Federal Budget Highlights

The following summary was prepared by the Policy and Research Officer at CASA.

Federal Budget, March 19, 2007

Excerpts from the Budget Speech

“There’s been a lot of talk about fiscal balance, Mr. Speaker. But what is it really about? It’s about better roads and renewed public transit. Better health care. Better-equipped universities. Cleaner oceans, rivers, lakes and air. Training, to help Canadians get the skills they need. It’s about building a better future for our country… So we’re taking action. Through this budget, we are delivering an historic plan worth over $39 billion in additional funding to restore fiscal balance in Canada.”

“Starting in 2007–08, we will put the Canada Social Transfer payments on an equal per capita cash basis to support post-secondary education, social assistance and social services equally in all provinces. We will increase the CST by $800 million for post-secondary education in 2008–09, and by 3 per cent per year afterwards. CST funding for post-secondary education will rise to $3.2 billion in 2008–09, a 40-per-cent increase—an additional $16 billion more invested in our future through the CST over seven years.”[1]

“Mr. Speaker, we recognized in Advantage Canada the need for a Knowledge Advantage, so that Canadians can compete more successfully in our modern, global economy. We set a bold goal—but an achievable one: to have the best-educated, most-skilled and most flexible workforce in the world. Actions we are taking today will help build that workforce tomorrow.

· First of all, we’re investing over $1.3 billion in new money for science and technology research.

· Secondly, we’re dramatically increasing financial support for post-secondary education.

· Third, we’re providing new funding for skills training. The result will be that any Canadian who needs training should be able to get training.

· Fourth, we’re providing the greatest number of scholarships ever granted to our graduate students through the Canada Graduate Scholarships program. These prestigious awards are worth $17,500 per year for master’s students, and $35,000 annually for doctoral students, for up to three years.”[2]

“ Mr. Speaker, we are not just funding scholarships. We are helping to create the next generation of leaders. Young Canadians who will make us proud, make Canada strong, and the world a better place through their achievements.

Finally, in addition to creating a future generation of leaders, we are also investing in leading research institutions. Budget 2007 sets aside the funding necessary to make that happen, and will help fund leading-edge institutions like the Life Sciences Research Institute in Nova Scotia, the National Optics Institute in Quebec, the Perimeter Institute in Ontario, the Canada School of Sustainable Energy in Alberta, and B.C.’s Brain Research Centre, among others.”

Items Relating to Post-secondary Education in Budget 2007

Earmarked Funding to Post-Secondary Education (PSE)

· A 40% increase to PSE funding – an additional funding of $800 million per year · The funding for PSE will be earmarked within the Canada Social Transfer (CST)[3] · The funding will begin in 2008–09, for provinces and territories to strengthen the quality and competitiveness of Canada’s post-secondary education system. · Federal support will grow by 3 per cent every year thereafter. · The government will be talking with provinces over the next year to determine how to implement the changes. · Earmarked funding does not necessarily have built-in accountability measures · The CST will be legislated to 2013–14, with an automatic 3-per-cent escalator, and be made more transparent.

Increased Funding to Graduate Student Scholarships

$35 million over two years and $27 million per year thereafter to support an additional 1,000 students through the Canada Graduate Scholarships. (via the Canadian Institutes of Health Research, the Natural Sciences and Engineering Research Council of Canada, and the Social Sciences and Humanities Research Council of Canada) Increase funding to the merit-based Canada Graduate Scholarships will provide some more opportunities for graduates student funding Unfortunately this change will not help those students in accessing the post-secondary system at the undergraduate level, particularly for lower-income and first-generation

Review of Canada Student Loans Program (CSLP)

· A review of the CSLP aimed at modernizing and simplifying this important student financial assistance program.[4] · The review aims to modernize the CSLP, however there are no details on how the government intends to improve CSLP and to make it more effective

Making Registered Education Savings Plans (RESPs) more attractive

· The Government of Canada helps parents to save for their children’s post-secondary education through registered education savings plans (RESPs), the Canada Education Savings Grant (CESG) and the Canada Learning Bond. Each year, the Government provides about $600 million in tax and grant assistance to encourage saving in these plans. · Eliminating the $4,000 limit on annual contributions. · Increasing the lifetime RESP contribution limit from $42,000 to $50,000. · Increasing the maximum Canada Education Savings Grant (CESG) annual amount from $400 to $500. · Part-time students will now be eligible to access up to $2,500 of their income and grants for each 13-week semester of study. Students will be required to spend at least 12 hours a month on courses, in a course lasting at least 3 consecutive weeks. (Currently, students can only access their RESP savings if they are enrolled in a program that involves at least 10 hours of classroom study per week.) · This change will be effective for the 2007 tax year. It is estimated that these changes will cost $5 million in 2006–07, $15 million in 2007–08 and $20 million in 2008–09. · Tax credits for savings programs do not effectively target those students that are in need, and do not improve access. · Tax credits for RESPs and CESGs disproportionately benefit higher-income families - About 61% of children living in high income households had parents who were using RESPs plans to save, compared with 42% of children living in low-income households. ·

Support to International Students to Work in Canada after Graduation

· $34 million over two years to ensure that foreign students and skilled temporary workers already in Canada can meet health and security requirements to stay in Canada. · Attracting and retaining skilled and experienced immigrants through improvements to the Temporary Foreign Worker Program and the creation of a new avenue to immigration for Canadian-educated foreign students and experienced temporary foreign workers.

International Education Marketing

· Providing $2 million over the next two years to launch a new international education marketing campaign to attract talented students to Canada.

Research & Innovation

Providing $510 million to the Canada Foundation for Innovation to undertake another major competition before 2010. This will support the modernization of research infrastructure at Canadian universities, colleges, research hospitals and other non-profit research institutions. Providing $120 million in 2006–07 to CANARIE Inc., a not-for-profit corporation that manages CA*net, a sophisticated research broadband network that links Canadian universities, research hospitals as well as other science facilities in other countries. This money will allow CANARIE to maintain the CA*net network for the next five years and to develop the next generation CA*net5. Providing $10 million over the next two years to the Canadian Institute for Advanced Research to help Canadian students and researchers participate in and lead groundbreaking research on the international stage. Providing $6 million in 2008–09 towards the relocation of Natural Resources Canada’s CANMET Materials Technology Laboratory to the McMaster Innovation Park in Hamilton, Ontario. Investing $85 million per year through the federal granting councils for research targeted on key priorities: health sciences, energy, the environment, information and communications technologies and management, business and finance. Supporting leading Centres of Excellence in Commercialization and Research with an investment of $350 million over 2006–07 and the next two years. Providing Genome Canada with an additional $100 million in 2006–07 to extend promising research projects and sustain funding for regional genome centres and related technology platforms. Investing $30 million in The Rick Hansen Man in Motion Foundation in 2006–07 to translate research into practical benefits for Canadians living with spinal cord injuries. ·

Increased funding for the Indirect Costs of Research

· Providing an additional $15 million per year to cover the indirect costs of research, including the operating and maintenance of research facilities.

Increased Equalization Payments

· Equalization-receiving provinces will receive an additional $1.5 billion this year—an increase of $1.9 billion since we took office—to ensure all provinces can continue to invest in roads and infrastructure, post-secondary education and health care. · For provinces receiving equalization payments, such as Quebec, this will help bolters base support to universities and colleges

Labour Market Training

· Providing $500 million per year starting in 2008–09 to provide labour market training to help people who are not eligible for employment-insurance-related training get the skills they need and employers want. Any Canadian who needs training will be able to get training.

Foreign Credential Recognition

· Creating the Foreign Credential Referral Office with a $13-million investment over two years.

Science and Technology Strategy

Creating a Knowledge Advantage requires a strong foundation in science and technology. Advantage Canada laid out an ambitious new direction for establishing scientific and technological leadership for Canada by building on existing strengths, focusing efforts in key areas where Canada can achieve global excellence, and better aligning research investments with the needs of businesses to make a real impact in the market.

In Advantage Canada, Canada’s New Government committed to: Invest in research equipment and facilities in universities and colleges to compete with the best in the world. Expose more students to private sector research challenges through internships and targeted collaborative research. Maintain Canada’s G7 leadership in public sector research and development (R&D) investment. Ensure that excellence is the primary criterion for government research support. Focus on results and improved accountability by establishing clear objectives and improved results management for the granting councils and other research entities. Consider transferring the management of some non-regulatory federal laboratories to universities. Target new investments in R&D, including those through the granting councils, to areas where Canada has the potential to be a world leader such as energy, environmental technologies and health sciences. Introduce competitive funding that levers investment by the private sector and other levels of government in large-scale, national scientific projects and commercialization partnerships. Strengthen the links between universities, colleges and the private sector through mechanisms such as business-led Networks of Centres of Excellence to enhance the commercialization of Canadian ideas and knowledge.

Building on these directions, the Minister of Industry will shortly release a comprehensive and forward-looking science and technology strategy. The strategy will outline a multi-year framework for action.

The federal government already provides substantial assistance for science and innovation. This includes advanced research, the most up-to-date scientific infrastructure, access for Canadians to advanced skills training, and investments with the private sector to commercialize knowledge and convert it into economic gains. Chart 5.2 provides an overview of existing federal investments in these areas.

Chart 5.2
Federal Investments in Science and Technology

Research Support The federal government provides support for primary research at universities, colleges and hospitals to generate new knowledge and support the training of young Canadians. Federal departments and agencies also undertake scientific activities in support of their mandates. Projected federal investments in 2007–08 include: Funding for research through the granting councils: $1.4 billion. Funding for the indirect costs of research: $315 million. Funding for centres of excellence in commercialization and research: $270 million. Funding for genomics research through Genome Canada: $100 million. Federal laboratory research and development: $2.1 billion. Total research support: $4.3 billion.	Science Infrastructure The federal government helps fund leading-edge science infrastructure at Canadian universities, colleges and research hospitals, in recognition that research and training of the highest calibre requires the most advanced equipment and technologies. Projected federal investments in 2007–08 include: Support through the Canada Foundation for Innovation: $430 million. Linking Canadian researchers to each other and the world through the CA*net high-speed research network: $25 million. Funding for genomics science infrastructure through Genome Canada: $20 million. Total science infrastructure: $475 million.
Advanced Skills and Training The federal government provides funding to attract and retain highly qualified personnel in Canada, and to enable young Canadians to acquire the advanced skills that prepare them for success in a knowledge-driven economy. Projected federal investments in 2007–08 include: Support for close to 2,000 research leaders at universities through the Canada Research Chairs: $275 million. Scholarships for Canada’s best students to pursue advanced studies through the prestigious Canada Graduate Scholarships: $120 million. Additional support for scholarships, fellowships, Chairs and awards for researchers from the granting councils: $460 million. Total advanced skills and training: $855 million.	Commercialization and Business R&D The federal government provides generous tax assistance, as well as direct funding support, to encourage companies to innovate and to undertake R&D in Canada. Projected federal investments in 2007–08 include: Tax assistance through the scientific research and experimental development tax credit: over $3.0 billion. University, business and government collaborative research through the Networks of Centres of Excellence: $82 million. Direct funding for business investments in R&D: $500 million. Total commercialization and business R&D: over $3.6 billion.

These investments have helped Canada become the G7 leader in public sector R&D. This leadership positions us for success by generating breakthrough new ideas and providing our young people with advanced training and experience. The private sector is well positioned to take advantage of this strong foundation by increasingly investing in science and technology to become more competitive. We will all benefit through a stronger economy, better jobs and improved products and services.

To build on our strengths while generating better results for Canadians, we need a new approach that is focused on creating real leadership for Canada while better harnessing our science and technology assets to meet our economic and social goals. Canada’s investments in science and technology will make an important contribution to achieving objectives under the Government’s ecoAction plan for a cleaner and healthier environment.

Budget 2007 puts in place significant new resources to begin implementing the Government’s new approach, which will be further outlined in the science and technology strategy. Budget measures will help sustain Canada’s G7 leadership in public primary research, target new investments in research to key areas where Canada can be a world leader, and align research investments with the real-world challenges of the private sector.

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[1] Budget Speech 2007.

[2] Budget Speech 2007

[3] Federal Budget 2007, page 122

[4] Federal Budget 2007, page 124