The economic and fiscal history of Canada from the early 70s to the mid-90s is one long, bad disaster movie (the Cassandra Crossing, say).  Unemployment went over 6% in 1974 and didn’t come back down to that level until 2008.  For nearly all of the 1980s, it was over 8% and from 1982 to 1994 it was over 10% half the time.  The Keynesian medicine that was supposed to get us out of such messes simply did not work because the problems were structural.  But by God that doesn’t mean we didn’t try – and we racked up enormous debts in the process.

Some of that money was spent on our post-secondary system, which again more than doubled in enrolment in this period, despite the baby boomers finishing passing through the system by the early 80s.  The Atlantic provinces finally got around to opening community colleges; the other provinces greatly expanded theirs.  The only genuinely new institution created in this period was the University of Northern British Columbia (though Nipissing converted from a teachers’ college to a university in 1992 and Ryerson from a “polytechnic” to a university in 1993).  British Columbia was by this time starting to realize you couldn’t actually run a province the size of BC on just four universities, and so it began experimenting with the idea of letting certain colleges become university colleges and offer four-year degree programming (though at first the degrees technically came from one of the three established universities).  Eventually, these colleges became Thompson Rivers, Vancouver Island University, University of the Fraser Valley, and Kwantlen Polytechnic University.

But while money wasn’t being spent on new universities, it was being spent on doing more expensive things at old universities.  Per-student spending in universities also doubled again, from about $10,000 to $20,000 per student (in today’s inflation-adjusted dollars).  Partly, that was the Baumol Effect at work, partly it was that universities were becoming more bureaucratic and offering more services to students, and partly it was that they were becoming more research intensive.  In the 1970s, when Canadian graduate programs were still mostly in their infancy, it was quite possible to get a job without yet having finished a PhD, and tenure in many fields required only the barest publication record. But gradually, as tenure and promotion requirements in the United States ramped up, and as more Canadian institutions started styling themselves as “research” universities, standards for tenure and promotion changed.

That had effects on the nature of the professoriate. By the mid-1990s teaching loads were decreasing, and new professors were being given a pass on teaching responsibilities, so they could focus on their research and make tenure.  Professors’ pastoral responsibilities to undergraduate students – that is, their role in helping students outside the classroom – began to wither, due both to increasing class size and the increased research responsibilities.  Those jobs started passing to non-academic staff and the professionalization of student life was under way.

Provincial governments mostly did their best to keep up with all this, but with public finances under strain from what amounted to a 20-year recession, they could not do so for long.  Commitment to low tuition (it fell in real terms in 1970s and stayed more or less even during the 80s) meant periods of government shortfalls tended to lead directly to cuts – quite significant ones in some cases. For instance, during the 1980s British Columbian institutions were asked to shoulder cuts of ten per cent or more, at a time when government funding made up over 85% of the operating budget.  The main professorial response to provincial cutbacks and perceived threats to job security was to unionize, and virtually every institution in the country (McGill, Waterloo and Toronto excepted) did so between about 1975 and 2000.

What really changed in the provinces in this period was the commitment to spend rationally.  This was an era when provinces would commission big independent reports into their systems and actually pay attention to the results.  They had dedicated agencies – sometimes outside government – advising them on how to best manage the system.  They had funding formulas – or at least fixed bureaucratic processes for establishing base funding – which could create predictable (if not always increasing) funding streams.  After the devil-may-care free-for-all of the 1960s, this was a radical shift.

Ottawa faced mostly the same financial problem as the provinces.  They expanded their post-secondary role a bit, first by creating SSHRC and NSERC, and then by co-funding the construction and operation of community colleges (and then withdrawing funding and letting the provinces pick up the bill).  On student aid, they made no changes of note.  In 1976, the old funding system was replaced by something called “Established Programs Financing” which was a huge block-grant, part cash, part tax-points (please don’t make me explain tax points) to cover both health and post-secondary education.  The main change from the 1967 transfer was that the feds stopped pretending to cover half the cost of these programs: they were simply going to ship billions of dollars, no questions asked, to the provinces and after that provinces were on their own.  Over time, due to a series of changes in the way the grant was administered, the cash portion began to wither away. By some estimates, there would be no federal cash transfers for health or education at all by the early 2000s—only tax points would be provided.

By 1990, the system was under strain but managing. Then, economic recession and the national unity crisis that started that year hit it like a freight train.  Deficits shot up at all levels.  Between a central bank obsessed with eliminating inflation and a bond market justifiably concerned that a badly indebted country that was in serious danger of dissolution might not repay its debts, interest rates skyrocketed and typically stayed 400 basis points above whatever they were in the US.  The economy ground to a halt.  Higher interest payments meant governments had trouble paying their bills: in Ottawa 33 cents on every dollar went to paying interest on the debt, and Saskatchewan teetered on the edge of bankruptcy.

In this kind of national emergency, post-secondary education never had a chance.  The cuts came at different times in different parts of the country – austerity came to Saskatchewan in 1992 but did not reach Quebec until 1997 – but the writing was on the wall before that. Tuition – now a source of income governments really needed to tap – finally started to increase.  In 1990, Quebec ended its 20-year freeze on tuition, and for the rest of the decade, increases in tuition of 7-8% above inflation were the norm.

And then the Chretien Liberals came to power. More on that next time.