UW Gazette, February 26, 1997 Tax benefits for students and their families, and lots of new money for "research infrastructure", were among the highlights of the federal budget presented February 8 by finance minister Paul Martin. The budget also included a promise that the federal Networks of Centres of Excellence program will be "permanent", with funding of $47.4 million a year. University leaders were mostly enthusiastic. "The minister of finance has obviously set out investment in postsecondary education as the key theme for this budget, and he is on exactly the right track," said Dr. James Downey, UW's president and this year's chair of the Council of Ontario Universities, in a statement released by COU. Downey added: "The federal government has found a good balance among the requirement of public support for education, the need to reinvest in our research enterprise, and the creation of incentives for students to invest in themselves." Among other things in the budget's fine print was a change in the maximum tax credit that large donors can claim in one year for charitable donations. The change is expected to help universities, as well as other agencies such as arts groups, attract big gifts more easily. Canada Foundation A new Canada Foundation for Innovation, created "to support research infrastructure in the areas of health, the environment, science and engineering", was announced as part of the budget. The finance minister said Ottawa is putting $800 million into the Foundation, which "will be carefully invested to accumulate interest. The Foundation will, thereby, be able to provide about $180 million annually over the next five years to support important research infrastructure.É "Investment decisions will be made solely by a board of directors, the majority of whom will be drawn from the private sector and the research and academic communities." A day after the budget, the government named Dr. John Evans, former president of the University of Toronto and now a pharmaceuticals executive, to be chair of the new foundation. Said the budget speech: "Through partnerships for individual projects, be it with the research institutions themselves, with the private sector, or with the provinces, the Canadian Foundation for Innovation's resources could very well lead to up to $2 billion in needed investment. "The fund will help provide our universities, colleges and research hospitals with the laboratories and equipment they need to complement their own efforts at innovation, laying the foundation for tomorrow's jobs as well as today's." A possible target for some of the foundation's money would be the proposed Centre for Environmental Science and Engineering which UW had hoped to be building this year. The $33 million project went onto a back burner last fall when the Ontario government said it was "postponing" $25 million in support for it that had previously been promised. "That should fit into the program without too much difficulty," said Dr. John English, a UW history professor who is Member of Parliament for Kitchener. And Waterloo's MP, Andrew Telegdi, said Kitchener- Waterloo might also draw on the new fund for money to provide high-speed computer communication links that would help high-technology industry - including, potentially, the development of a Waterloo research park. "The work we've been doing behind the scenes is beginning to pay off," said Dr. Carolyn Hansson, UW vice- president (university research). A program of spending on traditional "infrastructure", such as roads, was also part of last week's budget, but the finance minister took pains to say that research can be considered "infrastructure" too: "We must broaden our notion of infrastructure. We must take it beyond its traditional meaning, to include the components of future economic success - post-secondary education, knowledge, innovation, for example. These are the building blocks of the new wealth of nations and it is in this infrastructure as well that government must invest. "If we fail to do so, we will fail the country of tomorrow. We will short-change the next generation." He also announced the renewal of federal spending on the Industrial Research Assistance Program. On excellence The minister of health and the science minister - David Dingwall and Dr. Jon Gerrard, respectively -- held a news conference in Hamilton two days later to provide more details about the "permanent annual allocation" promised to the federal Networks of Centres of Excellence. (Hansson, UW's vice-president, was among the people there for the oc casion.) "The NCE program," said a statement from Dingwall, "is an important building block of the federal science and technology strategy as it contributes significantly to sustainable job creation and economic growth, to improved quality of life for Canadians, and to the advancement of knowledge." Martin's budget said $47.4 million a year was being allocated to the 14 NCEs, which specialize in such fields as telecommunications research, genetic diseases, concrete, and telelearning. They are to be "permanent", rather than supported through commitments that are open to reconsideration every few years, the government says. "Through the NCEs," a statement said, "some 400 Canadian-based companies are working with more than 1,500 top researchers in 48 univerities, 37 hospitals and federal and provincial government departments in truly innovative partnerships in all regions of Canada.É "Each Network is a national R&D team effort focusing on research that contributes to Canada's future economic and social prosperity.É "Canada's NCEs are an innovative approach to research and development which combines the vision and expertise of the country's top business and research leaders." Tax help for students The budget offered some measures aimed at students, including a gesture in the direction of tying student loan payments to income. Martin said the government "is ready to pursue with interested provinces, lenders and other groups, an additional option for repaying student loans. "Students would be able to choose between current repayment arrangements and a repayment schedule tied directly to the individual's income. By tailoring payments to individual circumstances, the result would be a much more manageable debt." The finance minister announced that the grace period before student loan repayment begins is being increased to 30 months, from the present 18 months. Telegdi, the Liberal MP for Waterloo, quickly came out with a statement endorsing that change. "What this does," he said, "is take account of the real situation a person is in after graduating. "After spending all that time studying and acquiring the student loan debt, the last thing a person needs is to have to start making payments before that investment starts to produce income." In other measures, the finance minister said the annual contribution limit to Registered Education Savings Plans is being raised to $4,000, "in order to help parents save more in RESPs". He also said that the "education credit" is being increased from the present $100 a month to $150 and later $200 a month; that the income tax deduction for student fees will now include ancillary fees as well as just tu ition fees; and that there is new money for summer job programs. And there was this additional announcement: "Under the current rules, some students or their parents cannot take advantage of these tuition and education credits because they do not have sufficient income in a particular year to utilize them. This is often the case for those who do not have supporting parents or for people who enroll in an education program later in life in order to reorient their careers or to retrain themselves. "Therefore, we are changing the rules so that students who are not able to use these credits in the year of study will now be able to do so by carrying them forward to be offset against future income." "That idea started here at Waterloo," says a proud Kelly Foley, vice-president (education) of the Federation of Students. She says it was raised last spring by two economics students, Chris Lowe and Paul Skippen, who got an endorsement from the Federation's council. "I brought it to the Canadian Alliance of Student Associations, who also liked it and adopted it as policy," Foley said. "The national director of CASA lobbied the government, making many MPs and members of the Post- Secondary Education Caucus aware of our policies. Then the federal finance committee recommended it for this budget. "Proof that the student lobby does work!" Said the finance minister: "As a result of the measures just announced and those put in place by last year's budget, the combined federal and provincial tax assistance for a typical student will rise from $900 to over $1,200 per year - an increase of one-third." Another voice in favour of the changes was that of John Snobelen, Ontario's education minister, who called the measures "certainly positive for students". He said he will be meeting later this month with Pierre Pettigrew, the federal human resources minister, to talk about income- contingent repayable student loans. "Repayment geared to income seems fair and reasonable to most people," he said, suggesting that a new repayment system could be in place by this fall. Reaction is favourable Said Dr. Robert Giroux, president of the Association of Universities and Colleges of Canada: "In terms of funding for university research, new initiatives for student assistance, and the treatment of charitable dona tions, this budget is extremely good news for our universities." Giroux said he is glad the government will implement a number of the research initiatives that had been proposed by AUCC, the Canadian Association of University Teachers and the Canadian Consortium for Research in a joint package entitled Putting Knowledge to Work. "These are wise investments for Canada's future prosperity," the AUCC executive said. "Universities will now be able to offer cutting-edge research facilities capable of attracting, developing and retaining top flight researchers." The tax benefits for students are also "good news", said Giroux's statement, noting that AUCC was part of a coalition, together with student groups, community colleges, professors and student aid administrators, which earlier this year urged the government to improve its student assistance package. "We're very pleased that the government has taken the issue of student debt seriously and has understood the need to help families pay the costs of higher education." The AUCC also had good things to say about another feature of the budget, a change in tax treatment for charitable donations, which it said will help universities in their quest for donations - "an important step forward in helping them to meet their budget challenges". Overall, the AUCC said, the budget "signals a new era for Canada's universities. Clearly, the federal government is acknowledging the critical role universities play in the knowledge economy. We look forward to working with the government and our private sector partners to advance university research and improve student assistance." Much the same song came from the Council of Ontario Universities, represented by Downey and by its president, Dr. Bonnie Patterson. "The new monies for the creation of the Canada Foundation for Innovation will help revitalize our universities' research infrastructure," said Patterson. "This much needed investment will pay dividends in improved economic prosperity." She added that the government "is properly recognizing higher education as an investment by providing increased tax relief to encourage this investment. The actions to expand the value and definition of eligible education tax credits, a more generous repayment schedule for student loans and an increase to the contribution limits for Regis tered Education Savings Plans are good news items for our students. "We are also pleased to see that the federal government will be negotiating with the provinces to move toward a national income-based loan repayment plan for students." Downey went on to comment: "I am encouraged that there seems to be a general reawakening to the importance of public support for higher education and research. We have seen it in the recent U.S. Budget. We see it in this federal budget. And I am hopeful that the Government of Ontario will ensure that Ontario universities and their students are not left behind as this reinvestment occurs generally. "Thanks to the recent excellent report of the government's own Advisory Panel on Future Directions for Postsecondary Education, Ontario now has a blueprint for making such a reinvestment." Also some caution The word from the Canadian Association of University Teachers was not quite so positive, although CAUT president Dr. William Bruneau said he "welcomed" much of what was in the budget. "In particular", he said, "we welcome the creation of the Canada Foundation for Innovation which is designed to provide $800 million over five years for university research". "We know", said Bruneau, "that universities have been developing proposals to meet their most pressing research needs. We also expect that the universities will be able to raise the matching funds called for in this program". He also spoke favourably about the renewed funding for the Networks of Centres of Excellence and for IRAP, about the changes in charitable deduction rules, and about what was being done for students. The most important change, he said, is the decision to increase the period after graduation during which the federal government will pay the interest on student loans from 18 to 30 months for students in need. "When added to the 6 month grace period, this means that a student in need would have a three years grace period." The Finance Minister announced that the education credit, normally available to individuals who attend full- time, will be available to individuals who attend part-time because of their disability. "This decision", said Bruneau, "will clearly be welcomed by disabled students." Finally Bruneau noted the assistance that will be forthcoming for summer job programs for university students that was created as a consequence of last year's budget. "All in all, this was a good budget for postsecondary education." "It is important," he went on to say, "for the federal government to look on these measures as part of a general five-year plan to ensure that Canada has world-class and competitive universities and colleges and that these institutions are accessible to all students with the ability and desire to attend. We hope that the government's platform for the election would suggest such an approach. "Part of that approach should be to create grants for the neediest students, in particular for single parents and for low income students commencing their university careers. "In addition, future plans will have to address the need for new funding for researchers themselves. Research facilities without researchers cannot be part of the government's future plans. "We also think that the government's plans for the future must provide assistance for the humanities and the fine arts in Canadian universities which is noticeably absent from this budget. "Such a five-year plan is necessary in order to offset the serious problems caused by the cuts in the federal transfer payments for postsecondary education and in the budgets of the federal granting agencies."