“…Mr. Speaker, we know that living standards depend on productivity, productivity depends on innovation, and innovation depends on skills, technology, and competition.  So we are going to ramp up on all of them.  This won’t be easy.  It won’t be quick.  We are not doing this with an eye to the next election; it’s a marathon not a sprint.  But we have to start somewhere.

Skills

Let’s start with skills.  While recognizing that having a skilled labour force is a national priority, we also recognize that like Canada’s other great national priority – medicare – the actual delivery of programs a provincial responsibility.  That’s not a constitutional mistake made by the Fathers of Confederation.  In a country as large and diverse as Canada, no national government is ever going to be sufficiently attuned to local conditions as to be able to make sensible national training policies.

In the past, the federal government has not always recognized this.  We’ll say things like “we should do something on skills, and model it on successful partnerships in the health sector, like the Canadian Institute for Health Information (CIHI)”.  And then proceed to ignore the central lesson of CIHI, which is that the provinces basically run the place.  We are risking missing this lesson with the Future Skills Lab, an interesting idea which is being impaired by a federal public service that just can’t bring itself to do CIHI again.  Or like we did with the Canadian Council on Learning, another interesting idea that lasted six years but was basically unable to reach its potential because the federal government failed to fully appreciate the role of the provinces.

Well, no more.  If we’re ever going to get anywhere in this country on skills, it’s only going to be through more CIHIs and more genuine provincial buy-in and involvement.  I’m directing our public servants, as of today, to stop equivocating on FutureSkillsLab and actually make it work following the CIHI model.  For anyone still seeking clarity on what I mean, read Andrew Parkin’s missive on the subject.  He has it exactly right.

I am not announcing any big new measures in skills in this budget, mainly because out policy thinking in this area is not yet at the point where it is wise to roll-out new money.  But I am directing another $10 million to FutureSkillsLab to answer the following two key questions over the next 18 months: first, how can Canadian institutions best develop shorter credentials which have real value in the labour for mid-career learners?  And second, how can we ensure that mid-career learners have the time necessary to learn? The second question may include include the possibility of creating a statutory right to time-off for training).  We look forward to seeing the results in early 2020, and acting upon them at that point.

 

Student Aid

On Student Assistance, I am announcing four new measures.  The first is an immediate increase of $150 million in the budget for the Post-Secondary Student Support Program, the program that provides assistance to individual First Nations to provide support to their own post-secondary students.

The second involves spending the remainder of the money saved from the abolition of education tax credits.  We got rid of the credits in Budget 2016 but didn’t spend all the savings because some of the savings took awhile to appear.  Last time, we spent the savings on increasing the size of the grant to low-income students, which we thought worked pretty well.  This time, we are going to find ways to reduce costs for those students whose costs are the highest: namely, students who have to move to go to school.  Participation rates for students from rural and remote areas remains low, and cost remains one of the reasons why.  That is why, as of September 2019, if you are an undergraduate or college student, and your chosen program of study is not offered at an institution within 30 miles of your home, you will be eligible for a grant of up to $3000.

The third change is simple: we’re reducing the monthly affordable payment amount in the Canada Student Loans Program.  Currently, it’s 20% of all income over $25,000, which is better than it used to be, but it still pinches early career borrowers pretty hard.  We’re going to reduce that to 15% to give a break to young Canadians getting a foot in the labour market.

The fourth change is the big one.  We are announcing a goal of being able to collect student loans through the income tax system by 2024. This will make both collection of loans, and the provision of post-graduation benefits, like the Repayment Assistance Program, much simpler.  Why 2024?  Because being able to provide real-time student loan accounts using current CRA processes is almost impossible.  It means an overhaul of the entire payroll tax system.  But it’s necessary because Canada has fallen a decade or two behind world leaders like New Zealand in the sophistication of its tax collection system.  This modernization will allow both the federal government and provinces to combine tax collection and benefit payments more smoothly, and we look forward to matching New Zealand Inland Revenue’s cost structure which is roughly 1/3 less, per dollar of revenue collected, than our own.  And it will make for a much better student aid system.

Science

And now the one you’ve all been waiting for: scientific research.  Mr. Speaker, I will be brief.  We are going to give the councils a phased increase to the base budgets of the granting councils by $1.3 billion over four years.  We are not going to get cute on the Report on Fundamental Science: that’s what it asked for and that’s what will be given.  Councils will be asked to make efforts to equalize proposal success rates across the research lifecycle.  CIHR, in particular, will be asked to raise proposal success rates substantially.  This will mean reducing the average size of grant awarded.  So be it.

This will not be entirely new money: both the Canada Excellence Research Chair program and the Canada First Research Excellence Fund will be phased out over the next five years in order to pay for it.  We are also not going to fund CFI at quite the same levels expected; frankly, between the two rounds of KIP/SIF in the last couple of years we believe infrastructure is reasonably well taken care of for a few years.  We will revisit this again once the $1.3 billion has been folded into the base.

However, this money is not unconditional.  The Government of Canada cannot be expected to provide unconditional support to the academic research community without having any say in how big that community is.  Universities, funded by a combination of private and provincial dollars, make hiring decisions and then just expect Ottawa to pay for it.  Moreover, there appears to be some confusion about why we fund science, particularly with respect to the role of science in training graduate students.  To be perfectly clear: if granting council money is being spent only to train the next generation of academic researchers, then it’s being mis-spent.  We need scientific talent to be spread across the economy.  And universities have a responsibility to ensure that this is what their training does.

To that end, we are calling for a Pan-Canadian Science Summit, to be held in November 2018, to discuss two issues with our provincial partners and leading academic researchers.  First, what should be the principles of funding growth going forward, and second, how should graduate programs be altered so as to focus on training for a broader labour market.  We need serious answers to both questions.  The third and fourth years of the planned increased in this budget depend on creating satisfactory answers.

Finally, no one should think that Fundamental Science is some kind of be-all and end-all.  One of the unfortunate side effects of the Fundamental Science review was to obscure the fact that applied research has a major role to play in any modern economy.  If you doubt this, take a look at Germany.

That is why we are announcing one final initiative today, and that is to triple the budget of the College and Community Innovation Program which allows Colleges and Polytechnics to work with small and medium enterprises on developing new products and adopting new technologies.

Mr. Speaker, skills, access to education and research are not the only things underpinning our standard of living.  Other things matter too, like competition and trade – which is why I will announce comprehensive measures to dismantle barriers to competition in banking, telecommunications and agriculture.  And more money does not cure all ills: Canada needs to take a harder look at value for money in post-secondary education generally, a measure where we are at best only middling across OECD countries.  But there is no doubt that we have been underinvesting in these areas since 2009 or so, and that we need to make consistent long-term efforts to change this.  Serious countries focus on the long-term, and do not get distracted by shiny boutique programs.

Mr. Speaker, with this budget Canada once again becomes a serious country on skills, access and research.”