Promises and the Liberal Long Game: Tuition in Ontario

Guest post by Eric Newstadt

There has been a lot of interest in the Liberal plan to offer full-time students an up-front grant so as to reduce their tuition-fees, not least from yours truly.  Indeed, the promise is a rather curious one, given McGuinty’s approach to tuition-fees since 2005.  First to strategy: It is notable that the Libs tried the same thing federally and we all know how that turned out.  As our long lost friend the Lonely Economist pointed out, this kind of grant doesn’t get the vote out, and it did almost nothing to swing popular opinion of the Libs.  Protectors of public services these pioneers of privatization are not.  What’s more, it is an odd move by a government that has just allowed tuition fees to rise by over 30 %.  Walkom, in today’s Toronto Star, is of the opinion that the Libs are responding to middle class anxiety in the midst of a recession; and in the process admitting that they were, as he put it, “dead wrong” to allow tuition-fees to rise annually since 2006.  As I explain below, I’m convinced  this is much more than electoral brinkmanship, but a rather represents considered public policy: and a Trojan Horse at that.

Before getting to the meat, I want to point-out another oddity, namely the failure of the Libs new plan to address part-time students.  Why not provide some subsidy to students who need to take-on full-time work and part-time study?  If this is really a plan to re-distribute a little wealth, the failure to support part-timers seems like something of a missed opportunity.  So what is going on?

Here are the clues: The first has to do with the Libs language around “ROI” and “shared burdens”, much of which comes, as Walkom also notes, straight out of Bob Rae’s infamous Report.  In an upcoming post I’ll deal more specifically with the mythology behind “social” vs. “private” ROI in higher education, the very mythology that acts as the cornerstone of the Libs new plan (Nora Loreto in a facebook post usefully describes it as a “scheme”).  Through a dense array of smoke and mirrors both the Libs and the Cons have been want to argue that most of the spoils from investing in higher education flow to the individuals involved through increased wages over their working lives (never-mind that average wages haven’t moved and that over 70% of jobs now require post-secondary).  In other words, the Lib scheme is premised on a set of ideas and rooted in a language that helps to re-create the neoliberal vision of a largely privatized and commodified world where the state can sometimes usefully act to support markets, albeit without having any ability to plan anything at all.

The other clue has to do with the Government’s plan to allow York, Ryerson, and the UofT to open massive, under-graduate and teaching only “universities” in the City’s hinterlands, which was announced alongside the up-front grants promise.   Indeed, rumour has it that the Government’s initial plan to open a new, teaching only “university” have been scrapped – the existing diploma mills are being told to industrialize further, to bet, as the Once-ler would have it, on biggering and biggering and biggering.  This idea of “tiering” the universities (now called “differentiation” in a discourse more akin to industrial efficiency), most recently comes from the pages of “Academic Transformations”, the work of four long-serving and practically minded academics/administrators/policy wonks.  As with the issue of ROI, I will, in still another blog-to-come address the mythology behind calls within various quadrants of the academy to argue that teaching and research can, without any detriment, be pursued separately.  In the meantime, it is important to merely note that the Government, based in part on the impoverished social scientism found in “Academic Transformations” has trotted out the idea that teaching only “universities” don’t involve the sacrifice of quality.  But they do lower unit costs!  And they will likely provide a means through which the universities can side-step existing collective agreements, and soak-up a good chuck of the under-employed and/or over-worked backlog of Phd’s floating around Southern Ontario too.

And then there are the more obvious clues: the government will continue to allow tuition-fees to rise at rate of about 5% a year.  Meanwhile, “core-funding” arrangements – the operating dollars that universities get from the government annually – will continue to be negotiated via annual dances the result of which are “multi-year accountability agreements” (MYA’s).  Via these monsters the Government has been able to increase the amount of conditional and envelope funds available to universities and progressively cut-back on the amount transferred via formula-based “block grants” that depend on enrolment, not specific performance criteria.  This is important because it indicates is very telling when it comes to the nature of the Government’s commitment – promise to share the burden, and make no commitment to increase overall funding levels, except under special circumstances, and particularly when the universities are able to attract private-sector money (through things like research contracts, the sale of naming rights etc.).   The rhetoric might be about helping families, but the silences on core funding speak volumes too!

There is more too, outside of the conditional MYA’s, the Government has precipitously increased, just like the three governments before it, the amount of conditional research funding aimed at producing “commercialisable” research.  Such monies haven’t tended to provide much short or long-term support for operations, and have tended to tie the fate of researchers to their ability to attract private research “partners”.  And the problems with such arrangements are legion (and likewise fodder for another blog-post).  Again, the upshot is that the Government, far from wanting to offset the up-front cost of post-secondary is rather tied to supply side initiatives of which private sector players are the beneficiaries.

Having read the tea leaves, my breakdown: the Lib’s proposal, while a seductively large amount of money, is really a means by which the government can cut-back block grants to universities, privatize the entire post-secondary system, and also perfect the apparatus necessary to produce a docile workforce.  More than this, the structure of higher education that the Liberal proposal portends will also be a boon to private sector profits, but not to the number of people on private-sector payrolls.

We will deal with each assertion in turn.  Over the past two decades tuition-fee increases have indeed been offset by cuts to operating dollars.  With the present proposal, the government will continue to pay 30% of the cost of average tuition-fees, such that as tuition-fees increase so too will the absolute value of the subsidy.  And this means that the government will have cause to play the kind of shell game I’m predicting – as the absolute value of the up-front grant increases, the government will almost certainly cut-back on operating grants, particularly those that come without conditions.  As such, the up-front grant will become nothing more than a glorified voucher system.  Universities will have to compete feverishly to attract whatever numbers are necessary to support their operation.  Those that fail, will lay-off workers, and those that succeed will be able to attract more students.  And what will attract students?  Quality?  Maybe.  More likely it will be the promise of a better ROI (privately defined).

With lower unit costs (and weak, if any, unions), the teaching only “universities” will act as the tuition-fee floor for the Province and thereby as the educational-cum-training institutions to which most students are sentenced.   Where the ceiling will be is hard to say.  Still, the elite “research” universities will nonetheless be able to charge through the nose.  And because the government will only subsidize 30% of the cost of the average amount of tuition-fees in the Province, the elite schools will become the bastion of the rich and privately educated or the poor and deeply indebted.  Of course, it is worth bearing in mind, that quality at the elite institutions won’t be so much better that it will be at the teaching only schools, not least because conditional forms of research funding will continue to transform universities into contract research organizations, anxious to earn favour with the private sector.

I can hear the retort already: this kind of privatization/competition coupled with on-going research  support for the private sector will yield economic growth, more jobs, prosperity for all.  To which I can only answer: Since when have supply side initiatives produced sustained growth and reasonably equitable outcomes?  As a cherry I’ll add my next post, on the near-sighted impoverishment of our research infrastructure at the hands of neoliberal orthodoxy.  A preview: the data doesn’t support the idea that corporate co-sponsorship holds the promise of meaningful innovation.  A hornet’s nest…for next time.

Is it too much to ask that Simpson check his basic facts before he opines on Quebec no less?

Sadly the brief answer is probably yes. There is so much wrong with Jeffrey Simpson’s column on Quebec, Quebec’s pay-everyone social programs are draining its purse, and on so many levels it is hard to know where to begin. Rather than make a catalogue let me just make two interventions: one on audience and one on accuracy.

The obvious needs to be pointed out; namely, that when writing in the Globe and Mail you are writing for an Anglo Canadian audience much of which is waiting to have its ignorant view of Quebec confirmed. So fact checking is kind of essential even when all you want to do is present a one-sided, single sourced position. Simpson’s opinion reminds me of the racist joke teller that can’t even get the intended target’s ethnicity right.

This brings me to accuracy. Here is the glaring claim:

Forty per cent of Quebeckers do not pay income tax, as young economist Mathieu Laberge has noted. One result is fierce opposition to program cuts by people who are not taxed to pay for government services. Another result is that, with only 60 per cent of the population paying income tax, it’s hard to raise big new revenues.

Sounds pretty desperate. So few people pay income tax in Quebec they cannot raise significant revenue through income tax increases. The way it is phrased it makes it sound as though this is unique to Quebec. Thus playing into the dominant stereotype of Québécois(e),lounging around in their English Canadian equalization payment paid for Swedish style welfare state. Indeed troll through the comments section of Simpson’s column and it would appear that Simpson’s mission is accomplished.

Here are some examples of the bile Simpson (in)advertently(?) encourages:

This is why the Quebec referendum threat is complete BS. They can’t afford to leave as they would no longer get transfer payments to subsidize their socialist spending problem. If you don’t give “less fortunate” members of society any reason to make a go at bettering themselves, why would they bother?

Quebec should deal with their own problems and stop crying for subsides from the RoC.

Clearly Simpson’s article, and the data provided by the young Mathieu Laberge, simply serves to stoke the image that the Quebecois(e) do not work as much as other Canadians and are unjustly rewarded for their lack of initiative. Having grown-up in BC and lived at the centre of universe for 10 years I can attest that this is pretty common stereo-type about Quebec.

I have one simple question are the percentages of Québécois(e), paying income taxes lower than in the rest of Canada? Or even out of line with any of the major English Canadian provinces? One caveat: I do not know how Laberge derives his figure that 40% of Québécois(e), do not pay income tax. It would seem he is just equating the employment to 15-64 year population ratio in order to get his number. And indeed in Québec the employment to population ratio is 60%. I would have thought a more accurate guestimate would have taken the labour force participation numbers as a percent of of the population between 15-64 (termed the participation rate). Unemployed workers have paid or presumably in the near future pay income taxes as they are in the paid labour market. The participation rate in Québec is 65.5% implying only 34.5% of Québecois(e) will not pay income tax this year.

However whether or not you use Laberge’s (and Simpson’s) somewhat exaggerated measure or mine the fact is that Quebec’s numbers are good as they compare with BC’s at 61% and 66% or Ontario’s at 52% and 67.5% respectively. Quebec hardly is a case of a low income tax paying province. And Quebec’s numbers compare favourably with its Atlantic Canadian neighbours. So if there be a problem with the percentage of income tax paying citizens to non-income tax paying citizens then it is a Canadian story with a western Canadian wrinkle (Alberta and Sask have high participation rates).

That is we could have made the same alarmist sounding claims about BC, Ontario and all of Atlantic Canada. So whatever the story is here it is not about L’exceptionnalisme Québecois(e).

Moreover, it is fine list of programs that Simpson presents from cheep affordable and quality post secondary education through to universal drug plans and by although no means universally accessible affordable day care. Hence it is hardly a surprise that we pay higher income taxes in Québec than almost anywhere in North America: Duh! because we have more public services. It is not a glitch Jeffrey and Mathieu, it is a prerequisite.

Look it is not like progressives have not seen this film before. First you attack universalism under the guise that you really want the rich to pay their fair share; then you start with an anti income tax campaign trying to get the public to internalize the idea they are over taxed; then you destroy universality and give the bulk of tax reductions to the very rich people you made the chumps think you were originally targeting. And in the interim destroy l’esprit égalitaire that Laberge so detests.

Simpson is right though in the sense that Charest is certainly attempting a re-run of this film in Québec and I suspect he will be successful.

All the data for this post can be obtained from Statistics Canada for free here.

Why increasing tuition fees is not the solution to adequately funding university education in Quebec

Quebec need not go down the same ideological road to policy making as English Canada. It is quite nearly always the same plaint: low tuition = low quality university education. With the implicit or explicit always being higher tuition = high quality university education. Indeed this is the form that Lucien Bouchard’s recent pronouncement on tuition fees takes. It is reported that Mr. Bouchard opined:

“Quebec universities are dangerously underfunded compared with those in Canada and North America.…. These precarious finances have now reached a critical stage. If nothing is done, it is students themselves who will suffer first. And surely, inevitably, so will all of Quebec society.”

Pretty ominous stuff. Luckily I have had the pleasure of teaching in universities from British Columbia to Ontario and now Quebec. And luckily, or unfortunately, I was in each province both as a student and then as a professor. So I can attest to the before and after of tuition hikes (well not yet in Quebec). Here is what I observed. While the need for tuition increases was always cloaked in the garb of quality education it has rarely resulted in higher quality university education. In both the cases of British Columbia and Ontario I observed the following:

(1) There was not an increase in professorial pay beyond the CPI (although some funds were made available to attract Stars).

(2) There was not a decrease in class sizes. They either remained the same or were scaled up so that the professor to student ratio was decreased; that is, more students per professor. And this has been at all levels from the bachelors through to the Ph.D.

(3) There was not an increase in the number of tenured faculty. In fact tuition increases were accompanied by an increase in a reliance on sessional faculty. And this is directly related quality. Sessionals get paid much less than their tenured counter-parts they must therefore take on a greater teaching load to make up for the difference; often teaching at two and sometimes different universities during the same semester. How much time do you think they can spend on quality education? Couple this with the increase in class sizes and the picture is less than high definition quality.

(4) Nor did I notice an increase in expenditure on support staff. The consequence of which is that for both students and faculty the level of administrative services is approaching that of Rogers or Bell: that is one level above Kafkaesque.

Nowhere in Mr. Bouchard’s comments was there any indication of what he meant by quality of education save for some vague reference to competitiveness. My suspicion is that what he really was talking about is a move towards greater cost recovery via user fees. That is, he thinks Quebec should be moving towards full cost recovery of the expense of running universities through raising tuition fees. That this much is a standard liberal economists preference is beyond doubt. Indeed, they have been the protagonists of this position across English Canada. And I have no doubt there is a cavalcade of liberal economists earning publicly subsidised salaries ready to throw in on Mr. Bouchard’s side.

Yet that Mr. Bouchard is little confused is evident by the fact that full cost recovery is predicated on the idea that the value of a post-secondary education accrues solely to the individual student (that is education is a private good) and not at all to society in general. Oddly at the same time he wants to maintain that the underfunding of Quebec universities, owing to low tuition, will eventually cost Quebec society in general (re-read the quote above). Either education is a public good with significant benefits flowing to society from an increase in the average age of the citizenry or it is private good in which the individual student captures most or all of the benefits. Mr. Bouchard wants it to be both. This is indeed a circle that is hard to square, although Bob Rae made a valiant effort at such double speak in his commission into tuition fees in Ontario.

Let us however leave the question as to the quality of higher education and the question over its public and private goods nature to one side. Let us assume all benefits of higher education solely accrue to the individual student. Let us further concede that university thus ought to be self financing: i.e., total cost recovery. There still remains the question of how to raise the money to do this.

Mr. Bouchard’s preference is apparently for front end financing a.k.a. tuition increases. But can this position be justified within the framework of a private goods approach to higher education. Normally yes. But the problem is that in Quebec and in the English Canada university education was previously heavily subsidised by the general citizen regardless of whether or not they went to university.

Let us Assume Mr. Bouchard gets his way and the liberals raise tuition next year three fold. On what basis, that is sense of justice, should it be that those who received their university degree this year and years past not be subject to any cost recovery? That is, if I received my degree three years ago I have the benefit of a high subsidy but those graduating three years from now must absorb a much higher percentage of the cost of their higher education. Simply put, I received a benefit the next generation of students will not. There is simply no way to justify this generational inequality of treatment.

However if the cost of higher education were to be financed through higher marginal tax rates then this disparity could be fully mitigated through a general tax increase on professional incomes (say above 70,000). To simply increase tuition amounts to an inter-temporal (intergenerational) transfer of wealth. Using the progressive tax system however would ensure that those who most benefit(ed) from a university education pay a proportionate share.

This also has two added benefits. First, those students who choose to go into lower paying professional jobs like k-12 education, social services, etc., are not unduly burdened by student debt. And second that the prospect of arduous student debt does not deter those from lower income families from pursuing higher education. Well it may be true well targeted bursaries for lower income families could ameliorate this problem to some degree. However in practice the calculation of lower income is not so easily defined and when coupled with the first point the raft of bursary programs necessary to compensate is unduly complex when compared to the relatively simple instrument of progressive marginal tax rates. That Mr. Bouchard has only thought the matter through to the extent of increasing tuition rates suggests that he, like the liberal economists he appears to be taking his crib notes from, is unduly burdened by a simplistic ideology when what is really called for is a pragmatic and realistic approach to policy making.

If we take both of these points together we can conclude that the demand for higher tuition fees has little to do with higher quality post-secondary education and everything to do with cost recovery. This being the case it stands to reason that all the generations which benefited from a higher education degree should shoulder the burden and not just the future crop of university students.

Quebec need not go down the same ideological road to policy making as English Canada.