Summary of Report

Government Expenditure Cuts to Health Care and Post-Secondary Education: Impacts on Low-Income Canadians

6. Inequities in Access: Post-Secondary Education

OTTAWA - According to Statistics Canada, in 1996, the richest 20% of Canadians saw their average incomes increase $2000 from 1995, while the poorest 20% saw their average incomes fall $500. This was the result of both lower earnings and a decrease in government transfer payments.

Today, the National Anti-Poverty Organization (NAPO) released a report titled, Government Expenditure Cuts to Health Care and Post-Secondary Education: Impacts on Low-Income Canadians, which adds another piece in the picture of how government cuts to social spending are having a disproportionately larger impact on Canadians living in poverty.

A summary of the report is attached. Copies of the report ($15) or the conclusions and recommendations ($5) can be obtained by contacting NAPO at (613) 789-0096.

This study has been made possible by grant from Human Resources Development Canada, and was researched and written by Kenneth Wyman, NAPO's senior researcher and policy analyst, with the help of Suzanne Lenon, research assistant. The knowledge and experience of Canada's low-income community, and the help of those with special expertise in health care and education across the country, was invaluable in the preparation of this report.

Government Expenditure Cuts to Health Care and Post-Secondary Education: Impacts on Low-Income Canadians

All of Canada's major social programs have experienced significant funding cuts in recent years. Whether and to what extent these cuts have been made disproportionately at the expense of low-income Canadians is a significant issue and is the focus of this report.

In a previous report NAPO has documented that many provinces have substantially reduced benefits and tightened eligibility requirements for social assistance in recent years. This has contributed to a dramatic increase in the depth of poverty and to the greatest degree of inequality in money incomes in a generation.

This report documents that cuts in government funding of social programs have not only led to increasing inequality in money incomes, but to rapidly growing inequities in access to both health care and post-secondary education for low-income Canadians. The key findings and recommendations of the report are summarized below.

Federal cash transfers to the provinces under the Canada Health and Social Transfer (CHST)--for health care, post-secondary education, and social assistance--were cut from $l8.2 billion to $12.5 billion over the past two fiscal years. In real per capita terms (that is, taking into account the effects of population growth and inflation) federal cash transfers for social programs fell by more than 40 per cent between l993 and l997, initially as a result of the freeze on spending under the Canada Assistance Plan and Established Programs Financing and since l996 because of the deep cuts under the CHST. Partly in response to cuts in federal cash transfers, many provinces have also substantially reduced funding for both health care and post-secondary education.

Whereas total provincial government funding for health care had increased in real per capita terms between l and 3 per cent every year between l978 and l992, it has been falling at an accelerating rate in every year since l992. Between l993 and l996 the percentage fall for Canada as a whole was about 6.3 per cent (l.1 per cent in l993, l.5 per cent in l994, l.8 per cent in l995, and l.9 per cent in l996). British Columbia is the only province which has slightly increased its real per capita spending for health care in the l990s. All other provinces have experienced decreases. Alberta has implemented the most dramatic cuts in provincial funding for health care, amounting to 22 per cent in real per capita terms over the l990-l996 period. Cuts of 6 per cent or more have occurred in several other provinces, including Saskatchewan, Manitoba, Nova Scotia, Ontario, and Prince Edward Island.

Total provincial government funding on post-secondary education has fallen sharply in the l990s. Provincial per student grants to universities in constant dollars were reduced by l0 per cent over the l990-l996 period. British Columbia was the only province which slightly increased its grants. Reductions in other provinces ranged from a high of 2l.6 per cent in Alberta to a low of 7.8 per cent in Quebec.

Cuts in government funding are leading to a creeping privatization of the health care system and to an erosion of Medicare, in some provinces more than others. The share of private financing in total Canadian health care expenditures rose from 25.2 per cent in l991 to over 30 per cent in l996. While expenditures on hospitals and doctors continue to be covered under Medicare, their share of total health care expenditures has been declining whereas the share of expenditures on prescription drugs and home care (which are not required to be covered under Medicare) has risen significantly. Ability to pay, rather than medical need, is becoming an increasingly significant determinant of access to the most rapidly growing components of our health care system.

While most Canadians are affected by growing inequities in access to our health care system resulting from cuts in government funding, low-income Canadians are the most adversely affected. This is true both because low-income Canadians are proportionately much less healthy than high-income Canadians as confirmed in many studies, and also because they have the greatest difficulty in paying for quality health care.

Seniors, who have an especially large need for health care services, are being particularly hard hit by the growing inequities in access to quality health care services. Furthermore this is occurring when, as recently confirmed by Statistics Canada, the incidence of poverty amongst seniors has risen for the first time in many years.

Women are also especially affected as caregivers, users, and paid workers in the health care system. Both income class and gender are relevant in this regard. With the dramatic downsizing of hospitals and reduced in-patient stays, women are disproportionately expected to provide a rising amount of unpaid home care services. As users, women are disproportionately affected because on average they live longer than men across all income levels. Furthermore, most of the unionized jobs lost in the hospital sector with cuts in government funding were held by women.

While governments increasingly emphasize the need for individuals to take greater responsibility for lifting themselves out of poverty, they have been busily shutting the door on one of the best strategies for such individuals to empower themselves, namely access to post-secondary education. Cuts in government funding for post-secondary education have resulted in a steep increase in financial barriers to access to post-secondary education in recent years.

Student debt loads have escalated greatly, linked to rapidly rising tuition fees and the virtual disappearance of needs-based student grants in most provinces. While youth from middle-class backgrounds are adversely affected by the escalation in student debt, the brunt of the financial burden has been placed on youth from low-income backgrounds who receive the least financial help from their parents.

The leveling off in university enrollment since l992 is a signal that escalating debt loads may already be acting as a deterrent to access, especially for youth from low-income backgrounds. Given that decisions by young people on whether to participate in post-secondary education are often made well before completion of high school, the deterrent effect of rapidly rising financial barriers on access will likely increase in the next few years. In NAPOs view the most important financial barrier to access is the current high level of tuition fees.

The barriers to low-income single parents, mostly women, seeking to participate in post-secondary education have risen especially sharply in the l990s. They have been affected by a double whammy. On the one hand, many provinces have cut off social assistance to single parents enrolled in post-secondary education. On the other hand, the costs of financing post-secondary education have risen greatly because of the steep increase in tuition fees and virtual disappearance of student grants. The combined result is to erect a very large barrier of debt in the way of low-income single parents seeking to improve their educational level as a way out of poverty.

In light of the above, the report makes a number of recommendations to increase equitable access to health care and post-secondary education.

The key recommendations for health care are two-fold: first, joint federal-provincial agreement to amend the Canada Health Act to expand the principles of Medicare to cover prescription drugs and home care; second, that the federal government fully compensate the provinces through increased cash transfers under the CHST for the incremental public funding that would be required to include prescription drugs and home care in Medicare.

As regards post-secondary education, two of the report's key recommendations are: (i) the establishment by the federal government of a comprehensive national needs-based student grant program in l998/99; (ii) a temporary freeze on tuition fee increases at post-secondary institutions for the next three academic years. These recommendations are consistent with the proposals made by the Canadian Federation of Students(CFS).

The report shares CFS's opposition to income contingent repayment (ICR) loans, under which the timing of debt repayment would be tied to future income levels. An ICR approach could lead to a larger amount of debt having to be repaid over a longer time, which in the report's view might actually increase barriers to access especially for students from low-income backgrounds.

The report also recommends that all provinces authorize social assistance recipients, who are qualified and interested in post-secondary education, to continue to receive social assistance benefits while attending post-secondary institutions. It endorses the view that education is one of the best ways in our society to move out of poverty.

THE NATIONAL ANTI-POVERTY ORGANIZATION
A Voice of Canada's Poor

Contents

THE NATIONAL ANTI-POVERTY ORGANIZATION A Voice of Canada's Poor

Contents

THE NATIONAL ANTI-POVERTY ORGANIZATION
A Voice of Canada's Poor