Aspire: Scent of a spending-heavy federal budget
Conservative budget tells provinces to spend a quarter of social funding on universities
NADYA BELL CUP OTTAWA BUREAU CHIEF
PHOTO:JASON CHIU
OTTAWA (CUP) — Aspire. It may sound like the latest Gucci perfume, but it comes with a $19.7-billion price tag.
The Conservative budget released on March 19, titled Aspire, has $19.7 billion of spending and tax cuts for next year.
The equalization program is the largest section of the spending, with a complicated agreement allowing each province to choose which formula will be used to determine the money it gets from the federal government. The program is worth $39 billion over the next seven years, including $12.7 billion next year.
“Through this budget, we are delivering a historic plan worth over $39 billion in additional funding to restore fiscal balance in Canada,” said Finance Minister Jim Flaherty in the budget speech.
The equalization program will allow provinces the option to to keep 50 per cent of natural-resource revenues — the plan that most benefits provinces that don’t have natural resources, such as Ontario and Quebec.
In addition, Newfoundland and Labrador and Nova Scotia will be allowed to keep their resource agreements from the Atlantic Accord. British Columbia also has an exemption around property values that gives them more money.
Bloc Québécois leader Gilles Duceppe is the only federal leader who says he will support the budget because he says the equalization program is sufficient for Quebec. The Liberals and NDP both oppose the budget on the grounds that it does not provide enough for provinces and Canadians.
Universities will also benefit from a number of different measures announced in this budget, from more funding through the provinces to extra grants for research councils.
The plan for post-secondary education includes raising the Canada Social Transfer (CST) on a per-capita basis. The whole transfer, which also funds health care, will increase from $8.5 billion to $9.5 billion next year.
Linking funding to population means larger provinces such as Ontario will get more money for their many universities. The budget also suggests the CST will increase by three per cent every year in the future.
Of the CST, 25 per cent of the money given to each province is earmarked for post-secondary education — $2.4 billion in total.
A further jump of $800 million in university funding is planned for next year under the CST, following discussions with the provinces on how to make the funding accountable.
Since federal funding for universities was rolled into other social spending in 1995, the federal government has been reluctant — or unable — to say how much money it contributes to running universities.
But without a binding agreement with the provinces, money the federal government says is for post-secondary education may not actually wind up at universities. The provinces are free to spend the money as they wish.
The Council of the Federation — the group of all provincial premiers — has prepared a draft Canada Education Act that would establish national standards for education, but it has not been adopted by the federal government. Signing this act is one way the federal government could ensure that universities get the money designated for them.
Like the Liberal promises for increased post-secondary education funding in Paul Martin’s fiscal update before his government fell, future spending for universities depends on the government staying in power.
Despite the money for universities through provinces, there is very little in the budget for students.
The budget offers a $500 tax benefit for Canadians who make between $3,000 and $21,000. Most university students would fit into this category, but the program — like welfare — excludes people who are in school full-time.
Following the budget speech, NDP Leader Jack Layton said he could not support a budget that leaves out Canadians who are poor or students.
“Despite new funding for post-secondary education, working and middle-class families will pay higher tuition fees and go further into debt for university and training,” Layton said outside the House of Commons.
The budget also launches a review of the Canada Student Loan program, which could lead to changes in student financing in the future.
The Liberal party says undergraduate students are left out of the budget because it only provides funding for graduate scholarships.
According to the budget, 1,000 more graduate scholarships will be available through the Sciences and Humanities Research Council of Canada, the Natural Sciences and Engineering Research Council of Canada, and the Canadian Institutes of Health Research.
The government is increasing support for two programs to finance education savings plans: the Registered Education Savings Plan (RESP) and the Canada Education Savings Grant.
The amount that people can pay annually into the subsidized savings plans is being increased. The RESP plan is set to receive $15 million in funding next year.
Don Drummond, chief economist with the TD Bank Financial Group, says he finds most people who benefit from these plans make over $70,000 a year.
“I think it’s sort of perverse as a program,” Drummond said. “People are not aware of it until they see a tax planner — but at the banks we find only higher-income people can afford [RESPs].”
Total tax credits for students in this budget are $1.7 billion, including previously announced programs such as the textbook tax credits.
Foreign students recently graduated from Canadian universities will be allowed to apply for citizenship without leaving the country. The budget provides more money to deal with the 25,000 applications expected with this change.
A number of research funds and initiatives are seeing increased funding in this budget, tallying up to $9.2 billion total investment in science and technology. The Canada Foundation for Innovation is getting more money, as is Genome Canada and the Network of Centres of Excellence.
Flaherty said in his speech funding for research would improve Canada’s competitiveness.
Universities will see an increase in funding to a program that helps to cover the indirect costs of research, such as laboratory equipment and infrastructure. The budget sets aside an additional $15 million for the program.
Students who want summer work may find it easier to get a job next summer, with $5 million announced for student internships in museums.
This funding will further reduce the impact of cuts to the Summer Career Placement program last fall. Ninety per cent of the cuts to this program, more than $43 million, was restored a few weeks ago.
