Sub 2003 Finance

Canadian Federation of Students

Submission to the

House of Commons
Standing Committee on Finance

September 2003

Page 12 Canadian Federation of Students

Let’s be clear about the effect of unsustainable cost and the resulting debts on individual students.
Wherever tuition goes down, enrolment goes up. And where does the increase in students come
from? From those with less money. In other words, the lower the fees, the more egalitarian the
society.The lower the fees, the more we are able to release the genius of the citizenry as a whole.
And that genius, that collective unconscious is the key to a successful democracy.
John Ralston Saul

INTRODUCTION funding cuts to post-secondary education and
shortsighted policy initiatives are
Canadians have long seen our system of post- undermining access to education for low
secondary education as a vehicle for social income Canadians.
opportunity. Since the end of World War II, In addition to reviewing the academic and
access to university and college has formed statistical literature on access and costs, we
the foundation of equality of opportunity. The will assess federal government policy
expansion of opportunity at Canadian initiatives in the context of those currently
universities and colleges was a direct result of denied access to college and university. In
substantial and sustained public investment doing so we will link the policy challenges of
beginning in the 1960s. Prior to the mid 1960s access to education to the growing gap
access to education in Canada was defined between the rich and the poor in Canada. We
almost exclusively by gender and income. will also demonstrate how the drift away
That changed because the federal government from core funding toward boutique programs
made access to education a fiscal priority. has undermined access. In particular we will
This history is a useful addendum to the suggest that a massive expansion of tax
Committee’s deliberations because it is the credits has supplanted the federal
position of the Canadian Federation of government’s ambition to promote access
Students that the federal government has among low income Canadians. We will also
retreated from its leadership role in re-iterate our concern that, in practice, the
guaranteeing access and presiding over the Millennium Scholarship Foundation has had
retrenchment of a system of post-secondary little or no effect on student debt. Worse yet,
education that exacerbates rather than the Foundation has embarked on a research
mitigates social divisions. Throughout this project designed to deny that tuition fees and
brief, we will offer evidence that federal student debt undermine the ability of low

Canadian Federation of Students Page 1

income Canadians to attend college or education listed financial reasons as the
university. In addition to being well outside of number one barrier.
its stated mandate, the Foundation’s A historical study undertaken by the
politically tainted research project calls into Canadian Association of University Teachers
question the federal government’s (CAUT) entitled Access Denied shows that
commitment to solving the long standing post-secondary education is less affordable
problem of student debt and rising tuition today than at any time in the last sixty years.
fees. The report examines changes in tuition fees
In our examination of the Canada Student from 1857 to 2002. When fees are adjusted for
Loan Program we make several tangible inflation, undergraduate university students
recommendations as well as pointing the way today are paying more than at any other time
towards a long-term vision for student in the past century.
financial assistance in Canada. Finally, we will The study measures how affordable
examine the federal government’s recent university education is today compared with
initiatives in research and offer previous periods by plotting the number of
recommendations. Our recommendations are hours of work (at an average carpenter's
guided by the need to protect academic wage) it would take to pay for one year of
freedom against some of the pernicious tuition fees. By this account, it takes more
consequences of public-private partnerships hours of work to pay for tuition fees today
in research. than at any time since 1940.

FINANCIAL BARRIERS TO Table 1 - Average Tuition Fees 1982 - 2002 (Year 2000$)
POST-SECONDARY EDUCATION 1982 1992 2002

The data is clear that income rather than Arts $1,517 $2,131 $3,561
initiative is determining access to post- Dentistry $1,909 $2,659 $9,245
secondary education in Canada. Though the Law $1,531 $2,136 $4,783
Millennium Scholarship Foundation and Medicine $1,812 $2,551 $7,681
many university presidents attempt to deny a
Engineering $1,595 $2,211 $3,697
causal link between family income and the
Source: The Canadian Association of University Teachers
cost of post-secondary education, the numbers
are stark:
Statistics Canada’s study, Participation in Post- CAUT also demonstrates that the decline in
Secondary Education and Family Income, reports affordability is felt most acutely by those at
that those in the highest quartile of income are the lowest end of the spectrum. A study
twice as likely to attend university. In a later entitled Out of Reach: Trends in Household
study Statistics Canada controlled for rural Education Spending, argued that “the impact of
residency and found that the high income higher fees [is] most discernible in terms of
earners in rural Canada were 5.6 times more exacerbating inequalities in access”. Between
likely to attend university than those in the 1991 and 1998 the real income and buying
bottom income quartile. Only 18.8% of 18-21 power of Canadians with the lowest 20% of
year olds from families in the lowest income after-tax income declined. Consider then that
quartile, attended university between 1993 in 1991 families in this category would have to
and 1998, whereas 38.7% of those from the earmark 14% of their household income to
highest income quartile attended university pay tuition fees. By 1998 that amount had
during the same time period. increased to 23%, which is actually an increase
of over 60% once coupled with the decline in
Statistics Canada’s recent Youth in Transition buying power. This conclusion is also
Survey documented the fact that 72% of those confirmed by Statistics Canada’s 1997
who faced barriers to post-secondary Education Quarterly Review that reports a five


percent decline in median family income in poor in Canada. Statistics Canada’s 2001
the 1990’s and a startling 21% drop in the census report showed that the income of those
average employment income of those between in the bottom quintile remained stagnant
the ages of 21 and 24 during the same period. through most of the 1990’s while families in
Studies conducted by individual universities the top one tenth of income made substantial
examining the effect of tuition fees on the gains. These findings are corroborated by
accessibility of professional programs have other Census data that found that those under
come to similar conclusions. The Department age thirty are earning substantially less, on
of Epidemiology and Biostatistics at the average, than they did in 1980. This statistic is
University of Western Ontario undertook a troublesome on two levels: first, it means a
study on the accessibility of Western’s medical decline in disposable income for those facing
school in the years immediately following the tuition fees that increased by 130% in the
deregulation of tuition fees in Ontario. This 1990’s. Second, for those lucky enough to
study was conducted over a four-year period attend college or university this income data
to determine the effect of steep fee increases shows that they are likely to experience
on the characteristics of new students. The difficulty paying back mortgage-size loans.
study examined participation rates by socio- Thus, Canada has the most indebted
economic status and documented a dramatic generation in its history facing a real decline
decline in participation rates from low-income in their income. The same study also reports
families by the fourth and final year of the that immigrants to Canada saw a startling
study. In the first year examined, 17.3% of decline in income during the 1990’s. Given the
students in medical school came from homes socio-economic data outlined above it is clear
where family income was under $40,000. In that the federal government’s rhetoric about
that year, students were paying the regulated an inclusive system of post-secondary
tuition fees of approximately $4,000. By the education is not matched by the reality of
fourth year of the study, when tuition fees had working Canadians. We now have a clear
risen to over $10,000, only 7.7% of students social divide when it comes to access to post-
were from homes of family income of less secondary education. Furthermore, most of
than $40,000. As a result of deregulated the research on the issue suggests that the
tuition fees, there was 50% decline in the divide is likely to get worse without strategic
participation of low-income students. policy interventions from the federal
government.
In the September 2, 2003 edition of the
Canadian Medical Association Journal, the The most recent data from Statistics Canada
editorial pages focused on access and medical substantiates the fear that access is now
school tuition fees. Based on recent determined by soci-economic status. In a
enrolments, the authors made the case that report released in September 2003, entitled
fewer and fewer low-income students will be Access, Persistence, and Financing: First Results
able to afford medical school. The editors also from the Post-Secondary Education Participation
raised the concern that high fees will Survey (PEPS), researchers document an 83%
exacerbate the divide in medical service participation rate for young people (aged 18
between rural and urban communities. With to 24) whose estimated family earnings
debt levels in excess of $100,000, students will exceeded $80,000. Those from lower socio-
invariably look to lucrative urban economic strata had progressively lower
appointments. The editorial also attributed participation rates. 67% of youth from families
the dramatic drop in medical school graduates earning between $55,000 and $80,000 had
practicing family medicine to expected some post-secondary education background,
student debt levels. and only 55% of youth from families earning
less than $55,000 had some college, university,
This evidence becomes more worrisome when
or CEGEP experience. The study also
it is viewed in the context of recent data on
augments an earlier study which shows that
the growing gap between the rich and the
only 19% of families earning under $30,000


per year are able to save for a child’s
education. The study estimates the median
cost of one year of post-secondary education
. . . it is perplexing that the
at $11,200. In addition to amplifying the federal government continues to
inequities of the Registered Education Savings develop a loans policy without
Program, this data re-enforces the necessity of
needs based grants and a national strategy on
attempting to also manage the
tuition fees. full scope of issues influencing
the cost and accessibility of post-
RECOMMENDATION #1 - The federal secondary education.
government should scrap the Millennium
Scholarship Foundation and the
Registered Education Savings Plans and Though it has been often said that the mixed
use the funds to implement a national jurisdictional authority for post-secondary
system of needs-based grants. education in Canada complicates policy
making, this fact has almost become a mantra
RECOMMENDATION #2 - The federal for government departments to avoid long-
government should, in consultation with term planning for the pressure that high
the provinces, develop a national strategy tuition fees put on the CSLP. The ever-
on tuition fees that includes a Post- increasing cost of a post-secondary education
Secondary Education Act. calls for a national strategy on tuition fees and
the establishment of a comprehensive needs
based system of national grants.
CANADA STUDENT LOANS A federal strategy on the issue of access must
PROGRAM further develop Canada’s system of student
financial assistance so that tuition fees, living
The Canada Student Loan Program (CSLP) expenses, and all related educational costs are
currently serves over 360,000 students considered. Further, the federal government
annually. As mentioned earlier in this brief, must also acknowledge that the fear of high
student debt hovers close to $25,000. Given debt deters thousands of qualified low income
the upward pressure on tuition fees, it is the Canadians from attending college or
view of the Canadian Federation of Students university. The Youth in Transition Survey cited
that a primarily loans-based system is not earlier in this brief clarifies that for those at
sustainable. The CSLP was designed in 1964 the low end of the economic spectrum, high
to provide a small supplement to those who cost and high debt is the primary factor in
could not afford the up-front cost of a post- their decision not to attend univeristy or
secondary education. From its inception, the college. To this end, the Canadian Federation
Program assumed relatively low up-front user of Students rejects the call for higher loan
fees and the existence of grants at the limits under the CSLP. Like most fast and easy
provincial level. Since the early 1990’s, solutions, increasing the amount students can
however, tuition fees have risen by over 130% borrow will offer a short-term solution at the
and most provinces have eliminated their expense of increasing debt and depressing
needs-based grants programs. In addition, as access over the long term. Senior officials
cited earlier, the real income of Canadians within the CSLP acknowledge this point and
under the age of 30 has actually decreased we call on the Finance Committee to rescind
over the past 20 years. In this context, it is its call for higher loan limits.
perplexing that the federal government
continues to develop a loans policy without Despite the fact that the CSLP is in need of a
attempting to also manage the full scope of major overhaul and re-orientation towards
issues influencing the cost and accessibility of non-repayable student financial assistance,
post-secondary education. the Canadian Federation of Students will also


outline several measures that can be a Charter challenge before the Supreme Court
undertaken in the short-term to address the of Canada to repeal this unjust and
needs of students. unconstitutional law. In addition to our legal
challenge, the Federation has also provided a
A Return to Fair Policy
detailed critique of the law to the Senate
Between 1995 and 2000 the federal Committee on Banking and Finance and
government signed over authority for the Industry Canada. During our appearance
CSLP to Canada’s chartered banks under the before the Senate Committee it became clear
risk sharing agreements. Under those that a consensus had emerged that the ten-
agreements the banks funded the principal year prohibition was too punitive. In addition,
amount of student loans in exchange for $300 a panel of experts convened by Industry
million in “risk sharing” payments. The Canada recommended that students be
agreement also gave the banks a decisive say entitled to a hardship hearing within one year
in the development of public policy. During of graduation and that the general prohibition
their tenure, the banks were able to be lowered from ten years to five years.
undermine the basic principle of access that Though the Canadian Federation of Students
had defined the CSLP since its inception in remains convinced that any prohibition is a
1964. At the behest of the banks the federal violation of students’ right to equality under
government agreed to credit screening for the law, there is a growing belief that a ten-
student loan applicants and the year prohibition is grossly inappropriate.
implementation of a punitive ten-year
prohibition on declaring bankruptcy on Debt Reduction in Repayment
student loan debt. Credit checks have had the The Canadian Federation of Students is
effect of screening out some of those most in calling on the federal government to honour a
need of student financial assistance. The commitment made to students in the 1998
Canadian Federation of Students has always budget. That budget committed to a Debt
supported measures that protect the integrity Reduction in Repayment program (DRR)
of the program from misuse and fraud. supposed to help over 12,000 students per
However, screening those out with a poor year. Designed to reduce unmanageable debt
credit history denies people most in need of after graduation, over-zealous restrictions has
the basic skills offered by university and meant that less than 600 students have
college the ability to pull themselves out of benefited from the program in its first three
poverty. In short, honest but unfortunate years. When the program was implemented
debtors should not be denied the right to the income tables were such that virtually no
utilize the Canada Student Loans Program. borrowers could qualify. In the 2003 budget
In the case of the changes to the Bankruptcy the Department of Finance finally
and Insolvency Act (BIA), the effects have acknowledged this problem and committed to
been destructive and widespread. This revamping the tables. However, to date no
legislation strips students of the very last revised tables have been presented. In
financial protection offered under the law. The addition, it seems that those who did not
provisions of the Bankruptcy and Insolvency qualify under the old income tables will
Act are designed to offer a last hope to those remain ineligible for DRR.
unable to cope with debt. Under the Act, an Another loan-related policy question for the
individual must appear before a judge and federal government is the issue of in-study
present evidence under oath that their income “clawback”. The 2003 federal budget
financial disposition makes it impossible for relaxed the in-study income clawback
them to meet their obligations. However, somewhat, allowing students to earn up to
changes introduced in the 1998 “education $1,700 per year (up from $600) before 80% of
budget” deprive students of this right under work-related income is deducted from their
the law. It is this provision that has compelled student loan disbursement. Recent studies
the Canadian Federation of Students to launch suggest that students are working an average


of 25 hours per week to cope with increased RECOMMENDATION #4 - The federal
education-related costs. Yet the current government should repeal the ten-year
clawback policy functions as a disincentive to prohibition on bankruptcy for Canada
work and/or report earnings. Given the Student Loan holders.
aforementioned elimination of most needs-
based provincial grants, a somewhat flawed
RECOMMENDATION #5 - The federal
needs-assessment mechanism, and the
government should remove the credit
potentially deleterious consequences of
check requirement for Canada Student
relying on private credit, it seems
Loans Program eligibility.
counterproductive for the federal government
to penalise students whose income is
supplemented by paid work. RECOMMENDATION #6 - The federal
government should eliminate the
Finally, the public subsidies provided to
clawback on in-study earnings.
private for-profit education enterprises
deserve the Committee’s attention. The for-
profit education industry receives more than RECOMMENDATION #7 - The federal
$315 million from the federal government as a government should end the massive
direct subsidy through the Canada Student Canada Student Loan subsidy to for-profit
Loans Program. In fact, most private education enterprises.
education shops would cease operating
tomorrow if this public subsidy ended. The
majority of provinces have little or no TAX POLICY
oversight body to assess the quality and
stability of private for-profit programs. Since the mid 1990s, the federal government
Private career colleges frequently go bankrupt has increasingly looked to tax expenditures as
and the taxpayer typically bears the cost of a substitute for directly allocated student
compensating students left in limbo. While financial assistance. Federal tax expenditures
high fees ensure high debt loads for private for education have grown from an estimated
college students, the lack of quality control at $566 million in 1996 to a projected $1.43
private institutions depreciates graduates’ billion in 20022. Some of the more significant
qualifications, future work prospects, and new measures and changes to existing
ability to repay student loans. As an education-oriented tax credits have included:
alternative, the Canadian Federation of • 1996 to 2001: A series of increases to the
Students proposes that funds currently education amount (the amount on which the
subsidising numerous transient private federal non-refundable education credit is
education shops be transferred to the well- calculated) has raised the potentially
established public community college system. allowable credit from $13.60 to $64 per month
These funds would ensure that students of full-time studies3.
previously studying at profit-driven
• 1997: The non-refundable education and
institutions would have a space at public
tuition tax credits were altered so as to allow
institutions, where the quality of instruction
students to carry value forward if the credits
and accreditation is rarely, if ever, in question.
cannot be claimed in the original year
• 1998: The introduction of a 17 percent
federal tax credit on the interest portion of
government should maintain the
federal and provincial student loan payments
maximum loan limit of the Canada
(changed to 16% in 2001).
Student Loans Program and meet unmet
financial need with grants (see Despite the size of these expenditures, they
Recommendation #1). have failed to keep up with rapidly escalating
tuition fees and living costs. Canadian
students are significantly financially worse off


now than they were in the late 1980s and early credits and tuition fees. By 1995 this gap had
1990s. Moreover, evidence suggests that increased to $2,151, as tuition fees climbed to
education-oriented tax expenditures $2,737 and applicable education tax credits
disproportionately benefit higher income rose to $587. By 2001 average tuition fees had
earners, and that education tax credits as a risen to over $4,000 and, despite increases to
general policy do little or nothing to improve the education amount in the 2001 budget, the
the accessibility of higher education. gap between tuition fees and federal tax
credits was nearing $2,900.
The Education and Tuition Fees Non-
refundable Tax Credit: The Wrong Approach
Of these various federal tax measures, the . . . changes to federal non-
non-refundable education and tuition fee tax refundable tuition and education
credits have been the most expensive and the
most widely used. In the 2000 tax year4, tax credits have actually done
2,169,360 students and parents/grandparents very little to offset the soaring
of students claimed the education and tuition tuition fees and increased living
amounts, costing the federal government
$909,728,140 in deferred tax revenues5. The costs students have faced over
changes introduced in the 2001 budget will the last decade.
likely raise this total even higher.
With a probable overall price tag of over $1 The gap between claimable amounts of
billion for the 2001 tax year, these credits federal tax credits and the costs facing
undoubtedly appear impressive when viewed students is even more dramatic. Combined
as a total amount. One would expect an tuition fees, mandatory student fees, and
expenditure of this magnitude to deliver room and board for an average Ontario
significant improvements to the financial well university undergraduate student climbed
being of individual Canadian students. from $6,755 per year in 1988 to $10,211 in
However, the unfortunate reality is that 2001. While tax credits also rose during this
changes to federal non-refundable tuition fee period, they did little to offset increasing
and education tax costs. The maximum
credits have actually federal education
Figure 2 - Growth of Ontario tuition fees versus
done very little to offset and tuition fees
federal tax credit increases
the soaring tuition fees $3,000 credit available to an
$2,847
and increased living average Ontario
costs students have $2,500 university student in
$2,151
faced over the last $2,000 2001 amounted to
decade. $1,426 only $1,215, leaving
$1,500

Figure 2 compares $1,215
a gap of almost
average Ontario $1,000
$9,000 between basic
$587
u n i v e r s i t y $500
$428
education costs and
undergraduate tuition applicable federal
$0
fees to the maximum 1988 1995 2001 non-refundable tax
federal non-refundable Federal Tax Credit credits for
education tax credits Gap between tax credits and tuition fees education.
available to Ontario
students in 1988, 1995 and 2001 (in 2001 Helping Those Most Who Need Help the
dollars). In 1988, an average Ontario Least?
university undergraduate student paid $1,854 Substantial disparities exist on the average
in tuition fees and could claim or transfer up amount being claimed by income bracket
to $425 in federal education tax credits, through the education and tuition fees credit.
leaving a gap of $1,426 between these tax


Individuals from the highest income brackets (less than $20,000) only received an average of
tend to claim more on these credits than do $6.83 a month. As this credit is only available
claimants from the lower and middle-income on interest paid, it provides absolutely no
ranges. In the 2000 tax year, for example, relief to the most desperate student loan
claimants with incomes less than $60,000 a holders who are unable to keep up with their
year claimed an average of $409 worth of loan payments. With average student debt
education and tuition fee credits. Claimants loads approaching $25,000, this credit is
earning over $250,000 (most of whom ineffective in addressing the ongoing crisis of
presumably claimed this credit as a student debt.
transferred amount from a child) averaged
Tax Credits Do Not Increase Access to
$628 on these same credits. A substantial (and
Higher Education
rising) percentage of non-refundable
education credits are being claimed as On the whole, tax credits are "back-ended"
amounts transferred, which provides no measures and do little to improve access for
guarantee that the full value of this credit is the most economically disadvantaged groups.
necessarily being applied to education-related Tax credits require students to pay money "up
expenses6. The Department of Finance front" in order to (maybe) have it refunded at
estimates that total education credits some point in the future. As a policy,
transferred have outstripped total credits education tax credits do nothing to address
claimed by students since 2001 (excluding the initial financial obstacles that prevent low
amounts carried forward)7. and lower middle-income students from
attending higher education. Thus, education
The "carry forward" measures introduced in
tax credits are most likely to benefit those who
1997 have allowed lower income students to
require little assistance with high tuition fees.
claim non-refundable credits that would have
been lost to them in the past. Although this is A recent study by Harvard University
a small improvement over the previous professor Dr. Bridget Long found that this was
system, it contains a flaw that again skews the precisely the outcome of education tax credits
value of the credit towards those with higher introduced in the United States: "[a]lthough
incomes. Because of inflation, students who one goal of the tax credits was to increase
are forced to carry forward education and access to higher education, this study found
tuition credits ultimately gain less value from no evidence of increased postsecondary
their credits than students who have enough enrolment among eligible students"9. Long's
income to claim them in the year they are study also found that the education tax credit
assessed. Lower income students are thus measures introduced in the U.S. appear to
penalised for not having enough income to have provided state governments with an
claim the credits when they are first made incentive to raise tuition fees at public
available. With the total carry forward of institutions10.
education and tuition fee credits projected to
reach $380 million by 2003, the cumulative RECOMMENDATION #8 - The federal
amount lost by lower income students government should cancel the education
through this depreciation could run into the and tuition fee tax credit for those earning
millions of dollars8. over $70,000 and apply the savings
The Student Loan Interest Credit directly to new national system of needs-
based grants.
The Student Loan Interest Credit is probably
the least useful of current federal tax
expenditures for education. Though the total
"cost" of this credit was over $71 million in ABORIGINAL EDUCATION
2000, the average amount claimed on it works The 2003 federal budget introduced a $12-
out to only $9.50 per month worth of debt and million endowment to establish post-
tax "relief" per claimant. Low-income earners secondary scholarships for Aboriginal


peoples. The Figure 1 stable core funding
scholarships will be Federal Aboriginal post-secondary education funding, from the federal
tuition fees, and Aboriginal post-secondary enrolment
administered by the government.
3.5 36,000
National Aboriginal Operating grants for
A c h i e v e m e n t institutions must be at
3.0
Foundation, a private 32,000 a level to promote
charity that provides 2.5
both research and
funding to Aboriginal 28,000 teaching, instead of
students for education 2.0 starving one to
and training. No details 24,000
support the other.
were provided on the 1.5 Federally sponsored
number of scholarships research grants should
1.0 20,000
that will be funded 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 recognise the validity
through the endowment, of all peer-reviewed
nor the dollar amount of Funding ($hundred million) research, science or
individual scholarships. Tuition Fees ($thousand) social science, basic or
While new money to Enrolment
applied.
assist First Nations The absence of these
peoples’ participation in commitments from
post-secondary education is welcome, this the federal government’s research strategy
one-time endowment does not constitute the will cheapen the quality and value of
type of long-term investment that is required Canadians’ investment in university research.
to boost access to post-secondary education Inadequate public funding will inevitably
for Aboriginal peoples. When adjusted for increase the reliance on dubious public-
inflation, annual funding through Indian and private partnerships that frequently detract
Northern Affairs Canada for Aboriginal post- from the independence of the research
secondary education actually declined by conducted.
almost $14 million between 1998 and 2002 (see
Commercialization
Figure 1). At the same time, rising tuition fees
mean that post-secondary education is more At its core, the motivation for the
expensive today than ten years ago. Reduced commercialization of university research is to
funding and rising tuition fees are likely a key blur the vital distinctions between “public”
factor in the stagnation of Aboriginal and “private.” Universities and colleges in
enrolment in post-secondary education since Canada have evolved to function, albeit
the mid-1990s despite a growth in the imperfectly, as public institutions. That is,
population. they are funded by the public’s collective
resources via a progressive system of taxation.
By definition, then, such institutions should
serve the public interest. This public interest
government should meet its treaty
can be defined through three broad functions:
obligations with First Nations by fulfilling
education, community service, and research.
the post-secondary education funding
In particular, university research serves to
needs identified by the Assembly of First
pursue and publicly disseminate knowledge.
Nations. Industry, government, and other researchers
may take this knowledge and build upon it
for their own ends, but what characterises the
RESEARCH university’s social product is the objectivity of
the process.
The ability of public universities to fulfil their
mandate to conduct high quality research in The public mandate stands in stark contrast to
the public interest relies on adequate and private sector interests. By definition,
corporations are ultimately accountable to


shareholders. The short-term solvency of the other two federal granting councils, the
business drives a preoccupation with short- Natural Sciences and Engineering Research
term gains. This motive extends to the Council (NSERC) and the Canadian Institutes
expectations of partnerships in university for Health Research (CIHR). In recent years,
research. When business ethics are applied to SSHRC’s budget has received modest
science in the institutional setting, academic increases, but has not kept pace with the
freedom is in peril. Commercially driven growing demand of graduate students and
abuses of academic freedom and good science faculty members in the social sciences and
are well documented in Canada, not only in humanities who make up more than half of
the high profile cases of Drs. Olivieri and the university-based researchers in Canada.
Healy, but amongst lesser known cases as This inequity between granting councils is
well. exacerbated by federal research funding
In spite of a growing scepticism of policy that devalues basic and SSHRC-funded
commercialization in the university research because it does not necessarily fit
community at large, the Government of Industry Canada’s narrow definition of
Canada and the Association of Universities “innovation.” With the exception of the much-
and Colleges of Canada signed the Framework welcomed Canada Graduate Scholarships, all
of Agreed Principles on Federally Funded recent federal initiatives largely exclude social
University Research in November 2002. The science researchers (Canada Research Chairs,
document pledges to double research output Canada Foundation for Innovation, Achieving
and triple commercialization targets at Excellence). Yet, social research plays the
Canadian universities. Rather than same vital role that applied research does in
establishing an honest point of departure for advancing the lives of Canadians in the
university-government co-operation on knowledge society. University research on
developing research capacity, the Framework is child poverty, globalization and HIV, or the
nothing more than a publicity stunt aimed at economic causes of war may not yield new
reassuring private investors that university “innovative” products, but it does contribute
presidents are supportive of the Innovation to the collective body of knowledge that
Strategy’s commercialization goals. The assists governments, agencies, or future
Framework only pays lip service to the value of researchers to develop solutions to social
non-commercial research, and was developed problems.
in a vacuum, without broad-based university
sector input. For these reasons, the Canadian
RECOMMENDATION # 10 - The federal
Association of University Teachers and the
government should double the base
60,000 graduate students represented by the
annual budget of the Social Sciences and
Canadian Federation of Students,
Humanities Research Council.
representing the vast majority of university
researchers in Canada, reject the Framework.
Faculty members, students, and the
Canadians whose tax dollars support
universities deserve a more serious strategy to
increase core funding and protect the integrity
of public research.
Social Science and Humanities
The ill-informed push towards the
commercialization of publicly funded research
reinforces an unbalanced national research
agenda. Since its inception, the Social Sciences
and Humanities Research Council (SSHRC)
has been poorly funded in comparison to the


FOOTNOTES 9. Bridget Terry Long "The Impact of Federal
Tax Credits for Higher Education Expenses",
1. The most spectacular example occurred in Prepared for the NBER Volume and
Newfoundland and Labrador in August of Conference: College Decisions: How Students
1998 when the Career Academy went Actually Make Them and How They Could.
bankrupt leaving 1,400 students in the lurch. Harvard University August 2, 2002
The government stepped in and found spaces
for most of the students at public institutions 10. Bridget Terry Long The Impact of Federal Tax
at taxpayer expense. Credits for Higher Education Expenses

The collapse of the Career Academy spawned
an inquiry by former Minster of Education
Phil Warren. The Warren Report, released in
1999, was highly critical of lax accreditation
and oversight of private colleges.

To take another example from the myriad
available, Lansbridge “College” (formerly
Unexis) went bankrupt in 2000 after receiving
over $100,000 in interest free loans from
Industry Canada. This amount, of course, is in
addition to the public subsidy it received
through the Canada Student loan Program.

For an example of the personal cost of career
“college” bankruptcies see the following story
from the St. John’s Telegram, “College
Bankruptcy Hits Student's Wallet” (October 9,
2001)

2. Department of Finance Canada Tax
Expenditures and Evaluations 2001.

3. The education amount has risen from $80
per month to $400 a month since 1996, but the
actual credit is calculated by multiplying the
total of the education and the tuition fees
amount by the lowest federal tax rate (16% for
2001 and 2002, and 17% on earlier returns).

4. The most recent year for which interim
statistics are presently available.

5. Canada Customs and Revenue Agency
preliminary figures.





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