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Stephen Marietta

Why major tuition hikes make sense

Quebec Finance Minister Raymond Bachand’s 2011-2012 budgets proposed increasing tuition by $325 per year from 2012 to 2017, amounting to a 75% increase. Perhaps unsurprisingly, the proposal was met with uproarious opposition from students, including a protest of a few hundred youths in Montreal. The tuition hike, however, is sensible given Quebec’s tuition rates vis-à-vis other provinces, and pragmatic given Quebec’s economic outlook.First, Quebec, by far, pays the lowest tuition rates in Canada. According to 2006-2007 data from Statistics Canada, Quebec students paid on average $1,916 per year for a BA degree, a paltry 42.8 per cent of the Canadian average ($4,472). Quebec’s 2006-2007 tuition also represented a 111% increase from 1990-1991, the second lowest increase among the provinces. This statistic is even more impressive, considering that it is 68 percentage points lower than the average percentage increase for all other provinces. In 2011 terms, students can be expected to pay yearly tuition of $2,168, with a looming increase to $3,793 by 2017. Even still, the tuition rate will be 30 per cent lower than the Canadian average.Secondly, Quebec’s perilous debt and demographic situation need to be addressed in the context of the tuition hikes. Louis-Phillipe Savoie, President of the Fédération des étudiants universitaire du Québec, in response to the Bachand budget stated: “Two thirds of Quebec students are going into debt to stay in school. So already, there’s a precarious and fragile financial situation. You can imagine how much more fragile that situation will become over the next five years.” This statement is almost laughable given the broader financial picture of the province at large.As of March 31, 2011, Quebec’s public sector debt stands at $235 billion, a 5.8% increase from one year ago. Not only that, Quebec’s debt stands at a sky-high 74% of gross provincial product, up more than $50… Read More

A Fatal Mistake: The European Stability Mechanism

As the European sovereign debt crisis continues to ravage the Eurozone, government ministers have agreed, in principle, to enhance the European bailout fund, with the inception of the European Stability Mechanism (ESM) in 2013. Ending a conference in Brussels on March 25, the European Council also unveiled a plan, the so-called “Euro-Plus Pact,” in an attempt to make the Eurozone more competitive. Debuting to little fanfare and amidst a growing Portuguese debt crisis, the plans represent continued attempts to reform a fatally flawed system. The European Council’s plan not only institutionalizes moral hazards within the Eurozone through the promise of continued bailouts, but also props up the fundamentally flawed concept of an all-inclusive European monetary union.The ESM will replace the current European Financial Stability Facility, and will hold 700 billion euros in its coffers. Beginning in 2013, 80 billion of the Mechanism will consist of paid-in capital from the Eurozone Member States, with the remaining 620 billion in the form of callable capital and guarantees; proportional to the size of their paid-in capital contribution. The ESM’s role is simple, “to mobilize funding and provide financial assistance, under strict conditionality, to the benefit of euro-area Member States, which are experiencing or are threatened by severe financing problems, in order to safeguard the financial stability of the euro area as a whole.”Moreover, the European Council established the Euro-Pact Plus, essentially a set of guidelines aimed at restoring competitiveness and cohesion within the single market. Such measures include converging on a single corporate tax rate, abolishing wage indices, and, most controversially, adopting more uniform pension and retirement measures. These goals are aimed at facing the demographic realities of the European Union, and the intrinsic link between government financing and pension systems.While both measures sound quite beneficial in theory, in practice they become quite… Read More