STANDING COMMITTEE ON GENERAL GOVERNMENT
COMITÉ PERMANENT DES AFFAIRES GOUVERNEMENTALES
Wednesday 6 June 2001 Mercredi 6 juin 2001
INVESTMENT FUNDS
INSTITUTE
OF CANADA
ONTARIO COMMUNITY
COLLEGE
STUDENT PARLIAMENTARY ASSOCIATION
CANADIAN ASSOCIATION
OF
NOT-FOR-PROFIT RESP DEALERS
ONTARIO
UNDERGRADUATE
STUDENT ALLIANCE
Wednesday 6 June 2001 Mercredi 6 juin 2001
The committee met at 1548 in committee room 1.
SUBCOMMITTEE REPORT
The Chair (Mr Steve Gilchrist): Good afternoon. I call the standing committee on general government to order. Our first order of business is to deal with the report of the subcommittee as we consider Bill 4, An Act to amend the Income Tax Act to provide a tax credit for contributions to registered education saving plans. Mr Levac.
Mr Dave Levac (Brant): Your subcommittee met on Tuesday, May 29, 2001 to consider business before the committee and recommended the following:
(1) That the committee meet on Wednesday, June 6, 2001, to hold public hearings on Bill 4, An Act to amend the Income Tax Act to provide a tax credit for contributions to registered education savings plans;
(2) That the clause-by-clause consideration of the bill be undertaken on Wednesday, June 6, 2001;
(3) That an advertisement be placed on the OntParl channel and the Legislative Assembly Web site and a press release to be distributed to English and French papers across the province.
The clerk of the committee is authorized to place the ads immediately;
(4) That the office of Mr Hastings (Etobicoke North) provide the clerk of the committee with a list of witnesses to be scheduled for public hearings;
(5) That the deadline for the written submissions be Wednesday, June 6, 2001 at 5:30 pm;
(6) That the witnesses be given a deadline of Tuesday, June 5, 2001 at 12 noon to request to appear before the committee;
(7) That the time allotted to individual witnesses for each presentation, on consultation of the clerk with the Chair, be determined by dividing the available time by the number of witnesses;
(8) That the clerk of the committee, in consultation with the Chair, be authorized prior to the passage of the report of the subcommittee, to commence making any preliminary arrangements necessary to facilitate the committee's proceedings.
The Chair: Do you move the adoption of the report?
Mr Levac: I move the adoption of the subcommittee report.
The Chair: Any comments? Seeing none, all those in favour of the adoption of the subcommittee report? Contrary? It's adopted.
SAVING FOR OUR CHILDREN'S FUTURE ACT (INCOME TAX AMENDMENT),
2001
LOI DE 2001 SUR L'ÉPARGNE EN PRÉVISION DE L'AVENIR DE NOS ENFANTS
(MODIFICATION DE LA LOI DE L'IMPÔT SUR LE REVENUE)
Consideration of Bill 4, An Act to amend the Income Tax Act to provide a tax credit for contributions to registered education savings plans / Projet de loi 4, Loi modifiant la Loi de l'impôt sur le revenu en vue de prévoir un crédit d'impôt pour les cotisations versées à un régime enregistré d'épargne-études.
The Chair: With that little bit of business out of the way, we appreciate the folks who have come before us here today. Our apologies that the vote up in the House has left us starting a couple of minutes late here.
SASHA SUPERSAD
The Chair: We'd like to call forward our first presenter, Sasha Supersad. Good afternoon and welcome to the committee.
Ms Sasha Supersad: Thank you for having me.
The Chair: Just a reminder we have 10 minutes for your presentation. You can use that whole time for your comments or you can leave time for questions, as you see fit.
Ms Supersad: As you all know, I'm a 20-year-old single mother of an eight-month-old daughter. I recently started the RESP program with the UIC when she was six months old. I just want to thank you guys for giving me the opportunity to come here tonight to voice my opinion on this.
I'm starting college in September and I have to take out a loan for me to actually further my studies, because I believe that with a secondary education that's the only way you can make yourself a name in this world right now. I believe the RESP, with the extra 10%, would give me the advantage to give my daughter something that I didn't have. I don't want her to have the burden of having an OSAP loan over her head when she graduates from school, which I will have.
I recently heard about the RESP from my aunt when I was pregnant, because she started that for my cousin. Now my cousin's education is thoroughly paid for. As soon as I heard I could start an RESP for my daughter, I jumped at the opportunity, because she needs that. I won't be able to properly pay for her to go to university on my own. I put away $50 from my child care tax benefit every month, which is very hard to do, because I make very minimum at the job I'm at and it's fairly hard to meet the necessities which she needs today. By the time she's ready to go to school, the tuition fees are going to be probably triple what I have to pay now. Currently, I have to pay $1,000 for my first semester, so by the time she's ready to start, it's going to be $3,000 or $4,000, which I would not be able to afford.
Those are the main reasons why I support the 10% tax credit, because there are a lot of single mums out there whom I know personally who can't afford to put their children through post-secondary education, because they're struggling themselves. This is going to benefit not only single mums but the lower-income families who struggle these days to make ends meet. That's it.
The Chair: Thank you very much, Ms Supersad. Any questions from the Liberal caucus?
Ms Caroline Di Cocco (Sarnia-Lambton): Thank you very much for your presentation. I have to say that it's always remarkable when I see young single mothers who are trying to raise their children and continue post-secondary education and trying to develop a way of affording what is going to increase. You're absolutely right about the cost.
How much do you think the 10% of the qualifying contribution a year -- I don't know. I was reading the explanatory note, and I believe that the maximum is $100 per year. You knew that?
Ms Supersad: I know that.
Ms Di Cocco: OK. I think you've explained, but can you just reiterate for me, if you could, how you think that's going to help not just young people but people who want to further their own and their children's education?
Ms Supersad: I'm involved in a community program in Ajax where I'm at that helps out single mums or mums who just need that extra support. There are a lot of my friends who have children around my daughter's age who can't even go off to secondary education right now because of financial need. If they know they can get an extra $100 back to reinvest into the RESP for their kids, they're going to feel better off. They're giving their kids something that they didn't get the opportunity to fulfill at their time. If they get that opportunity, then their kids are going to know, "OK, even though my mum had me when she was young, she's at least looking out for my future before I even get there." I think that's going to be better for the kids, because then they're going to know that it doesn't matter where you come from, at least you can always get a secondary education.
Ms Di Cocco: How much is that premium that you pay for this?
Ms Supersad: I pay $50 a month, starting off right now.
Ms Di Cocco: Oh, $50 a month?
Ms Supersad: Because I get $191 from the child care tax benefit, so I take $50 from that. Actually, I have to leave here after this, because I have to go to night school at Durham College. I'm taking a dental receptionist course, which will make me more money. So once I start getting the higher income, I'm going to increase the amount to go in. The more I can put in for her, the better it's going to be better for me in the long run.
Mr Rosario Marchese (Trinity-Spadina): You're obviously worried that many people can't get to university or college, right? You said you know people who at the moment can't get there.
Ms Supersad: Yes.
Mr Marchese: Your feeling is that this will help to keep some of the people in colleges and universities --
Ms Supersad: I don't mean to cut you off, but at least our children would have the opportunity to fulfill something that they didn't get the chance to do right away.
Mr Marchese: I understand, of course. My problem is -- I'm not opposed to this, obviously, and I'll get to other people; I'll be able to ask them other questions -- I think governments are making it harder and harder for people to go to university --
Ms Supersad: They are.
Mr Marchese: -- because tuition fees are very high.
Ms Supersad: Every year the tuition keeps going up and up.
Mr Marchese: Right. What do you think about that?
Ms Supersad: I think that's very unfair. I know they have to maintain the image of the university, because it's a lot of money to maintain all the students coming in, all the programs and everything, but it's being unfair to those lower-income families who want their kids to go off to school, to get a better-paying job, to make themselves a better name. So the more they raise the tuition, it's harder for us.
Mr Marchese: So while this might help a little bit for some people, you've still got a big problem on your hands in terms of paying these exorbitant tuition fees that this Conservative government has put in place in the last five or six years. Yes?
Ms Supersad: Yes.
The Chair: Thanks very much, Ms Supersad. We appreciate your taking the time to come before us here this afternoon.
Ms Supersad: Thank you very much for having me.
INVESTMENT FUNDS INSTITUTE
OF CANADA
The Chair: Our next presentation will be from the Investment Funds Institute of Canada, Leslie Byberg. Good afternoon and welcome to the committee.
Ms Leslie Byberg: Thank you. My presentation will be very brief. My name is Leslie Byberg and I appear here before you on behalf of the Investment Funds Institute of Canada -- known as IFIC, for short -- and IFIC's president and CEO, Tom Hawkins. It's a pleasure to be here.
If you don't know who we are, we're the national industry association for the Canadian investment fund industry. Today we have 77 fund manager members, 118 retail distributor members and 71 affiliated professional firms that are members of our organization. Our members manage over $415 billion in investors' assets in 52 million unit-holder accounts, roughly, and many of our members offer and distribute RESPs to investors.
My brief observation is that we were pleased to see the initiatives to introduce in Ontario an RESP tax credit. As we've noted in some of the investor information we provide on RESPs, they're an important tool to help Canadian families provide for their children's education in a way that encourages some financial planning. The proposal to create a provincial tax credit would provide, we think, an additional incentive, obviously, to encourage Canadian families to save for their children's education.
Those are my very brief remarks.
The Chair: This time the questioning will commence with the government caucus.
Mr John Hastings (Etobicoke North): Ms Byberg, what is your assessment: if Ontario should adopt this initiative in a future budget, how do you think this would be accepted across Canada?
Ms Byberg: The hope would be that other provincial governments would consider a similar initiative. I think you'll probably be hearing from future presenters on the impact that the federal incentive has had on encouraging people to open these kinds of accounts.
Mr Hastings: In your considered assessment, where do you think Canada is as a whole compared to our US neighbour and other countries in terms of incentives provided in budgets by governments for savings for education? Specifically, I reference President Bush's education bill which is going through Congress. From what I can see, under section 529 of the Internal Revenue Code, the specific provisions under the college savings plans, Congress is probably going to expand the savings incentive in certain instances by a quarter of a million dollars, tax-free. What do you think of this initiative and where Canada lies in comparison and contrast to where the Americans are going, given the high overheads that drive education costs, which the NDP constantly ignore?
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Ms Byberg: I don't know much about that. I don't know much about the US proposal. What I do know is that the overall costs for education in the States are much higher, even at state universities. So maybe there's some catch-up going on there.
I guess I can say that our organization has, not just in this context but in the context of promoting incentives to encourage people to save, particularly for retirement, which is not what we're talking about today -- we are obviously very much in support of that and our organization has made a lot of public statements to that effect.
Mr Levac: Just a quick question about an observation I'm making about various groups: I don't know if you're included in that, but a lot of people are saying, to this incentive and to Mr Hastings, "Thank you very much. It's a good idea. It's in the right direction," but then they proceed to say, "But we have some other problems about how students are expected to fund their education."
It says in most of the research and some of the responses that 85% of students pursue post-secondary education after being seen as attached to some type of RESP. For my own knowledge, what happens to the other 15% who don't? Where does that money go?
Ms Byberg: For students who don't pursue --
Mr Levac: Yes.
Ms Byberg: I think, at least under the federal system, the income can actually be rolled over into an RRSP, to be contributed to as an RRSP, if I'm not mistaken.
Mr Levac: So there's no substantive loss in terms of putting this away?
Ms Byberg: No. I think the --
Mr Levac: I was alerted that there was a situation where you did lose some money if you didn't. So I was just wondering if you had any information about that.
Ms Byberg: No, I'm afraid I don't. I'm actually just going to look at some of the materials we have here on the Canada education savings grant.
Mr Marchese: If you have another sibling, you could transfer it to another sibling.
Ms Byberg: I think there was a lot more flexibility introduced so that you could somehow capture what you had been accumulating over those years.
Mr Levac: That's helpful. I would want to make sure to dispel any kind of misunderstanding that might exist that there are people lining their pockets with this type of program. At one time there were rumours or even actual facts where some people lost money because their child decided not to go to school.
Having said that, put that one out of the way and come back to the fact of your opinion in terms of, from your field, would you still encourage the government to participate in talks that would probably lower the cost of students going to school?
Ms Byberg: Yes.
The Chair: Thank you, Ms Byberg, for coming before us this afternoon.
ONTARIO COMMUNITY COLLEGE
STUDENT PARLIAMENTARY ASSOCIATION
The Chair: Our next presentation will be from the Ontario Community College Student Parliamentary Association, Tracy Boyer. Good afternoon and welcome to the committee.
Ms Tracy Boyer: Just so people know, my name is Tracy Boyer and I'm the executive director for the Ontario Community College Student Parliamentary Association, Association parlementaire des étudiants des collèges communautaires de l'Ontario. OCCSPA/APECCO represents about 140,000 Ontario community college students. We work with education partners and government to develop solutions to many issues that impact our constituents.
On April 25, 2001, our association provided a letter of support addressed to Mr Hastings for the 10% provincial tax credit on the first $1,000 saved in an RESP. To reiterate our rationale, OCCSPA/APECCO has been working with a provincial group called the Ontario Advisory Committee on Student Financial Assistance -- the acronym for that is OACSFA -- to make recommendations to government about changes needed to student financial assistance.
We are well aware of the need for parents to save and plan for their child's education. It is evident to our organization that not enough parents know they are expected to contribute to their child's education. Although through the establishment of OACSFA, the government has taken steps toward developing solutions regarding student financial assistance, we believe more action is necessary.
Providing an incentive for parents to save is important to increasing access to post-secondary education. The Investing in Students Task Force also echoed the need for change in the area of student assistance and suggested developing an "invest in students" culture. Under this recommendation, they felt that early financial planning for post-secondary education is very important. As part of creating an "invest in students" culture, OCCSPA/APECCO believes that the government must provide incentives for parents to save for their child's education.
We support the need for change and endorse the recommendation of providing a 10% tax credit on the first $1,000 saved in an RESP for families in Ontario. We look forward to further change in the area of student financial assistance by the provincial government and see this change as a step toward increasing access, but we still have more work to do.
We strongly believe that recommendations from OCCSPA must also be considered and implemented to uphold the commitment in the throne speech 2001 that every qualified and willing student will be guaranteed access to a post-secondary education.
Our organization was pleased to see that all parties supported this bill. We feel the comments made by the opposition parties were important in emphasizing the need for increased investment in post-secondary education.
The Minister of Training, Colleges and Universities appears to be committed to further improvements in student assistance. We understand that government views the cost of education as a shared cost but feel we really need to focus on ensuring this shared cost is reasonable and does not affect access.
The Investing in Students Task Force report that was released in February included a section on access and affordability. From the information in the report, it's plain and simple to see that for college students there have been significant tuition increases along with very significant operating grant decreases, which affect service and quality in our institutions. Tuition has risen quickly in such a short period of time. However, our communication to parents and students has not increased to help people plan for this sort of change. The report emphasized the need for early planning, counselling and communication. OCCSPA has created a communications plan for student assistance, and we feel it's important that communicating change be a priority.
Our organization is also sensitive to comments made about families who cannot afford to save. In the college sector, there are a significant number of sole-support parents who are students as well, and I think Sasha spoke well to that. We cannot make these people choose between their own education and their child's future education; both are equally important to our society. More creative solutions are necessary. We need to recognize that although this is a positive step, more solutions are needed to ensure equity for all Ontario families.
To conclude, OCCSPA/APECCO continues to support this bill and encourages government to ensure this tax credit is properly communicated to parents as well as to track the benefits this bill provides to Ontario families. We need to be able to measure progress and ensure we are moving in the right direction with policy decisions.
The Chair: Thank you very much. This time we'll start the questioning with Mr Marchese.
Mr Marchese: Tracy, thank you for your comments. You pointed out that financial planning is important. I don't think there are too many people who disagree with that.
Ms Boyer: Right.
Mr Marchese: I also think you commented on the fact that many people would probably like to but can't, and so that's my question to you: do you think it's just a matter of people not wanting to versus not being able to?
Ms Boyer: I think what you have is a combination. You have some people who can afford to and do. Obviously you have statistics on how many people invest and how it makes students successful. Then you also have the people who don't know about how they can invest. That's where communication becomes very important. You also have a segment of the population which doesn't have the money to invest. What we're trying to say is that maybe this is a step in the right direction but we need to come up with some more creative solutions.
Mr Marchese: Tracy, my view is that a significant number of Ontarians simply can't afford to put that kind of money aside. While we have examples of people who are happy to be able to have this opportunity, the fact that 50% of Ontarians who work earn less than $30,000 suggests to me that most people are just struggling. So, that's my concern around this particular issue.
The other thing Mr Hastings talked about is, where are governments with respect to giving incentives to people to save for their children? Do you think an incentive could be to reduce tuition fees as a way of getting students to go to college or university? Could that be an incentive?
Ms Boyer: I think to attend, but when you're talking about saving, I think it might be different. But yes, an incentive to have more people going to institutions, sure.
Mr Marchese: My view is that it would be an incentive.
Ms Boyer: Maybe that's something that can be worked on in addition to this sort of initiative.
Mr Marchese: Would that were the case. That's why I say to you that I support this as an initiative, because it's going to help a lot of people. There's no doubt about it.
My view is that those who have money will be able to save and those who don't, regrettably, may not be able to. Yes, it will help some; it won't be able to help many. My answer to it is to reduce tuition fees as a way of helping people.
The Chair: Thank you, Mr Marchese. We have time for a brief question from the government.
Mr Norm Miller (Parry Sound-Muskoka): Thanks for your comments, Tracy. There's a $100 limit on this tax credit per year. What is your feeling about that?
Ms Boyer: Reflecting the views of my membership, they felt it wasn't substantial. However, it's important to start somewhere, and with the fact that a lot of things have been cut in our post-secondary education system, to try to get something out of the government in this area is an accomplishment. We felt it was important to support it, because it's a start. We'd like to see more substantial -- maybe we can see that pocket grow.
Mr Miller: So, if it was a higher amount, that would be better?
Ms Boyer: Yes. For students, I think it would be better, families.
The Chair: Thank you, Ms Boyer. I appreciate very much your coming before us here today.
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LOUISE SALTON
The Chair: Our next presenter will be Ms Louise Salton. Good afternoon. Welcome to the committee.
Ms Louise Salton: Good afternoon, members of the committee, ladies and gentlemen. My name is Louise Salton. I am from London, Ontario. I'm a single mother of a foster child and an RESP subscriber. I am a nurse at St Joseph's hospital in London and am also involved with children's aid.
I first welcomed my daughter, Brooke Amber Lynn Gatto, into my home about three years ago. She was five at the time. She had already been in three foster homes prior to my home.
I started contributing to the RESP eight months ago, after seeing a sign about this in my bank. I contribute $40 a month. I considered other options, such as savings for Brooke in a personal savings account, but the federal grant and the solidity of an RESP made it seem like the best option.
I feel it is very important for all parents to contribute to the RESP for their children. I recommend it to all parents and I do that every day. I think it is particularly important for foster parents, since these kids have often come from broken homes and abusive homes and do not have strong family foundations.
Investing in an RESP for my daughter has strong psychological benefits, as it shows her that I have a long-term plan for her future and will take care of her. This is a stability she has never known, and it is very important to her social and psychological growth. Letting her know that I believe in her abilities and value her contribution will build her self-esteem and lead her to set higher goals for herself.
More than psychological benefits, RESPs have definite financial benefits for foster children like my daughter. Unlike other children, foster children often have no plans made for their futures, no financial resources of their own. When they leave the homes of their foster parents, they may end up working at a fast-food restaurant or in another job where a lower education level is required and never get the chance to rise above that.
By preparing for her future with an RESP, I am breaking the chain for Brooke -- helping her become educated, competitive in today's society and financially independent.
I think an Ontario tax credit will be a tremendous help to parents like myself who cannot invest as much as they would like for their children's future. The extra $100 could be reinvested back into the RESP, meaning more saved for post-secondary education. I think an Ontario tax credit would also make more parents aware of the benefits of RESPs and start them on the road to saving for their children's future.
I would just like to add that Brooke's wish is to become a nurse or a doctor, and both fields require a post-secondary education. This means I have to save for her future education. That's why I have started the RESP for her. My education background, of course, is a college degree, which I obtained working and actually going to school at the same time. Coming from a very large family of 10 children, I had no choice.
The Chair: Thank you, Ms Salton. We'll start with Ms Di Cocco.
Ms Di Cocco: Thank you for your presentation. I have to say that I have to agree with you that education is the foundation for opportunity; it's where it's at, absolutely. You said that you have a responsibility. I sense your sense of responsibility toward your child. Government also has a responsibility. I agree that more parents -- and I wished I was one, because it certainly cost me a lot to have my kids in school. We have to educate parents more to get into RESPs. The other part of the equation -- I don't know if you know this or not, some of the stats that are out -- is that today students have to work about 660 hours to pay for a bachelor's degree, whereas years ago it was about 235 hours and they could actually work themselves through school. Today the government is giving $3,500 of public funds for private schools. I wish it would be sent off to post-secondary education because that, to me, is what the future is about.
The question is, what other mechanism do you think, besides the RESP, what other venue can we have to also sort of promote the responsibility that parents could buy into these RESPs?
Ms Salton: As a foster parent, I've actually gone to the children's aid and made sure this is in the newsletter, because a lot of us foster parents don't know about it. The only reason I knew about it was that I walked into my bank and it was right in front of me. So it's going to be in a newsletter, and that's Middlesex county. To make it more public, I don't know if you could do it through newspapers or television or something.
Ms Di Cocco: Some promotion on it anyway.
Ms Salton: Yes, it should be a promotional thing.
Mr Marchese: I want to wish you the best as a foster parent, because obviously you're going to be a very good parent from what I hear from you. I have one question. Do you know parents who are having a difficult time even paying rent at the rates I see here in Toronto and in many other big cities and who would have a difficult time putting even $40 aside, as you're trying to do, for this kind of plan? Do you know anyone?
Ms Salton: Yes, I do. I have a very good friend. She has three children and her daughter is in my daughter's class. She has a very hard time. She's living in London housing.
Mr Marchese: So she wouldn't be able to put money aside for this. Even though we would do all the education in the world to try to get her to put money aside, she would have a hard time, right?
Ms Salton: She would have a hard time meeting that. The minimum maybe, but with three children it's hard, and she's a single parent.
The Chair: Thank you, Ms Salton, for coming forward. I'm sure Brooke will have a much better chance based on what you've told us here today. Congratulations on what you're doing.
JOSIE DEBORGER
The Chair: Our next presenter will be Ms Josie DeBorger. Thank you very much. I appreciate your coming before us here today.
Ms Josie DeBorger: Good afternoon, Mr Gilchrist and members of the committee. My name is Josie DeBorger. I am a 42-year-old RESP subscriber from London.
Both as a nurse and a teacher, I understand the value of a post-secondary education and the impact it has on a child's future. That is why I have already started saving for my two-year-old son, Peter Alexander. I agree with you that it is the foundation for opportunity. I have three other sons and we've had to sacrifice immensely to get them through school, where they are. As a long-term benefit, this is your financial planning. You have to plan for the future. It's for yourself and everyone else who's involved.
Because I am a firm believer in the benefits of long-term investment, I started subscribing in an RESP at the first chance I could and I hope to double my monthly contribution of $56 per month in the future, because I don't believe you should take risks. This is your child's life, and who knows if we'll even be there. I'm sure that within our will or anything like that we could make sure this RESP would continue to be paid throughout until its term is filled. So it's a guarantee that there's something there for your child. It wouldn't maybe pay everything, but it would give them a very good incentive to go. It would give them hope.
I first heard about it from an enrollment representative. With the other three boys there was a small investment firm and it wasn't all that helpful. They got through OK and they're doing all right, but I don't want to worry about Alex when I'm supposed to be looking at a retirement investment for myself. He's only two. If you're thinking of when he's ready to go to school, I will be in my sixties. I'm not sure of my future in retirement and I just don't want him to have to worry.
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Looking at the Ontario tax credit rollover, a 10% provincial tax credit will help me invest more in my son's future. An extra $100 provided by the provincial government could be rolled over into next year's RESP contribution and earn the 20% Canada education savings grant. In this way, the credit would make much more of an impact than the original amount that was returned.
Also I'd like to include with the topic matter just before this that I put myself through school after the age of 30. I was a stay-at-home mom, but I wanted to give more to society and to fulfill my life. Ten years ago was 1992. I was paying $300 for a university credit, for one subject. Now, as a teacher, if I want more credits, I pay almost $900. That's three times the cost already.
I can truly appreciate the fact that you said, "We'd like to lower tuition." I'd love to have that as a guarantee, but for Alex in 15 years, we cannot take a promise. OK, we promise the tuition's going to be lower in 15 years. This $100 per year might be small, but it's a stepping stone and it's more of a guarantee than a promise that in 15 years our tuition will be down. We would really like to have those promises that tuition will go down, but this is a stepping stone and it will make people look to the future with maybe a little bit more promise.
I would not be able to afford Peter Alexander's education costs without an RESP. I have to do it. There's just no other way. Overall, this tax credit would put out an alert for all parents to look into RESPs for their children. It might take one year of their going to the tax office and for their accountant to say, "Have you put anything away for the RESP?" A $100 tax credit would be enough for them to go home and say, "Maybe we can do something about it."
Another issue is the amount you can put in per month. You don't have to put in $50. You can put in $10. If you would put in $10 per month, that's $120. That means you would really only be paying $20 that year for even considering something for that child. As one's income can increase, you can increase what you're giving to the RESP. If this year I can only do the $56, at the end of the year, if I have anything extra, I can put that in. The following year, if I earn more, I can put more in.
It's just teaching the public that there is something you can do for your child's education, no matter how small or how big. It would make them think of their child's future and it's part of their financial planning.
In closing, I would like to thank Mr. Gilchrist and the members of the committee for their consideration. I think this is a great initiative on Mr Hastings's part and it needs to be supported. No matter how small it is, we can always alter the amount that is a tax credit, but it's something to give our citizens hope for the future and hope for their children, because there are some families that don't have a lot of hope. This is maybe a small sense of security, but a small sense of security can give people a lot of encouragement to work a little harder and find other means in educating their children and making sure they're well taken care of.
This is my second family. My first ones are all fine and they're all doing well, but when I'm 60 years old, this child deserves just as much of a chance as the other three did.
The Chair: We have time for one question.
Mr Hastings: Thank you for coming today. My question would reflect more on the sense of responsibility, or a culture of empowerment. Do you feel, in talking to other people who are subscribers to an RESP, that they have a greater sense of empowerment and responsibility in dealing with their children than a sense of dependency, which some critics would prefer to foster?
Ms DeBorger: I agree totally. The day I signed to give an RESP to Alex was a day when I felt fantastic; I really did. I felt that was just one less thing to really worry about. In fact, the sense was amazing. As a single parent, that was the first thing I did that week. That was the first thing I did. I just needed to know that was taken care of. Every day we have so many things that are unpredictable that can be there staring at you. You have to deal with them every single day, and it could be something different. But when you know that at least that is taken care of, it gives you that sense of empowerment that you have some control of your destiny and of your child's destiny.
Mr Hastings: Do you think that's even more important than the money, per se?
Ms DeBorger: The money is important too, but to have that feeling of security, I think, is what our citizens are looking for.
The Chair: Thank you very much, Ms DeBorger. We very much appreciate your coming all this way to make your presentation today.
CANADIAN ASSOCIATION OF
NOT-FOR-PROFIT RESP DEALERS
The Chair: Our next presentation will be Tom O'Shaughnesy and Ken Goodwin from the Canadian Association of Not-For-Profit RESP Dealers. Good afternoon, gentlemen, and welcome to the committee.
Mr Hastings: Mr Chair, if we have folks who have travelled, are they entitled to travel costs per kilometre?
The Chair: The committee may decide to do that if there is an appeal. That's the sequence.
Mr Marchese: That was very helpful, John. I'll remember that.
The Chair: Welcome to the committee.
Mr Tom O'Shaughnessy: Thank you, Mr Chairman. First of all, we appreciate the opportunity to speak before the committee on general government today. It's our pleasure to be here. We represent the not-for-profit RESP dealers. Between the organizations in the not-for-profit group, we have approximately $2.5 billion in assets under administration and over 600,000 individuals across the country signed up with us saving for RESPs. Our experience with RESPs is significant and has gone on for a long period of time. We have been involved with them for over 40 years.
Mr Ken Goodwin: We were very encouraged by the all-party support for second reading. As I understand it, it's very rare that we have all-party support.
Mr Marchese: Extremely rare.
Mr Goodwin: But it does actually show that all parties do support the fundamental principle that affordable post-secondary education is a top priority for the government. This initiative, we believe very strongly, is a very big and excellent step in that direction. It recognizes a need to motivate parents to save for education, and I think it's very important to get everyone sharing in the issue.
I would also like to remind the committee that even with the federal grant program, which has come into place since 1998, there are still only 22% of eligible parents in Ontario who are participating in RESPs. We want to increase those numbers to get more people participating.
Mr O'Shaughnessy: I'd like to thank Mr Hastings for his hard work on the initiative. We spent a fair amount of time going through the issues with him. It was his idea to bring this forward as a private member's bill. We thank him for his foresight and the work he and his assistant, Eve, have done in bringing it forward today.
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Mr Goodwin: I'd also like to thank those who spoke so enthusiastically on the bill in second reading: Marcel Beaubien, John O'Toole, Ted Arnott, Marie Bountrogianni and Rosario Marchese. John Hastings also made some excellent remarks about encouraging long-term savings by low- and middle-income families for post-secondary education, and Marie raised a good point about reviewing and improving the student assistance program to complement this bill. Of course, you spoke very passionately about access to post-secondary education, and we appreciate that. We know this is just one step, and we'd like to thank you all for the support you have provided. But we also recognize that this isn't the only thing that has to be done.
I would just like to let everybody know that we have met delegates in seven other provinces -- Tom and I have been across the country over the last couple of years to try to promote this type of idea and concept -- and we're going to another three very shortly. There is very strong support all across the country for this sort of thing. There's a federal program in place, but there are no provincial programs. Everybody recognizes the need, everybody is interested in doing something, and it's just a matter of getting on their priority list. Of course, everyone is looking to Ontario to provide leadership, as it always does.
Mr O'Shaughnessy: To talk about the issues specifically, we view that there are really three funding pillars for post-secondary education in the province. One would be direct funding to institutions by government, and that is taking place today. The student loan program available to individuals who don't have the financial wherewithal -- and obviously OSAP is there. There can be lots of discussion about its relative strength and effectiveness right now, but it is there and it is working. The third pillar is an encouragement for parents to save their own funds. At the provincial level there certainly isn't anything there right now. I'm sure there could be debate among the various parties about the relative weighting of each of those three pillars and how much is provided to each of them, but we see those three as the base. The pillar of saving for kids' education by parents really is one that will encourage a reduction in the requirement for the other two.
First of all -- and I think it was mentioned by some of the members -- the figures we have indicate that a family that has an RESP for a child will be in a position where they have a much greater possibility of that child not only going to post-secondary education but completing post-secondary education. Our figures indicate that over 85% of the children in our programs go on to some kind of post-secondary education. It doesn't have to be university. It can be community college, training schools -- anything that provides a skill set beyond secondary. The other is that in the long run we feel it will reduce student loan costs in the province, that ultimately, when responsibility is put back on to the parents, the requirement for student loans will go down over time and ultimately the cost of writing off student loans will go down over time. It is a shift in responsibility, but it's also recognizing that there's still a shared responsibility between governments and parents to save for their kids' post-secondary education.
Mr Goodwin: As I mentioned before, the all-party support is very encouraging and does reflect positively all across the province, since those who buy plans are not of any one political persuasion. There's a universal recognition that there is a very big need here. As Tom mentioned, these savings don't have to go to university and extended post-secondary programs. They are good for any post-secondary program to help people get further education, which is definitely needed. Certainly this type of program will help get parents started in programs. As some of the other people have said, there are a lot of Ontario citizens who are saving very small amounts of money, but it does really help their children get into post-secondary education at the end of the day. They don't have to save $4,000 a year. If they save the $25 or the $50, and if we can get another 5% or 10% of the population to do that, that's going to help the Ontario economy.
Mr O'Shaughnessy: In closing, I would like to say that we recognize this is not the final solution; obviously, it's a step in the right direction. There have been some comments today about the fact that many families in Ontario just can't afford to put anything away. What we have seen in our organizations -- we spend a lot of time with lower- and middle-income families; we're not organizations that try to attract people who do have money; we're focused on trying to get people access who would not normally have access to post-secondary education. So we do have a large number of families in the lower- and middle-income group who are saving, and saving relatively small amounts, in our organizations. We truly believe this initiative will encourage more of those type of individuals to participate and to ultimately give their children access to post-secondary education, and I think add future value to the Ontario community.
Thank you very much for letting us speak.
The Chair: You timed that almost bang on, so we won't have time for questions, but we do very much appreciate you coming before us here today. Thank you for your input.
Mr Levac: Mr Chair, one observation?
The Chair: Very briefly. You're using up your turn for the next go-round.
Mr Levac: You would do that? I'd forfeit my spot?
The Chair: Go ahead.
Interjection.
Mr Levac: Oh no, our spot. That's what she said. That's why she was pinching me.
I do want to make just one observation. You claimed that education was the top priority of this government. I beg to differ.
The Chair: And I was so charitable.
Mr Levac: That's the one I needed to make a comment about.
The Chair: It serves me right. Thank you very much. I appreciate your coming before us here today.
USC EDUCATION SAVINGS PLAN
The Chair: Our next presentation will be from USC Education Savings Plan, Mr Kevin Connolly. Good afternoon and welcome to the committee.
Mr Kevin Connolly: Good afternoon, Mr Chair, members of the Legislature, ladies and gentlemen. My name is Kevin Connolly and I am the executive vice-president of USC Education Savings Plan. Our plans are offered by a not-for-profit organization based in Mississauga, Ontario -- obviously, Ontario. It is an honour and a privilege to have the opportunity of speaking with you today about an industry I have worked for now for more than a decade. It seems like yesterday, but it's a long time.
USC is one of the founders of the Canadian Association of Not-for-Profit RESP Dealers and we've been in business for over 35 years. We currently have over $1 billion in assets and over 1,800 representatives across the country, many of those representatives here in Ontario. Ninety per cent of these representatives are parents who saw the importance of saving for their children's education through an RESP and wanted to tell others in their community about it. We have over 300,000 subscribers across Canada, 130,000 in Ontario alone. This year our organization paid out approximately $12 million to post-secondary institutions across Ontario to help educate some 9,000 students.
I'd like to talk a bit about, first, the motivational benefits of an RESP. My role has been to help get the message out to Canadians and legislators that not only are there clear financial benefits of saving for children's education in an RESP, but there are significant motivational benefits as well that are often overlooked. As you heard earlier, our studies have shown that over 80% of students enrolled in plans go on to post-secondary education, and Statistics Canada surveys show that less than 40% of students without RESPs go on to higher education. An RESP has been proven to help children beat these odds. With only 20% of eligible parents holding an RESP, we really have a long way to go.
RESPs act as motivators for children to aim higher and to achieve their goals. When a parent subscribes to an RESP with a not-for-profit organization, or any group RESP organization for that matter, they receive a certificate that looks like this, and I can pass it around to let folks see that. They receive a certificate to put in their child's bedroom, serving as a constant reminder that the parent has faith in their child and has invested in their future. It's the kind of faith and encouragement that increases their children's self-esteem and leads them to pursue their goal of a post-secondary education.
With two thirds of all jobs now requiring post-secondary education, it's vital that every child receives the opportunity to compete in this global economy. That is only possible with a university degree or, at the very least, a diploma from a college or a trade school. We cannot overlook the importance of the growing need for higher education. The Ontario government must do everything it can to ensure a qualified, educated and competitive workforce for the new millennium.
Since 1998 the federal government has provided Canadians, as you all know, with a 20% Canada education savings grant on all RESP contributions. The proposed Ontario tax credit we are reviewing today would allow Ontario students to access two federal dollars for every dollar invested provincially. In fact, it's even more than that if parents reinvest the tax credit into an RESP and then receive the Canada education savings grant on top of that.
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While the RESP industry itself has tripled in size since the introduction of the CESG in 1998, from $2.5 billion to over $6 billion in the year 2000, in the last year the rapid rate of growth has somewhat slowed. One of the ways to address this problem is to show that encouraging RESP investment is not one government's response but has solid support from across the political spectrum. We must not overlook the fact that education is a provincial responsibility and this is a golden opportunity to put money back into parents' hands, and students' hands, and to support them in saving for their future.
As I travel this country, and I do so on a regular basis, there is a tremendous interest from other provinces in introducing an initiative of this sort. But everyone first asks -- and this is true -- what is Ontario doing about it? I'm hopeful that this province will take the lead role on this and set a precedent for all other provinces to follow.
Also, for the last 25 years, we have published an annual Guide to University Costs -- I believe you've all received one; it looks like this -- that measures the cost of going on to post-secondary education by province, across the country. The recent trend we have seen is a dramatic rise in tuition fees as compared with years past. Ontario currently has the highest tuition fees in the country, this year edging even above Nova Scotia, which had previously held the record for the highest tuition rate for years. It's vital that we take further action to combat these rising fees and make sure post-secondary education is accessible to all, no matter what their income bracket may be.
One of the ways the provincial government has historically fought the war against the rising costs of post-secondary education is through the Ontario student loan program. The Ontario Ministry of Finance suggested last year that $30 million to $50 million a year is written off in student loan default costs, not to mention the student loan defaults not written off that occur every year. Students graduate from their programs with an overwhelming amount of debt looming over their heads which they cannot pay back, or else they don't finish at all and the money is wasted. It just doesn't make sense.
While student assistance at the post-secondary level is always needed, and loans, grants and scholarships are imperative in helping students complete their education, what is missing is a motivation and resources to go on to higher education in the first place. What better way to use the $30 million to $40 million lost than to address this need directly and encourage Ontario families to take their children's education into their own hands, with the government's full support?
Students become motivated from an early age to continue and to complete their higher education, and with the government's help they accumulate the resources to do so. I meet with parents every day. Most of our subscribers are low- to moderate-income Canadians. On average, they put away $600 to $700 a year for their children's education, but for them this is the most important investment they can make.
This would be a great opportunity for the Ontario government to show leadership, courage and sensitivity, and leave a legacy for Ontario's children. Our goal is to double the number of children in these plans in the next five years. Short of abolishing tuition, we really believe this is one of the best moves Ontario could make.
The Chair: Thank you very much. Ms Di Cocco.
Ms Di Cocco: Thank you for your presentation, by the way, and the balance with which you made the presentation. I have to say that you are right about the fact that, unfortunately, investment has to be a responsibility of the parents but also a responsibility of government. It's tremendously important.
When you were making your submission I was thinking, wouldn't it be a great idea if the government somehow, since our investment in post-secondary education is the lowest in the country, were to provide not only this tax incentive but increase the tax incentive so that more parents -- to make it one of the mandates that they will give tax credits in the way that they've obviously found money for, as I said, public funds for private education? But if they could put funds into providing that encouragement, and I mean more so than they are now -- in other words, give that process a real good kick; in other words, provide that fund -- What do you think about that?
Mr Connolly: I believe we have to walk before we run, obviously, and there are financial considerations that have to be taken into consideration. But I can't disagree with you. The more initiative and the more incentive we can provide for Ontario parents to save for their kids' education through increased tax credits would be a good idea. But we do feel that this as a beginning would provide -- people talked before about the promotion of RESPs. The existence of a tax credit, even at this level, would be such that it would bring a lot more focus on to RESPs and provide new initiatives for people to invest in them.
Failure of sound system.
The Chair: -- any chance at all, about a minute and a half.
Mr Marchese: Thank you so much and I thank you for your presentation and bringing your observations and -- Failure of sound system -- one to one. Many of them find it a stretch to even put away $10 a month.
Failure of sound system.
Mr Marchese: What happened?
The Chair: We're back on.
Mr Marchese: Kevin, I find your report informative and I agree with many of your observations, including where it says, "I meet with parents every day. Many of them find it a stretch to even put away $10 a month," because it's true. That's the group I'm worried about. I don't have any disagreement with this plan, but I'm worried about how we help those who don't even have the ability to put $10 aside for such a plan.
My concern is, of the 300,000 subscribers you've got -- and I would have loved to have asked the Investment Funds Institute of Canada, because they've got billions, to see whether or not they keep statistical information on the people who invest in these funds and what the medium is -- do people, by and large, who invest, the majority of them, have more than $50,000, more than $60,000, more than $70,000? Because I suggest to you it's a class-related issue.
Mr Connolly: I would say to you that in our particular case, and I believe it would be true with many of the other group RESP companies, we deal with low- to middle-income Canadians primarily. While it is a stretch at times to put $10 away, what we work with, with these families, is sometimes to reprioritize their financial goals to say, "You want to save for your retirement. You have your normal day-to-day expenses that you must cover." That's reality; we all have that. But to say to them, "The post-secondary education of your kids happens before your retirement" -- I'm not suggesting retirement isn't important. I'm suggesting, though, that many times they will find ways, even low- to middle-income Canadians, to reprioritize money to get an RESP going. A little bit is better than nothing. As long as you're making the effort, over time that money can grow and make a difference for those low- to middle-income Ontario families.
Mr Marchese: I understand, Kevin. I wish I had a little more time, but I don't.
Mr Connolly: We could debate that.
The Chair: Ms Mushinski is desperate to get in a very brief comment. I indulged Mr Levac, so just to show how balanced I am, Ms Mushinski.
Mr Levac: I knew I'd have to pay for this.
Ms Marilyn Mushinski: I will try not to be partisan, contrary to some members of this committee. I really appreciate your guide to university costs. The interesting bullet under the big picture on university education, which really spells it all out, says, "According to Statistics Canada, two thirds of all jobs in Canada now require a post-secondary education." I take it that you represent education savings plans for all kinds of registered post-secondary education institutions, that it doesn't just apply to universities or training colleges. Does it apply, for example, to co-op job training programs?
Mr Connolly: Yes, it can, as long as it's an accredited post-secondary institution that offers it.
Ms Mushinski: So RESPs essentially do allow flexibility when you have changing job market needs, for example, to accommodate those kinds of job opportunities. Would you not agree that Ontario is actually leading in providing those kinds of jobs?
Mr Connolly: In fairness, to answer the first part of the question, Revenue Canada sets out guidelines as to what programs are eligible for RESPs; however, there is great flexibility for many types of post-secondary programs. I unfortunately really can't comment, because I don't consider myself an expert, on the second part.
Ms Mushinski: The more jobs that are created and the more opportunities that are created, obviously it's really going to help the future of our children.
Mr Connolly: Absolutely; no question about it.
Ms Mushinski: I just wanted to get that question --
The Chair: Thank you very much, Ms Mushinski, for that clarification, and thank you very much, Mr Connolly, for coming before us this here this afternoon.
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ANGELIQUE GALANIS
The Chair: Our next presentation will be from Angelique Galanis. Good afternoon and welcome to the committee.
Ms Angelique Galanis: Good afternoon. Hello, everybody. My name is Angelique Galanis and I am a prospective RESP subscriber from Toronto, Ontario. It is a pleasure and an honour to be speaking before the committee on general government today.
I'm a mother of four daughters: Stephanie is nine, Kathrine is seven, Georgia is five and Andreana is three. I'm an entrepreneur who headed back to school at age 33 after 15 years in the insurance industry. I wanted to start up my own aesthetics business, and to do this I went to Seneca College part-time and the Canadian Aesthetic Academy full-time. I had to dip into my RRSP to finance this career shift, the lifelong learning plan, which I have to pay back within 10 years.
I got married at a fairly young age and was not able to go to university after high school, due both to my marriage and lack of financial resources. Re-educating myself at 33 made me realize the value and importance of a solid education. It is something everyone needs to advance in their careers and it is something I would like to give my children so that they don't need to make the sacrifices I made.
I had looked into getting an RESP years ago, before there was any financial incentive to invest in them. At the time, I decided to invest my money elsewhere. I heard about them again recently from a family friend and then from an enrolment representative. With the Canada education savings grant, they definitely make more financial sense. I like the fact that they are a forced investment, and they guarantee there will be financial resources for my children when they need to go to higher education.
The 10% provincial tax credit would certainly help. It would mean $400 in extra dollars a year to be reinvested in our children's plans, money that could earn the federal grant and multiply.
With four kids, my husband and I have 16 years of post-secondary education ahead of us. With this credit, I'm certain the RESPs would be a tremendous help in ensuring that all our daughters receive the best education they can.
The Chair: Thank you very much. We'll start the questioning this time with Mr Levac.
Mr Levac: Thank you very much for your presentation and your dedication to your children, which is obvious from the people we've heard from, including the companies that are presenting before us. I dare say anybody who has children wants to provide for their education. I congratulate you on that. Thank you for your efforts.
Are you concerned about tuition fees?
Ms Galanis: I am.
Mr Levac: By saying that, is there anything you have thought of beyond the tax credit? Because quite frankly everybody around the table has indicated they actually support it.
Ms Galanis: The tax credit? With four children, I think a $400 tax credit can make a significant difference if it's reinvested for us. When the children were born, I went and opened up a bank account. I've been putting money aside, whether it's a birthday or Christmas or whatever.
Mr Levac: What made you do that?
Ms Galanis: I was thinking at the time that I've got to save for their future. That money does not grow, trust me. It grows very little every year. I think it was in 1991 or 1992, after my first daughter was born, when we looked at this, and there wasn't really a financial incentive to put the money in it; it was better for me to put those contributions toward my RRSP. But at the time that was the decision we had made.
Now, just in conversation, talking with some friends, they bring this up. I thought, "Oh, that's great. Let's look into it." It's definitely something we need to do for our kids. We need to transfer those savings. Even though Kathrine takes her book and looks at it and checks to see how much money's there, it's not a lot and it's not going to be enough.
Mr Levac: The best of luck.
Mr Marchese: Angelique, I'm just curious. Galanis: is that Lithuanian?
Ms Galanis: No, it's Greek. Both my husband and I are Greek.
Mr Marchese: I notice that Greek and Lithuanian last names correspond quite often.
Ms Galanis: Oh, is that right?
Mr Marchese: I have a question, because I worry about tuition fees. I think they're too high. I worry that a lot of people who don't earn a lot of money are having a hell of a time. So while this is a good idea and it's a good idea for you and many parents, I'm concerned about the fact that there are a whole lot of working Ontarians who are not earning a whole lot of money, and they have so many worries. Paying for college and university for their children is one concern, and I'm sure that everybody's got the same concerns we all do: concern about whether they have an apartment or a home, or whether they have enough money left over to even take some trips from time to time, I'm not even saying once a year.
While this is a good idea, I ask you the same question, Angelique, that I asked Sasha earlier on -- no, it wasn't Sasha; it was Louise. Do you believe there are people who won't be able to put money aside, not because they don't want to but because it's hard?
Ms Galanis: It's hard, but I think if I can do it, anybody can do it. Trust me. There are areas where we can hold back, and even if it's a small amount it can be done.
Mr Marchese: I'm sure it can. I'm sure that people can put some money aside, no doubt. But do you believe, however, that while this is a good plan, you would encourage the bad guys over there --
Ms Galanis: I don't see any bad buys in this room.
Mr Marchese: -- that you would encourage the government members to take a look at the fact that tuition fees have been incredibly high? In the last six years, tuition fees in universities have gone up 63%. That's in the regulated program, because in some of the unregulated programs like medicine and law it's gone up 500%. Don't you have any advice for them in terms of what they ought to do about tuition fees -- some advice?
Ms Galanis: Some advice. OK, just a suggestion out of my mind here: if the tuition fees are going to go up, why don't they go up at the same level that the cost of living goes up?
Mr Marchese: There's a thought, because you think 66% in six years is a lot, right?
Ms Galanis: It's a little outrageous. Yes.
Mr Marchese: Because your wages haven't gone up 66%, have they?
Ms Galanis: No, not at all.
Mr Marchese: By the way, Angelique, they're not listening right now.
Ms Galanis: They're not listening.
Mr Marchese: Have you noticed that when you have good suggestions, all of a sudden they're just busy?
The Chair: Mr Hastings, you have about one minute.
Mr Hastings: Ms Galanis, thank you for coming today. You're an entrepreneur, I take it.
Ms Galanis: Yes, I am.
Mr Hastings: For how many years?
Ms Galanis: I finished my education in November 1999 and started my business December 1999.
Mr Hastings: Do you have overheads in your business?
Ms Galanis: I do, but I've been managing quite well, thank you.
Mr Hastings: Would you suggest that one of the responsibilities of universities and community colleges and all the other public institutions is to manage their costs as well? What both sides forget about here is that what drives costs up to a great extent are your salaries and benefits, which I don't begrudge anybody having, but they forget to explain that. I'm trying to make a link here between your costs in your small business and the costs of the overheads in education, which are there.
Ms Galanis: From my 15 years in the insurance industry, what I experienced was that the benefits became paid by ourselves, not necessarily by our employers.
Mr Hastings: Right. The consumer.
Ms Galanis: Yes, bottom line. The experience reflected and the premiums went up and the deductions were made. So by the time you look at it, it's 100% contributed by the employee.
Mr Hastings: So your advice to us is that we should try to maintain our costs to the cost of living in the operation of post-secondary education?
Ms Galanis: Yes. I would say so.
Mr Hastings: Thank you very much.
Mr Marchese: What about the $12 million in income tax --
The Chair: Thank you very much.
Ms Galanis: The cost of living --
The Chair: That's what happens when the root topic is something we all agree on, from what I hear from the debate. Thank you very much, Ms Galanis, for coming before us here today. We very much appreciate your presence today.
Ms Galanis: It was a very interesting experience. Thank you.
ONTARIO UNDERGRADUATE
STUDENT ALLIANCE
The Chair: Our final presentation this afternoon will be from the Ontario Undergraduate Student Alliance, Ryan Parks. Good afternoon. Welcome to the committee.
Mr Marchese: No politics, OK?
Mr Ryan Parks: How is that possible?
The materials that are being handed out now -- there's no text for the presentation in them. What they are is a package developed by our organization to highlight the issue of student debt in the province. That's a result of many factors, and some of those factors I'll be speaking about today with reference to this bill.
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Mr Chair, committee members, on behalf of the Ontario Undergraduate Student Alliance and the university students of Ontario, I'd like to thank you for allowing me this opportunity to address your committee.
The Ontario Undergraduate Student Alliance represents the interests of all university students in the province. Our members include the University of Windsor, Western, Waterloo, Brock, Laurier, McMaster, Queens and part-time students at U of T.
I should begin by saying that our students appreciate the government's intentions with respect to Bill 4, An Act to amend the Income Tax Act to provide a tax credit for contributions to RESPs. We appreciate that the government and all members of provincial Parliament, judging by the vote at the end of the first reading of this bill, appreciate that the cost of a university education is much greater today than at any time in the past and that these higher costs and higher student debt can, and do, affect whether or not a student chooses to attend a university.
We recognize that in this new era of personal responsibility and accountability, many believe that families, when they have the means to do so, should plan to contribute a manageable sum to the costs of their children's education. We support this bill because it offers some, if modest, assistance for some families who chose or are able to invest in their children's goals of attaining a post-secondary education. But we have to recognize that times have changed. Students are expected to contribute even more toward the costs of their education than those who have studied before them.
In the past decade, average tuition for an undergraduate arts and science degree has increased by over 140%, and that's not in keeping with CPI. In programs that have been allowed to deregulate, the numbers are even more daunting. For example, the tuition at the University of Western Ontario's medical school has increased $10,000 in just three years. While we appreciate the intention of this bill, clearly it will not assist those students who have experienced those increases. The tuition of this program is now $14,000 a year, and the figures suggest that the percentage of students from lower-income families in that program has decreased.
Situations such as these help to illustrate why it is now necessary for families to save for their children's education. Such a dramatic shift from public support to private funding, depending on your perspective, from our perspective is unfortunate. This makes the modest relief offered in this bill even more important for those who are able to afford to take advantage of it.
OUSA believes that students should contribute to the costs of their education, no doubt about it. However, the expectations that the government now places on students are becoming increasingly unrealistic. Students work longer hours to earn the same degree and still accumulate larger debt than previous generations of students. For example, at the University of Toronto, to afford one year of tuition in 1977, a student would have had to work approximately 250 hours of minimum-wage work that year. Currently, for that same degree, the student at a minimum-wage job would have to work 620 hours. To expect that students nowadays would work three times longer, if not three times harder, than students of their parents' generation we would suggest is unrealistic and onerous for students.
We hope in some small measure that this bill will decrease the debt load that current students endure for the next generation of students. Average student debt for a graduate in an undergraduate university arts and science program now sits at $22,000 for a four-year program. For a young couple, this means they're graduating -- one has a degree in English and one in science -- with a combined debt of approximately $50,000. For them to approach their banker, to want to start a family, to get a mortgage, to pay off those students debts is very, very difficult. We sincerely hope these graduates will be able to pay down their debt, start a family, make those purchases that are necessary and still have enough money left over to contribute early enough to an RESP for their children so they can benefit from this measure.
On the issue of choice, we do need to ensure that high school students are properly prepared for the realities of post-secondary education. Clearly, there has been a shift. But if we want to, as the government suggests, create choice at the secondary school level with tax credits, we also need to endeavour to create choice for students who are entering the post-secondary level, not only that they will be able to study in the area of their choice but also at the institution of their choice. Although the government has made limited commitments to ensuring that every student who is motivated and qualified receives a post-secondary degree, that does not necessarily mean that student will be able to get that degree in the area they wish. If they choose to be a social worker, a teacher or a lawyer, arguably that now is out of reach for many students.
In conclusion, Bill 4 is a modest but we think positive initiative for the future of students in this province. We would like to thank you for allowing us to present to you today.
The Chair: This time, the questioning will begin with Ms Di Cocco.
Ms Di Cocco: I just wanted to thank you for your presentation. I don't know if you know, but 10 years ago Ireland was the economic basket case of Europe. I believe after grade 10 parents had to pay for high school. Today, not only is high school paid for but so is university. Their investment in education has developed, if you want to call it, a competitive, innovative workforce. The whole issue of investment in post-secondary education is not something you have to convince me of, nor my caucus.
I just want a comment from you, because I hear over and over universities equated to a business. We have to run public institutions in a business-like fashion, but they are not a business; they're not the same as a business. The idea that somehow they should not be provided with funds by government, that they should figure out a way of doing it -- what do you think about that kind of ideology or concept, that everything is equated to a business?
Mr Parks: Whether we like it or not, if that's the standard to which the government is holding institutions -- we look at the recent Investing in Students Task Force that was commissioned by the Ministry of Training, Colleges and Universities. It was commissioned to find excessive or wasteful expenditures in the university system. Fortunately, from our perspective, the Investing in Students Task Force found that, by and large, institutions were operating efficiently. They were implementing business-like practices and there was not this large amount of money being wasted.
I believe firmly that education is a public good and should be funded as such. Maybe not in our country, but people from all areas of the political spectrum in the United States certainly feel that. If we've got this mindset of global competitiveness, we need to remain competitive with our closest trading partner, the United States. On a per capita basis, funding for post-secondary education in Ontario ranks 59th out of 60 jurisdictions. George Bush's Texas is the only jurisdiction that is unable to beat us -- so Arkansas, Louisiana, Tennessee.
Mr Marchese: What gives? We should be number one.
The Chair: Mr Marchese, we only have about a minute left.
Mr Marchese: No, no. I appreciate Ryan's work. I thank him, and I want to give my time to the Tories because I'm sure they have lots of questions for him.
The Chair: If there's a quick question.
Mr Hastings: What do you believe, Ryan, led to the circumstances of making us 59th today? It wasn't just something that occurred. History is cumulative.
Mr Parks: I'm not here speaking on behalf of any party. I think it's a failure of society to recognize not only the social importance of post-secondary education but its economic importance. Students are not in favour of deficit spending, by any stretch of the imagination, but we do believe that a strong investment in post-secondary education will benefit everyone.
Mr Hastings: Do you believe this initiative, if passed in a future budget, could make available even more monies under the existing OSAP program? You would have some pressure relieved from those people who, because you didn't have this in place and did not have the federal measure in place -- those families would be accessing OSAP to some extent. Do you see some pressure relief value in this initiative?
Mr Parks: I would, except the minister has already committed the government to making funds available for every eligible student. That's not an issue. The pie will grow with the number of students. Unfortunately the amount of money per student is not increasing. So no student will be cut off simply because they say there's no more money. Having said that, that's assuming the current level of funding for student assistance. You would consider it adequate and we would not.
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The Chair: We appreciate you coming before us here this afternoon.
With that, we'll now move into clause-by-clause consideration of Bill 4. Mr Hastings, normally the process would now be that you would move each section, unless anyone wants to make any brief comments. Are there any amendments from any of the three parties?
Mr Miller: I guess the only thing I wonder about is the amount, whether there is any consideration for raising the amount of $100.
Mr Levac: On that question from Mr Miller, would that affect it as a private members' bill?
Mr Miller: The likelihood of it being --
Mr Levac: Because a private member's bill is not allowed to do finance ministry money or something like that.
The Chair: A private member's bill is not allowed to raise taxes. There is no restriction on the ability to reduce taxes.
Mr Levac: A tax credit. So that's not an expenditure.
The Chair: This is not an issue, no.
Mr Levac: OK, that's all. It was just a clarification. I defer to John.
Mr Miller: My only thought about that was I'd like to see it passed, so if it is passed at $100 then I'm in favour of it, but I certainly would otherwise be in support of raising the amount to make it more substantial.
Mr Marchese: Briefly, Chair, as New Democrats, we support the initiative because it will benefit some people. Our worry as New Democrats is there are a whole lot of people who don't have a whole lot of money who won't be able to invest in this. While it might create an incentive for some people of even modest income to contribute $10 a month, and while you might think it's a great thing, it simply will not help the majority of those people who desperately need to get help to deal with the tuition problems they're facing because of your government's initiatives. One of those initiatives --
Mr Miller: Excuse me, is he talking about raising the amount? What are you talking about, Rosario?
Mr Marchese: Sorry, Norm, I'm speaking to your --
The Chair: Rosario, in fairness, this might very well be Norm's first day in committee, so the process --
Mr Miller: He's just making political statements again.
The Chair: You might find, Mr Miller, that is not an all too infrequent occurrence in committee. Mr Marchese, I ask your consideration as we go through this.
Mr Marchese: I would if Mr Miller was a little more careful. When he says, "He's making political statements," the assumption he makes is that what he's proposing isn't political, that it's simply a harmless suggestion. I'll be kind to him, but Monsieur Miller, you've got to understand that what you've proposed is something New Democrats have a difficult time with. What we're suggesting, as New Democrats, is that you reduce tuition fees, that that's the better solution, that you're forcing more and more -- he's not even listening, poor guy. You want me to be gentle, but he --
The Chair: I was just referring to the process of how the committee works here.
Mr Marchese: The fact of the matter is that more and more young people are working longer hours than ever before to meet the fact that tuition fees have gone up 60% in six years. People can't afford it. They can't afford to go to college, and if they're going, they're doing so assuming tremendous debt, those who go to college and those who go to university.
While this initiative may help some people, it will not help the majority of people the New Democrats worry about, and that is those who are on low incomes. Who helps them? This initiative, if it were to be increased in terms of the amount, while it would help those who have more money to put into these savings accounts, will not help the vast majority for whom New Democrats worry. That's my concern. For those, I say not to increase this amount to get to them but reduce tuition fees.
That's my proposal to him and I don't support that initiative at all. If he were to propose it, I would vote against the bill.
The Chair: Mr Miller, we've heard Mr Marchese's comments. An amendment is always in order.
Mr Miller: We're working on one.
Mr Levac: My observation on the sparked discussion that took place is to point out that a couple of the presenters provided us with the three pillars of our post-secondary education, which are the direct funding from government; the student loan program, OSAP; and direct savings from parents. To Mr Hastings, I believe you are headed in the direction that most people wanted us to go in in terms of trying to get the parents, to educate them, to ask them to contribute, and I think that's laudable.
One of the concerns I had was that some of the comments made were maybe we have to reprioritize one and two. I'd like to cite an example that's taking place in my riding that I think needs addressing and, hopefully, members on that side and members of the government will assist us in this, and that is, Mohawk College offers a program called quickstart. The students in my riding are not eligible to get OSAP grants to do a quickstart program for 24 weeks. That's way over that program application requirement for OSAP to be 12 weeks, which I believe it is. For that length of period of time, we can't get any funding for those students to take those programs in skills development programs.
So I would encourage very strongly that we take a look at one, two, three, those pillars, and make sure that OSAP is qualifying those students to get those loans, because if you're expecting them to pick up the slack and lessen the expectation of OSAP to pay for some of those courses the students can't afford, then I would say your bill is being used for the wrong purpose, not that you're proposing it that way, but if we're not going to take a look at OSAP grants and maybe make sure those students who want to take those courses are getting qualified grants, then you're going to expect them to come up with that money on their own. I'm saying that your proposal may be misused to lessen the burden of OSAP. I've heard those arguments before. I'm definitely afraid that's going to happen.
I agree with the three pillars, I agree with the legislation, but I am concerned that OSAP may be reshuffled, or they're not qualifying them, and say, "But we're expecting you to save the money to pay for it anyway." I'd like to challenge to make sure those pillars are in place for the proper reasons.
I want to echo what my colleague from the New Democrats said, that there are going to be some people who are not going to get some money. Our responsibility as legislators is to make sure that every single student in this province has an ability to get a post-secondary education. We know the research and we know we can't afford not to have them in that realm of post-secondary education.
Mr Hastings: I appreciate Mr Levac's comments regarding the situation in Brantford. I think you may be somewhat misconstruing my question to Ryan, that in fact somehow or other OSAP wouldn't be eligible -- and it isn't for a certain number of reasons. I suspect we need to look at that specific government policy, but it's outside the purview of this. My intent in asking that question was very legitimate and I believe that in no way are we trying to undermine OSAP. We need this pillar, along with the other two. I think that when you empower people, even if they only put in $10,000 over 10 years, that gives them maybe one half of a year of tuition at a community college that they didn't have before. That lessens the $10,000 debt that they would have had had they been eligible under OSAP for whatever program they were applying for.
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All I'm trying to point out is that the effectiveness of this proposal is to advance education on all three fronts and to relieve the pressure that could have come when we don't have such an initiative in place. It's a complementary proposal, not a competitive proposal, to OSAP.
I think you would agree with me. I'm using a very modest number. If you have somebody who's only been able, over 10 to 15 years, with compound interest to save $10,000 to pay for whatever the costs of a community college program -- and I use that one because the university ones are to some extent becoming very internationally priced -- I think that is an effective, demonstrable, realistic proposal that people can see in their mirror. It is a way of giving them some power to handle it. It doesn't mean they're not still eligible for the other $10,000 they may need for the price of the tuition in a given community college program. It could be university. It could be, under the specific circumstances Mr Connolly noted, a co-op work program. Maybe that's something we need to look at together in terms of the skills development of your specific community.
Those are my comments.
The Chair: Thank you, Mr Hastings. Ms Di Cocco?
Ms Di Cocco: I wanted first of all to congratulate Mr Hastings, because I believe this bill certainly encourages parents to take responsibility -- which, for the most part, I believe they do -- and gives them that incentive. I do want to congratulate you.
One of my biggest fears in the context of post-secondary education -- I want to make this clear. Investment in post-secondary education by all people responsible, the parents as well as government, is key to developing what I call the best resources we have in this province, our human resources, our human capital, if you like. I'd like to think your bill provides, hopefully, a key point for the government in the larger picture, that we must invest and have access for our population, our society, to post-secondary education. We don't have that today.
As the young man from the students, Ryan Parks, indicated, the problem today is that it becomes inaccessible. This incentive will be great for the future, but I believe that too often the government -- this is my view -- divests itself of its responsibilities to the institutions providing what we need, thus creating this increase in personal cost to students and to parents, so much so that this becomes a drop in the bucket.
The Darwinian model of government, which is every person for themselves -- I support this small initiative, by the way, but it does not address, to any extent, the issue of access to post-secondary education. To me, that's fundamental for the government to support, to invest in, in the long term, because that's what our future's about. Sustainable economic development is about our young people being able to access post-secondary education, not just because their parents can afford to and can submit monies every month, but because we believe as a society that that's important. And then the other part of the equation has to fall in too, because if it doesn't, globally we're just going to miss the boat.
Mr Marchese: I'm trying to curtail the discussion, but they make it so hard for me. Here is the nefarious, in fact insidious, nature of this proposal that I want to speak to. What this government is doing -- what you guys are doing -- is that people now are forced to save because of the high tuition fees. They have no choice.
This proposal encourages people to put more money aside for university and college. Mr Hastings, why are you doing that? I suggest to you that this is where the insidious nature of this proposal is. If people are saving more money, they will not be angry at you for continuing to increase tuition fees to the extent that you are, making it harder and harder for young people to deal with those debt burdens.
If parents are saving for those kids, they won't be as angry, as many of them are now. This incentive is only intended to help people like you and your government, who are cutting back on investments in universities and colleges, and making up for those cutbacks by forcing students to pay more and more in tuition fees.
So your brilliant idea comes along: "We want to help people like Angelique Galanis. We want to help her because she's a good entrepreneur. We'll give her a couple of bucks and she's going to have a greater incentive to put money aside for her young kids." She feels great because she's getting a break from you. While that is a nice break for some people and while, yes, it benefits a section of the population, it won't help a whole lot of people who, in the last 10 years, haven't seen an increase in their income to be able to put money aside for this modest proposal you've put forward, let alone to deal with the disaster you've caused with the high tuition fees you've imposed on students.
Do you understand what I'm saying? It's a nifty little thing you're doing, in my view. It's so hard to vote against it because, my God, how do you vote against it, right?
I'm suggesting to you that the initial proposal you put forth, Mr Hastings, is something that I can accept and probably most New Democrats are likely to accept. I will vote against Mr Miller's proposal. I suggest to your government that to reduce tuition fees is the better way to go.
The Chair: Allow me to pose the question: Are there any amendments to section 1?
Mr Miller: I move that clause 8(9.6)(b) of the Income Tax Act in section 1 of the bill be struck out and the following substituted:
"(b) 20% of a qualifying contribution or $200 per beneficiary."
The Chair: Any further comment?
Mr Marchese: Recorded vote.
AYES
Gill, Hastings, Miller, Mushinski.
NAYS
Levac, Marchese.
The Chair: The amendment carries.
Shall section 1, as amended, carry?
Mr Marchese: I'm going to propose that as a result of Mr Miller's motion, I will be voting against the bill, just for you to know.
The Chair: All those in favour of section 1? Opposed? Section 1, as amended, is carried.
Section 2: Any amendments? Seeing none, all those in favour of section 2? Opposed? Section 2 is carried.
Section 3: Any amendments? Seeing none, all those in favour of section 3? Opposed? Section 3 is carried.
Shall the title of the bill carry? Carried.
Shall Bill 4, as amended, carry? Carried.
Shall I report the bill, as amended, to the House? I shall report the bill, as amended, to the House tomorrow.
Mr Hastings, did you have one small matter of business you wanted to give us?
Mr Hastings: I would like to move a motion that those folks who came today as presenters be entitled, or whatever the appropriate wording would be -- be recognized by the committee to be paid for their kilometrage from their home to the Legislative Assembly.
The Chair: Just a point of clarification, Mr Hastings: traditionally it's people from outside of the Toronto area.
Mr Hastings: Outside of the Toronto area.
The Chair: Is that your motion?
Mr Hastings: That's my motion.
Mr Marchese: I'd like to speak to that, just to remind Mr Hastings that in the past we used to make it known to people that when they travelled they would be paid for that. Since your government came into place, there have been different ways of managing those problems because you're all so fiscally worried about money.
This is the first time I have ever heard a Conservative member, in public, say he wants to move a motion to pay for those people who came from out of town. New Democrats have always said that we should support those requests when they come to us, so I've got no problem with that. But Mr Hastings, I want to tell you that you and your members have been the ones who have been very hush-hush about this, that you have been very tight about supporting people who come from out of town, generally speaking. Normally, we agree in advance; normally, I propose to those folks that when people make that request, we support their request because we want to hear from people. It doesn't matter where they come from. Otherwise, it might reduce that access. I just wanted to put that on the record, Mr Hastings, because I'll remind you in future meetings with you at least.
The Chair: Mr Marchese, the Chair doesn't enter debate, but since this is dealing with a procedural issue of the committee, allow me, because in fairness, your party tends to sub in people for various bills. It is an oversight in our subcommittee report that we did not make it clear to Mr Hastings, as we normally would make it clear to the ministries, that people be required to advise us in advance if that is a condition of their attending. Recognizing that that wasn't in there and Mr Hastings was not advised, it's a sort of ex post facto dealing with this. I will make sure, as has been our custom in the past -- not to contradict you too much -- but where anyone has raised it and there has been a legitimate reason to reimburse, this committee has done so, at least, under my chairmanship since April of last year.
I will make sure, with your indulgence, to the three gentlemen on the subcommittee, that in the notice that goes out to Mr Galt's bill and Mr Agostino's bill we put in the reminder we traditionally put in, that people be advised to tell us before they attend what their expectations are.
Mr Levac: Just to comment on that, I would suggest respectfully that that needs to happen all the time.
The Chair: It does. As I say, it was an oversight, Mr Levac, when we crafted the subcommittee.
Mr Levac: But I will bring this up to you: in the two subcommittee meetings where we did set those bills in place, we didn't do it. If it is traditional, we'd better make sure it's a procedure and maybe instruct the clerk that our first line will be, "Don't forget to do this." That's just to support it.
The Chair: It has duly been noted.
All in favour of Mr Hastings's motion? Opposed? The motion carries.
Thank you very much. The committee stands adjourned until next Monday.
The committee adjourned at 1733.
CONTENTS
Wednesday 6 June 2001
Subcommittee report G-3
Saving for Our Children's
Future Act (Income Tax Amendment), 2001, Bill 4, Mr
Hastings /
Loi de 2001 sur l'épargne en prévision de l'avenir de nos
enfants
(modification de la Loi de l'impôt sur le revenu), projet de
loi 4, M. Hastings G-3
Ms Sasha Supersad G-3
Investment Funds Institute of Canada
G-4
Ms Leslie Byberg
Ontario Community College Student
Parliamentary Association G-5
Ms Tracy Boyer
Ms Louise Salton G-7
Ms Josie DeBorger G-8
Canadian Association of Not-For-Profit
RESP Dealers G-9
Mr Tom O'Shaughnessy
Mr Ken Goodwin
USC Education Savings Plan G-10
Mr Kevin Connolly
Ms Angelique Galanis G-12
Ontario Undergraduate Student Alliance
G-14
Mr Ryan Parks
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair / Président
Mr Steve Gilchrist (Scarborough East / -Est PC)
Vice-Chair / Vice-Présidente
Mr Norm Miller (Parry Sound-Muskoka PC)
Mrs Marie Bountrogianni (Hamilton Mountain L)
Mr Ted Chudleigh (Halton PC)
Mr Garfield Dunlop (Simcoe North / -Nord PC)
Mr Steve Gilchrist (Scarborough East / -Est PC)
Mr Dave Levac (Brant L)
Mr Rosario Marchese (Trinity-Spadina ND)
Mr Norm Miller (Parry Sound-Muskoka PC)
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)
Substitutions / Membres remplaçants
Ms Caroline Di Cocco (Sarnia-Lambton L)
Mr Raminder Gill (Bramalea-Gore-Malton-Springdale PC)
Mr John Hastings (Etobicoke North / -Nord PC)
Clerk / Greffière
Ms Anne Stokes
Staff /Personnel
Ms Anne Foy and Ms Catherine Macnaughton, legislative counsel