HESA

Higher Education Strategy Associates

Category Archives: Budgets

August 29

Fundamental Choices on Fundamental Science

The federal government has been somewhat quiet on the subject of science funding since the release of the Fundamental Science Review (see previous blogs here here and here) back in April.  Within much of the scientific community, which for the most part fell head over heels in love with the Report, this has given cause for concern; personally, I think this is pretty much par for the course, and we aren’t likely to see much in the way of hints about the size of any possible investment until October or so.

The major good piece of news is that for the first time in a long time, economic growth is going way ahead of expectations and the likelihood is there’s going to be about $10 billion more in the fiscal framework than originally expected.  Now the likelihood is they’ll blow some of that on projects designed to keep Kathleen Wynne in power, some on daycare, and maybe a bit on deficit reduction just to show they haven’t totally forgotten their pledges around fiscal restraint, but there should be enough left in the till to put a decent amount of money towards science.

But the question is: will they?  And how fundamentally will they re-shape the system in the process?

To give you the research situation in a nutshell:  Apart from a brief blip in the 2016 budget, the overall granting council budget has been falling gently in real dollars since 2010.  The overall science budget has actually stayed steady or even increased, but a lot of that extra money is going to programs like the new Canada 150 Research Chairs, the Canada First Research Excellence Fund, etc.  And within the granting council budgets, and increasing amount of money has been diverted away from fundamental research.  Some of it has gone to more graduate scholarships, but there has also been an increasing focus on making research more focussed on end-use, creating partnerships with industry (which has a similar effect), etc.  Add to the fact that some granting councils (notably CIHR, whose management decisions over the last decade appear to be the result of sustained cane toad licking) have started substantially reducing the number of awards they give out each year in order to increase the average size of their awards.

This has varied outcomes from a political point of view.  A large number of individual researchers in basic sciences, particularly biology and medicine, are livid.  A smaller number of researchers with more strength in translational and applied research are doing just fine, thank you very much.  And the universities, who are still by and larger getting the money they want, recognize that many of their employees are unhappy campers; however, since they continue to receive money either way, the status quo isn’t intolerable even if it isn’t ideal.

Now, into this steps David Naylor and his fellow commissioners with a report on how to fix it.  They ask for a whole lot of money: $1.3 billion in funding for fundamental research phased in over four years.   But – and here’s the tricky bit – how to pay for it?  Do you ask for completely 100% new money?  Because that’s a lot.  It’s something like a 30% increase, which not many programs get these days.  Or do you say: hey, let’s undo all those bad decisions of the past decade and dismantle CFREF, the Excellence Chairs and whatnot, rejig the council funding so less of their money goes to translational research, etc. (Nassif Ghoussoub outlines one possible approach along these lines here). Basically, spend the money we have better before asking for more dollars.

If it were me, I’d take option two.  But that would create winners and losers and governments hate that even if the winners in this case would be very loud and happy.  So Naylor and co. went with option one: ask for all money to be new.  Well, they actually did kind of say all that other money (CFREF, CERCs) was bunk because there were a lot of “this program should be reviewed but it’s out of our scope” comments (not sure it was actually, but leave that aside) but they very specifically avoided saying “lets repurpose some money.“  It’s a higher risk strategy, I think, because you need to ask for a larger sum of money, but on the plus side: no losers.

What will the outcome be?  If I had to guess, it’s that Naylor will mostly get his wish on funding because, fortuitously, money is available and they can probably get by without much re-purposing. But if that hadn’t been the case (and still may not be – still plenty of time for a Black Swan even between now and budget day), who knows what would have happened?  Because just as turkeys don’t vote for Christmas, you know there is literally no one in Ottawa willing to brief the politicians on the re-purposing option.

Which is too bad, because even with all the research money in the world, it’s still important to spend it properly.

August 28

Welcome Back

Morning all.  Hope you had a good summer.  To welcome you back, let’s take a quick look at state of play in the sector as we start the academic year.

In Canadian PSE, I don’t think there’s a whole lot of doubt about where things are headed this year.  Post-Naylor, we’re going to be talking research, research, research.  If you doubt this, take a look at Universities Canada’s recent budget submission.   As always, there are three “asks”; for the first time I can remember all three asks are about research.  It’s clear that scientists – particularly those in health-related fields who have been jerked around the most in recent years – have been making their voices heard and that University Presidents at least are responding to that pressure by making this issue central to higher education lobbying for the next twelve months.

(I think this is poor form, actually.  Less than two years on from the Truth and Reconciliation Commission and not an enormous amount of progress immediately evident, I’m not sure how appropriate it is to not have something on indigenous education this year.  But I’m not in charge.)

“Superclusters” will probably get a lot of mileage as they get announced in the run-up to the budget next winter.  Apparently the competition – which is supposed to have five winners – received 50 applications, each of which was supposed to have at least one post-secondary education partner.  However, we’ve also been told that only 20 PSE institutions’ names were attached to these proposals.  From this we can deduce that i) it’s likely that a handful of institutions’ – no prizes for guessing which ones – are on three or more proposals (rumour has it one is on no less than 18), and either ii) almost none of these proposals have more than one participating PSE institution or iii) there are a lot of the same institutions over and over again.  If it’s the latter then the program has basically abandoned the idea of clusters being geographic in nature and this program basically is back to Network Centre of Excellence but with some private enterprise attached.  Which defeats the purpose of this stuff, in my view.  No self-sustaining cluster gets by on research alone. It gets by more than anything on having lots of trained workers of various kinds.  And that means colleges and polytechnics *have* to be part of the mix.  If they’re not then this whole thing is a conceptual failure from the get-go.

(But hey, this is Ottawa.  No one’s ever going to measure the results.  And even if by some miracle the policy’s was found officially wanting, presumably they can always claim that it’s because they didn’t spend enough money.)

While much of the attention will be focussed on Ottawa, remember we live in a federal country.  For most institutions, the real game this year will be in provincial capitals.  2018 is going to see elections in Ontario (June) and Quebec (October).  Combined with a minority legislature in British Columbia, what we have is a situation where the country’s three largest provinces – all of whom have budgets which are more or less in balance – are going to be in spending mode for the next twelve months.  Not everyone is going to share in this bounty, of course. My guess would be that Manitoba, Newfoundland and Saskatchewan are going to see continued or intensified restraint and from what I hear Alberta is about to find out exactly how miserable a tuition freeze combined with zero funding growth can be.  But still, for the sector as a whole, what we have right now is possibly the best alignment of the constellations we’ve seen in about a decade.

Outside Canada, I think the big stories are going to be in Brazil, Russia, where the lingering effects of the commodity price collapse have left state budgets in very weak shape to fund higher education; in England the chaotic combination of Brexit and a historically incompetent/cowardly government will surely provide some entertainment, while in the US the twin topics of free speech on campus and the dismantling of many Obama-era improvements in student policy – particularly in the area of oversight of private colleges – will get top billing even if President Trump’s own ideas about student aid are surprisingly generous.

Here on this blog, I’m hoping to shift topic areas slightly this year.  Often last year I felt I wasn’t adding much to discussions beyond what I had already contributed in the previous five years, and I do worry sometimes about the blog feeling stale.  I hope this year to be able to focus a little bit more on areas I’ve dealt with less fulsomely in the past: particularly, colleges & polytechnics and on international PSE (the latter with a bit of a data focus).  Also, at some point this fall we will be moving to accept advertisements. We’ll see how all that goes.

And with that: have a good year, everyone.  Let’s get to work.

May 15

Provincial Budgets 2017

Springtime brings with it two certainties: 1) massive, irritating weekend traffic jams in Toronto as the city grants permits to close down Yonge street for a parade to virtually any group of yahoos, thus making it impossible to go from the cities east to west ends and 2) provincial budgets.  And with that, it’s time for my annual roundup of provincial budgets (click on the year for previous analyses – 2016 2015 2014 2013.  It’s not as bad as last year but it’s still kind of depressing.

Before we jump in, I need to remind everyone about some caveats on this data.  What is being compared here is announced spending in provincial budgets from year-to-year.  But what gets allocated and what gets spent are two different things. Quebec in particular has a habit of delivering mid-year cuts to institutions; on the flip side, Nova Scotia somehow spent 15% more than budgeted on its universities.  Also, not all money goes to institutions as operating funding:  this year, Newfoundland cut operating budgets slightly but threw in a big whack of cash for capital spending at College of the North Atlantic, so technically government post-secondary spending is up there this year.

One small difference this year from previous years: the figures for Ontario exclude capital expenditures.  Anyone who has a problem with that, tell the provincial government to publish its detailed spending estimates at the same time it delivers the budget like every other damn province.

This year’s budgets are a pretty mixed bunch.  Overall, provincial allocations after inflation fell by $13 million nationally – or just about .06%.  But in individual provinces the spread was between +4% (Nova Scotia) and -7% (Saskatchewan).  Amazing but true: two of the three provinces with the biggest gains were ones in which an election was/is being held this spring.

Figure 1: 1-Year change in Provincial Transfers to Post-Secondary Institutions, 2016-17 to 2017-18, in constant $2017

Province Budget Figure 1 Year Change Provincial Transfers

 

Now, this probably wouldn’t be such a big deal if it hadn’t come on the heels of a string of weak budgets for post-secondary education.  One year is neither here nor there: it’s the cumulative effect which matters.  Here’s the cumulative change over the past six years:

Figure 2: 6-year Change in Provincial Transfers to Post-Secondary Institutions, 2011-12 to 2017-18, in constant $2017

Figure 2 6 year chage in provincial transfers

 

Nationally, provinces are collectively providing 1% less to universities in inflation-adjusted dollars in 2017-18 than they were in 2011-12.  Apart from the NDP governments in Manitoba and Alberta, it’s really only Quebec which has bothered to keep its post-secondary funding ahead of inflation.  Out east, it’s mostly been a disaster – New Brunswick universities are down 9% over the last six years (not the end of the world because of concomitant enrolment declines), and a whopping 21% in Newfoundland.

The story is different on the student aid front, because a few provinces have made some big moves this year.  Ontario and New Brunswick have introduced their “free tuition” guarantees, thus resulting in some significant increases in SFA funding, while Quebec is spending its alternative payment bonanza from the Canada Student Loans Program changes (long story short: under the 1964 opt-out agreement which permitted the creation of the Canada Student Loans Program, every time CSLP spends more, it has to send a larger cheque to Quebec).  On the other side, there’s Newfoundland, which has cut it’s student aid budget by a whopping 78%.  This appears to be because the province is now flouting federal student aid rules and making students max out their federal loans before accessing provincial aid, rather than splitting the load 60-40 as other provinces do.

Figure 3: 1-Year change in Provincial Student Financial Aid Expenditures, 2016-17 to 2017-18, in constant $2017

Figure 3 1 Year change in student aid expenditures

 

And here’s the multi-year picture, which shows a 46% increase in student aid over the past six years, from $1.9 billion to just under $2.8 billion.  But there are huge variations across provinces.  In Ontario, aid is up 83% over six years (and OSAP now constitutes over half of all provincial student aid spending), while Saskatchewan is down by half and Newfoundland by 86%, mostly in the present year.  The one province where there is an asterisk here is Alberta, where there was a change in reporting in 2013-2014; the actual growth is probably substantially closer to zero than to the 73% shown here.

Figure 4: 6-Year change in Provincial Student Financial Aid Expenditures, 2016-17 to 2017-18, in constant $2017

Figure 4 6 Year Change in Provincial Student Aid

So the overall narrative is still more or less the same it’s been for the past few years.  On the whole provincial governments seem a whole lot happier spending money on students than they do on institutions.    Over the long run that’s not healthy, and needs to change.

March 31

The Meaning of Zero

I’ve had a lot of time over the past week to think about the federal budget. And the more I think about it, the more baffled I am about the decision to completely stuff the granting councils. I think it is either a sign of real political ineptness, or that something pretty awful is in the pipeline.

It’s not as though the Liberals are averse to spending on Science, per se. The budget dropped hundreds of millions of dollars on Artificial Intelligence, Cleantech, Superclusters, what have you. And it’s not as though they have a problem with that money going to college and universities: the AI money was clearly headed to McGill, Toronto and Alberta, winning supercluster applications are going to need universities as partners (in a rational world they should all have also polytechnics/colleges to provide technical skills training as well, but I’m not totally convinced Industry Canada understands this yet).

So why not the granting councils?

Yeah, yeah, don’t say it: the Naylor Report. Because they are waiting for the Naylor Report (which has mysteriously disappeared) and they don’t want to spend any money until it’s out because there might be a big shake-up.

(Related note: the Science Minister, Kristy Duncan, was on my Ottawa-Toronto flight this week. I asked her when the Naylor Report would be published. She said read page 88 of the budget [which says the report will be released “in the coming months]. I asked what was taking so long. She said they had just had so many consultations, it took time to read them all. I said yeah, but Naylor submitted the report on time in December, right? She said – and I quote – “well, that’s a position”. Make of this what you will, but for me at least it did not dispel the impression that games are being played.)

The problem with this thesis is that imminent future program change wasn’t a barrier to spending in some other program areas. Youth Employment Services and the Post-Secondary Student Support Program, both got very significant increases in their budgets despite the fact that the budget indicated that both would be subject to change in the near future. In those cases, the budget was written so as to show a budget bump for two years and two years only, to indicate that the government didn’t think the old structures would still be around.

So why did the government push for temporary budget boosts in other areas but not the councils? I am not sure, but I don’t see a credible answer that says “once Naylor is published the taps will flow”. I think a more likely answer is this: maybe this government doesn’t actually like granting councils as a policy tool any more than the last one did. No, there’s no “war on science” – though frankly, if it were a Conservative government that had hidden the Naylor Report and given the councils 0%, I’m pretty sure we’d be hearing that phrase 24/7.   

But I think it’s dawning on people that federal disenchantment with granting councils is not a partisan thing. The Chretien/Martin government may eventually have been good to councils (1995 budget excepted), but they also set up and funded a whole bunch of different science agencies (Brain Canada, Genome Canada, etc) precisely because they thought they knew better than the councils where science money should be spent. The Harper government wasn’t much into creating new agencies, yet was pretty consistent in funding big science projects every year outside the council structure.

One last piece of data: Universities Canada couldn’t even muster up a word on the councils’ behalf on budget night – it was all “yay MITACS and yay future Naylor report”. Seriously, their press release was embarrassing. Possibly someone in government leaned on them to give positive publicity “or else” (this has been known to happen), but possibly also that in the grand scheme of things, as long as money is coming in via clusters or AI or whatever, university administrations don’t give two hoots about the councils either. And if they don’t, why would the government?

From all of this I draw two conclusions.

One, even if the Naylor Report does result in more money for Science (and I’m not sure we can take that for granted), it’s not obvious that the councils will be the recipients of the money. The belief in Ottawa that granting councils “don’t get the job done” is deep; there is a bipartisan consensus that politicians and senior public servants, collectively, can manage the science enterprise better than scientists.

Two, Universities Canada is apparently deeply comfortable with this situation, even if not all its members are. For there to be a change in policy direction, someone is going to need to challenge the prevailing science discourse directly in Ottawa. And if it Universities Canada isn’t going to do it, it will have to be done by scientists themselves organizing and representing themselves independently in Ottawa. Sure, CAUT claims to do this, but ask a random sample of active scientists if they think this is the right vehicle for Science representation and you’d probably struggle to get into double-digits. Scientists themselves have to organize this fight, and quickly.

Three, it’s possible I’m entirely mistaken about this. Maybe the government just goofed in its messaging and there really is a pot of gold at the end of the Naylor rainbow, and Universities Canada’s behind-the-scenes work (of which I assume there is a great deal) will pay off handsomely. But honestly, at this point: would you bet on that?

March 30

What’s Next for Student Aid

A few months ago, someone asked me what I wanted to see in the budget.  I said i) investment in aboriginal PSE, ii) system changes for the benefit of mature students and iii) changes to loan repayment (specifically, a reduction of the maximum loan payment from 20%  of disposable income to 15%).  To my great pleasure, the government came through on two of those wishes.  But there is still a lot of work to do yet.

Let’s start with the Post-Secondary Student Support Program, which the Government of Canada gives to individual First Nations to support band members’ education costs.  The Budget provides a $45 million (14%) bump to this program but also said the Government would “undertake a comprehensive and collaborative review with Indigenous partners of all current federal programs that support Indigenous students who wish to pursue post-secondary education”, which I think is code for “we’d prefer a new mechanism which is somewhat more transparent than PSSSP”.

Let’s just say I have my doubts about how easy this collaborative review will be.  Indigenous peoples – young ones especially – have a lot of issues with the federal government at the moment, and it will be difficult to try to manage a focussed review of this one subject without a lot of other agenda items intruding.  I’ve written on this subject before, and there certainly are ways which the funding could be arranged to be managed more efficiently.  That said, some of these ways involve taking management away from band councils and giving it to some other aboriginal organization operating at a larger scale and not all bands are going to find that appealing.

Anyways, the takeaway is: if the feds are expecting a replacement to PSSSP to be in place by fall 2019, they’d better get to work yesterday.

Now, what about the new measures for mature students/adults returning to school?  This was a welcome budget initiative, because the policy discussion has perhaps been focussed too heavily on traditional-aged students for the past few years.  There are however, maybe two cautions I would put on the initiative and how it will roll out.

The first is the budget description of the $287M over three years for programs benefitting these students as a “pilot project’.  I am fairly certain that is PMO-speak, not ESDC-speak.  First of all, I’m moderately certain the law doesn’t allow pilots; second, the idea that provinces are willingly going to spend time and money re-jigging all their program systems to accommodate program changes that are inherently temporary in nature is kind of fanciful.  So I suspect what’s going to happen here is that over the next few months CSLP is going to come up with a bunch of different ways to help this population (change cost allowances for older students, and maybe for dependents too), re-jig how prior-year income is calculated, raise loan limits for this population, raise grant eligibility, etc etc) and then roll them out in roughly ascending order of how irritating they are for provinces to program.  It’s not going to be a big bang, which may limit how well the policy is communicated to its intended targets.

But there’s a bigger issue at play here which the government missed in its haste to get a budget out the door.  One of the biggest problems in funding re-training are the artificial breaks in funding and jurisdiction that occur at the 12-month mark.  If your program is shorter than that, you’re covered by various provincial labour market initiatives and on the whole your compensation is decent.  Longer than that, you’re on fed/prov student aid, which in general is not as generous (and more to the point is repayable).  It would be useful for the two levels of government to work together to provide a more seamless set of benefits.  Perhaps regardless of program length, learners could benefit from 8 months of the more generous treatment and then move on to a slightly less-generous mixed loan/grant system.  This wouldn’t be a quick shift: my guess is that even if you now started talking about how to achieve this, it would still take four or five years for a solid, specific solution to come into view (if you think universities are slow, try federalism).  But still, now’s as good a time as any to start, and perhaps the dollars attached to the mature students programs may be a good conversation starter.

My third wish – the one that didn’t get any traction in this budget – was for improvement in student loan repayment.  I’m not that disappointed in the sense that I’m not greedy (no budget would ever have given me 3-for-3), but I do think there I work to be done here.  Perhaps this gets enacted as part of the follow-up to the Expert Panel on Youth being chaired by Vass Bednar and due for release at some point this spring (although who knows, if the Naylor Report is anything to go by, we could be waiting into 2019).  Or perhaps not: it’s not like CSLP hasn’t already been given a huge whack of work for the next couple of years.

But if that’s the worst problem we have in student aid in Canada, I’d say we are in pretty good shape.

 

(As a coda here, I’d just like to pay tribute to the Canada Student Loans Program’s Director-General, Mary Pichette, who is leaving the public service shortly.  Mary’s been involved two big rounds of CSLP reform: the one in 2004/5 which first created the grants for low-income students, and second the ones around the 2016 budget (not just the increase in grants but the many smaller but still important changes to need assessment as well. 

 I won’t say –I’m sure she wouldn’t want me to – that those two reforms were down to her.  But they were down to teams that she led.  She did a lot over her two stints in the program to make the policy shop more evidence-based and her legacy is simply that she’s made life easier for literally hundreds of thousands of student across the country.  They can’t thank her, but I can.  Mary, you will be missed.)

March 29

Conflicting Views on Research Funding

Every year on budget night, we at HESA Towers publish a graph tracking granting council expenditures in real dollars.  This year it looks like this:

Tri-council Funding Envelopes

Research Council Funding.png

Some people really like the graph and pass it around and re-tweet it because it shows that whatever governments say about their love for science and innovation, it’s not showing up in budgets.  Others (hi Nassif!) dislike it because it doesn’t do justice to how badly researchers are faring under the current environment.  Now, these critics have a point, but I think some of the criticism misunderstands why government funds research in the first place.

The critique of that graph usually makes some combination of the following points:

  1. Enrolments have gone way up over the past fifteen years, so there are more profs and hence more people needing research grants.
  2. At some councils, at least, the average grant size is increasing, sometimes quite significantly.  That’s good for those who get grants, but it means the actual number of awards is decreasing at the same time as the number of people applying is increasing.
  3. In addition to an increasing number of applicants, the number of applications per applicant also seems to be increasing, presumably as a rational response to increasing competition (two lottery tickets are better than one!).

Now, from the point of view of researchers, what all this means is that “steady funding in real dollars” is irrelevant.  On the ground, faculty are having to spend more time on grant proposals, for fear of not receiving one.  The proportion receiving awards is falling, which has an effect on scientific progression, particularly when it happens to younger faculty.  So it’s easy to see why the situation has academic scientists in a panic, and why they’d prefer a graph that somehow shows how applicant prospects of receiving grants are nosediving.   And that graph would as be as undeniably true as the one we publish.

But, from the perspective of Ottawa, I think the answer might well be: “not our problem”.

Here’s why.  The main reason governments get into the research game is to solve a market failure.  The private sector can’t capture all the benefits of basic research because of spillovers, so they underinvest in it.  Therefore, governments invest to fill the gap.  This has been standard economic theory for over 50 years now.

So, to be blunt, government is there to buy a particular amount of science that is in the public interest given corporate underinvestment.  It is not there to provide funds so that the academic career ladder works smoothly.

Provinces and universities decided to hire more science profs to deal with a big increase in access?  Great!  But did anyone ask the feds if they’d be prepared to backstop those decisions with more granting council funds?  Nope. They just assumed the taps would keep flowing.  Academia decided to change the rules of pay and promotion in such a way that emphasized research, thus creating huge new demand for more research dollars.  Fantastic!  But did anyone ask the feds to see how they’d cope with the extra demand?  Nope.  Just hope for the best.

There’s a case, of course, to say that the federal government, via the granting councils, should be more concerned than it is with the national pipeline for scientific talent.  What’s happening right now could really cause a lot of good young scientists to either flee their careers or their country (or both), and that’s simply a waste of expensively-produced talent.  But for the feds to thoroughly get into the business of national science planning requires provinces and institutions to give the councils a more direct role in institutional hiring decisions and the setting of tenure standards.  I bet I can guess how most people would feel about that idea.

So could the government put more money into granting councils?  Sure.  Could some councils make things better by reversing their Harper-era decisions to go with larger average grant sizes?  Yes, obviously.  But let’s remember that at least part of the problem is that institutions and academics have taken a lot of decisions over the past twenty years about what research and scientific careers should look like with very little thought to the macro fiscal implications, under the assumption that the feds and the councils would be there to bail them out.

That needs to change, too.

March 23

Federal Budget 2017

Morning all.  A long night last night at HESA Towers as we covered Budget 2017, which contained an exhaustingly large list of little programs (as well as a few big ones) affecting post-secondary institutions.  You can find our full budget analysis here.  My thanks to the HESA crew – Paul, Melonie, Johnathan and Jackie – for sticking it through the evening.
Just a few thoughts, from very late last night: Budget 2017 is uneven: some parts are good, others not so good.

Unequivocally, the Skills component is excellent.  The money for Indigenous peoples is a great step, as is the commitment to provide more help for mature students.  The biggest investment, on skills training, properly goes to the provinces through the existing Labour Market Transfer arrangement and the amalgamation of several of these transfers means that provinces will have more flexibility in designing new programming.  One could quibble about the lack of detail on some programs (e.g. the CSLP “pilot projects”), but that would be churlish.  And the one initiative that had the potential to be a disaster (FutureSkillsLab) has been hedged in such a way that the government can take several more months to get the essentials right (which means spending lots of time with the provinces).  Overall, the Government has done good work here, and unlike last year, their efforts cannot be derided as solely university-focused; colleges will do well out of the training provisions.

An aside here: universities and colleges have not got what they asked for on Work-Integrated Learning, but I think the government has done the right thing by putting all its eggs in the MITACS basket.  Effectively, the government has said it is happy to play a role in Work-Integrated Learning, but only for graduate students, where the outcomes are tied to other policy goals around innovation.  Undergraduate students?  College students?  No thanks, that’s a provincial responsibility.  That’s both shrewd and respectful of provincial turf.

The Innovation section is not great, but the thinking on display is a lot better than it has been for most of the last 12 months.  The government still confuses growth policy with innovation policy, but at least it has realized that innovation is mostly about firms.  There are all sorts of justifiable trepidation about government “picking winners,” and no doubt regional jealousies will play an outsized and unwarranted role in the final set of decisions, but you know, baby steps.

Where the budget really falls down is on Science.  Between the unconscionable stalling on the publication of David Naylor’s report on Fundamental Science and now the funding freeze – not to mention the ongoing fiasco at CIHR – the nation’s academic scientists are going to be at war for funding.  Any goodwill the government fostered from last year’s bump of council funding is almost certainly gone.  For a government that prides itself on being pro-science, they have a big communications challenge ahead of them for the next 12 months, even if they do intend to make big investments in the area next year, as some have suggested.

On the whole, there is more to like in this budget than not.  Students in particular will be happy.  But the government has squandered an enormous amount of goodwill among scientists.  Expect a lot of sniping from this quarter: and it’ll be aimed not just at government but at the university administrators.  Universities Canada’s decision to not criticize the government, even a little, over the granting council snub will almost certainly not play well in laboratories across the country.  Stay tuned.

March 22

The Next Big Skills Policy Agenda

So today is budget day.  If the papers are anything to go by, there’s something big-ish in there about “skills” which will no doubt be presented as some massive benefit to the country’s middle class (and those trying to join it). I have difficulty imagining what might be announced since most skills policies are in the hands of the provinces.  But what I do know is that skills policy is an area long overdue a makeover.

The labour force is aging.  Any new burst of productivity – essential for rising incomes – is going to have to come from older workers, not newer ones.  Part of that is going to have to come from firms making greater capital investments – that is, better machines and IT infrastructure for workers to use.  But part of it is going to have to come from more intensive and continuous skills upgrading on the part of workers’ themselves.  And this is a problem, because historically Canada has been uniquely bad at achieving a culture of skills upgrading.  Go back year after year, report after report, and it’s the same story: where continuous upgrading is concerned, it tends to be concentrated among people who already have high levels of skills.  Those that have get, those that do not, do not.

Part of the problem here is funding.  That’s why we sometimes see government get interested in handing money either to individuals or to firms (for example, the Canada Jobs Grant) to subsidize training.  But I’d argue that money is at best a partial barrier to more training.  A larger barrier is time.  And a lot of existing institutional practices are as much a hindrance as a help in this regard.

Workers don’t have a lot of spare time.  They have jobs, kids, parents, families: all of which make time a scarce resource.  We don’t normally think of time as something governments can control, but they actually do have a couple of policy levers they could pull, if they wanted to.  First, they could create incentives or entitlements to time-off for the purpose of training/re-training.  This idea was mooted 35 years ago in the Macdonald Commission report as a “Time Bank” – every year, workers would accrue a certain amount of time off specifically for the purpose of training.  It would no doubt be a colossally unpopular move among employers, but is still probably something worth considering (and might not create that much dissension provided it was fairly applied across all workplaces and didn’t create free-rider problems).

But the other way to make more time available to people is to radically re-consider the nature of the credentials being sought.  Universities, God Bless ‘em, have never seen a labour market problem they couldn’t design a 1- or 2-year Master’s Degree to solve.  The problem is a) not everyone wants to do a year of full-time study (or the part-time equivalent over a longer period of time) and b) who really wants to wait until next September to get started if you just got laid off last week?

From an adult learners’ perspective, the best thing in the world would be credentials that are both shorter and continuously available.  The latter can be solved to some extent simply by throwing money at it.  Continuous intake is relatively easy if you have more instructors to teach more classes at different times of the year.  Putting a greater fraction of classes online could conceivably bring some economies of scale that would assist in the process.

But the bigger problem is reducing the length of credentials.  In theory, there is a pretty clear way forward, which are called “stackable credentials”.  Many institutions use some variant of this: thirty credits equals a certificate and once you bunch three certificates together you get an applied degree, or something along those lines.  But even the notion of thirty credits can be kind of off-putting if what you think you need is just a minor skills upgrade. What is needed is a trusted provider (which usually means a non-profit provider) to come up with a way to come up with smaller-duration credentials which actually convey to employers a sense of competency/mastery in particular fields, and which could also combine over time (i.e. “stack”) into more traditional credentials like diplomas and degrees.

What’s the government role in this?  Well, the problem is really one of co-ordination.  Individual campuses can experiment with short credentials or competency-based credentials all they like: if employers don’t understand the credentials, they will be worthless.  What is needed is collective action – someone has to corral institutions to work together to create new credential standards, and someone needs to corral business to talk about what feature they would find most useful in new, shorter credentials.

That may sound like a job for somebody like the Business-Higher Education Roundtable.  But frankly, some coercion is called for here.  My guess is if BHER floated this you’d probably get a few Polytechnics showing up to play (because it’s the kind of thing they do) and no one else.  But government has the muscle and dollars to make this happen a heck of a lot more quickly and efficiently.

Now, note I say “government” and not “the Government of Canada”.  It would be better all around if provincial governments, who constitutionally are the ones in charge in this area, took the lead.  But one could argue that the feds – provide they stay the hell away from directly funding institutions or getting too far into the curriculum weeds themselves – could at least nudge the key players towards the table.

Bottom line: if we want higher labour productivity we have to get much more serious about creating opportunities for workers to upgrade their skills.  Since the key pressure point for skills upgrading is time, we need to create new, shorter pathways to meaningful credentials.  That means shorter, stackable credentials.  These will need to be designed by employers and institutions together, but the quickest way to start this program runs through governments.  And there’s no time like the present to get started.

March 13

Tea Leaves on the Rideau

Last Tuesday, federal Finance Minister Bill Morneau set the date for the federal budget for next Wednesday (March 22) and naturally people are wondering: what goodies are in store?  Without being privy to any inside information, here’s my take on where we are going.

At the press conference announcing the budget date, Minister Morneau dropped some important hints.  The biggest one is that, contrary to what had been heavily promoted for the past year, this budget will not be an “Innovation Budget”, but will represent a “downpayment” on an Innovation Budget.  From this we should probably deduce two things.  One: the feds are broke.  Well, maybe not broke, but certainly unwilling to increase borrowing in the face of a $30 billion deficit, slow growth and adverse demographic trends.  Two: the government has – THANK GOD – attained enough self-awareness to discern that does not really know what it’s doing on this file.  I noted back here that the Finance Minister’s Economic Council was flatly in opposition to the Innovation Ministry’s ideas about innovation clusters, and it probably came to the conclusion that making big budget commitments in the face of such disagreement was untenable.

To be clear: I am thrilled with this outcome.  Yes, it’s too bad the feds seem to have wasted a year on this file.  But far better to take a sober second look at the issue and make smart policy rather than to charge forward in order to meet an artificial deadline.  I also take it as a favourable sign that the government has brought Ivey Professor Mike Moffatt – co-author of a large recent piece on Innovation Policy by Canada 2020 – into the ministry on a temporary basis. For one thing, he actually understands what innovation policy means outside the tech sector, a concept which has been missing from ministry discourse since the minute Minister Bains was appointed.

(Many of you have been asking to me on twitter to explain what the hell the terms “Innovation” and “Innovation Policy” actually mean.  Sit tight: we’ll work on that one this week.)

There were also hints from the Minister that this would be a “skills” budget, a sentiment which has left many puzzled.  A year ago, the big issue for the near term was supposed to be the renegotiation of Ottawa’s Labour Market Development Agreements with the provinces, which mostly hasn’t happened. Since then there have been no major policy initiative apart from that.  There has been – via the consultations on Innovation policy – something of an understanding that skills are a big part of the innovation problem, but government thinking doesn’t appear to have progressed much beyond “more coders”! as a result.  (At a rough approximation, this government’s skills policy is more or less the same as the last ones, only if you just take out all the references to welding and insert the coding instead).

The worry here is that the “big initiative” will in fact be the implementation of the horrifically-named “FutureSkills Lab” promoted by Dominic Barton, chair of Morneau’s Economic Advisory committee (which I described back here).  If that’s the case, we may be about to view the first really big policy disaster of the Trudeau era.  First of all, no one is going to buy FutureSkills – essentially a kind of policy laboratory – as something which will help Canadians in anything other than the long term.  Second of all, the feds have yet to discuss the idea meaningfully with the provinces and without their buy-in, this initiative will be Dead on Arrival, just as the Canadian Council on Learning was.

To be clear: I don’t think this is going to be the “big initiative”.  I don’t think the Liberals are that stupid.  But I guess we’ll see.

What about Science?  Here, the news is not good.  You may recall that the Government of Canada commissioned a Fundamental Science Review, and asked by the inimitable David Naylor to run it.  Naylor, as requested, submitted the report to the Minister of Science in December.  The Government of Canada has yet to publish it and refuses to answer questions about when it might be published.  Why?  It seems transparently obvious that the government found some of the findings inconvenient, and would prefer to bury it until after the budget.  Maybe the report suggested the system needed more money (which would have been beyond the committee’s remit since it was only asked to comment on the management of the system, not the size).  Maybe the report suggested that certain science bodies which the government has already decided to fund were redundant.  Either way, the government seems to have decided the budget will be easier to spin if we haven’t all first read Naylor’s report.  I have a hard time imagining how this could a harbinger of good news.

In sum: don’t bank on anything big in this budget.  In fact, brace yourself for at least one major piece of goofiness.  Fingers crossed it doesn’t happen, but best to be prepared.

January 24

Budget Fun at the University of Ottawa

Back in early December, the Ottawa Citizen reported on a controversy at the University of Ottawa.  Basically, the story was that the University is facing a $20 million budget shortfall, the administration is consulting re: how to cut its budget and some people are very upset with some of the proposed solutions.

Of course, cutbacks anywhere, anytime, are unacceptable to someone in the institution.  The library, for instance, is being asked to contemplate a cut of $2 million).  “A source” told the Citizen that such a cut would “decimate its holdings and – horror of horrors – “severely damage its reputation”.

(Regular readers of this column may recall some data on library statistics I published earlier this year.  A quick check here suggests that even with these cuts, library expenditures per student at Ottawa would still be ahead of the not-reputationally-challenged-last-I-heard Queen’s, and that University of Ottawa has over the past ten years increased its collections budget by 50%. Even with the proposed cuts, it would still have the largest net increase in funding of any research university library in the country since 2004.  It would be surprising, to say the least, if any real reputational damage ensued from this.

How did Ottawa get into this position in the first place?  Here’s what a university spox told the Citizen: “The University of Ottawa is one of many Ontario universities facing financial challenges.  This is due in part to a permanent reduction in revenues from the provincial government of two per cent (over 2012-2013 levels) in government grants per registered students, resulting in decreased funding … At the same time, the university’s expenditures, especially those related to salaries, benefits, and special payments for pension plans continue to grow.”

OK, so let’s parse this.  Government has actually increased funding since 2012-13, not decreased.  Not by much, admittedly, but it has increased.  And the funding formula hasn’t changed.  So if “dollars per student” are down, it’s because  a) the University is admitting more students outside the formula (i.e. international students), or b) it’s new enrolments are disproportionately enrolled in “cheap” subjects like Arts and business, rather than expensive ones like medicine –  and that’s bringing down the ratio of “basic income units” (Ontario government jargon for “weighted student units” in an enrolment-driven funding formula) to actual students. The third option is that c) other universities have chosen to grow faster than University of Ottawa, thus dropping its share of system-wide BIUs slightly.  I have no idea which of these is true – I’m fairly confident both “a” and “b” are true but am not sure about “c”, but in any case those are institutional policy decisions, not government ones.  Blaming the government for them isn’t really kosher.

The government could of course, be blamed for not putting more money in the system as a whole.  But look – this province had a $17 billion deficit no so long ago.  The 2010 provincial budget was crystal clear that between 2010 and 2016, total program funding was only going to increase by $5 billion (about 4.4%). In fact, universities as a whole did better than this: they got an increase of about 6% in nominal terms (yes, still a decrease in real terms but actually better than anticipated).  The University of Ottawa  got an increase of about 5% in that period.

Would life be easier if government wrote bigger checks? Sure.  But everyone has had plenty of warning that government assistance wasn’t going to be increasing very much.  The real question is: given that everyone knew this, why were university expenditures allowed to grow so much?

Well, let’s go back to the summer of 2013, when the university was negotiating a new contract with the Association of Professors of the University of Ottawa (APUO).  Remember, at this point, everyone had known for more than three years that government wasn’t coming through with new money anytime soon.  And yet the institution conceded this astonishing deal.  The APUO’s summary of the deal is here, but the two key bits were:

  • A guaranteed increase in academic/librarian staff complement of 4% (from 1250 to 1311).
  • An increase in pay of 11.5% on top of PTR  over four years (but really three since the deal was backdated to 2012).

The result: between 2010 and 2016, the period in which government said “sorry guys, no more money”, aggregate expenditures on academic staff salaries – the biggest single line-item in the institution’s budget – increased by 29.4%.

Did I mention that the Faculty Union responsible for this $50 million rise in costs has launched a grievance re: the cuts?  No?  Well, now you know.

Of course, that’s not the only reason the university is in trouble.  While U of O made valiant efforts to increase its revenues in other ways (revenue from investments increased, and revenue from fees rose almost 45%, thanks in part to higher fees but equally if not more to increased international student enrolment), it wasn’t exactly doing much to curb expenditures in non-salary items either.  Sure, academic staff wages were increasing at close to 5% per year throughout this period, but other operating costs were rising at a little over 4%.  Bluntly: strong cost controls are not in place.  There’s blame to go around here.

It may seem like I am picking on the University of Ottawa, but trust me: I could tell a story like this about virtually any university in the country.  Governments are not ponying up for higher education the way they used to.  Student fees – international student fees especially – have made up some but not all of the gap.  Faculty unions are demanding pay increases in excess of institutional income growth and by and large they are getting them.  And cost controls in other areas of spending are little more effective.

Something has to give.

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