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Archived - Chapter 4 - Moving Forward on the Priorities of Canadians -
The Importance of Learning

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Learning is the cornerstone of Canada’s economic and social foundations. Investments in learning are key to a strong economy. Learning produces a workforce qualified to meet the demands of a growing economy and fosters advances in knowledge, the development of new technologies, new products and improved production processes. These in turn increase productivity, generate economic growth and promote Canada’s international competitiveness.

Support for learning is an important instrument for ensuring equality of opportunity for all Canadians:

It is clear (see chart below) that in order to create, find and keep good jobs in the knowledge-based economy, Canadians will increasingly need to pursue learning opportunities—both during their youth and as working adults later in life.

Employment Growth by Level of Educational Attainment, 1990-2003

By international standards, Canada has been highly successful in providing access to post-secondary education. Canada has the highest post-secondary education attainment among the Organisation for Economic Co-operation and Development (OECD) countries. In 2000, 41 per cent of the population aged 25 to 64 had completed post-secondary education, i.e. college or university. However, the proportion of those with university education is lower than in four other countries, and 8 per cent more Americans aged 25-64 have university degrees (see chart on next page).

International Ranking of Post-Secondary Education Attainment (Per Cent of Population Aged 25-64)

The challenge is to ensure that all Canadians have access to learning opportunities. This requires support that is adequate and effective. The Government helps by providing direct support to individual Canadians and their families at various stages of learning throughout their lives. The Government also provides indirect support through partnerships with provincial and territorial governments, educational and research institutions, and employers and labour unions.

Key Federal Programs and Tax Expenditures in Support of Learning
  • The Government provides funding to the provinces and territories for post-secondary education through cash and tax transfers under the Canada Health and Social Transfer and, after April 1, 2004, under its successor, the Canada Social Transfer.
  • The Government supports access to post-secondary education by providing financial assistance to post-secondary students through the Canada Student Loans Program ($1.5 billion annually in loans to nearly 330,000 students) and Canada Study Grants ($75 million annually in grants to some 55,000 students). The Government also provides more than $300 million annually to support 27,000 First Nations, Inuit and recognized Innu students who pursue post-secondary education. The Government provided a $2.5-billion endowment to the Canada Millennium Scholarship Foundation in 1998; the foundation provides $300 million annually in bursaries and scholarships to 100,000 students.
  • The federal personal income tax system contains several measures that recognize the costs incurred by students for their education. Together, in 2003 they provided nearly $1.3 billion a year in tax relief to students and those who financially support them. Key measures include the tuition tax credit ($290 million claimed by 1.3 million students), the education tax credit ($265 million claimed by 1.3 million students), and the transfer and carry-forward of unused credits ($530 million claimed by 1.1 million tax filers).
  • The Government helps families save for their children’s post-secondary education by providing $365 million annually in Canada Education Savings Grants (CESGs) for contributions made into registered education savings plans (RESPs). The Government also helps working Canadians use their registered retirement savings plan (RRSP) savings to finance their own learning (nearly 15,000 withdrawals in 2002).
  • The Government supports university research through the granting councils ($1.4 billion in 2003–04), funding for the indirect costs of university research ($225 million in 2003–04), and Canada Research Chairs ($240 million in 2003–04). The Government has provided endowments to Genome Canada and the Canada Foundation for Innovation; the foundations provided $89 million and $360 million, respectively, in research funding in 2003–04.
  • Through Labour Market Development Agreements with the provinces and territories and other programs, the Government provides over $2 billion a year under Employment Insurance Part II in funding for the delivery of employment benefits and support measures, including skills upgrading and training, to over 600,000 Canadians.
  • The Aboriginal Human Resources Development Strategy, launched in 1999, is a five-year, $1.6-billion government initiative, that addresses the training and employment needs of Aboriginal people.
  • The Government currently provides $50 million in annual direct support, growing to $60 million by 2006–07, to 29 sector councils—industry-wide partnerships that bring together employers, unions, workers and educators to assess future employment patterns, skills requirements and training practices, and to develop measures to help employers and workers meet and adapt to the changing needs of each sector.

In its support of learning, a key government goal is to ensure that no qualified Canadian misses out on post-secondary education because of a lack of financial resources. Low income should not be a barrier to achieving learning potential. Accordingly, this budget takes significant steps to enhance support for those who need help in obtaining access to learning for themselves and for their children, including measures to:

These measures fully recognize that support for learning starts with the birth of a child and extends well into adulthood. The chart on the next page identifies the core federal programs available at the four main stages of a lifetime of learning, starting with childhood and continuing through post-secondary education and adult learning. These programs assist students and their families, with assistance particularly targeted at low- and middle-income families. The programs that are enhanced or introduced in this budget are highlighted.

Federal Support for Learning Over Individual Lifetimes

Caring for Canada’s Children—Early Learning and Child Care

Ensuring that all children get the best possible start in life and equal opportunities throughout their early lives is a fundamental part of the legacy Canadians leave to future generations. Over the years the Government, in partnership with provincial and territorial governments, has developed a strong agenda in support of Canada’s children. Budget 2004 builds on this commitment by increasing its support of early learning and child care, strengthening the community’s knowledge about their children, and taking steps to protect children from harm.

This national commitment is embodied in both the 2000 Early Childhood Development Agreement (see box on next page) and the Multilateral Framework on Early Learning and Child Care agreed to in 2003 by federal, provincial and territorial ministers responsible for social services.

Early Childhood Development Agreement

In September 2000, the Government entered into an Early Childhood Development Agreement with provincial and territorial governments. The Agreement’s objectives are:

  • To promote early childhood development to ensure that children are—to the fullest extent possible—physically and emotionally healthy, safe and secure, ready to learn, and socially engaged and responsible.
  • To help families support their children within strong communities.

To meet these objectives, governments agreed on four key areas for action:

  • Promoting healthy pregnancy, birth and infancy.
  • Improving parenting and family supports.
  • Strengthening early childhood development, learning and care.
  • Strengthening community supports.

Governments are committed to making significant new investments in these areas, in accordance with the needs and priorities of their respective jurisdictions. To give Canadians a clear picture of progress, governments also agreed to report annually on their investments in early childhood development programs and services and to provide regular reports on how young children are doing.

Under the Agreement, the Government committed to provide $2.2 billion in funding over five years to provincial and territorial governments through the Canada Health and Social Transfer, including $300 million in 2001–02, $400 million in 2002–03 and $500 million annually from 2003–04 to 2005–06. In 2003 the Government announced it would continue its funding commitment after 2005–06 at the level of $500 million per year. Beginning in 2004–05 these early childhood development transfers will be paid to provinces and territories under the new Canada Social Transfer.

In addition, the Government set aside a further $320 million over five years ($65 million annually) for early childhood development programming for First Nations and other Aboriginal children.

The Multilateral Framework on Early Learning and Child Care (ELCC) was agreed to in March 2003 by federal, provincial and territorial ministers responsible for social services. This Framework builds on the foundation of the earlier Early Childhood Development (ECD) Agreement by increasing funding for the third of its key areas for action (strengthening early childhood development, learning and care). Under the Framework:

This budget proposes to accelerate implementation of the Framework by increasing cash transfers to provinces and territories under the Canada Social Transfer over the next two fiscal years, for a total commitment to early learning and child care of $150 million in 2004–05 and $225 million in 2005–06 (see box). The combined amount of $375 million over those two years, which represents an increase of two-thirds over previously committed funds for those two years, could fund up to 48,000 new child care spaces or provide up to 70,000 fully subsidized spaces for children from low-income families.

Summary of Federal Investments Under the Early Childhood Development Agreement and the Multilateral Framework on Early Learning and Child Care

   2003–04 2004–05 2005–06 2006–07 2007–08


(millions of dollars)

2000 ECD Agreement1 500 500 500 500 500
2003 Multilateral
Framework on ELCC
25 75 150 300 350
Acceleration of ELCC in this budget 75 75
Revised funding for ELCC 25 150 225 300 350
Total ECD and ELCC investments 525 650 725 800 850

1 The 2000 Early Childhood Development Agreement covers the five-year period from 2001–02 to 2005–06.

To complement the ECD Agreement with provinces and territories, the Government also provided $320 million over five years for early childhood development programming for First Nations and other Aboriginal children.

With the ELCC Framework, the Government committed a further $35 million over four years for early learning and child care services for First Nations children living on reserves. This budget proposes to add a further $10 million over four years to this funding for early learning and child care subsidies, bringing its total investment to $45 million.

Understanding the Early Years

In 1999 the Government launched a community research pilot project, Understanding the Early Years, in which 12 communities across Canada have participated. The purpose of this initiative was to provide research information to strengthen the capacity of communities to make informed decisions about the best policies and most appropriate programs to support families with young children.

The pilot project is widely regarded as a success. The information collected in the participating communities has positively influenced policy and program decisions both at the community level and at the provincial and territorial level. As a result, Budget 2004 proposes to extend the pilot project to 100 communities over the next seven years. This would make significant progress towards ensuring that Canada’s children reach their full potential, and that their families and the communities in which they live have the information they need to support them effectively. Over the next two years this budget will invest $14 million in extending this project.

Protecting Children From Exploitation and Abuse

Protecting children from the risk of sexual exploitation on the Internet is a priority for Canada. While widespread Internet access and usage benefits Canadians in many ways, it has also provided opportunities for criminals to exploit children for sexual purposes. Canada’s laws against child pornography are among the toughest in the world and were further strengthened in 2002 with the addition of provisions to address the increasing misuse of the Internet.

Building on this legal framework, this budget proposes funding of $8 million a year to launch a national strategy to counter the sexual exploitation of children on the Internet. The major part of these funds will be provided to the RCMP to enhance its ability to gather evidence and conduct investigations so that offenders can be successfully prosecuted. Some funding will also be used to enhance public awareness, in part by using the SchoolNet program and reporting suspicious activity through a national Internet tip line.

Helping Families Plan Ahead for Post-Secondary Education

Parents want their children to achieve their full learning potential. They know how important education will be for their children to succeed in life and want to help them get the best possible education.

At the same time, particularly in low-income families, parents face immediate challenges in tending to the needs of their children. This limits opportunities to accumulate savings for the future, including for the education of their children. To help these families realize their aspirations, the Government has introduced programs to help lower-income families address their children’s current needs and future educational goals.

For current needs, the Government provides significant income support through the Canada Child Tax Benefit (CCTB), including the National Child Benefit (NCB) supplement that is paid to low-income families. In program year 2004, the CCTB is providing $9.1 billion of assistance to 3.5 million families with children. Budget 2003 announced significant additional investments in the NCB supplement. By 2007 the maximum CCTB benefit for a first child in a low-income family will reach $3,243—more than double the level of benefits in 1996. Total annual assistance to families with children through the CCTB is projected to reach $10 billion by 2007.

To help fund future learning goals, the Government helps Canadian families to save for their children’s post-secondary education through registered education savings plans (RESPs) and the Canada Education Savings Grant (CESG). The RESP and CESG provide a solid foundation for saving for the future education of Canada’s children.

How do RESPs and the CESG Work?

  • An RESP is a registered saving instrument in which investment income grows tax-free.
  • Since 1998 the CESG has supplemented private education savings in RESPs: the first $2,000 contributed each year to an RESP for a child attracts a 20-per-cent CESG.
  • The CESG makes family savings in RESPs more effective by providing up to $400 per year for each child, up to a lifetime maximum of $7,200.
  • Over 1.8 million Canadian children have benefited from the CESG program, which added about $365 million to family RESP savings in 2003.

While the CESG has resulted in a substantial increase in education savings—with RESP saving increasing from $2.4 billion in 1997 to $11.4 billion in 2003—RESP savings among low- and middle-income families have been relatively modest. The Government wants to provide greater support for low-income Canadians to help offset the costs of post-secondary education, and to encourage families to save to help finance their children’s post-secondary education.

To that end, the budget proposes two measures:

The Canada Learning Bond

To kick-start education saving for low-income families, the budget proposes to introduce the Canada Learning Bond (CLB). The CLB will provide up to $2,000 of education savings by age 16 for children in families entitled to the NCB supplement.

Starting in 2004 an initial $500 CLB will be provided at birth for children in families that are entitled to the NCB supplement—generally, those are families with incomes under $35,000. Subsequently these children will qualify for up to 15 additional $100 CLB instalments (until age 15), one for each year in which they are entitled to the NCB supplement. Children born after 2003 who are not entitled to the CLB in the year of birth but become entitled to the NCB supplement in a subsequent year will also qualify at that time for a $500 CLB. They may also subsequently qualify for annual $100 CLB instalments.

The CLB will be paid into an RESP for the benefit of the child. An additional $25 will be paid with the initial $500 CLB to help families cover transaction and other incidental costs of establishing an RESP. The CLB will earn and accumulate investment income in the RESP. A child in a family entitled to the NCB supplement throughout his or her childhood would receive CLB payments of $2,000, which could accumulate, with a 3.5-per-cent real rate of return, for example, to about $3,000 (in 2004 dollars) by age 18.

As with the CESG, the CLB will be a source of savings for the student solely to cover costs for post-secondary education. The CLB will generally be subject to the same conditions as the CESG.

It is proposed that the CLB be effective starting January 1, 2004. The first payment of the CLB will be made after Royal Assent and once delivery systems are in place. Therefore, it is not expected that CLB payments will be made before January 2005.

At maturity, the CLB is expected to cost about $325 million annually and to benefit about 2.2 million children each year. It is estimated that the CLB will cost $85 million in each of 2004–05 and 2005–06, and that in 2004–05 the CLB will benefit over 120,000 newborns.

Enhancing the Canada Education Savings Grant for Low- and Middle-Income Families

The new CLB provides low-income families with a solid foundation for saving for their children’s post-secondary education. To complement the CLB, and to strengthen assistance for low- and middle-income families that wish to save for their children’s post-secondary education, Budget 2004 proposes changes to make the CESG more responsive to the needs of these families. More specifically, the budget proposes to:

Other eligible contributions will continue to qualify for the 20-per-cent matching rate.

It is proposed that the enhanced CESG matching rate be effective starting January 1, 2005. The enhanced CESG is expected to cost $80 million annually and will be available to over 4.5 million children.

By ensuring a guaranteed source of savings for the post-secondary education of children from low-income families and by assisting education saving for low- and middle-income families, the CLB and the enhanced CESG signal the importance the Government places on early planning for post-secondary education and provide a solid foundation towards the future education of children (see box below). Additional information on the CLB and the enhanced CESG is provided in Annex 9.

In the coming months the Government will work with provinces and territories, as well as with RESP providers, to ensure that low-income families have access to saving opportunities and realize the full benefit of their efforts to save for their children’s education.

How the New Canada Learning Bond and Enhanced Canada Education Savings Grant Will Help Families Save for Their Children’s Education

How the CLB and enhanced CESG will help a child in a family earning $30,000 annually

  • Meg is born in 2004. Her parents earn $30,000 annually and receive $2,060 under the Canada Child Tax Benefit each year.
  • Meg would qualify for an initial Canada Learning Bond of $500 (plus $25 to cover incidental fees) plus $100 in each year in which her family remains entitled to the National Child Benefit supplement, until Meg turns 15.
  • Therefore, Meg could qualify for CLB payments totalling $2,000. If invested in an RESP, this money could grow to $3,000 by the time she reaches age 18.
  • In addition, if her parents start at her birth to put $4 per week into an RESP for her, after 18 years, there would be up to an additional $7,500 in the RESP. In total, about $10,500 could be available to finance Meg’s post-secondary education.
  • This would be enough to finance three years of tuition and other ancillary fees at a typical community college (assuming these fees increase at the same pace as inflation).

How the enhanced CESG will help a child in a family earning $60,000 annually

  • John’s parents earn $60,000 annually and receive $945 each year under the Canada Child Tax Benefit.
  • If his parents start at his birth to put $6 per week into an RESP for him, after 18 years, about $10,300 could be available to finance John’s education.
  • This would be enough to finance three years of tuition and other ancillary fees at a typical community college.

Note: All figures are in 2004 dollars. It is assumed that amounts in the RESP earn a 3.5-per-cent real rate of return.

Easing the Transition to Post-Secondary Education for Students From Low-Income Backgrounds and Students With Disabilities

For many prospective students from low-income families and students with disabilities, the immediate financial consequences of starting down the road of pursuing post-secondary education may appear challenging.

Existing federal, provincial and territorial support to students in post-secondary education has facilitated access to post-secondary education for large numbers of Canadian students over the past four decades. For some individuals from low-income backgrounds, however, the prospect of accumulating student debt may cause them to hesitate about going on to post-secondary education. For persons with disabilities looking to undertake post-secondary education, the prospect of having to take on major new expenses associated with pursuing post-secondary education may be even more challenging.

This budget proposes the following measures for implementation by August 1, 2005:

This grant will be available to dependent students whose family income falls within the range of entitlement to the NCB supplement (generally, those are families with incomes under $35,000). It will provide a comparable level of support to that given to students who will be eligible to accumulate savings for post-secondary education through Canada Learning Bonds. The grant will cover one half of tuition, up to the lesser of $3,000 or the student’s assessed federal need. It will reduce the amount of federal student debt that would otherwise be incurred. It is estimated that more than 20,000 students will receive the new grant each year, at a cost of $30 million starting in 2005–06. For students in subsequent years of study, bursaries will continue to be offered by the Canada Millennium Scholarship Foundation.

The grant will cover the lesser of $2,000 or the student’s assessed federal need, thereby reducing barriers to access associated with the high costs faced by students with disabilities. The new grant will replace the existing grant for students with disabilities that is paid only to those who have financial needs in excess of the weekly loan ceiling. The Canada Study Grant for students with disabilities to cover the cost of education-related services and equipment (up to $8,000 per year) will still be available.

Over 6,000 students are expected to receive the new grant each year—a significant number of whom would not have qualified for the previous grant for students with disabilities—at a cost of $15 million starting in 2005–06.

Enhancing Canada Student Loans

Since the Canada Student Loans Program was created in 1964, the Government’s goal has been to ensure that lack of financial resources does not deny the opportunity to pursue educational opportunities at a private education institution, a community college or university, to those with the motivation and capacity to pursue them. The box below provides information on average federal and provincial student loan debts at graduation.

Indebtedness at Consolidation

Average Federal and Provincial Student Loan Indebtedness1 at Consolidation by Type of Institution

It is estimated that in 2000–01, some 40 per cent of students did not have a federal or provincial student loan in that year. Of those who did borrow, the average estimated combined federal and provincial debt from student loans at graduation was $14,453 in 2001–02.

Loan Year University Community
Private Average



1989–90 12,514 6,840 5,900 8,839
1991–92 12,917 7,285 6,509 9,261
1993–94 12,917 7,917 6,817 9,783
1995–96 14,782 9,844 8,870 11,629
1997–98 16,747 10,244 10,435 13,181
1999–00 18,520 11,369 11,136 14,421
2001–02 18,520 12,192 11,912 14,453

1 For students who receive federal and provincial student loans. Does not include private sources of debt.

Source: Human Resources and Skills Development Canada estimates. Takes into account provincial student loan remission programs. Student loans are consolidated six months after graduation.

The Canada Student Loans Program has been very effective in promoting access to post-secondary education over the years, and Canadians have the highest attainment rate with respect to post-secondary education in the world. In this budget, some of the program’s features will be updated in order to ensure its continuing effectiveness. Specifically, the Government proposes that:

Since the weekly loan ceiling was last increased in 1994, rising costs have eroded the ability of the program to meet the financial needs of some students. It is estimated that this measure would result in a $74-million increase in student loan costs for the Government starting in 2005–06, rising thereafter. This measure will provide 185,000 students with more support (see example on next page).

The ceiling will be reviewed periodically in light of the rising cost of education to ensure that post-secondary students in financial need continue to have the financial support required to pursue their studies.

Students with dependants often have financial needs in excess of the current weekly loan ceiling of $165 per week and are eligible for Canada Study Grants of up to $3,000 a year to help cover their additional costs. Students with dependants will continue to receive the same level of support they currently collect even with the increase in the loan ceiling.

The cost of post-secondary education as a percentage of family income has risen for moderate- and middle-income families whose children are not currently eligible for Canada Student Loans (or eligible for only limited assistance) because of the expected high parental contribution included in the assessment of needs. The proposed change will ensure that students from such families have access to additional financial support of up to $2,550 per family to pursue their studies (see examples on next page).

It is estimated that this measure would result in a $10-million increase in student loan costs starting in 2005–06, rising thereafter. It would provide more access to student loans for 40,000 students from families with incomes in the $60,000 to $100,000 range, half of which were not able to access student loans prior to this change.


Increased Loan Ceiling

Richard is a student at a community college and has total assessed financial needs of $11,900 for the school year, comprising 34 weeks of study. Under the current loan ceiling, the Government covers 60 per cent of assessed need, to a maximum of $165 per week, and the provinces usually cover 40 per cent to a maximum of $110 per week. Therefore, Richard would receive $5,610 in Canada Student Loans and $3,740 in provincial loans for a total of $9,350. With the increase in the weekly loan ceiling, Richard would get a Canada Student Loan of $7,140 and $4,760 from the province for a total of $11,900, an increase of $2,550 from the current level.

Reductions to Parental Contributions

Julie is a second-year university student in Ontario. She studies away from home, so has relatively high needs, and is dependent on her parents. Her parents earn a total of $70,000 annually and the expected parental contribution before the changes is $4,996. Julie is eligible for federal and provincial student loans totalling $8,012. After the proposed changes take effect, the expected parental contribution falls to $2,775. As a result, Julie is now eligible for federal and provincial student loans totalling $10,233.

Jonathan and his sister Linda are both studying at university in Nova Scotia. They also study away from home, and are dependent on their parents. Their parents earn a total of $90,000 annually and are currently assessed an annual contribution of $11,982 (or $5,991 per child). Jonathan and Linda are each eligible for federal and provincial student loans totalling $6,572. After the proposed changes, the expected parental contribution falls to $9,432 (or $4,716 per child). As a result, Jonathan and Linda are each eligible for federal and provincial student loans totalling $7,847.

Easing Undue Financial Burdens After Leaving School

For the majority of graduates, repaying their student debt does not represent a problem. Reflecting the significant benefits post-secondary education brings in terms of employability and income, some 10 per cent of Canada Student Loans are repaid in full within the first two years and 80 per cent are repaid within the 9.5-year normal repayment period.

The current design of the Canada Student Loans Program recognizes that, for some former students, the transition from school to workplace can be difficult, and debt management measures are available.

Canada Student Loans: Debt Management Measures

For some graduates, the transition from post-secondary education to the job market can be difficult, making it hard to make ends meet while servicing their student debt obligations. For this reason, the Canada Student Loans Program provides assistance, in exceptional circumstances, for former students facing financial difficulty in repaying their student debt. The key features are as follows:

  • Interest relief: The Government provides interest relief by paying all interest costs for up to 54 months in the first five years after students leave school if a borrower’s monthly family income falls below an established income threshold (adjusted for family size) in relation to the required monthly payment on the loan. Nearly 130,000 borrowers benefited from interest relief in 2002–03. Budget 2004 increases the income thresholds for interest relief eligibility by 5 per cent.
  • Extension of repayment period: At any time during the repayment of the loan, borrowers can request an extension of the repayment period to 15 years, which can reduce monthly payments to an affordable level. This extension is done automatically for all borrowers who have received interest relief for 30 months.
  • Debt Reduction in Repayment (DRR): For students who are still in financial difficulty (below the DRR income threshold for debt level) after exhausting available interest relief, the Government may now forgive up to $26,000 of their outstanding debt over a three-year period. The DRR measure was significantly enhanced in Budget 2003 and it is further enhanced in this budget. Currently close to 2,000 borrowers a year benefit from this measure.

Budget 2004 proposes to set aside resources to ease the eligibility criteria for interest relief. This will be done by increasing the income thresholds used for determining eligibility for interest relief by 5 per cent.

For borrowers who remain in financial difficulty after exhausting interest relief, the maximum amount of debt reduction will also be increased to $26,000 from the current maximum of $20,000 to ensure that the increase in the weekly loan ceiling does not result in greater financial hardship for borrowers experiencing long-term difficulty in repaying their loans.

The cost of these two measures is estimated to be $8 million in 2005–06. Current debt management measures will be reviewed, in consultation with the participating provinces and territories, with the aim of simplifying and improving them to ensure that they accurately reflect the capacity of borrowers to repay their student debt.


Interest Relief

Stephanie is a single individual with monthly income of $1,800 (annual income: $21,600). With the proposed 5-per-cent increase in the interest relief (IR) income thresholds, Stephanie would qualify with a monthly payment of $100 or more (corresponding to Canada Student Loan debts of $8,500), rather than $150 or more (debt of $12,700) under the current system.

David, a single father with one son, has monthly income of $3,000 (annual income: $36,000). With the proposed 5-per-cent increase in the IR income thresholds, David would qualify for IR with a monthly payment of $250 or more (debt of $21,200) instead of $325 (debt of $27,600) under the current system.

Debt Reduction in Repayment

Karen is a single mother with one child. She has federal student debt of $18,520 with monthly payments of $176 after extension of the repayment period to 15 years (she has used up the IR available to her). Her gross income is $2,000 a month ($24,000 a year).

Under Debt Reduction in Repayment, Karen can afford a debt level of $5,257. Karen’s debt will be reduced by $10,000 (the maximum amount of debt reduction in the first year), resulting in remaining debt of $8,520, and monthly payments of $81.

If Karen is still experiencing financial difficulty one year after the initial debt reduction, her debt will be reduced by a further $3,263, to produce a monthly payment of $53.

After the changes proposed in this budget, if Karen graduates with $28,560 of student debt under the new loan ceiling and is in similar circumstances, her debt would be reduced by over $23,300.

Encouraging Lifelong Learning

The upgrading of skills by Canadians working full- or part-time enables them to meet the challenges of a rapidly evolving economy. While Canadians start out with a solid base of education and skills, they and their employers are increasingly aware of the need to constantly upgrade their skills.

Enhancing the Education Tax Credit

The current education tax credit recognizes the non-tuition costs of post-secondary education and training, such as textbooks. The credit amount is $400 per month for full-time students and $120 per month for part-time students. However, employed individuals are not eligible to claim the credit in relation to the costs of programs directly connected with their current employment, even if they pay out-of-pocket for the courses.

In order to help more students undertake lifelong learning connected to their current employment, the budget proposes, starting January 1, 2004, to allow students to claim the education tax credit for education related to current employment, when the costs are not reimbursed by the employers. This will give Canadians who are upgrading their skills in their field of work access to the same tax benefit that is available to other post-secondary students, at a cost of $5 million in 2004–05 and about $10 million per year thereafter.

As well, existing measures in support of part-time students under the Canada Student Loans Program will be reviewed with the aim to increasing the number of students with low incomes who take advantage of opportunities for part-time studies.

Implementing a New Workplace Skills Strategy

Labour market challenges are changing. It is now more important than ever to ensure that Canada’s labour force is made up of the highly skilled, knowledge workers needed to compete in the 21st century. This means more emphasis on skills for, and acquired in, the workplace in addition to education.

The Government is developing a Workplace Skills Strategy in cooperation with its partners—provinces, labour unions, employers and sector councils. It is critical to better understand the needs of workers and employers—and of Canada’s economy as a whole—and to identify how each of them can best play their parts in responding to changing needs.

As a first step, the Minister of Human Resources and Skills Development will be seeking the advice of representatives of employers and workers, industry associations, skills providers, provinces and communities with a view to developing a strategic plan for workplace skills of the future and to identify practical options and priorities for action. Key issues to be considered would include literacy training and essential skills upgrading for workers; measures to encourage apprenticeships in skilled trades; and employer-based training. The role that sector councils can play in contributing to the Strategy will be assessed.

As an immediate measure, this budget proposes to put in place a three-year Training Centre Infrastructure Fund pilot project with funding of $15 million over the first two years. This measure will address a growing need for union training centres to replace aging equipment and simulators that are not up to current industry standards. The pilot project will match employer and union investments in new machinery and equipment for selected training centres, with a particular focus on trades that have undergone significant technological change or whose scope has broadened or have new curricula.

As well, this budget provides increased funding of $30 million annually for the federal-provincial-territorial Multilateral Framework for Labour Market Agreements for Persons with Disabilities that supports the workplace integration of persons with disabilities (see the section "The Importance of Health").

Enhancing the Integration of New Immigrants Into the Labour Market

An important dimension of lifelong learning for new immigrants to Canada is the need to acquire and perfect their language skills. Most newcomers destined for the labour force have adequate conversational language skills upon arrival in Canada. Nevertheless, many employers report gaps in recent immigrants’ mastery of specialized workplace language skills and vocabulary. Last year the Government of Canada provided $5 million per year for pilot projects under which community-based partners deliver labour market language training at more advanced levels.

The Government is working with several provinces and employers to set up these pilot projects. To expand the program and reach more new immigrants in need of such training, Budget 2004 proposes to invest an additional $15 million a year. The focus will be on language training at advanced levels that is custom-designed for the immigrant and his or her potential job. The pilots will also provide local labour market orientation and assistance in finding employment within the immigrant’s field of expertise. This is another element of the New Deal for Communities (see the section "The Importance of Communities").

Immigrants have much to offer in terms of education, training and experience. Yet some meet difficulties in getting their credentials recognized. This budget sets aside an additional $5 million per year beginning in 2005–06 to further enhance the work of sector councils in raising awareness about the integration of skilled immigrants and in assessing and recognizing the credentials of internationally trained workers. This builds on funds provided last year for work to be undertaken by sector councils, the key mechanism for reaching employers in non-regulated occupations.

Opportunities for Aboriginal Canadians

The Government of Canada is committed to bringing about concrete improvements in the economic opportunities and living standards of Aboriginal Canadians. In recent years the Government of Canada has implemented a range of measures aimed at improving the lives of Aboriginal Canadians and strengthening their communities.

Recent Government Measures Aimed at Improving the Lives of Aboriginal People and Their Communities

Budget 2001 identified $60 million over two years for special education to support children living on reserve who have special learning needs at school. The budget for this program is $95 million a year.

In 2002 the Government announced $320 million over five years for early childhood development (ECD) for First Nations and other Aboriginal children, including head start and child care programs, as well as measures to reduce the incidence of fetal alcohol syndrome on reserves. These funds complemented the $2.2 billion over five years transferred to provinces and territories under the ECD Agreement to help augment their support for young children and their families.

In 2003 the Government committed $1.9 billion over five years to priority areas for Aboriginal people, such as health and infrastructure, including:

  • $1.3 billion over five years for the First Nations and Inuit Health Program, including $32 million for a national on-reserve immunization strategy.
  • $600 million over five years to upgrade, maintain and monitor water and wastewater systems on reserves.

Further new investments in the areas of education, skills development and economic development were also launched last year, including:

  • A $12-million post-secondary education scholarship program to be administered by the National Aboriginal Achievement Foundation.
  • $25 million per year to address high teacher turnover and support active parental involvement in First Nations schools.
  • $85 million over five years for new Aboriginal Skills and Employment Partnerships to facilitate Aboriginal access to training and employment opportunities.
  • Additional support of $10 million per year to Aboriginal Business Canada.

In 1999 the Government initiated its Aboriginal Human Resources Development Strategy—a five-year, $1.6-billion strategy to help Aboriginal people develop their skills and find and keep jobs with the help and support of a network of Aboriginal organizations across Canada.

Budget 2004 renews the Strategy, providing $125 million over five years ($25 million in each year) to replace funds that are scheduled to end on March 31, 2004. This will enable the Government to deepen its commitment to working with provincial and municipal governments and Aboriginal communities to meet the skills and employment needs of Aboriginal people, and will contribute to the New Deal for Communities.

This funding will enable the continuation of programs and services provided to urban Aboriginal clients, training for the organizations administering the Strategy and access to quality child care for many First Nations and Inuit clients while they pursue training or employment opportunities.

The Government of Canada recognizes the importance of post-secondary education in closing the gap in life chances between First Nations and Inuit people and other Canadians. The Government is committed to working with First Nations and Inuit people in order to better meet their educational needs and aspirations. In partnership with First Nations and Inuit people, the Government will work toward reducing drop-out rates, improving access to post-secondary education and successful completion of a post-secondary education. In addition, special efforts will be made to make Aboriginal students aware of the various access programs that are available to eligible individuals from low-income families to help them meet the costs of post-secondary education, such as grants for first-year students from low-income families and student loans, and to encourage their use.

Urban Aboriginal Strategy

All too often, the face of poverty and disadvantage in Canadian cities is Aboriginal. The Government of Canada is committed to working with its partners—provincial, territorial and municipal governments, service providers, Aboriginal organizations and others—on practical solutions to the important issues of Aboriginal people in urban communities.

Under the current Urban Aboriginal Strategy (UAS), $25 million is provided through to 2005–06, providing funding to support innovative, multi-partner pilot projects that address the needs and priorities of Aboriginal people in eight urban centres.

Urban Aboriginal Strategy

Projects are currently underway in eight urban centres: Vancouver, Calgary, Edmonton, Saskatoon, Regina, Winnipeg, Toronto and Thunder Bay. These projects have mobilized community efforts to address a wide range of Aboriginal priorities.

Some of these projects are linked to larger initiatives addressing inner-city concerns and urban revitalization.

  • In Winnipeg UAS projects focus on supportive housing needs, transitional services, inner city schools and youth, and employment.
  • As part of the Regina Inner City Community Partnership, the UAS is supporting projects that will help to reduce poverty and improve community safety and housing conditions for urban Aboriginal people, in partnership with the private sector, three levels of government and a cross section of service organizations including First Nations and Métis service providers.
  • In Vancouver UAS pilot projects are focused on three priorities: Aboriginal youth, health and homelessness. Project partners include the cities of Vancouver and Surrey, the province of British Columbia and local Aboriginal organizations.

This budget proposes to extend the UAS through to 2006–07 and to double its total budget from $25 million to $50 million. This would allow current projects with promising results to be expanded and, in partnership with willing provincial and municipal governments, would support projects in up to six more communities.

Table 4.4
The Importance of Learning

   2004–05 2005–06

   (millions of dollars)
Caring for Canada’s children    
Accelerating the Multilateral Framework on Early Learning and Child Care 77 77
Understanding the early years 6 8
Protecting children from exploitation and abuse 8 8
Total 91 93
Helping families plan ahead for post-secondary education
Canada Learning Bond 85 85
Enhancing the Canada Education Savings Grant 20 80
Easing the transition to post-secondary education 45
Enhancing student loans and debt management 92
Total 105 302
Encouraging lifelong learning    
Enhancing the education tax credit1 5 10
Implementing a new Workplace Skills Strategy 5 10
Enhancing language training for immigrants 15 15
Foreign credential recognition 5
Total 25 40
Opportunities for Aboriginal Canadians    
Aboriginal Human Resources Development Strategy 25 25
Urban Aboriginal Strategy 5 6
Total 30 31
Total 251 466

1 Tax initiative.

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