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Higher Education Strategy Associates

Tag Archives: NDP

September 12

NDP Leadership Race Notes

So the deadline to sign up for the federal NDP leadership passed a couple of weeks ago, and the first deadline for the mail-in ballots is next Monday.  So what to make of the four candidates and their views on post-secondary education?   Based on their platforms and a series of responses to a questionnaire on Science policy from Evidence for Democracy (responses available here), my take is as follows:

Jagmeet Singh.  Nothing.  He has a lot of policy proposals on various topics but effectively nothing on skills, education and how to pay for them.  He is also the only one of the four candidates specifically avoided making any commitments at all with respect to the Naylor Report.

Charlie Angus.  On the skills side Angus says he would “establish a labour market partners’ forum so government can work with labour and other stakeholders to develop programs and make Canada’s labour market development programs more accessible by lowering the eligibility requirement.”  I am not entirely sure what this means, though the use of the term “eligibility requirements” seems to imply that he’s talking about skills acquisitions as being entirely tied to Employment Insurance, which is somewhat restrictive (even though Angus does simultaneously promise it to make it easier to qualify for EI).

On post-secondary generally, Angus says he would work “towards a comprehensive education accord with the provinces that eliminates tuition, ensures adequate funding for research, sets standards for mental health and sexual assault policies, and improves working conditions for students, staff and adjunct or contract faculty on campus,” which suggests ambition if not a totally firm grasp on how federalism works (also: no price tag attached).  He also says he wants to eliminate interest on Canada Student Loans (bad idea), put new money into PSSSP for Indigenous students and extend it to include bridging programs, increase weekly loan limits for all students and better harmonize federal & provincial retraining programs (all excellent ideas).  And finally, with respect to Science, Angus is pro-Naylor (committed to implementing the report, full stop) and anti-superclusters.

Guy Caron.  For a former CFS chair, Caron is awfully quiet about PSE (then again, as an MP from Quebec, his perspective may have changed somewhat).  From an income standpoint, his Basic Income scheme – everyone over 18 gets their income topped up to at least equal Statistics Canada’s Low-Income Cut Off  would pretty much take care of the need to increase student aid any time soon.  But also in Caron’s platform is a genuinely intriguing mention of an “Activity Account for Lifelong Learning” which is describes thusly: “financed by contributions from workers, employers, and the federal government, the account will enable its holder to finance lifetime learning and job retraining. It would be portable so that if the individual moved or switched jobs, the account would migrate with them”.  The notion is not developed further, so it’s hard to say exactly what’s intended, but it sounds a lot like a mix of CPP/EI (compulsory deductions) with RESPs (government top-ups) for personal use.  In principle there’s much to like about this kind of idea though it’s worth remembering that a badly-implemented version of this idea cost the UK government hundreds of millions of dollars back in 2001.  Caron also supports full implementation of the Naylor report.

Niki Ashton.  This is the big one.  Ashton promises to:

  • Eliminate tuition fees, as per the proposal made by the Canadian Centre for Policy Alternatives.  That would cost $3.5 Billion, and still depends on a) provinces being willing to pick up half the bill, and provinces being willing to accept massively different levels of federal support to so (basically, provinces currently doing most would receive the least under this program, leading to the obvious problems I described back here).
  • Reduce tuition for international students to “affordable levels”.  No financial details as to what possible mechanism would compel institutions or provinces to go along with this, or whether it has even occurred to her that most HEIs would sharply reduce intake of international students if this ever happened (unless the feds ponied up a couple of extra billion in compensation).
  • Eliminating interest on Canada Student Loans and doubling the repayment threshold so students do not need to repay loans if earning under $50,000.  It’s hard to tell from the platform, but this looks like a retroactive commitment – that is, it applies to all outstanding student loans.  That’s an expensive commitment, since international evidence shows that raising the threshold usually has significant knock-on effects in terms of lifetime repayment rates.
  • Increase funding for Aboriginal PSE.  Basically the promise here is to fulfill the TRC recommendation to get rid of the 2% cap (which the Trudeau government already ditched last budget), fund the backlog of First Nations applicants and include Metis students in this funding arrangement.
  • Increase funding for graduate students and “equalize research funding across disciplines”.  My interpretation of this is that it means increasing the SSHRC budget relative to those of NSERC and CIHR, but it’s not 100% clear.
  • With respect to Naylor’s recommendations, Ashton carefully says she is committed to “addressing” them, but carefully avoids any comment at all on the big issue of a $1.3 Billion increase in funding.  The bits she likes involves “re-balancing” funding and handing more money to grad students, post-docs and early career scientists.  If one were being uncharitable, one might suspect that she cares about government funding for science mainly as an income support mechanism for scientists rather than a means for actually performing scientific endeavours.

No argument from me on the Indigenous funding, but apart from that, my comments on Ashton’s platform are largely the same ones I had on the Green Party platform in the 2015 election (to which this bears more than a passing resemblance): so many billions of dollars, and not one of them going to increase the quality of provision or increase the number of student seats.  It’s all about cheaper.  Such a waste.

Anyways, if I’m ranking these platforms, Angus probably edges it.  His PSE accord idea is unworkable, but the pledges on Indigenous education and harmonizing training funding are good.  Caron would come second for the originality of his learning account idea.  Ten points to Ashton for thinking PSE is important, another ten for her position on Indigenous education but minus several hundred for the actual, wasteful substance.  Singh is simply missing in action.

The first round of voting takes place October 2nd; should extra ballots be required, they will take place on the following two weekends.  Best of luck to all.

February 22

Notes for the NDP Leadership Race

As contestants start to jump into the federal NDP leadership race, it’s only a matter of time before someone starts promising free tuition to all across the land.  Now, I’m not going to rehash why free tuition is both regressive and undesirable (though if you really want to take a gander through the archives on free tuition, have a look here).  But I do think I can do some public service by talking about federalism and higher education, or rather: what the feds can and cannot do in this sphere.

The entire Canadian constitution is based around a compromise on education dating from 1864.  Upper Canada came to the Quebec conference with one overriding aim: representation by population in Parliament, so that their superior population would give them the most seats in Parliament.  Lower Canada agreed if and only if a second, local, and equal tier of government was created which would have jurisdiction over education and health, because over-their-dead-bodies were a bunch of (mostly) Orangemen going to get their hands on a hallowed set of (mostly) French catholic institutions.

There’s nothing in there that stops Ottawa’s ability to give money to individuals for the purpose of education.  This is why, despite all the sturm und drang, Quebec never put up a legal fight to the Canada Millennium Scholarship Foundation: Ottawa can give cash to whoever it wants, whenever it wants.  But when it comes to dealing with institutions, their ability to direct money to areas of provincial jurisdiction is subject to provincial veto.  The provinces accept (with limits, in Quebec’s case) that the feds can flow money to institutions for the purposes of academic research.  Hence the Canadian Foundation for Innovation.  They do not accept that it can send money to institutions for operating purposes.

(Historical footnote: there was a period where nine out of ten of them were prepared to accept this.  Back in the mid-1950s, there was a ruse in which the federal government handed tens of millions of dollars every year (a lot back then) to Universities Canada – then known as the National Conference of Canadian Universities and Colleges – which it would then distribute to institutions.  In theory this was a canny work-around to the constitution.  In practice, it stalled because Duplessis blew a gasket and told Quebec universities that if they touched a dime of that money, he’d take it out of their provincial funding.  Pierre Elliott Trudeau then wrote a wonderful article in la Cite called “Federal Grants to Universities” explaining why Duplessis was 100% right and St. Laurent was in kookooland, constitutionally speaking.  It’s a great article, read it if you can.  Anyway, this arrangement lasted into the 1960s, when the feds got out of this arrangement and moved into per-capita grants instead.  And that door is now shut: there is no going back through it.)

Politically, there is a fantasy shared by some on the political left that the federal government can simply re-acquire policy leadership in the post-secondary field by passing an act of Parliament and adding great wodges of cash to existing transfers… with strings attached.  I’ve previously (here) torn a strip off the idea of a federal Post-Secondary Education Act, but let me focus here specifically on the idea that a generalized fiscal transfer could actually affect tuition fees.  Let’s just imagine how that discussion would go.

Ottawa: we want to give each of you money so that you bring your tuition fees to zero.  Quebec and Newfoundland, your fees are about $3000, so we’ll give you that per student…

Ontario: Our fees are $7500 a student or so.  Fork it over.

Quebec and Newfoundland: Hold it.

I could go on here about the nuances of fiscal federalism, but basically that’s the problem in a nutshell (for my American readers: in some less disastrous timeline, Hillary Clinton is facing exactly this problem as she attempts to implement her free tuition promise for public universities). There are ways the federal government could bribe provinces into lowering tuition.  In fact, something like that actually happened in Nova Scotia as a result of the NDP-Liberal budget deal in the minority Parliament of 2005.  But you wouldn’t necessarily get them to lower by an equal amount, and you definitely wouldn’t get them to go to zero because they have vastly different starting points.

So, here’s the quick heads-up to all prospective New Democrat leadership candidates: even if it wanted to, the Government of Canada has no sensible way to eliminate tuition nationally.  If you do manage to form a government, this will be broken promise #1.  So don’t promise it.  Instead, think about ways to support students which don’t involve tuition.  There is a whole whack of things you could do with student assistance instead.  And the best part is: if you use student aid as a tool instead of tuition, you can channel aid to those who actually need it most.

September 29

The Ontario NDP’s Bad Student Loan Math

The Ontario NDP have started down the road to madness on student aid.  Someone needs to stop them.

Here’s the issue: the NDP have decided to promise to make all Ontario student loans interest-free.  As a policy, this is pretty meh.  It’s not the kind of policy that increases participation because students don’t really pay attention to loan interest, and it’s not going to make loans a whole lot more affordable because Ontario forgives most loans anyway (as a consequence something like 90% of all loans in repayment in Ontario are federal loans which wouldn’t be subject to this policy).   My back-of-the-envelope calculation is that this policy might save a typical borrower in repayment something like $5/month, which isn’t a big deal as far as affordability is concerned.  One could argue that affordability of loan repayments shouldn’t be a big priority since loan payments as a fraction of average graduate income has gone down by about a third in the past fifteen years, but on the other hand, this isn’t likely to cost very much either, so really, who cares?

No, the problem isn’t so much the proposed program as it is the tagline that’s gone along with it. To wit: “The government shouldn’t be making a profit from student debt”.

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I mean, where to begin with this stonking bit of nonsense?

The worst-case interpretation of this is that the NDP actually believes that “interest” equals “profit”, or, to put it another way, that money has no time-value.  Read literally, it suggests that all interest is usury.  The NDP is sometimes accused of being stuck in the 70s as far as economic policy is concerned; this particular slogan suggests it might be more 1370s than 1970s.

More likely, though, this is the NDP aping Massachusetts Senator Elizabeth Warren, who has been saying these kinds of things about US student loans for a few years now.  The essence of the critique is this: governments borrow money cheaply and lend to students at a higher rate (in the US, the rate on Stafford undergraduate subsidized loans is the 10-year Treasury rate plus 250 basis points, and somewhat higher for other types of public loans).  The gap between the two rates is needed because of course the government loses money on loans through loan defaults (it also loses money by assuming the loan interest while a student is in school, but that’s a separate issue).  For reasons beyond comprehension, the US government does not base its financial calculations for student loans on actuarial reports which are linked to actual student behaviour, but rather according to “standard conventions”, one of which essentially assumes no loan losses at all.  It is by using this convention – i.e. basically ignoring all actual costs – that Warren came to the conclusion that student loans “make money”. For a more complete description of why this is total nonsense, check out Jason Delisle’s work on the subject here as well as articles from the Atlantic, the Washington Post and the Brookings Institute.

But even to the limited extent the Warren critique makes sense in the US, it doesn’t work in Ontario.  OSAP loses money.  A lot of it.  It doesn’t publish numbers directly on this, but it’s easy enough to work it out.  Ontario 10-year bonds go for about 2.5% these days, and OSAP lends to students at prime + 1%, or about 3.7%.  So Ontario’s spread is only 120 basis points, or half the American spread (CSLP loans, are different: the feds borrow at 1% and lend at prime plus 250 basis points, for a total spread of 420 basis points).  120 basis points per year is not much when you consider that simply covering the cost of borrowing while students are in school is twice that.  Basically, it means that for someone who borrows for four years, the government loses money every time they pay back the loan in less than eight years.  And that’s not counting the cost of defaults, which are in the tens of millions of dollars each year.

Put simply: Ontario students get to borrow at zero interest while in school, and positive-but-below-market rates after graduation despite default rates which are astronomical by the standards of any other personal loan product.  That costs the government money.  If it defrays some of that cost through an interest rate spread, so be it – that does not constitute “making a profit”.  It is simply stupid of any political party which wishes to be entrusted with public finances to suggest otherwise.

October 16

Election 2015: Last Thoughts

Voting day Monday.  So before y’all head out to the polls, here are a few last thoughts on each party’s position on post-secondary education, science, and innovation.

One: The Green platform is a vacuous embarrassment.  If you’re voting on higher ed issues, do not vote for this.

Two: It is an excellent thing in this election that all three major parties decided to focus their PSE initiatives specifically on families from below-median incomes.  The Tories are doing it through targeted measures on educational savings, the NDP and Liberals are doing it through new student grants (with the latter paying for it by taking tax credits away, thus actually raising prices for richer families).  No universal tax credits.  No schemes to lower tuition.  Just intelligent, targeted programming.  I’m immensely heartened by this.  It implies there is hope yet.

Three: Well, sort of… because pretty much all of the Science/Innovation policy on offer is pretty depressing.  Yes, lots of good stuff from Liberals and New Democrats about restoring freedom to science, creating various types of official science councils/advisors, restoring the long-form census, etc. etc., but when you get right down to it what’s on offer is this:

Liberals: hundreds of millions of dollars to incubators and accelerators.  Nothing to universities or colleges.

Conservatives: lots of tiny research promises: $24M for advanced manufacturing hubs, $45M to Brain Canada, $150M to the Canadian Partnership Against Cancer.  $4.5 Million for – I cannot believe I am writing this – Lobster Biomass Research (clearly, the Tories are in thrall to “Big Crustacean”).  Some of this might end up at universities (the Brain Canada money, for instance), but this is small bones.

NDP: The only party to actually suggest giving money to the granting councils (yay!), they budgeted a grant total of $55 million for the next four years.  Or about 25% of what inflation is likely to be (boo!), meaning the real value of council funding will continue to fall.

Greens: negative money for research because they’re going to shut down anything related to GMOs or Atomic Energy.  Because, you know, evidence-based policy-making. (Did I mention not to vote Green on higher ed issues?)

All of which is to say, scientists who want to communicate the need for more investment in basic research need to go back to the drawing board. Because on this evidence, something is going seriously wrong.

Four:  Nobody even mentioned the idea that we should touch transfer payments and get money to institutions that way. If you grew up watching politics in the 80s and 90s (as I did), this is almost unfathomable.  But it possibly represents a matured understanding of how the Federation is supposed to work.

Five: If you rank the parties on how much money they want to throw at students, access, and PSE institutions, it would look like this:

1) Green – several bazillion dollars (who’s counting?).

2) NDP – somewhere north of $1 billion.

3) Conservatives  – somewhere south of $100M.

4) Liberals – In net terms, according to their own manifesto $0 (in practice possibly higher than that).  But a more effective re-arrangement of existing dollars.

One probably shouldn’t get too depressed by this. Thinking back to the Tories: they’ve never campaigned on more money for research, but they always found a way to come up with something in every budget.  It might not have been quite what people wanted, and it might not have been as large as people would have liked, but there was never nothing.  Manifestos give you the baseline, not the entirety of a new government’s plans.  Improvisation happens.  Science can still get more than is on-offer here; it just needs to up its game.

Go vote.  And to Hull-Aylmer’s Greg Fergus, the best PSE candidate in this election: in bocca al lupo.

October 07

Party Platform Analysis: Science and Innovation

In the platform analyses I’ve done so far (for the Greens, the Conservatives, the NDP, and the Liberals), I’ve focused mostly on the stuff around student finance.  But in doing so, I’ve left out certain platform elements on science and innovation, specifically from the Liberals and the New Democrats.

There are some pretty broad similarities between the two parties’ programs, even though they package them somewhat differently.  Both are long on promises about process.  The Liberals will appoint a Chief Science Officer; the NDP will go one better, and appoint an Office of the Parliamentary Science Officer AND create a Scientific Advisory Council to the Prime Minister.  Both promise to “unmuzzle” scientists; both promise to bring back the long-form census (which I personally find irritating – shouldn’t we at least try to move into 21st century with an administrative register?).  Both promise to make government data “open”; additionally, the Liberals promise to ensure their policies are “evidence-based”.  The word “independence” shows up a lot: Liberals want to give it to Statscan, without actually specifying what the word means; the NDP want to restore it to the granting agencies, without specifying what the word means.  They also want to re-establish scientific capacity in government, but apparently aren’t allocating any money for it, so you know, take that with a grain of salt.

The differences, such as they are, are about where to spend the lucre.  The Liberals have set aside an extra $600 million over three years for an “Innovation Agenda”, which will “significantly expand support to incubators and accelerators, as well as the emerging national network for business innovation and cluster support”.  This, apparently, is meant to “create successful networks like the German and American partnerships between business government and university/college research”.

Genuinely, I have no idea what they are talking about.  Which German and American programs?  The Fraunhofer institute?  The Tories already did that when they converted NRC to an applied research shop.  As near as I can tell, this seems to be innovation-speak for “let’s give money to middle-men between academia and business”.  Which is not promising.  I mean, even assuming that early-stage commercialization is the real bottleneck in our innovation system (and where’s the evidence for that, evidence-based policy guys?), why is this the right way to go about fixing it?  Weren’t the Centres of Excellence for Commercialization and Research supposed to do the same thing, albeit from another angle?  Shouldn’t we – you know, wait for some evidence about what works and what doesn’t?

The Liberals also are promising another $100 million over three years to the Industrial Research Assistance Program, which would normally make me want to tear my eyes out, but apparently it’s all going into something that is meant to mimic the US Small Business Innovation and Research Program, which does tend to get high marks.  But, significantly, there is not an extra cent for educational institutions, and not an extra cent for the granting councils.

The New Democrats, on the other hand, are talking much smaller sums: $105 million over four years to “support researchers in post-secondary institutions”.  A helpful NDP staffer has clarified for me that this actually means money to the granting councils, which would make the NDP the only party to commit to more council funding.  That said, unless inflation dips below 1% (unlikely, but not impossible), that amount is not enough to cover inflation.

So, take your pick here.  On non-financial aspects of their policies, the two parties are essentially singing off the same sheet.  Financially, the Liberals have more money on the table, but none of it appears to be heading to institutions.  The NDP has a much smaller package, which will benefit researchers via the granting councils, but not by a whole lot.

Back next Friday with a final summary of the election and higher education.

October 05

Party Platform Analysis: The New Democrats

I’m going to have to go a little off-piste for the analysis of the New Democratic platform, because its launch was so odd.

The platform was unveiled last Thursday morning.  In Saskatoon.  While Mulcair himself was in Montreal.  This meant that the  event was not covered by any of the national press (the biggest outlet that filed a story was the Ottawa Citizen).  The announcement itself was unaccompanied by any backgrounder, which meant that many key details were missing, including cost estimates.

On a purely political level, this is incomprehensible.  It seems as if the party didn’t actually want their proposal to be covered.  But why make a billion-dollar (see below) spending commitment if you’re not going to publicize it?

Then again, maybe it’s better no one made a big deal about it given some of the silly things their candidates said at the event, such as “debt is up 30% since 2006”, which may be true if you look at federal loan volume, but that’s because so many more people are going to school.  You know, because of access.  In fact, over that period, the incidence of debt is down slightly, while the average value (in real dollars) is up slightly, making the whole file a bit of a wash.  Another candidate made a different, utterly ridiculous statement: “governments shouldn’t profit on student loans!”  I don’t know whether she got that line from Elizabeth Warren or Donald Trump (both have said it), but it’s not even vaguely true, and suggests she knows nothing of how income from student loan interest funds the in-school zero-interest period, the repayment assistance program, and covers the substantial losses the program experiences with defaults.

Anyways, it’s too bad the packaging of the event was so embarrassing, because the substance isn’t so bad.  The details, as we know them, are as follows:

First, the NDP proposes to spend an extra quarter of a billion dollars over four years on student grants.  That’s all we know.   Is it to enrich the current Canada Study Grants (i.e. more money to the same people), or is it to extend the current Canada Study Grant (i.e. give the same money to more people)?  Or is it for something new entirely?  We have no idea, because the NDP – unlike the other three parties – declined to provide more backgrounders about its policies.  Why this is considered acceptable in this day and age is a question for others to answer.

Second, the government plans to “eliminate interest on student loans”.  As far as I can tell, no one asked if they meant eliminate interest on all existing loans, or just those consolidated from 2016 forward, or just those issued from 2016 forward.  So we don’t know.  The fiscal consequences of this are huge.  If all loans suddenly become interest free, that’s a hit on the order of $2 billion over 4 years.  If it’s all loans consolidated (i.e. going into repayment) then my guess is this is on the order of $700 million or so, and if it is just loans issued then we are talking about maybe $300 million.

(Huge caution: my numbers are very back-of-the-envelope, based on incomplete public data and an inability to model the second-order effects of interest abolition such as savings on RAP and default.  Take it as a good-faith attempt to project costs based on limited data. And a total unwillingness of the NDP to reveal any program details or cost assumptions.)

It’s a bit difficult to evaluate the pledge without knowing the costs, but I think we can say two things about the Thursday announcement:

One, regardless of the price tag or details, this platform is substantially better than the usual NDP policy of “let’s cut tuition fees”.  It’s more targeted at students in need, and doesn’t run you into all kinds of problems of federal-provincial co-ordination (in contrast to the NDP promise on child care, which runs precisely into this set of problems).  That’s a huge improvement over most previous NDP platforms, and the party deserves some love for it.

Two, the zero-interest platform is kind of “meh”.  It’s good in the sense that it’s a benefit focused on students with need.  But no study I’ve ever seen has suggested that student loan interest rates makes an ounce of difference to access.  It’s a cost, but one small and well-hidden enough that it seems to have no bearing on the decision to attend post-secondary.  And it’s not entirely clear what problem this is designed to solve: student loan repayment burdens have fallen by more than a third over the last decade.  All this subsidy will do is raise the returns to education slightly – a windfall benefit to those who have already decided to make the investment.

A final note: the NDP appear not to be making any announcement on science/innovation.  Along with the Tories and Greens, that makes three parties who are making no commitments in these areas, which may mean something fairly dire for granting councils in future.