the Millennium Scholarship Fund goes forward?

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Mr. Émile Vallée: No, we haven't made that calculation.

Ms. Christiane Gagnon: Well we made a very quick one. If 5% is to be set aside for administrative costs, that means 1,000 fewer grants that would be available to Quebec students.

You also stated that your preferred option would be restoring transfer payments to their previous levels. A number of witnesses from Quebec have said the same thing.

We also know that Quebec's priorities are the high school dropout rate and student guidance and support. We are not against students, but if we don't help them at a very basic level, by providing appropriate guidance and support, and by freezing tuition fees, the impact could be quite serious and cause imbalance within the system we have put in place in Quebec. Do you agree with me on that point?

Mr. Émile Vallée: Yes, absolutely. Our view is that it would have been far more advantageous for Quebec had the funds set aside for this initiative been put back into the Canada Health and Social Transfer. Then the government of Quebec could have used those monies to meet its own priorities.

However, we also believe that if the Canadian government chooses to do things differently, that is fine, except that it has to respect one important priority, namely everything that has been developed in the educational sector in Quebec over the past 30 or more years. There is absolutely no point in starting from scratch and putting a new system in place that will compete with or complement one we already have. From a strictly financial standpoint, it doesn't make much sense.

Ms. Christiane Gagnon: Are you aware of the increased funding Quebec could have provided to students since 1990—in other words, since institutions have been losing financial assistance because of federal budget cuts?

Mr. Jean-Pierre Néron (Legal Counsel, Quebec Federation of Labour): I can respond to that. I sit on a student assistance committee and as such, am familiar with the circumstances many students currently find themselves in. There is no doubt that there is a significant need for funding. We're talking here about an average of $11,000, but some twenty-five year olds find themselves starting out in life with a $30,000 or $40,000 mortgage. Those are considerable amounts of money that call for government intervention.

As Mr. Vallée said, we would in fact have preferred a transfer of funds. That would have been the simplest thing to do. However, if that does not happen, I think some accommodation is possible that would allow the federal government to maintain the visibility it seeks through this program, while allowing Quebec to continue to have full jurisdiction in this area. I think an accommodation is possible.

Ms. Christiane Gagnon: If the federal government does not demonstrate good will on this issue, do you think this will have a negative impact on peoples', as well as the central labour bodies, perception of this whole affair? The wind certainly seems to be blowing in the direction of decentralization and the CHST. Do you think this will have a negative impact on the federal government and its supposed flexibility?

Mr. Émile Vallée: We drew a parallel to the manpower training issue. In our mind, if this issue is not resolved, we may well find ourselves in a situation similar to the one that arose with that file. I think we can already see—I seem to recall noting that the Association des manufacturiers et des exportateurs du Québec made a presentation here supporting Quebec's position. As we mentioned earlier, an increasing number of groups believe the foundation should not be set up in Quebec and that there should be an agreement between the two levels of government.

I would just like to add, however, that there is a big difference between this issue and the manpower training file. In that case, the federal government was talking about transferring to Quebec programs that had been in operation there for a very long time but that the federal government was administering. So, the federal government had in fact developed expertise on the programs in place.

In this case, to my knowledge, the federal government does not administer any loans and grants program in Quebec. So, the expertise just isn't there. We are not asking it to set aside or hand over something that already exists.

• 1630

What now exists is already in place in Quebec. So, why start all over again? The reasoning here is really quite simple.

Ms. Christiane Gagnon: I have one last question. You touched on a sensitive issue. From the very beginning, I have been hearing witnesses express their solid support for Quebec's position. That was the case with the Canadian Manufacturers and Exporters Association, as well as the Taxpayers Association. They told us they were starting to feel quite uncomfortable about the federal government's attitude and its determination to invade an exclusive provincial power.

Indeed, the provinces may want to borrow some of Quebec's good ideas and apply them back home. Just because we have established a good system in Quebec doesn't mean we should be penalized for it today.

Some students also told us that they feel rather embarrassed and intimidated. There is no doubt that an analysis of the loans and grants system in other provinces clearly shows that the reality there is quite different from the one in Quebec, but those provinces would not be the slightest bit frustrated if the government of Canada, following negotiations that are currently underway and that we hope are honest negotiations, led to recognition of Quebec's demands.

We sense that some groups are somewhat intimidated by the whole situation. They are members of Canadian associations, and at the same time they are well aware of what is going on in Quebec. In your brief, you gave a very good explanation of the relationship between the CLC and the QFL. That is exactly what we are experiencing here with respect to Canadian associations. When we meet with them and talk about Quebec, some people start to listen to what we have to say. We look less like cranks than we did initially, back in 1993. When the Bloc Québécois talked about Quebec's demands, people thought it was just small marginal associations that were backing them. Nowadays, though, a number of pan-Canadian associations with no political ties are starting to see that the federal government is acting in bad faith. In this particular case, the government is certainly showing very bad faith in its treatment of Quebec.

[English]

The Chairman: That was more of a comment, right? You got everything on the record, that's good.

[Translation]

Honourable Members: Ah, Ah!

Ms. Christiane Gagnon: That's great.

[English]

The Chairman: Ms. Torsney, followed by Mr. Szabo.

[Translation]

Ms. Paddy Torsney (Burlington, Lib.): Mr. Néron, could you tell me what your job is?

Mr. Jean-Pierre Néron: I am a lawyer with the Quebec Federation of Labour. Are you asking me that because of the comment I made earlier?

Ms. Paddy Torsney: Yes.

Mr. Jean-Pierre Néron: I am a permanent staff member with the QFL. I sit on a committee that advises the Minister of Education. I am also a member of a socio-economic committee responsible for advising students experiencing financial problems. Through those contacts, I have been able to see for myself the kind of financial difficulties students are having. I think the same probably applies to all Canadians. I'm not trying to say that Quebec students are any different. I think everyone agrees that money is really needed to help young people. There's no doubt about that.

I don't think we should be trying to reinvent the wheel all the time. We have a system in place, and my view is that we should be trying to do things in as simple a fashion as possible.

Ms. Paddy Torsney: I asked you that question because I was interested in knowing what you did. You said that things were pretty serious for students in Quebec. There have debts of around $11,000. And yet other witnesses representing the government, students and teachers have been telling us that the situation is not that serious in Quebec, because the average debt is only about $11,000, and that things are actually much worse in the other provinces of Canada.

In fact, I think the impact of a $3,000 grant is greater for a student in Quebec than for someone from another province who has a higher debt. So, this scholarship may in fact be more advantageous to Quebec students.

Mr. Jean-Pierre Néron: What I said was that I considered those amounts to be very high. Others may not agree. Maybe it's because of their age. I am soon going to be 52, and the idea of having to begin my professional life with that kind of a mortgage at the age of 20 would have terrified me. So, that's what prompted my reaction.

I don't really know whether a $3,000 scholarship has a greater impact in Quebec than it would in Vancouver. I have no idea. What I do know, however, is that most people see those amounts as being pretty high.

• 1635

Ms. Paddy Torsney: I myself was a little surprised when I heard young students saying $11,000 was not that bad. It's a lot of money to me.

Do you think that if this legislation goes forward in its present form, it would be possible for the Quebec government to use the other money for university and college buildings? Is it preferable to keep the system we're proposing, thereby allowing it to use the rest of the money for other things?

Mr. Émile Vallée: It seems to me the government of Quebec announced that if those funds were transferred, most of that money would be spent on the loans and grants program. I believe that has already been decided. The idea is not to take this money to use it, as you were saying, for buildings or other things. I saw a paper—a proposal from the government of Quebec to the committee appointed by Mr. Chrétien and Mr. Bouchard, which clearly stated that those monies would be used to support students and provide additional loans and grants.

Similarly, he indicated that the federal government's visibility would be guaranteed and would be in line with the amount of its contribution. If the money comes from the federal government, young people should know that is where it is coming from. But I had the impression that the government of Quebec's position on that was already clear.

[English]

Ms. Paddy Torsney: Do you want an agreement just for Quebec, or do you think we should make 10 agreements with the 10 provinces?

Mr. Émile Vallée: I think it could be 10 agreements. I think basically it's a question of trying to find what's best for all the students in all the provinces.

If the situation is different in Ontario from what it is in Quebec, it should be treated differently. They should be set up in the most convenient and efficient system. We're not asking that Quebec be given a special deal or anything. If Ontario wants the same because it's the same situation as that in Quebec, fine. If it's not, it's whatever the two levels of government can agree on.

We're trying to find a system that will help the young people. That should be our objective.

Ms. Paddy Torsney: So are we.

Mr. Émile Vallée: Exactly. I'm sure you are. Maybe there is a better way than what is proposed in the bill.

Ms. Paddy Torsney: Thank you.

The Chairman: Thank you.

Mr. Szabo.

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

The federal government is publicly contemplating pharmacare and home care as possible investments in the health of Canadians. Do you support those kinds of initiatives by the federal government?

Mr. Émile Vallée: I think they would be great. I think people in this country need pharmacare.

Mr. Paul Szabo: I agree, but there seems to be a parallel here. The delivery of health care is provincial jurisdiction. Through the Canada health and social transfer, do you think the federal government is somehow getting directly involved in health care?

I guess the parallel would be the Millennium Scholarship Fund. Although the administration of post-secondary education is provincial, the federal government is also looking at ways to enhance it.

I raise it as a parallel, because interestingly enough, to the best of my knowledge, representatives from the province of Quebec are the only ones who have come before this committee to say this is provincial jurisdiction and you shouldn't do it.

Having said that, let me ask you whether or not my logic might hold water if I suggested to you that the reason there is going to be a Millennium Scholarship Fund for Canada is that all provinces don't have such funds. It is going to exist. It's going to have a mechanism, it's going to have rules, etc., and be available for Canadian students.

• 1640

So that theoretically there is no duplication, because it must exist for the rest of Canadians, and to the extent a student in Quebec makes application for a scholarship under the millennium fund and would be granted that scholarship, presumably any program the Quebec government would operate would in fact take that into account in determining whether or not the student would qualify for anything more.

As a result it would relieve the burden on the Quebec government for their existing program and allow them to have more resources then they otherwise would have. What would have been given to this student would be able to go to other students.

The net or the end result, whether the money is given to Quebec to give or whether it's done this way, works out to be the same thing. The same number of students on a pro rata basis still are being assisted, whether it be by the millennium fund or directly by a similar Quebec fund.

Mr. Émile Vallée: I have three things. First, we're not saying the federal government should not get into the business of the scholarship. We're not saying that. We're saying if it's important in this country, if young people need some help because they can't afford it, fine. We're saying the federal government can. We're not saying you shouldn't touch it.

You make the reference to pharmacare. The pharmacare comparison is not completely perfect, but it's not a very bad one either. Pharmacare and health care are areas of provincial jurisdiction, but we've seen over the years how the governments have handled health care. I think we probably wouldn't have medicare in this country if the federal government hadn't come in in the mid-1960s and said there should be medicare and we're going to work something out with the provinces. Finally we got a system. We didn't get a single medicare system, we got ten medicare systems. Each province got into the program at different times according to specifications. They don't get the same coverage from one province to the other. I just moved from Ontario, and I noticed that. In Ontario I could get my eye examination free as part as medicare; in Quebec I've got to pay for it. It's not big, but it is different.

As for your proposal, you're saying that if the student in Quebec got money from the scholarship, Quebec wouldn't have to give it. I think that means there would have to be two administrations. The Quebec system would have to continue to have an administration for scholarships, and there would be one at the federal level too. Both sides would be examining the application by a student. We'd be doing it in duplication.

The other thing is, if the student got the money from the federal foundation, what would happen if Quebec turned around and said that because the student already got it from the federal government, they won't give it to the student? It's putting the Quebec government into a situation of being a bad guy because it's cutting the money. I don't think we want to put any government in that kind of a position.

Mr. Paul Szabo: Thank you.

The Chairman: Thank you, Mr. Szabo.

We'll have one final question from Madam Gagnon.

[Translation]

Ms. Christiane Gagnon: Before I ask my question, I just want to provide some clarification with respect to what Ms. Torsney, the Liberal member, said earlier. She said that in Quebec, we are not particularly concerned and that we don't want the Millennium Scholarship. But that is not what we have been saying.

Federations representing college and university students came before this Committee and said that if the money were put back into the Canadian Health and Social Transfer, loans and grants and the educational system would be given priority. That is something the Quebec government and teachers have already agreed on.

There is an attempt here to claim, based on snippets of our explanations, that Quebec is not concerned about student debt. It seems to me some rather hasty conclusions are being drawn from comments made here by the federations representing college and university students in Quebec. They compared the debt level of students in the rest of Canada with that of students in Quebec.

• 1645

I just wanted to point out that if Quebec students have a lower debt load than students elsewhere, it is because the Quebec government is providing them with more assistance and because tuition fees are lower. They also said they wanted us to maintain that policy, so that all students could benefit from lower costs and access the educational system more easily. That is what students told us—not that an average debt of $11,000 was not significant.

Here is my question. The plan is to entrust $2.5 billion to the Millennium Scholarship Foundation. However, the Auditor General of Canada has criticized the fact that this amount appears as an expenditure in the 1998 budget. We all know how tough it was for people all across Canada and Quebec while the federal government was making cuts and restricting eligibility criteria for employment insurance. All of a sudden, $2.5 billion is being invested in a foundation that will only start to have some real impact in two years time, and then for only a period of ten years.

So, I want to ask you what you think about the fact that this money is being charged to the 1998 budget. Perhaps it would have been possible to carry it over several budgets. Let's not forget that the government can't even provide the usual transfers to the provinces. What are your views on this?

Mr. Émile Vallée: I guess the simplest thing, for comparison purposes, is to see it from the standpoint of an individual. If I wanted to buy a house and I had to immediately pay back the entire debt, I wouldn't be able to buy it. I would want to spread that cost over a certain number of years. But I won't go any further than that. This is a matter for the federal government and the Auditor General to resolve. I don't think the purpose of our presence here today was to address that issue at this time. We have our own views, but I think it's probably more appropriate to present them at another time and in another forum.

[English]

The Chairman: Thank you very much for that.

Mr. Vallée, Mr. Néron, thank you very much for your presentation and for helping us with Bill C-36.

I'll suspend until 6.30.

• 1648

• 1838

The Chairman: I'd like to call this meeting to order and welcome everyone here this evening.

As you know, the order of the day in accordance with the order of reference of the House of Commons on Tuesday, March 31, 1998, is to resume consideration of Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998.

This evening we have the pleasure to have representatives from the Council of Presidents, Alberta Public Colleges and Technical Institutes: Dr. Doug MacRae, president of Keyano College and past chair; and Margaret Hildebrand, executive director. From the Halifax Initiative we have Ms. Robin Round; and from the University of Ottawa, Professor John Trent, political science.

Welcome. As you know, you have approximately 10 minutes to make your presentation and thereafter we will engage in a question and answer session.

We will begin with Dr. Doug MacRae.

Dr. Doug MacRae (Member, Council of Presidents, Alberta Public Colleges and Technical Institutes): Thanks very much, Mr. Chairman. Members of the committee, thank you for the opportunity to speak on this issue.

As you pointed out, I'm speaking on behalf of the Council of Presidents of Alberta's Public Colleges and Technical Institutes. The council includes 17 institutions serving approximately 250,000 credit and non-credit students annually. Our institutions provide a very comprehensive range of programs.

In recognition of the hour and the fact that you have had a very busy day, I'm not going to read the paper that is with the papers being distributed, but I'll touch on the key points we've tried to make.

Our paper does talk about the changing economy and the need for education. It also refers to the benefits of education, but I don't need to convince this group of that. I would like to move on, though, to the specific response to the millennium scholarship.

• 1840

The establishment of this scholarship is applauded. The high cost of post-secondary education has created a debt crisis for many students. High costs also act as a deterrent for many considering a post-secondary education. We've learned that about 40% of post-secondary students have student loans. The average size of the loan is approximately $25,000. This debt is a deterrent to entering or continuing post-secondary studies.

There have been other initiatives to alleviate debt and reduce the financial barriers to post-secondary education. For example, in Alberta we have just introduced an Alberta opportunity bursary, which does some things to address these issues. However, this millennium scholarship is most welcomed.

Our council presidents, on behalf of our institutions, congratulate the Government of Canada for recognizing the need for financial support provided by these scholarships. Our council also welcomes the inclusion of part-time students for eligibility for scholarships and support. Each year, more learners pursue their studies on a part-time basis. The council also welcomes the inclusion of students enrolled in certificate and diploma programs, as well as degree programs. Traditionally, scholarships of this type focus on degrees only. The financial need of students in the community colleges is also very pressing.

We support the principle that the majority of the funds are to be directed to people who are in financial need and demonstrate merit. We also support the provision that a portion of the funding is to be earmarked for meritorious performance only. We also support eligibility for students attending an institution outside their province of residence. We support capping scholarship funding and the term of the scholarship. We support the recognition of additional costs for students enrolling in institutions outside their normal region or province. This is particularly critical in a somewhat rural province like Alberta. We support the commitment to discuss criteria for awarding scholarships with the provinces. Finally, we support the equitable awarding of scholarships across Canada.

In closing, on behalf of Alberta's 17 colleges and institutes, I congratulate the Government of Canada for introducing a program to assist students in meeting their post-secondary educational goals.

During questioning, I'll certainly be able to talk about this from a student perspective. We discussed this issue with our students somewhat extensively, realizing that probably not too many students from Alberta will be here in attendance. Thank you.

The Chairman: Thank you very much, Dr. MacRae and Ms. Hildebrand.

We will now move to the representative from the Halifax Initiative, Ms. Robin Round. Welcome.

Ms. Robin Round (Halifax Initiative): Thank you very much, Mr. Chair and members of the committee, for inviting me here to appear tonight.

Again, in the interests of the long, long day you have already had, I've abridged my presentation. I encourage you to take a look at the brief provided and the fact sheet that I have attached on the Tobin tax.

The Halifax Initiative is a coalition of ten environment, development, social justice, and faith groups deeply concerned about the policies and practices of the international financial institutions and committed to their fundamental reform. I'm the coordinator of that coalition.

I appear before you this evening out of a concern that at a time when the Parliament of Canada should be engaged in active debate on the astonishing policy failures of the International Monetary Fund, you are being asked to consider authorizations and legislative amendments that would give it more money, without any analysis of its deservedness.

An approval of these measures is no less than a Canadian parliamentary endorsement of the IMF's complete mishandling of the Southeast Asian financial crisis, as well as renewed financial and moral support for the IMF's bid to further expand its control over sovereign nations, without any public debate, comment, or scrutiny.

• 1845

For Canada to give the IMF more money now with no strings attached is unacceptable. There are very few levers IMF member countries have to control the thousand economists who dictate the economic conditions of life to over 1.4 billion in over 75 developing nations. Money is our only lever. The IMF is not subject to moral suasion, as we've tried for years.

Canada must insist on a critical analysis and evaluation of why we should contribute to one of the world's most secretive and anti-democratic public institutions. I urge you to seize this critical opportunity to block the proposed changes to Bill C-36, clauses 125 to 133.

I urge you to insist that there will be no allocation of additional Canadian resources to the IMF until:

(1) the IMF's failure to understand and identify the proximate causes of the Southeast Asian crisis has been fully and independently assessed and recommended policy changes implemented;

(2) the IMF's mishandling of the bailouts to Thailand, South Korea, and Indonesia has been fully and independently assessed and recommended policy changes implemented;

(3) the IMF can provide assurances that it will finance no further bailouts until inappropriate lending by creditors is fully penalized;

(4) the IMF will cease efforts to abolish all controls on international capital movements;

(5) the IMF begins to undertake research into the appropriate prudential measures designed to discourage speculative, destabilizing financial flows, including financial transfer taxes and the Tobin tax; and

(6) the IMF becomes fully transparent and accountable to its member governments and the public.

Canada has already provided $1 billion in loans to South Korea, $500 million to Thailand, and $280 million to Indonesia as part of the bailout package. Proposed Bill C-36 changes would ensure Canada will continue to pay the IMF without any critical examination of how it may effectively be catalyzing financial instability in the global marketplace.

As the negative impacts on the global economy, the Canadian economy, and the people of Southeast Asia mount, the failure to seize a rare opportunity to insist that the IMF account for its failures and reform is unconscionable.

Members of this committee and the House have despaired of their powerlessness in the face of economic globalization. You are not powerless. You have billions of Canadian dollars and the power to allocate them in your hands. Please, don't write the blank cheque to the IMF.

Thank you.

The Chairman: Everybody's being very brief today.

Thank you very much for a precise presentation.

The next presentation will be made by Professor John Trent from the University of Ottawa. Welcome.

Professor John Trent (Individual Presentation): Thank you, Mr. Chairman.

I too thank you for having invited me to be a witness before you, particularly with regard to the question of the Canada Millennium Scholarship Foundation.

I'm afraid that unlike my colleagues from Alberta, I will not be supporting this initiative of the federal government.

Let me start off simply by saying that the federal Liberal government of Prime Minister Jean Chrétien has had a generally good track record in respecting federal-provincial powers and the principles of federalism, good enough to have received much better recognition than it has from the provinces, the media, and the public.

In light of this positive record, what a tragedy it is for Canada to see the federal government erase this record by once again using its spending power with Bill C-36 and the Millennium Scholarship Foundation to unilaterally invade the provincial jurisdiction of education. Ottawa's Bill C-36 is a frontal attack on the principles of federalism.

Now, to be quaint for a minute, Mr. Chairman, from the outside one has the impression of a cute political ploy cooked up at night by a bunch of backroom tacticians and foisted on the party and the government. One can also hear their calculations, saying, hey, here's how we'll stick it to the provinces and get back public visibility. People who understand that higher education is the front line in the battle for world economic competitiveness know that governments have cut too much out of education. So we'll do a monster scholarship plan and make the provinces look cheap. We'll wrap it up in the flag and the millennium; it will look like prime ministerial leadership, and the provinces won't be able to touch us. They know we have the money, and their students and the parents and the college of course want it to happen. Colossal.

• 1850

I imagine that in addition to hearing about the desperate debt of university graduates and their necessary gratitude for financial relief from any source, this committee has also heard most of the downside arguments against this little plan: It's too little too late. It may be available only to a fifth or a sixth of students. All the rest will continue to be hit by high tuition and living costs, forcing them into debt and, as I see at my university, to work long hours at the expense of their education. It will not be available for another three years, when the students have pressing needs now.

The fund is not economically efficient or rational. I think that should be the point for this committee. If aimed at merit and excellence, it will not aid those who have the most needs and it is likely to be a boon to those with resources, without necessarily attracting the competent but the disadvantaged.

It will surely lead to federal-provincial duplication and will overlap with current plans.

The millennium scholarships I think compete with the Quebec loans and bursaries program, which many consider to be a superior plan.

Finally, most editorialists and columnists, or at least those I've read, have declared the fund a vulgar grab for the political spotlight that is too obvious to be of much use in heightening the credibility of the federal government.

I'm not going to repeat the details of these arguments, but I will concentrate on one issue: the millennium scholarships as an abuse of the principles of federalism. I want to be clear, Mr. Chairman, I am not against the idea of scholarships for needy students—God knows I see it around me enough not to be. Quite the contrary. But I believe the goal of the finance committee and of Parliament must be to ensure that the bursary program fits in with our federal institutions. Otherwise, the costs will be much more than dollars and cents; they will be the viability of the country.

Mr. Chairman, because I wish to convince—as a professor I hate to say I want to convince rather than lecture—let me digress from the realm of intellectual principles for one moment and get down to personal sentiments.

Years ago as an anglophone and as a young person in Toronto...I remember my many frustrations with federalism, which has always seemed to be a “get in the way of, take charge, get on with the task at hand” type of country we all wanted that didn't get hung up on petty quarrels of jurisdiction. So I can well understand the sentiments of those who do not care whose flag is on the scholarship cheque, just let's get me the cheque.

I hate to admit it, but it's taken me a lifetime to learn that while specific issues may come and go, heating up our blood as they pass, federalism is at once more profound and simpler. To use an everyday word, federalism is a deal, a fair deal some call it, a pact or a covenant democratically negotiated between partners to create a country and a balanced constitution that allows the partners full protection and participation.

It is because they do not perceive Canada as living up to a fair federal deal at this time that the two main opposition parties in the House of Commons at present are regional parties, in part seeking a new deal.

During the past few years federalist practitioners and political scientists and many meetings and books coming from many countries have tried to encompass the essence of federalism.

Let me offer you my codification of these international discussions as a set of nine principles. I'm not going to read them all to you, Mr. Chairman—they're in the document I've presented to you—but I'll give the headlines. They are: unity and diversity, mutual trust and bargaining, a spirit of pragmatic accommodation, democratic self-restraint by the majorities in the country, acceptance of contradiction, autonomy and participation, state promotion of a federal culture, continuous adaptation, constitutional legislating and administering, and balance. Balance is the principle that underlies all the others.

• 1855

I think the foundation is a direct attack on the notion of diversity and multiple identities. It also attacks the provincial education systems, which are the underpinning of our cultural diversity. It is the antithesis of mutual trust and bargaining. It is an imposed program unilaterally dreamed up by the central government, invading a provincial jurisdiction without prior consultation and with an explicit refusal of negotiation and bargaining. There has been no effort to accommodate diversity.

The federal spending power is being used to subordinate provincial jurisdictions, which is a betrayal of the principle of local autonomy. If the federal government can trample provincial powers as sacrosanct as education, federalism is an empty shell. The corollary of course in this day of the interdependent governments is the necessity for prior negotiation of joint programs in the fields of policy overlap.

Last but not least, it looks as though once again majoritarianism and homogeneity, “one policy suits all”, is being forced on Quebec. This is in defiance of Parliament's own resolution recognizing Quebec's distinct society proposed by Prime Minister Chrétien. The irony is that the Quebec government will once again blame English Canada for this usurpation of rights, when it will not be the case.

Some have argued that the Supreme Court has given constitutional validity to the spending power when it does not amount to an attempt at regulation outside federal authority. However, this is precisely the subject of ongoing current discussions and attempts at regulation of the federal spending authority. The sincerity of these efforts to find collaborative approaches to the use of the federal spending power will be cast into doubt by Bill C-36.

Being an optimist, Mr. Chairman, and in closing, I am of the opinion that most of the federal government's objectives of the Millennium Scholarship Foundation can still be achieved by other means. Mr. Chrétien was correct to have seen the pressing need to provide students with resources to surmount their debt crisis, as our friend from Alberta has said. It is the vehicle for delivering these resources that must be reworked. We have here a classic problem of means and ends.

We all know that no matter how good your goals, in this case those of the federal government, if illegitimate means are used they will come back to haunt you and destroy your good intentions.

If our principles of federalism, those I propose, can serve as a guide, I suggest, Mr. Chairman, the finance committee recommend to the House and the government that:

(1) Bill C-36 be negotiated with the provincial governments;

(2) Ottawa be prepared to have the programs administered by the provinces within the current student programs, with appropriate recognition being accorded to the federal government and to student mobility. Another possibility would be a federal-provincial foundation, but it seems to me that this is useless duplication;

(3) special consideration be given to Quebec's unique case; and

(4) additional funds be made available now for recent graduates and students currently in the system.

Thank you, Mr. Chairman.

The Chairman: Thank you very much, Professor Trent.

Now I'll go to Mr. Harris for the first question.

Mr. Dick Harris: Thank you, Mr. Chairman. I will try to be brief.

I have a comment for Mr. Trent and then questions to the other presenters.

First of all, Mr. Trent, I want to thank you for your well-prepared presentation. I suppose in your business that's what you do, you prepare well.

Prof. John Trent: I sometimes try.

Mr. Dick Harris: Considering our last meeting, I'm happy to see that we've arrived at very common ground again. I certainly agree 100% with your observations as to what the millennium fund is all about. Also, I'm sure we'll agree that considering the $4 billion that's been taken from education funding in Canada since 1993, a billion and some put back in, although of some help, certainly won't replace the cutbacks.

• 1900

I and my colleagues also believe that instead of the Millennium Scholarship Foundation and the fund that was set up on this basis, as you stated earlier, the same thing could be accomplished by giving the funding to the provinces through a balanced means. The scholarships could then still carry forward, but at the administration of the provinces, which are at the ground level of education in their jurisdictions.

I don't have any questions for you, because you've covered pretty well everything here. I want your permission, I guess—and I don't know if I need it or not—to distribute this to my colleagues, which I will. Thank you for your presentation.

I have a question for Mr. MacRae and Ms. Hildebrand.

Assuming that the millennium fund would in fact go forward the way it's presented, we certainly want to ensure that it treats college and university students fairly. I understand your support for it, certainly. I'm sure if it were administered through the provincial level, your support would be there as well. We're talking about the same dollars, but just in a different way.

You didn't express any concerns in your presentation, and I'm wondering if there are any real concerns that you as administrators have yourselves or that your students have expressed to you regarding it.

Dr. Doug MacRae: What is driving our position is the view that any opportunity we can use to get dollars to our students—and we're speaking on behalf of the students as well here, obviously—would be welcomed. That may be pragmatic, but it also is very real.

We're concerned about duplication, as others are. We've had some announcements about some Alberta bursaries and scholarships recently. Is there going to be overlap? Our concern always rests with whether we are going to be spending an inordinate amount of the money involved in administration of these programs. That's always a concern of ours.

But the principles make sense to us: get money to students, and get money to college students as well as university students. That we're very encouraged by. And the other principles that are there more or less make sense. Our concern would be, let's get on with getting the money in the hands of students. That's the principal factor that drives us, both from, as I say, a student perspective as well as from our own perspective.

Where the money comes from, whether it's federal or provincial, to the student who's trying to get into school or stay in school or, once graduated, get over this tremendous debt load, is less of a concern, certainly at the community college and institute level. That would be my view, but I would invite Margaret to respond as well.

Ms. Margaret Hildebrand (Executive Director, Council of Presidents, Alberta Public Colleges and Technical Institutes): I think, Doug, you've covered it. The critical thing is to foster access to post-secondary education, which in turn allows greater access to the economy. If these funds can help more people access education and training, then that's great.

Mr. Dick Harris: Thank you.

My last question is to Ms. Round. Your presentation certainly leads me to believe you're not a fan of the IMF, or at least their activities of late.

The Chairman: Very perceptive.

Mr. Dick Harris: Yes.

Do I take it that you don't favour the IMF, period, that you're tremendously concerned and upset about the way they've been doing business, their business methods, and some of the things they've been doing? And if that's so, has your institute created some alternatives to an IMF body that you think would function better, and is that in print and is it available?

• 1905

Ms. Robin Round: First of all, I think there is a need for multilateral institutions looking at the global financial system. The IMF as it has been performing in the last number of years, for all the reasons I've cited, is not doing the job that is necessary. It is not doing the job it was originally envisioned to do, or the job that needs to be done in terms of controlling financial markets, etc. So there is clearly a need for a multilateral institution.

Whether we can reform the IMF I think is the question we're all asking ourselves. This is a notoriously secretive, closed and extremely powerful bureaucracy controlling, as I said, the lives of billions of individuals, but with very little scrutiny.

In 1992 the Auditor General of Canada was concerned that parliamentarians weren't given enough information about the risks associated with Canada's exposure through the IMF, and Canadians know little about the IMF or its functioning, and have no means of ensuring any kind of accountability. So as it's currently constituted I don't want to see that institution running or managing or in any capacity representing the interests of Canada globally.

Are there alternatives? At this point there are not, and I think that's what is necessary for us to begin to open up. And I see a real political opportunity coming out of the Southeast Asian crisis to open up that debate. The evidence is before us of what the IMF has done. There needs to be broad analysis.

It's already being done in the media and by academics. Mainstream economists are having quite a debate on the role of the IMF. I think this is an enormous opportunity to open that up to broad public debate to see what we actually want in that kind of an institution, and whether we think we could change it.

Mr. Dick Harris: Okay, thank you.

I have one question for Mr. Trent and then I'm done.

Mr. Trent, I think we both agree that if the government, instead of creating this millennium fund, which some people have called a monument to the leader of the government....

I've never called it that, Mr. Chairman—

The Chairman: Duly noted.

Mr. Dick Harris: —but I may some day.

Do you agree that exactly the same thing—and with probably better results—could be accomplished if the government were to distribute these targeted funds to the administrators of the provincial education systems, letting them use them for scholarships or enhancement of education in their own provinces, eliminating the duplication, the administrative overlap?

I know the answer is yes, but maybe you could expand on that a little bit.

Prof. John Trent: I think the intense increase in student debt at the present time is being driven by two things. One is ideology, and this is at both the federal and the provincial levels. There is a belief that has been expounded for the last half dozen years that the students are the beneficiaries of their education, both intellectually and economically, and therefore should carry a greater percentage of the burden. That is one of the things driving provincial education programs that has lessened the amount of money available to universities and colleges, and both forced and allowed the universities to increase the fees that students are charged, which is a great portion of their debt.

The second is the one you mentioned earlier, and that is the billions of dollars taken out of the education system by the federal government during the past years as part of a general program of austerity to drive down the deficit and the debt.

• 1910

I think all Canadian citizens have recognized that everyone had to participate in this effort to diminish the deficit and the debt. On the other hand, I think a lot of us, and I'd like to think I'm not just preaching for my own area, think that education is the key to economic growth, and therefore it's cutting off our nose to spite our faces to have hit education as much as was done.

So I'm not sure that just putting money back into the provinces without serious negotiation about bringing this into bursaries rather than debt, and to giving the federal government recognition for its portion of this thing—that just handing over the money to the provinces would be sufficient in itself. If I were in the position of the federal government I would want to be in serious negotiation with the provinces, to the point of threatening that if they don't allow for mobility, don't allow us recognition, don't allow some of these funds to go into bursaries, then we will proceed on our own path.

Basically, my answer is yes. I think there has to be one set of responsible hands for the administration of education. Someone has to be finally responsible, and we've always said in Canada that responsibility falls to the provinces.

A lot of people have been saying that the federal government has been into the loans business for years, but I'd like to make two points. The federal government got into funding education for two reasons. One was for veterans. Veterans were considered to be a federal financial responsibility, and that was clear at that time. The second was to help finance access to higher education, and this was a federal financial responsibility only through loans, not through bursaries.

So this new program is a complete reversal, and as I said in my paper, I think it is very dangerous and will come back. The hopes for national unity and for kudos for the federal government will come back to hit you in the face in the years to come. This will become a rabid bone of contention between the federal and provincial governments, and we'll be sorry we ever did it.

Thank you, Mr. Chairman.

The Chairman: Thank you.

Madam Gagnon.

[Translation]

Ms. Christiane Gagnon: Welcome to the Committee. It is rather difficult to ask questions, because you do not seem to be saying the same thing.

Mr. Trent, you are not a sovereignist—at least I don't think you are. And yet, your perspective on the Millennium Scholarship Fund is very much the same as ours, in Quebec. For once, the federal government could have shown its good will and agreed to Quebec's demands with respect to the foundation. As a number of organizations from Quebec have argued, including federations representing college and university students, the CEQ and the CNTU, this runs completely counter to Quebec's demands and creates duplication and overlap, and the reason tuition fees are lower in Quebec is precisely because the Quebec system provides more effective assistance to students.

Some people would have the members of this Committee believe that Quebec is not really very concerned about the difficulties posed by student debt levels. We are trying to minimize the problems that creates. We are very concerned about high student debt levels, but we also believe that our educational system has to perform at a high level and that students must continue to receive the proper guidance and support. In some colleges and universities, they have trouble getting a psychologist to help students deal with their problems.

• 1915

Part of the funding earmarked for the millennium scholarships could be used to ensure that students benefit from appropriate guidance.

We won't get into a debate here because we don't believe in federalism anymore. It isn't flexible and doesn't recognize specific characteristics, which may also exist in other provinces. Too many Quebeckers went to Ottawa to try and make federalism work, and they all came up against the same lack of flexibility. I am now in my second mandate and I could have been brought to believe that it wasn't so, but I have seen for myself that it is quite the reverse. We use a great deal of energy trying to get people to understand the specific circumstances of people living in various areas of Quebec.

You talked about the principle of federalism. I remember hearing a political analyst mention that he questioned the very essence of federalism—which is first and foremost supposed to be flexible, more transparent and sensitive to the demands of the provinces—and the federal spending power.

In any case, I am not familiar with all the principles, but I do think you raised an important point. Most of the witnesses we have heard from said they were very concerned about the way the scholarship funds will be spent, given that all the provinces have been affected by budget cuts, that the money will not be appropriately invested and that this will cost the taxpayers too much money. I have concerns about the way the $2.5 billion will be administered.

What do you think of the idea of an independent board of directors being responsible for administering public funds? You referred to the IMF earlier. It looks as though now the government has a little bit of money to throw around, it's ready to use its nest egg for just about anything, without consulting the provinces. At the First Ministers' Conference, the provinces asked to be consulted, and the Prime Minister agreed. But there were no consultations either with the provinces or with student organizations before any statement was made about the Millennium Scholarship Foundation. The issues were identified, but no one told the Prime Minister to establish the Millennium Scholarship Foundation. And most of the people who appeared before the Committee see certain dangers in that initiative. I would like to hear your views, though, because you did raise a number of valid points.

You laugh, Mr. Chairman, but I think Mr. Trent really did provide an interesting analysis. I'm happy to hear his views, because he certainly isn't a sovereignist and his view may not be based on the same vision we have as sovereignists. But he did make a couple of important points. As I said this afternoon, to me this has just as much symbolic value as the government's response to Quebec's demand for control of manpower training. I'm telling you, there's going to be another battle. It's possible people will see things your way, but you may end up achieving exactly the opposite of what you hoped to achieve.

Mr. John Trent: Thank you, Ms. Gagnon. I want to begin by apologizing for not providing a French version of my text, but I have been out of the country for a month and simply didn't have time to have it translated.

I do hope that your party will have a look at my principles of federalism and see them as goals for the future. You don't need to be a sovereignist to support the cause of a distinct Quebec, with autonomy and so forth. It goes hand in hand with federalism. I'm rather sad to hear that because of party squabbling, discussions at this table have not so far included a very important issue, and one which is recognized as such in Canada: if we don't pay attention to the underpinnings of the federal system, we run the risk in the long term of alienating not only Quebeckers, but also Westerners, Northerners and Aboriginals.

As I stated in my brief, I fully understand the federal government's frustration with the lack of recognition, on the part of the provinces, of its efforts—more significant efforts than have been made in some years—to be fairer and provide for decentralization in certain areas.

• 1920

However, it seems to me this legislation is a reminder of the worst examples of federal government interference in areas of provincial jurisdiction during the period since the Second World War. And what is worse, one of the major problems I have with this bill is that it could mean people will start attacking the Anglophone majority. Neither Anglophones nor the majority in Canada asked for this bill, but they will once again be attacked because the rights of the provinces are being trampled—and particularly those of the province of Quebec, even though it is not the only one to be affected.

Your other question dealt with the board of directors that is provided for in the legislation. I had to laugh when I read the bill. It was written in capital letters that the foundation would neither report to the federal government nor have the status of a crown corporation. And yet, we are being told that the federal government will appoint the chairperson and five other directors, which gives the chairman, if we include him, a quorum of six out of the total of fifteen. The nine other members will be selected by the first six members. Give me an organization like that. I'm telling you if I were the Prime Minister, I would clearly be in an position to dominate, even though it doesn't say so in the bill. I believe we will end up with an organization that very definitely reports to the federal government, whether or not it is an independent foundation.

Ms. Christiane Gagnon: Mr. MacRae, you seem to be quite optimistic about the Millennium Scholarship Foundation. A number of witnesses expressed concerns, for a variety of reasons, because we don't know either by whom or how it will be managed. We are practically talking about federal control of the Foundation, even though they are saying it will be democratically instituted.

Do you not have any concerns in that regard or with respect to the merit issue? A number of witnesses told us they were quite concerned about the concept of merit, in the absence of well- defined criteria, and about the possibility that certain disciplines could receive preferential treatment.

If the members of the Foundation are not representative of the teaching profession and are more interested in the economy and economic imperatives, is there not a danger that the social sciences, journalism and other disciplines could be forgotten and that these scholarships will be awarded to students who have proven their merit in disciplines that help the economy progress more quickly than does social thinking?

You seem to have no concerns whatsoever and to go along with this whole initiative from A to Z. In other words, the Foundation is a good thing, the merit principle is appropriate and the way it will be structured suits you fine.

[English]

Dr. Doug MacRae: First of all, I have some confidence in the fact that there is a statement that the criteria will be established in consultation with the provinces. I have confidence that something will come of it that makes sense for students.

• 1925

Where I and my colleagues are coming from is that when the millennium scholarship was announced, and it came on the heels of an Alberta bursary that was a fairly major injection of dollars in the province, the major response I noted at my institution, as did my colleagues, was relief by students. They said at last there is a recognition that the tremendous debt we are experiencing, and that costs continue to go up, is becoming a barrier. That became the overriding response to the federal announcement and our provincial announcement.

Many of the issues raised by Professor Trent, and I'm sure by other witnesses you heard earlier, are real. However, our view is that we have some confidence in our provincial representatives as the discussions carry forward with regard to criteria. Certainly the legislation talks in terms of the recognition of merit and need, and we support that. Scholarships in our own institutions funded through donations traditionally marry the two.

We look at other things too, but need becomes an important driver, as does merit. The legislation talks of a 5% that would recognize merit only, and I don't have a problem with that. I don't think there's anything wrong with combining both concepts.

I don't know what else you talked about. I guess that's all I have to say for now.

The Chairman: Thank you.

Ms. Hildebrand, would you like to add something?

Ms. Margaret Hildebrand: I don't think there's much to add to Doug's comments, except that I think we would like to approach this from an attitude of optimism and hope as opposed to trying to find all the problems with it and perhaps making it too destructive before it gets off the ground.

The Chairman: Thank you.

Mr. Riis.

Mr. Nelson Riis (Kamloops, NDP): Mr. Chairman, I came in a little late. Although I've read the briefs, I think it wouldn't be fair to my colleagues to allow me to ask questions. If there's time at the end, I do have a question I would like to ask.

The Chairman: Are they ready now?

Mr. Nelson Riis: Yes.

The Chairman: Please go ahead.

Mr. Nelson Riis: That's very kind.

Except for my colleagues, because I realize we're a little ahead of.... There are timetables, but—

Mr. Paul Szabo: Yes, you can speak, but unfortunately your time is up.

Mr. Nelson Riis: Doug, in your presentation you say that you and those you are here to represent welcome the inclusion of programs of study that lead to a certificate or diploma program, as well as a degree program.

In Alberta there are a number of private career colleges. It's not clear that they're part of this. Alberta has been a pioneer in a number of areas. I'm thinking of charter schools and a whole number of things. You often bring a new perspective to some of these issues. Would you and your colleagues support these scholarships being available to students attending private career colleges, particularly given that Dr. Trent points out that only a fifth or a sixth of students will actually be eligible?

Dr. Doug MacRae: The private career college, as you refer to it, is not a terminology that we use. Private institutions that are recognized institutions—I guess that's my concern, that somebody doesn't pop up and create some kind of an institution and then the students become eligible.... As you may know, we've had some concerns in our province about some of our private institutions and their credibility and those kinds of things. As long as it's recognized by the province, I wouldn't have a concern.

Mr. Nelson Riis: Recognized meaning what?

Dr. Doug MacRae: Accredited. There is a process that private institutions need to go through demonstrating credibility, curricula that make sense, stability and those kinds of factors. As long as the institution was accredited, I wouldn't have a problem.

• 1930

Students make choices for a variety of reasons, and I don't think I would want to see students barred from access simply because of the institution they selected.

Mr. Nelson Riis: Would your view also include apprenticeship students?

Dr. Doug MacRae: Yes. In our province, for the first time ever, we have introduced tuition fees for apprenticeship students.

Dr. Trent talked in terms of tuition being a factor, and it's a growing factor in our institutions. For example, tuition can contribute up to 30% of the operating cost of an institution. Legislation has just been passed in our province allowing that, and more and more we are seeing tuition as a growing part of the cost of education. And as I say, we recently introduced tuition fees for apprenticeship students.

Mr. Nelson Riis: Okay, thank you.

Professor Trent, your brief was very interesting. I'm looking forward to the first cheques that are mailed out. Quite frankly, I think it's a brilliant Liberal political strategy, whcih I think you've mentioned in a rather oblique way. But when I see these cheques coming with I don't know whose signature on them, but I can probably guess, and flags and so on.... The students will love to see these—$3,000 cash, hey, that will be great.

The Chairman: Do you think they'll notice the signature on it?

Mr. Nelson Riis: Setting that aside—I mean, that's just a reality we live with—as to your mention of tuition fees, and Doug mentioned it as well, and the new legislation in Alberta, many countries don't have tuition fees, and the Province of Quebec, in their college system, doesn't charge tuition fees. Sixteen of the OECD countries in fact don't have tuition fees. They see that as a barrier. Would you support that notion?

Rather than look at a scholarship or all sorts of other programs of the provincial governments, if, as you say, education is critical to economic development, why wouldn't we be bold as a country and say let's not provide any barrier; let's do everything we can to provide an incentive to people and remove tuition fees as a good investment for our society? Would you agree with it?

Prof. John Trent: Mr. Riis, really, it's a fascinating—-

Mr. Nelson Riis: I'm not asking for a major discussion, because—-

Prof. John Trent: —and tough question.

I've seen both sides of it. I've seen Yugoslavia, where there are no tuition fees, and the students were having the time of their life staying in university for 10 or 15 years. And I've seen Denmark, where there are no student fees and it's superb. They don't seem to have had that problem. I'm not sure exactly how they control it.

Mr. Nelson Riis: You have to show progress.

Prof. John Trent: You have to show progress. But not only are there no fees; they pay you to go to university.

Mr. Nelson Riis: That's right. You're paid to go to university, plus they pick up your books and lab supplies and everything.

Prof. John Trent: The reason I say it's a tough question is because it brings in incredible questions of beliefs and morality, not just efficiency, and so on.

I must say—and I'm talking for myself—that I'm torn between the fact that not every person in society ever gets a chance to go to higher education, and in that sense it's somewhat unfair to make everyone in society totally responsible for paying for those people for whom it is an advantage and it is a privilege. So I do think many people get tremendous advantage, and as you go on in your education, as you professionalize, an even greater advantage, and to some degree it is wise to have people paying for some portion of their education.

Mr. Nelson Riis: Why don't we apply that to grade ten students or grade twelve students?

Prof. John Trent: That's a good question, and I don't believe my feelings are by any means infallible.

We used to only say grade eight. We used to go only through primary school. Then we went to grade ten and the whole of high school. There was a belief that there was a necessity for a minimal level of education.

Mr. Nelson Riis: Do you know approximately when that was, by any chance?

• 1935

Prof. John Trent: When it meant going to high school, I think it was toward the 1920s or 1930s, but I'm not sure.

Mr. Nelson Riis: But John, if in the 1920s and 1930s, with the kind of economy that Canada had at that point, we decided that grade 12 was an absolute minimum level of education we should aspire to, my God, we certainly have gone beyond that by now to at least grade 14 or 16 or something, wouldn't you think?

Prof. John Trent: Yes, and certainly Quebec has recognized this through its CEGEP system, gone through to grade 13 or 14, depending on how you calculate. But even with that in consideration, I think there's something to be said for a degree of self-responsibility, a degree of payback. If I had a solution, if I were God or Mr. Chrétien—

Mr. Nelson Riis: There is a difference, by the way.

Prof. John Trent: —I would do away, certainly, with undergraduate fees, and I would tax back later on and I would tax back everyone, even us, people who have been through the system. I would tax back those who have been able to use their education to gain wealth.

Mr. Nelson Riis: I appreciate that. We always talk around this table about more than simply what's in front of us, because we'll soon be into key budget consultations again for the next round and so on. These are helpful.

You are from the University of Ottawa?

Prof. John Trent: Yes.

Mr. Nelson Riis: Do the children of the professors have free education at your institution?

Prof. John Trent: Yes.

Mr. Nelson Riis: Doug, what about the ones you represent, do they have free tuition there?

Dr. Doug MacRae: No, it's taxable.

Mr. Nelson Riis: It's a taxable benefit. Nevertheless, it is free. So if you happen to be the son or daughter of a professor, as in your case, John, your children would not pay any tuition fees for as long as they kept going to school, for 10 or 15 years.

Prof. John Trent: No, he has to show progress.

Mr. Nelson Riis: But it can take a long time to get through graduate school.

Prof. John Trent: We've changed the system around. They are given—

Mr. Nelson Riis: I'm not criticizing you particularly.

Prof. John Trent: No, no. We've changed the system around. These children of professors, and more than that, their wives, aunts and uncles, get a scholarship from the university, which is taxable.

Mr. Nelson Riis: Right. That covers the cost of their education.

Prof. John Trent: That's right.

Mr. Nelson Riis: This is my last question, Mr. Chairman.

The Chairman: Is that because you want to extend it to members of Parliament?

Mr. Nelson Riis: I know you have young children, Maurizio. Maybe we should adopt for a few years, have some temporary adoptions for a few years.

My last question is to Robin. I appreciate your comments about the IMF, and I have two questions, one quick one. Clause 125 of the bill—in your mind, does that give the Minister of Finance veto power over any financial assistance to third world countries or other countries? Do you know? Is that how you interpret it? Is that too specific a question?

Ms. Robin Round: No, I think that's too specific. I'm not clear on that. Actually we've been trying to consult with the finance department on some of the implications of that. It's not clear.

Mr. Nelson Riis: I tend to agree with your analysis of the IMF, and I have for many years.

I'll ask this as a serious question, because obviously you're a student of the IMF. Can you think of a single instance where the IMF moved in and actually did something useful for the people of that country, as opposed to the élite of the country? Obviously, when you go in and bail out banks for countries in order for the bankers to get paid off, you're dealing with the very select, the élite of a country. Can you think of any good initiative the IMF has ever taken?

Ms. Robin Round: Frankly, no.

Mr. Nelson Riis: I can't either. Okay, I thought maybe you knew of one.

Thank you, Mr. Chairman, that's fine.

The Chairman: Thank you, Mr. Riis.

Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chairman.

I have a couple of questions for Robin, and thank you for your presentation. It was very interesting on the IMF. It would an interesting presentation for the foreign affairs committee as well, and I would urge you to gain an audience there.

First of all, I differ with you on a couple of points, and I'd like to ask your opinion on this. In regard to the speculators, who are so frequently blamed, for instance for the Southeast Asian meltdown, typically the only opportunities for speculators exist when a government's operating a monetary policy that is grossly inconsistent with its fiscal policy, and that was the case in each country in Southeast Asia.

• 1940

There are people, some economists, who argue that ultimately this kind of policy is very bad long term, it's unsustainable, and what the speculators do by rushing in is they make a lot of money, obviously, but they also right a wrong in what is in a short-term sense a very painful way but in the long-term sense may be beneficial to the country. This is just one position I have that I'd be interested in your comments on.

Secondly, with regard to a Tobin tax, the idea is very seductive, the idea of a Tobin tax that would help reduce the hot money syndrome, but the difficulty with it I believe would be enforcement. We already have difficulties with some tax havens for instance on simple things like income tax, which would be in many ways easier to track than transactions, especially with e-commerce. And arguably for a Tobin tax to be effective it would require a commitment from almost every industrialized country, or potentially actually greater than that, to prevent havens from existing, and the enforcement of it with e-commerce might be almost impossible.

Thirdly, have you been watching what's been happening with the World Bank under Wolfensohn and some of the reforms they're starting to implement? I would be interested in your feedback on that and whether or not you feel the IMF can be similarly reformed.

Lastly, it's very difficult. There's been a de-linkage of human rights and foreign policy in Canada since 1993, and arguably our trade policy involves governments acting as sales people for individual companies. I would be interested in your feedback on what impact you believe that has had in compromising our foreign policy agenda in traditional areas like human rights and environmental policies, especially in areas like the EDC's involvement in Three Gorges.

I also have a couple of quick points on Mr. Trent's presentation. That was very interesting, Professor Trent, but there has been a disproportionate growth in student debt over the increase in tuition. There's been an increase of about 110% in tuition across Canada on average and at the same time a 200% increase in student debt, and arguably part of that is because of the student employment situation, where jobs just simply are not as easy to obtain today as they may have been ten years ago. Part of the problem is that you have students competing with adults for the same entry-level positions that used to be the official domain of students.

Do you believe, for instance, that as a holistic policy for this we should look at tax reduction to stimulate employment growth as part of the strategy? I would be interested in any of your positions on this, because there are some people who feel that the millennium scholarship is very much a very targeted approach to an extremely holistic problem. It's kind of a specific approach to an extremely holistic problem that requires holistic approaches, and I'd be interested in your feedback on those issues as well.

Thank you.

Ms. Robin Round: You may have to remind me of a couple of questions on my list, because there was quite a pack there.

Mr. Scott Brison: Okay. The first one was on the speculators a little bit.

Ms. Robin Round: I think I have most of them, but you can catch me where I've missed them.

Mr. Scott Brison: Sure. Thank you.

Ms. Robin Round: On the question of whether speculators in fact right a wrong, I would disagree. I think there is some truth to the notion that these countries in fact had some of the fundamentals wrong, but I think we have to look at the magnitude of the capital moving in and out and how it can actually overwhelm governments' ability to in fact fend off a run on their currency. And actually speculators are in fact making it very difficult in some ways for these governments to enact their monetary policy because of the threats that capital will fly.

There is this control, this authoritarian control, that is perceived as being out there because governments no longer have that authority to make the decisions for themselves because they haven't got the resources to defend their currencies because there is so much money moving out there, $1.3 trillion a day. That's what the speculation is. That's the daily rate of money moving through the system, they estimate. That compares to about $4.3 trillion a year for the entire global productive economy. The amount of money that's moving around out there is just beyond reckoning and imagining.

• 1945

In terms of the Tobin tax, which was proposed by James Tobin 20 years ago to throw sand in the wheels of speculators, of anywhere from 0.1% to 0.5% on foreign exchange transactions, the question of enforcement has long come up. It frustrates me to no end that that's where the economists end their discussion: “No, we can't enforce it. Let's forget about it.”

Well, if you actually start looking at the numbers, about 66% of the transactions are done between two banks. About another 20% are between banks and other financial institutions. Most of those transactions, 55%, are done in only three countries: the U.K., the U.S., and Japan. In New York alone, 70% of all those transactions are done by 20 banks.

So when you start to look at the fact of just how many institutions are actually involved here, there are not billions of speculators out there. There's a fair few, they're contained in certain places, and they're not spread out across the map; they're largely in the large financial centres. So it starts to become less of a picture of millions of speculators out there, no one knows where they are, and they can run offshore at any point. Responsible institutions will not avoid this once they are brought into it.

Because these are trades between banks, if banks do decide to run offshore, there are ways and means to deal with that. Let's say participation in the IMF is conditioned on the collection of a Tobin tax, or those countries that potentially could be tax havens are provided with resources from the revenues generated by a Tobin tax. The range of revenue is estimated at anywhere from.... Depending on the conditions, whether it's 0.1% to 0.25%, let's say, and recognizing that revenue would decrease as a result of the tax, if in fact it works, it may be between $120 billion and $300 billion a year. What if you provided some of those resources to those countries to ensure they participated in the program? That surely can be done with that level of resources.

The debate needs to move beyond “No, we can't do it” to looking at the mechanisms by which it can be done. That's one reason the Halifax Initiative, in cooperation with academics and others, are looking to hold forums here in the fall, prior to the Commonwealth finance ministers' meeting, to begin to look at these alternatives very specifically and say let's move beyond the political wall that says, “No, it can't be done” and the wall that of course the financial community is throwing up that says, “We don't want to have anything to do with this”, to the reality that we really need something to begin to control these speculative financial flows and recognize that we have the systems to do it. There's an electronic record of every one of these transactions. It's not impossible to track. There are ways and means to enforce it. We need to open up that debate on what can be done.

Again, a lot of it is blockage by the powers that be, the financial community itself, and lack of political willingness to actually lever open the debate. We've done amazing things before. The World Bank and the IMF has created a multilateral debt initiative that no one ever could imagine. The IMF is giving grants to it. We came up with a landmines treaty. These things can be done. Again, it's an issue of political will and the willingness to actually lever open the debate. That's what we actually have to do.

Regarding the World Bank and reform and whether the IMF can be reformed, my presentation doesn't say shut down the IMF; it says use the tools we have to push for reform. And those tools are money levers. If you look at how the reforms at the World Bank actually began, it was the Pelosi amendment in the U.S. that attached conditions to the release of funds to the World Bank. It said you must become more socially responsible, more accountable and more environmentally responsible. That began a process, and there has been incremental change at the institution. From where I sit, watching the level of environmental devastation and wrecking of an enormous amount of human capital through programs instituted by the IMF and World Bank, it's not fast enough.

• 1950

Mr. Scott Brison: What about EDC?

Ms. Robin Round: Now there's a closed and unaccountable institution. We've been encouraging, through the discussions that have been going on at the SHERPA—because that's under discussion at the G-7 this year—to open up a very secretive institution. I can't get any information from EDC about its loans or where they are going, and there are no social and environmental criteria attached.

There's a push on in the U.S. right now to get OECD-wide minimal standards for export development corporations. So I won't hold that one up as a reform winner, but until we actually start attaching conditions to the money that we give to the IMF, we'll never know if it can be reformed. We will never know because it operates in its own bubble. It's highly secretive and highly bureaucratic. There's virtually no access by the public or by parliamentarians to the decision-making process.

Jeffery Sachs states that considering there are only 1,000 economists there and given all the economies they're running, it took about seven economists to decide the fate of each country in Southeast Asia. They're not accountable for what those decisions are. We don't know what the process was. We don't know whether there will be any analysis of the outcomes. In fact, we anticipate there won't be. They're completely unaccountable.

So until we attach conditions to that money, we'll never know if the IMF can be reformed.

On the last point, about foreign policy and government acting as sales people instead of emissaries for Canadian values, I agree with you completely. I think it was Sylvia Ostry who recently commented in the Globe and Mail about the bankruptcy of Canadian foreign policy, and I would have to agree. Aside from brilliant flashes such as the landmines treaty, etc., as I watch the Prime Minister head off to China or Latin America or wherever and pay lip service to human rights while signing billions' worth of deals, I find that completely morally bankrupt and unacceptable.

The Chairman: Thank you.

Dr. MacRae.

Dr. Doug MacRae: You were making a point about tuition, and I'd like to respond to that.

Mr. Scott Brison: Tuition and the whole employment issue.

Dr. Doug MacRae: Right.

I think there may be a misconception. I can only speak at the community college level, because the university is different. In Alberta, at least, tuition fees are about double. In our province, the tuition fees to attend a community college or an institute are around $2,000 per year. The costs are somewhere between 10% and 15%, depending on the student and their needs and those kinds of things. So there's a lot of focus on tuition and a lot of discussion when tuition fees go up.

Earlier you talked about the possibility of institutions without tuition fees. In response to considerable debate that we had in our province, our students were supportive of tuition fees. They wanted a cap, they wanted predictability and they wanted a maximum contribution by students, and both of those things are now in legislation.

I think the bigger issue that you talked about is the whole thing about student employment. The competition for student employment is probably more aggressive than ever. A lot of it is entry level. You're probably not able to save as much, so the loan issue starts to grow each year. But I think it's a mistake to focus simply on rising tuition fees and say there's increasing debt. As I say, tuition fees represent 10% or 15% of the annual cost of going to school. I think we need to keep that in focus. We tend to look too much at tuition fees. It's all of the other costs associated with having no or minimal income coming in, and your cost of living and other costs that drive up the cost of education and result in a pretty significant debt load.

• 1955

The Chairman: Are there any further comments? Mr. Szabo.

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

I've been doing a bit of research on a social problem, and I found on a particular subject matter that 3.4% of women had some sort of a social problem—a gambling problem, for instance. I have three or four questions, so maybe we can get a quick answer. In Canada, 3.4% of adult women have this social problem. How would you characterize that in terms of dimensions, Professor Trent and Dr. MacRae? How would you describe it or characterize it in terms of severity, size, or whatever?

Dr. Doug MacRae: I don't have a clue. I don't understand your question and—

Mr. Paul Szabo: I'm trying to make a point here.

Dr. Doug MacRae: Okay.

Mr. Paul Szabo: If I told you that 3.4% of women had a gambling problem, would that be of some concern but not a big deal?

Dr. Doug MacRae: I don't know if it's not a big deal. It's a concern, sure.

Ms. Margaret Hildebrand: It's a big deal for them.

Mr. Paul Szabo: Yes, it's a big deal for them, but in the whole scheme of things....

How about you, Professor Trent?

Prof. John Trent: I'd be worried whether one of them was my wife.

Mr. Paul Szabo: Here's the point. We've had some testimony about student debt. I've heard anywhere from 30% to 50% of student debt—I think Mr. MacRae said that 40% of students have debt. We also got substantial concurrence that 93% of students repay their loans. We got substantial support for that, which means that only 7% default. We also found that a good majority of them actually defaulted or declared bankruptcy before the interest freeze period expired, which means they're not even good-faith defaults. There were a lot of sour ones in there.

But even if you assume a 7% default rate, only 40%—that means that only 2.8% of students in Canada had a debt problem. You don't seem to think that 3.4% of women gambling is a particularly terrible problem, Dr. MacRae, yet you described it as a debt crisis. Professor Trent described it as desperate debt. I wanted to make the point that it appears there is a different standard in terms of magnitude of problem.

Personally, I don't believe the issue here is really student debt. I think Margaret said it very clearly: anything that helps the accessibility of post-secondary education to Canadians, particularly those who otherwise might not have the opportunity, is a hell of an investment to make. It is the most important. It's student-centred.

There's been some discussion here about unemployment. Yet Human Resources Development Canada tells us that for people with a university degree who are still under 25 years of age, the unemployment rate is only 6.5%. For Canadians with any university or college degree, the unemployment rate in Canada is only 4.5%. Clearly, the investment of whatever it is in education pays off. One witness told us that it was the equivalent of a 15% after-tax return for the rest of their lives.

I want you to know that what I've heard from people and what I think the program is all about is not how we are going to help 7% of today's students with their debt. I hope it's going to help students who aren't students today to become students because we want them to participate. I hope that's going to happen.

• 2000

The balance of my questions, Mr. Chairman, have to do with Mr. Trent.

I can tell you that I hope one day you and I get to play poker, because I'm sure that you either don't play poker, or if you do, you do very badly, because your face gives you away when we start talking about some of the issues you raised.

Let me ask you a quick question. Do you believe the government should give some sort of a top-up of the RESP, the 20% top-up? Do you think the government should be involved in that? It was offered in the last budget. Do you support it?

Prof. John Trent: Yes.

Mr. Paul Szabo: You do. Do you think that the federal government, in terms of its initiatives on—

Prof. John Trent: If it's a tax, it's a tax. It's in the federal domain.

Mr. Paul Szabo: —income-contingent repayment of loans—is that something that's useful?

Prof. John Trent: It's in the Income Tax Act, Mr. Szabo. It has nothing to do with provincial education.

Mr. Paul Szabo: Well, okay, but it has to do directly or indirectly with somehow putting more resources available for the education of a student—

Prof. John Trent: Delighted.

Mr. Paul Szabo: —ultimately to get into their pockets to reduce whatever, not unlike the millennium fund.

I guess I'll ask you the simple question: if a foundation is set up to administer this for all of Canada, and one particular province has that already, does it automatically mean that it's duplication in totality, if only one province has something? I think that's an important aspect.

Secondly, to the extent that a Quebec student would apply and receive a millennium scholarship, theoretically the accessibility or amount of any Quebec scholarship would be offset or maybe eliminated because of the receipt of the millennium scholarship. Following that through, this basically means that those funds would be freed up in the Quebec system, and either allowed to further reduce tuitions or to expand the grant program. In other words, the end result is identical.

The only difference here I think is not the educational accessibility issue, it's the political issue that you've raised about whether or not Jean Chrétien's name is on a cheque. Is it really the political thing that bothers you, or is the economics of promoting accessibility?

Prof. John Trent: Mr. Szabo, let me say first of all that I don't want to chew my cabbage twice. I've said what I've had to say; it's in my document and it's on the record. I have set up a set of principles of federalism—principles, I should tell you, as perhaps you'd be interested to know, that were all aided and abetted by the federal government in their development and in their publication.

This being said, I think it would be astounding if the public were to hear you say that students don't have a debt problem, or that it's minimal. I'm not sure how we get to 2.8% using your calculations—saying that only 2.8% have a debt problem—but I'm sure there are an awful lot of students in this country who would be really astounded to hear that.

I do believe it is the magnitude of the problem that has driven the government to want to do something about it—access as well as debt. I also think, when you say it's clear that investment in education pays off, it is sad that not only the federal government, the provincial governments—everyone has forgotten this for the last half dozen years, as they have sabred into the amounts of money available for our education institutions.

Now to your most important observation, the one that has to do with duplication in Quebec, I'm not going to go back into it. I've said what I've had to say about the principles of federalism, and I think it's very dangerous for us at any time—I don't care whether the province is Quebec, Alberta, or Newfoundland—to write off one province as not being that significant if there's a program that's needed by everyone else, and that province, or the minority, or whoever it happens to be at that time, just has to sit and take it. I think it's a very dangerous principle of federalism.

• 2005

You bring up the question of duplication. I think it is probably the most difficult of all the questions we have to deal with here in the millennium program. I've said in the paper that my analysis suggests—to me, anyway—that there will be inevitable duplication, overlap, and so on. They're even mentioned in the bill itself—that these possibilities are there and the government wants to minimize them. The government itself accepts that there will be the possibility of duplication.

What it seems to me we fail to recognize is that somewhere down the line someone has to administer a college, a university. Someone has to put into perspective the costs for students, the costs for professors, the costs for research, the costs for administration, the cost for buildings, and all these things have to be in a package.

If we multiply the number of agencies that are out there doing their own thing, even with consultation, even with bringing some people on the board, what we're going to do is multiply the duplications. I don't mean just duplication of two people doing the same thing. I'm talking about not being able to have a coherent policy.

That's what I am very much afraid of, just as I'm very much afraid of, in the final line, with tuition costs and so on.... The bottom line for me is the endowed student who hasn't got money. These people obviously need to be supported. They're the ones we really have to look after in this program.

There has to be a program that fits in with a total university education picture and fits in with the total package of federal and provincial institutions.

Mr. Paul Szabo: Mr. Chairman, I'd just like to ask one last question of Mr. Trent.

I'm assuming you are here as an individual and not representing the position of the University of Ottawa.

Prof. John Trent: Probably my rector would kill me.

Mr. Paul Szabo: I don't need to ask the question then. It's been answered.

Mr. Nelson Riis: Mr. Chairman, can I ask you a question?

The Chairman: Absolutely.

Mr. Nelson Riis: In light of this last round, can students now, graduating from a university or any institution with let's say a debt load of $25,000 or $40,000—as the graduate student the other day indicated—can anybody just declare bankruptcy today and that's it? I thought the bankruptcy laws were changed a couple of years ago, and that did not make this possible. Could any student declare bankruptcy and become debt-free as a result?

The Chairman: Yes, but I think—

Mr. Paul Szabo: There are some restrictions.

The Chairman: There are some restrictions, and I think student bankruptcy is actually excluded.

Mr. Nelson Riis: Could we ask our researcher to look into it?

The Chairman: Yes.

Mr. Nelson Riis: I think it's rather important, because—

Mr. Richard Domingue (Committee Researcher): It's ten years now, but it's new.

The Chairman: I think they've moved it to ten years, but it's new. The last changes we made to Canada student loans addressed that particular issue.

Mr. Nelson Riis: I thought so, but a number of people have mentioned this bankruptcy option that's open. I guess what we're saying is that at the moment, it doesn't seem to be.

The Chairman: A ten-year period, as the researcher said, is in Bill C-36.

Mr. Nelson Riis: Which means what? What does that mean?

Mr. Paul Szabo: The bill in front of you.

Mr. Nelson Riis: I know that, but what does it mean?

The Chairman: It means that when you declare bankruptcy, you can't get discharged until the tenth year.

Mr. Nelson Riis: Declare bankruptcy on the basis of your student loan.

The Chairman: Yes, exactly.

Mr. Nelson Riis: So you have this kind of pall hanging over you for ten years.

The Chairman: Yes.

Mr. Nelson Riis: Okay. That's in this legislation?

The Chairman: That's right. There were changes—I think it was Bill C-35, the bill in the last Parliament, or Bill C-28. Something like that.

[Translation]

Ms. Christiane Gagnon:.Mr. Chairman, this comment is for you, not for Mr. John Trent. I wanted to point out that if there is duplication in one province, and 5% of the budget is to be set aside for administration, in Quebec alone, we will end up with 1,000 fewer scholarships every year. That represents 10,000 scholarships over a ten-year period.

• 2010

As I was saying, I have no further questions; I simply wanted to make that point before I leave.

[English]

The Chairman: Just a comment? Okay, there you go.

Ms. Round, Professor Trent, Dr. MacRae, and Ms. Hildebrand, I'd like to thank you on behalf of the committee. It has been an excellent round table. You've brought out some very interesting points, and your perspective will certainly help us as we study this bill, Bill C-36. Once again, on behalf of the committee members, thank you very much.

The next meeting of the finance committee, meeting number 79, will be held tomorrow morning at nine o'clock, in Room 362, East Block. We'll be dealing with part one.

The meeting is adjourned.