It was 20 years ago today that then-Human Resources Minister Lloyd Axworthy presented the findings from his long-awaited “Green Paper” on social security to the House of Commons (the paper itself was released the day before, on October 5, 1994).  The back-drop:  Lucien Bouchard was leader of the opposition, Jacques Parizeau was the new Premier of Quebec, and we were on track for a referendum the following year.  Unemployment was over 10 percent; for youth, it was 20 percent.  Our basket-case status led to a run on the currency; the price of defending it was sky-high interest rates.  Interest payments on the federal debt were eating-up close to a third of the federal budget, so citizens were paying $1 for about 70 cents worth of services, and feeling pretty ornery about it. 

Basically, we were screwed.

By late summer it was clear that the Liberals were going to take an axe to pretty much everything in the next budget.  Where PSE was concerned, the day was looming when cash transfers would drop to zero and Established Programs Financing (the CHST was yet to be created) would become a tax-point-only affair.  It was at this juncture that HRDC minister Lloyd Axworthy decided there was no time like the present to start talking about re-designing Canada’s social security system, including student assistance.  This was either extraordinarily brave or face-palmingly stupid, depending on your point of view.

The upshot of the Axworthy student aid proposals – articulated in the general social security “Green Paper” of October 1994, and in a subsequent student aid “White Paper” in November – had its roots in some ideas that had been percolating 25 years earlier during Pearson’s second-term, when Tom Kent was the Liberals’ Policy guru.  Instead of sending money to the provinces to support higher education, why not give that money to students, either through scholarships or – this was the new bit, based on Ottawa’s straightened circumstances – loans.  And of course, this being the early 1990s, these were going to be income-contingent repayment (ICR) loans.

ICRs were all the rage in the early 90s.  Australia and Sweden had recently introduced them (Bill Clinton was in the midst of doing the same in the US), and in the former case, at least, they had permitted the introduction of fees that had made institutions better off, and permitted a major increase in university capacity – and all without negatively affecting access.  But of course, since it involved higher fees, the usual suspects in Canada had an aneurism, which led to an autumn of student protests.  Students and PSE institutions united, arguing that they wanted federal funding to go through institutions, not students.

The reforms died with a whimper – with little third-party support, the reforms basically died on the night of the 1995 budget, when transfers to provinces were slashed with no concomitant change in the loan programs.  But in the medium-term, the Liberals actually ended up accidentally enacting much of the Axworthy agenda.  Student Loans became substantially income-contingent through the improvement of Interest Relief (which later evolved into today’s Repayment Assistance Program), and transfers to students to pay for higher fees increased substantially through education tax credits, grants, and educations savings programs.  In fact, by the early 2000s, the feds had more or less replaced a couple of billion in transfers to provinces with an equal-sized set of transfers to individuals without anyone (including possibly themselves) really noticing.

The Green Paper was one of the great might-have-beens in Canadian social policy.  But because it’s remembered (not entirely correctly) as a failure, it’s unlikely we’ll see anything that ambitious in social policy ever again.  Shame.