Rising cost of education

By Daniel Je

As student fees rise across the country, being able to afford university is increasingly difficult.
All students should be know where their fees and tuition payments go, instead of paying what’s needed and then forgetting about it.

However, financial statements aren’t always easy for the average student to understand, especially if they’re not a business student.

So at OneClass, we decided to conduct a financial analysis on a Canadian school in hopes of helping students be more aware of their expenses and the financial workings of their school.
We analyzed the past five years of financial statements at Queen’s University in Kingston, Ont., (2014 to 2018) and a few findings might besurprising. (When a year is stated, it refers to the end of the school year, so 2014 refers to the 2013-2014 school year).

First, fees per student (including tuition, health, recreation and athletics fees) at Queen’s increased 3.4 time more than inflation from 2014 to 2018. Fees per student increased almost 22 per cent while the inflation rate in that period was only 6.5 per cent.

We looked at fees per student instead of total student fees paid to the university because an increase in total student fees could be directly attributable to higher enrolment.
Second, the annual increases in fees per student outpaced both the maximum allowed tuition increase in Ontario and the annual inflation rate until 2017.

Aggregate tuition increases in Ontario were capped at three per cent as of the 2013 school year. The average annual inflation rate from 2014 to 2018 was 1.58 per cent.

Fees per student increased 5.54 per cent, 5.75 per cent and 6.57 per cent in 2014-2015, 2015-2016, 2016-2017 and respectively, by far outpacing both the maximum allowed tuition increase and inflation.

Third, total student fees increased three times more than financial aid for students from 2014-2018.
Total student fees increased from $245.8 million in 2014 to $354 million in 2018 (an increase of $108.2 million), while student assistance only increased $8.6 million, from $55.4 million in 2014 to $64 million in 2018.

Fourth, student fees grew 1,518 per cent greater than capital asset investment (into such things as land and building) from 2014 to 2018.

In 2014, total student fees and capital asset investment amounted to $245.8 million and $236.5 million, respectively, a difference of just $9.3 million. However, by 2018 total student fees amounted to $354 million and capital asset investment totalled $203 million, a difference of $151 million.

Fifth, total endowments have steadily increased each year.

Endowments are essentially money or other financial assets donated to the university. The total includes contributions from donors, how much the investment of endowments earned and how much was in the endowment at the start of the year.

From $800.2 million in 2014 to $1.086 billion in 2018, total endowments have grown steadily each year. That indicates positive returns on the investment income and healthy contributions each year.

The analysis offers other insights but what's contained here summarizes the key findings. To see the full report, go to Queen’s University by the Numbers: An Intuitive Financial Analysis For Students.

A university’s financial statements contain plenty of jargon and dense details that the average student could miss. That’s why we created a report that’s easy to understand and will help students stay informed.

The Ontario government is set to make major changes to post-secondary education for the 2019-2020 year, such as eliminating free tuition for low-income students and decreasing tuition by 10 per cent.

It will be interesting to see how Ontario universities’ bottom lines are impacted and what they’ll do to change, adapt and innovate.

Daniel Je is a graduate from the Schulich School of Business at York University and a content editor at OneClass, the educational technology firm based in Toronto.

– Troy Media


Flipside of wage hikes

By Matthew Lau

Minimum wage hikes by provincial governments across Canada last year were sold as policy intended to make life easier for workers.

However, advocates overlooked some of the negative of the policy. Now they’re prescribing yet more government interventions to remedy the problems caused by the wage hike.

When the Ontario government hiked the minimum wage from $11.60 to $14 an hour in January 2018, one of the immediate effects was a huge increase in the prices of labour-intensive goods and services, such as child care.
Just two weeks after the $14 minimum wage came into effect, the CBC reported that “child-care costs increase due to minimum wage change … some parents [are] saying their fees have jumped by as much as 24 percent this month. This is despite a $12.7-million provincial fund to help daycare centres deal with the wage increase.”
Clearly, one of the negative effects of the minimum wage increase was a significant cost to families with young children. The cause of rising child care fees was taken up in a recent paper from the left-learning think-tank Canadian Centre for Policy Alternatives.

Concluding from a survey that child care fees rose faster than inflation in most Canadian cities in 2018, the CCPA report called for more government spending on child care.

Nowhere did the report mention that the major cause of rising child care costs in 2018 was another government intervention – the minimum wage hike that the CCPA vigorously supported.

When child care prices rise, fewer parents use those services, resulting in fewer jobs. The same is true for restaurants, retail shops, convenience stores and so on. Higher prices driven by higher labour costs in all industries mean lower demand for goods and services, which means workers lose jobs.

This often provokes calls for more government intervention to help those who have lost their jobs or skills training to boost workers’ employability. (Much of the unemployment increase resulting from minimum wage hikes is among young workers.)

According to a study in 2014 by economist Morley Gunderson for a government-sponsored Ontario think-tank, “the Canadian evidence is more in agreement, with the recent evidence based on different data sets and methodologies generally finding that a 10 per cent increase in the minimum wage reduces employment by about three to six per cent for teens and slightly less for young adults.”

In order to remedy the problem of high youth unemployment, which is largely a result of provincial governments ratcheting up the minimum wage, the federal government spends hundreds of millions of dollars in subsidies each year through the Canada Summer Jobs program.

Child-care spending, additional programs to help the unemployed and summer job subsidies for youth are just three examples of government interventions that are designed to counteract the economic problems caused at least partly by minimum wage hikes.

And these additional government interventions create their own problems. Higher spending means higher taxes, which reduces business investment and slows economic growth.

Instead of layering government interventions in an attempt to remedy economic problems created by other government interventions, policy-makers ought to look for economic solutions that involve scaling back the role of government.

Interventionist policies are often the root of economic problems to begin with.

Matthew Lau is a research associate with the Frontier Centre for Public Policy.

– Troy Media

More seniors isolated

By Stephanie Chamberlain and Carole Estabrooks

What happens when a person grows older and can no longer make health and financial decisions for themselves – but also doesn’t have family or friends who can make those decisions on their behalf?

Health and social services use a hard-hitting term to describe this growing population: unbefriended.
Unbefriended individuals may have experienced homelessness, mental health issues or substance abuse; they may be estranged from their family, have outlived their family or never had a partner or children. Although the unbefriended can be of any age, they’re often older adults. 

Unbefriended seniors are the most vulnerable of the most vulnerable — and we need to do more to safeguard their access to basic daily needs, including companionship, and improve their quality of life.
Not much is known about this population, which is why we undertook a study– the first of its kind in Canada – examining the quality of care and quality of life for the unbefriended across seven long-term care homes in Alberta. 

Our study found that many of these individuals are low-income, living on limited government-provided pensions. Even though they’re living in long-term care facilities where they have food and shelter, few can afford basic personal care items, such as clothing, lotions or denture adhesive. Similarly, uninsured services, such as dental, hearing and eye and foot care, are beyond their financial means.

Even those who can afford these basics frequently go without these items because they have no one to purchase them on their behalf or arrange for appointments.

Our study found that overworked care aides in long-term care facilities – who often make a basic wage – frequently purchase supplies out of their own pockets to help the unbefriended. One care aide reported buying dental adhesive out of her money so the residents in her care could put in their dentures. Another reported seeing unbefriended seniors in worn and threadbare clothing so they scouted out second-hand clothes for them.

We also found that unbefriended individuals have limited social interaction, especially if they exhibit challenging behaviours due to mental illness or dementia. Little social interaction contributes to a lower quality of life. Those with more financial means could hire a companion for social interaction, but most are unable to afford this luxury or are unable to facilitate hiring someone.

In Canada, unbefriended seniors are assigned a government-appointed public guardian to take over decision-making responsibilities on their behalf, such as for their health care and living arrangements. But public guardians are not care providers or family members. They don’t spend much time with their clients who live in long-term care facilities because they’re deemed safe and housed. Many public guardians carry large caseloads of well over 50 clients. While they’re supposed to visit their clients four times a year, they often struggle to meet this goal.

What can be done to improve the quality of life and access to basic daily living needs for someone deemed unbefriended?

We could expand the public guardian role to include basic living needs beyond food and shelter, such as quality of life markers and social interaction. Alternatively, governments could fund organizations to work alongside public guardians to systematize such services so that no individual is left neglected or forgotten, or relying on the charity of care aides.

But first and foremost, we need to simply put the unbefriended on the map. We can’t address what we don’t count and measure, and largely, they are the forgotten population in the policy landscape.

With the numbers of single households rising dramatically, more of us could find ourselves in this position as we age. We owe it those who are at their most vulnerable to provide a life of basic dignity and security.

Stephanie Chamberlain is a doctoral candidate at the University of Alberta. She is an Alzheimer Society of Canada Doctoral Fellow and a Revera Scholar. Dr. Carole A. Estabrooks is scientific director of the pan-Canadian Translating Research in Elder Care and professor in the Faculty of Nursing at the University of Alberta.

– Troy Media

Love those high gas prices?

By Aaron Wudrick and Kris Sims

While British Columbians mutter profanities as they watch gas prices soaring as high as $1.79 a litre, carbon-tax advocates who should be popping champagne are instead quietly avoiding eye contact.

Anyone who wonders if gas prices matter to ordinary people should spend an afternoon watching a busy border crossing. British Columbians are flocking to Washington State to fill up, where, even after the exchange rate, they’re saving about 50 cents per litre.

For a vehicle with a 70-litre fuel tank, that works out to saving $35 per fill up. Multiply that by two fill ups a weeks for the average commuter family in Langley (not a lot of people can afford to live downtown with outrageously high housing costs) and suddenly you’re looking at either spending in Canada or saving in the States $70 extra per week — or $3,600 per year.

A little further down the road in Seattle, the price of gasoline is even cheaper, at about $1.15 (Canadian) per litre, proving that a major city in the Pacific Northwest can indeed exist without prohibitively high fuel costs.

With these record prices coming just weeks after the introduction of the new federal carbon tax in Manitoba, New Brunswick, Ontario and Saskatchewan, federal Conservative leader Andrew Scheer was keen to highlight B.C.’s high prices as a glimpse into the future for all Canadians under steadily rising carbon taxes.

Some carbon-tax backers immediately pounced on the argument, noting that B.C. has had a carbon tax for over a decade and that B.C.’s high prices didn’t have anything to do with the new federal tax. They’re actually missing the point.

It’s true that taxes are not the only factor that determines gas prices, but they are among the biggest. In B.C., different types of taxes accounted for about a third of the entire price, including the provincial carbon tax that works out to 9.8 cents per litre with GST.

Carbon-tax advocates should be very happy about this state of affairs. Based on the logic of carbon taxes, The causes of higher fuel prices are irrelevant; it only matters that prices are high enough to discourage consumption. Carbon taxes are just meant to ensure that prices stay higher, even when the market price is lower. So you’d think such high gas prices would deliver the punishment carbon-tax advocates keep saying is necessary to reduce emissions. They should be cheering themselves hoarse.

Instead, carbon tax disciples don’t seem too keen to boast about high gas prices. It’s almost as if they’re afraid it will make carbon taxes even more unpopular.

That seems to be the conclusion drawn by B.C. Premier John Horgan, who in recent weeks was musing about offering “relief” from high gas prices. That’s strange, since the B.C. NDP are big fans of carbon taxes. In fact, the B.C. government just jacked up the provincial carbon tax again on Apr. 1. Did no one tell the NDP that the very point of carbon taxes is to drive up prices? Were they not aware that high gas prices — or more accurately, high everything prices — are not a bug, but a feature?

Indeed, when the B.C. Liberals first implemented the carbon tax in 2008, they promised it would stop rising at $30 per ton, be revenue neutral, and lead to a plethora of affordable alternative energies, all while reducing carbon emissions.

Ten years later, none of those things are true.

Interestingly, now that they’ve had a chance to sober up on the opposition benches, the B.C. Liberals are throwing their lot in with embattled commuters, saying that provincial gas taxes are too high and they’re demanding relief too.

No average commuter family could be expected to absorb $3,600 in additional gasoline costs and not feel the hurt financially. But suddenly, carbon-tax cheerleaders don’t seem so keen on championing that pain in the wallet.

Scheer is simply pointing out the obvious: whatever their direct relationship to the carbon tax itself, high gas prices in B.C. are an expensive sneak preview of just the kind of future that the Trudeau government, with its rising carbon tax, wants for all Canadians. The government wants your gas to be more expensive, period. What carbon-tax advocates don’t want you to realize is that it will be just as unpleasant as what Vancouver drivers are dealing with now.

Kris Sims is the B.C. director and Aaron Wudrick is the federal director of the Canadian Taxpayers Federation.

Addicted to income tax

By Jock Finlayson

The latest federal budget, delivered in March, contains a wealth of information on the activities of the government, as well as the money it raises for its endlessly expanding array of expenditure, regulatory and income support programs.

This year, the federal government expects to spend $356 billion in total. Roughly $330 billion is allocated to programs and services. The remaining $26 billion consists of interest payments on the government’s accumulated debt.

Federal spending has increased significantly in the past decade. In 2010-11, it stood at $276 billion, meaning expenditures have risen by almost 30 per cent since the beginning of the decade.
The government projects it will collect $339 billion in revenues in 2019-20. This is up more than 40 per cent since 2010-11.

Digging deeper into the data reveals that the government depends heavily on a single revenue source: personal income tax. In fact, as shown in the accompanying table, Ottawa gets more than half of its revenues from personal income tax – amounting to more than $170 billion in this fiscal year.

The structure of federal government revenues, 2019-20
*percentage figures are rounded to the nearest whole number

By any measure, that represents a high degree of reliance on a single revenue stream. Canada has the fifth highest reliance on personal income tax among all 36 advanced economies, according to research from the Organization for Economic Co-operation and Development.

In most other developed countries, national governments are funded with a more diverse mix of revenue sources, including taxes on consumption, payrolls and property.

As the Chartered Professional Accountants of Canada and other prominent organizations have argued in recent reports, the country’s overall tax system has become creaky, inefficient and needlessly complicated. Income tax compliance costs continue to rise for businesses and households. The CPAs say it’s time for a fundamental reboot of taxation. I agree.

One key part of fashioning a tax system suited for a 21st-century economy that’s being reshaped by technology is to retool and simplify the increasingly cumbersome income tax system.

As part of broad tax reform, the federal government elected in October should look to reduce the role of income tax in generating revenues to pay for programs and services.

When provincial taxes are added to those imposed by Ottawa, top marginal tax rates exceed 50 per cent in most of the country. The aggregate income tax burden is now excessive for skilled workers, managers, professionals, innovators, top researchers and entrepreneurs. These are the people we need to drive entrepreneurial wealth creation and develop and sustain a productive and competitive economy

Many talented individuals with these kinds of qualifications and experience are leaving Canada or seriously contemplating doing so.

Above all, federal policy-makers should focus on trimming income tax rates while broadening the tax base. The latter means narrowing the use and scope of tax preferences, loopholes and special rules that sometimes allow two individuals with similar incomes and family responsibilities to pay significantly different amounts of tax.

Scaling back the number of complex rules, tax deductions and preferences is a worthy goal in itself. Combined with lower tax rates, an income tax reform package that aims to simplify the system and widen the tax base can help to lay the foundations for a better economic future.

That future would be characterized by faster economic growth and steady increases in productivity and workers’ wages.

Jock Finlayson is executive vice-president of the Business Council of British Columbia.

– Troy Media

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