It’s tough to be in government these days: prolonged slow growth means it’s difficult to keep increasing spending at a rate at which citizens have become accustomed. Instead, with rising costs and little appetite to raise taxes or fees, governing often seems to be one long exercise in nickel-and-diming. Higher education – in most of Canada at least – has felt some of this, but in truth has been insulated more than most other parts of the public service.
But the key role of government should not simply be to find ways to cut: it should be about increasing the effectiveness of public expenditures. And in particular, making sure public expenditures are designed in such a way as to promote and not hinder growth. That’s why, if there was one place in Canada I wish I could be an Advanced Education Minister right now, it’s Manitoba. Because, as I explain in a new paper HESA is releasing today, Manitoba has a boatload of poorly-performing expenditures in higher education tax credits that could be re-purposed into areas which could really help the province.
Here’s the scoop: Manitoba has two tax credits – the Education Amount Tax Credit and the Tuition Fee Income Tax Rebate – which are neither particularly effective nor have many defenders within the higher education sector. The former tax credit is a hold-over from the Diefenbaker era which all provinces (except Quebec) got stuck with in their portfolios when the provinces moved from a tax-on-tax to a tax-on-income system back in 2000. In the past 12 months, the federal government, the province of Ontario and the Government of New Brunswick have all eliminated this tax credit because it was neither progressive nor efficient, and funneled that money back to student assistance. The latter tax credit is effectively a tuition rebate for students who stay in the province, which is batty and wasteful for number of reasons I’ve previously outlined here. In any case, it is demonstrably too small to achieve its intended goal of convincing students who would otherwise not live in the province to live in the province. The result is this money is a windfall gain to graduates, paying them to do something they were going to do anyways. The elimination of these two tax measures could yield approximately $67 million per year in savings which could be spent more productively elsewhere within the higher education sector.
$67 million is a lot in Manitoba higher education. Taking that money away from unproductive tax credits could fund a whole lot of new, useful investments. These include:
- Adding $14 million/year to provincial student assistance fund. Spent correctly, this would be enough to fund an Ontario-like “free tuition” guarantee to low- and middle-class Manitobans even if tuition fees were allowed to rise by a third (which, given how low tuition is in Manitoba, is probably a not a bad idea).
- Investing $12 million/year to increasing supports to Indigenous students and expanding community delivery of programming in or near First Nations communities
- Supporting the expansion of work-integrated learning at Manitoba universities and colleges with the creation of a dedicated $15 million/year fund.
- Redressing a long-standing imbalance in post-secondary spending by increasing the number of seats in non-Metro Manitoba with a $15 million/year investment.
- Creating an $11 million/year employer-driven “quick response training fund” to make it easier for employers with expanding businesses to access bespoke training.
In sum, for the price of two badly-designed tax credits, Manitoba could make real investments in access, both in terms of financial aid and providing spaces in under-served areas, increase support to Indigenous students and communities, improve the quality of education and provide more funds for employer-led training that could help relieve skills bottlenecks for investors. How could you pass this up? Who wouldn’t do this?
Over to you, Manitoba.