The Canada Social Transfer and post-secondary education

 

The Federal Budget, tabled last month by Finance Minister Jim Flaherty, promises to invest $800 million into Canada’s post-secondary education system through the Canada Social Transfer (CST). The system, however, will have to wait until the 2008-09 fiscal year to receive any of that new money because the federal government lacks the necessary accountability mechanisms to ensure that the provinces will indeed spend the new money in their jurisdictions on post-secondary education.

 

The problem of accountability arises because the CST is a block transfer that provides funding from Ottawa to the provinces with virtually no strings except to support the provision of education and social services. Under the current transfer agreement with the provinces, the federal government cannot simply earmark a certain portion of the transfer to one priority and expect that the provinces will spend that money according to Ottawa’s wishes.

 

As post-secondary education becomes increasingly important to both Ottawa and the provinces, many observers were expecting last month’s Federal Budget Speech to include an announcement of a separate federal transfer on post-secondary education. Such a move is not without precedent and would have enabled the government to put new money into post-secondary education immediately. In 2004, the federal government established two transfers, the Canada Health Transfer and the CST, by separating the Health Transfer from what was then the Canada Health and Social Transfer.

 

Instead of creating a separate transfer for post-secondary education, the federal government will take the next several months to discuss accountability measures with the provinces and establish an agreement to ensure that the new funding it wants to pump into the post-secondary education system will be spent by the provinces accordingly. Reaching such an agreement between Ottawa and the provinces is invariably a difficult task in Canada, but there are positive signs that suggest a deal may be within reach. For instance, the provinces and territories are already on record urging Ottawa to play a greater role in funding post-secondary education.

 

In a recent open letter to Monte Solberg, Federal Minister of Human Resources and Social Development, the Councils of Ministers of Education, Canada (CMEC), called on the federal government to “immediately restore the intergovernmental transfer that supports post-secondary education to 1994-95 levels.” The new $800 million in funding promised in the budget is a significant step toward restoring federal transfers to the provinces to their pre-1995 levels, but the new funding falls well short of meeting the target set by the CMEC.  

 

The federal government says that the CST funding for post-secondary education will reach $3.2 billion in 2008-09, and starting the following year, the government will increase the CST annually by three per cent. This is an improvement over the current situation where the CST lacks an automatic escalator to account at least partly for inflation and pressures associated with a growing population.

 

The Federal Budget also contains new initiatives that can take effect in the current fiscal year. There is new money to support research and attract new academics. The three granting councils––the Canadian Institutes of Health and Research, the National Sciences and Engineering Council of Canada, and the Social Sciences and Humanities Research Council of Canada––will share $85 million to fund research activity.

 

The government will also invest $15 million in additional funding to support the indirect costs of research. Lastly, the government will invest $35 million over two years and $27 million per year thereafter to expand the Canada Graduate Scholarships.