Hi all. Yesterday was budget day, and it was a big deal. The HESA Towers team worked late into the night putting together our usual Budget Commentary for you to peruse at your leisure. We hope you enjoy it. But if you don’t have time to read it all, here are the five most important points. First, even though significant spending reductions were anticipated, the actual reductions were insufficient to prevent the government from accumulating a budget that was comparable to the one that followed the disastrous 2008 financial crash. So, in a sense, we have the worst of both worlds: big cuts to programs that make some people unhappy and put the government in bad financial shape. Any further decline in our economy will probably cause bigger cuts in the future. The Liberals are not to blame for everything—they did not request a trade war with the United States. But it’s not as though any other party could be held responsible for the situation, either.
Second, students lost money like they’ve never lost before due to this budget. The government appears to be yanking $1 billion in funding from grants in the Canada Student Financial Assistance Program (CSFAP) and in the process reducing maximum grant funding from $4,200/year to $3,000/year. That is massive. That said, the fact that the budget did not spell out the cut suggest either that it was too cowardly to admit this was what it was doing or – possibly worse – that the whole thing was an inadvertent mistake. It’s not as though there weren’t places to cut in the CSFAP: the 2023 decision to eliminate interest on student loans so that new graduates could get “help with the rent” (seriously, that is how it was described in the budget) would have been a much more obvious place to reduce expenditures. Keeping that subsidy while dropping assistance to student trying just to get a foot in the door at university/college is actually pretty grotesque.
Third, universities came out of this whole thing not too badly. In light of the circumstances, the fact that the increases to the tri-councils in the budget for 2024 remained relatively unaffected is a significant accomplishment. Although politically gauche, the internal talent acquisition component (why does this government continue to refer to talent as something that must be imported rather than grown) Yeesh.) This is a nice sum of money: $131 million per year for 13 years. It’s better than a kick in the teeth, even if most of the money is likely to end up at just a handful of big research universities. However, it is probably important to keep in mind that more than half of the cost is actually being covered by a cut to the budgets of the granting councils. Fourth, as we’ve pointed out before, the economy the Liberals seem to want to build is a deeply twentieth-century one. The idea that we might build a new service-oriented, science-powered economy, a notion that was at the heart of the late Chretien-Martin period, seems like a very distant memory. There are tens of billions of dollars being spent to “build” Canada, but very little of it is going to educational institutions. It’s deeply disturbing and represents the central problem that the post-secondary community must confront over the years to come.
But, that said, there is still a lot to play for. Even though they aren’t guaranteed any of the infrastructure funding, colleges and universities appear to be eligible for a lot of it. There are significant sums of money allocated to defense and security in the budget, but it is unclear how those funds will be spent. Universities, the government, and industry can collaborate effectively on security files in a variety of ways, as demonstrated by experiences in Sweden, Australia, and the United Kingdom. All we need are policy entrepreneurs who can convince the government to spend money wisely. Ultimately, given how little this government seems to value the knowledge economy, it wasn’t a bad night for universities and colleges (students are another story). It could have turned out much worse. In addition, it might be even better if the industry became proactive and innovative in order to take advantage of new opportunities.
