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Knowledge Advantage

In the modern global economy, the most successful nations are those that best combine people, skills, new ideas and advanced technologies to create a competitive edge. Canada must be well positioned to succeed in this new environment. That's why we're making investments to create the best-educated, most-skilled and most flexible labour force in the world. Budget 2007 takes action on creating a Knowledge Advantage in Canada by:

• Investing an additional $800 million per year, beginning in 2008-09, for provinces and territories to strengthen the quality and competitiveness of Canada's post-secondary education system. Federal support will grow by 3 per cent every year thereafter.


• Helping graduate students cover the cost of their education with $35 million over two years and $27 million per year thereafter to support an additional 1,000 students through the Canada Graduate Scholarships. These scholarships will be dedicated to the memory of Canadians who have made a real and lasting impact in their respective fields: Sir Frederick Banting and Dr. Charles Best, Alexander Graham Bell, and Joseph-Armand Bombardier.

• Making registered education savings plans (RESPs) more attractive by:

• Providing $510 million to the Canada Foundation for Innovation to undertake another major competition before 2010. This will support the modernization of research infrastructure at Canadian universities, colleges, research hospitals and other non-profit research institutions.


• Providing $120 million in 2006-07 to CANARIE Inc., a not-for-profit corporation that manages CA*net, a sophisticated research broadband network that links Canadian universities, research hospitals as well as other science facilities in other countries. This money will allow CANARIE to maintain the CA*net network for the next five years and to develop the next generation CA*net5.


• Providing $10 million over the next two years to the Canadian Institute for Advanced Research to help Canadian students and researchers participate in and lead groundbreaking research on the international stage.


• Providing $6 million in 2008-09 towards the relocation of Natural Resources Canada's CANMET Materials Technology Laboratory to the McMaster Innovation Park in Hamilton, Ontario.


• Investing $85 million per year through the federal granting councils for research targeted on key priorities: health sciences, energy, the environment, information and communications technologies and management, business and finance.


• Providing an additional $15 million per year to cover the indirect costs of research, including the operating and maintenance of research facilities.


• Providing $500 million per year starting in 2008-09 to provide labour market training to help people who are not eligible for employment-insurance-related training get the skills they need and employers want. Any Canadian who needs training will be able to get training.


• Supporting leading Centres of Excellence in Commercialization and Research with an investment of $350 million over 2006-07 and the next two years.


• Providing Genome Canada with an additional $100 million in 2006-07 to extend promising research projects and sustain funding for regional genome centres and related technology platforms.


• Investing $30 million in The Rick Hansen Man in Motion Foundation in 2006-07 to translate research into practical benefits for Canadians living with spinal cord injuries.


• Extending and improving the Aboriginal Skills and Employment Partnership through the provision of an additional $105 million over five years.


• Improving the Temporary Foreign Worker Program with a $51-million investment over two years.


• Dedicating $34 million over the next two years to help Canadian-educated foreign students and skilled foreign workers stay in Canada as permanent residents.


• Creating the Foreign Credential Referral Office with a $13-million investment over two years.


• Providing $2 million over the next two years to launch a new international education marketing campaign to attract talented students to Canada.

Advantage Canada recognizes that talented, creative people are the most critical asset to a successful national economy. In Canada, we can create the best-educated, most-skilled and most flexible labour force in the world. In the modern global economy, the most successful nations are those that best combine people, skills, new ideas and advanced technologies to create a competitive edge. Canada must be well positioned to succeed in this new environment.

This means that we need to focus on enhancing the education and skills of Canadians so they get the best jobs, earn a better living and build a stronger future for their children. Individuals, businesses and governments must all play a role. Canada's changing demographics and emerging labour shortages also highlight the need to provide a helping hand to those who require support in joining the workforce, and to attract skilled immigrants.

Canadians will thrive in a knowledge economy. In this budget, the Government is acting to create a Knowledge Advantage by investing in science and technology leadership, strengthening post-secondary education while making it more affordable for students and their families, and ensuring that we have a skilled, flexible and inclusive labour force. These actions will result in more people with the right skills to succeed, more and better-paying jobs, fewer people unemployed and a brighter future for our children.

Science and Technology Leadership

Creating a Knowledge Advantage requires a strong foundation in science and technology. Advantage Canada laid out an ambitious new direction for establishing scientific and technological leadership for Canada by building on existing strengths, focusing efforts in key areas where Canada can achieve global excellence, and better aligning research investments with the needs of businesses to make a real impact in the market.

 

Building on these directions, the Minister of Industry will shortly release a comprehensive and forward-looking science and technology strategy. The strategy will outline a multi-year framework for action.

The federal government already provides substantial assistance for science and innovation. This includes advanced research, the most up-to-date scientific infrastructure, access for Canadians to advanced skills training, and investments with the private sector to commercialize knowledge and convert it into economic gains. Chart 5.2 provides an overview of existing federal investments in these areas.

Chart 5.2
Federal Investments in Science and Technology

Research Support The federal government provides support for primary research at universities, colleges and hospitals to generate new knowledge and support the training of young Canadians. Federal departments and agencies also undertake scientific activities in support of their mandates. Projected federal investments in 2007-08 include: Funding for research through the granting councils: $1.4 billion. Funding for the indirect costs of research: $315 million. Funding for centres of excellence in commercialization and research: $270 million. Funding for genomics research through Genome Canada: $100 million. Federal laboratory research and development: $2.1 billion. Total research support: $4.3 billion.

Science Infrastructure The federal government helps fund leading-edge science infrastructure at Canadian universities, colleges and research hospitals, in recognition that research and training of the highest calibre requires the most advanced equipment and technologies. Projected federal investments in 2007-08 include: Support through the Canada Foundation for Innovation: $430 million. Linking Canadian researchers to each other and the world through the CA*net high-speed research network: $25 million. Funding for genomics science infrastructure through Genome Canada: $20 million. Total science infrastructure: $475 million.

Advanced Skills and Training The federal government provides funding to attract and retain highly qualified personnel in Canada, and to enable young Canadians to acquire the advanced skills that prepare them for success in a knowledge-driven economy. Projected federal investments in 2007-08 include: Support for close to 2,000 research leaders at universities through the Canada Research Chairs: $275 million. Scholarships for Canada's best students to pursue advanced studies through the prestigious Canada Graduate Scholarships: $120 million. Additional support for scholarships, fellowships, Chairs and awards for researchers from the granting councils: $460 million. Total advanced skills and training: $855 million.

Commercialization and Business R&D The federal government provides generous tax assistance, as well as direct funding support, to encourage companies to innovate and to undertake R&D in Canada. Projected federal investments in 2007-08 include: Tax assistance through the scientific research and experimental development tax credit: over $3.0 billion. University, business and government collaborative research through the Networks of Centres of Excellence: $82 million. Direct funding for business investments in R&D: $500 million. Total commercialization and business R&D: over $3.6 billion.

These investments have helped Canada become the G7 leader in public sector R&D. This leadership positions us for success by generating breakthrough new ideas and providing our young people with advanced training and experience. The private sector is well positioned to take advantage of this strong foundation by increasingly investing in science and technology to become more competitive. We will all benefit through a stronger economy, better jobs and improved products and services.

To build on our strengths while generating better results for Canadians, we need a new approach that is focused on creating real leadership for Canada while better harnessing our science and technology assets to meet our economic and social goals. Canada's investments in science and technology will make an important contribution to achieving objectives under the Government's ecoAction plan for a cleaner and healthier environment.

Budget 2007 puts in place significant new resources to begin implementing the Government's new approach, which will be further outlined in the science and technology strategy. Budget measures will help sustain Canada's G7 leadership in public primary research, target new investments in research to key areas where Canada can be a world leader, and align research investments with the real-world challenges of the private sector.

World-Class Excellence for Research Leadership

Centres of Excellence in Commercialization and Research

A number of Canadian research institutions are now well positioned as recognized global leaders, creating national benefits through specialized facilities, breakthrough discoveries, and unique training opportunities. Large-scale commercialization initiatives are also emerging that aim to build on our primary research investments by bringing the resulting knowledge to market through innovative companies. The value of these centres of excellence is highest where there is a coordinated approach that brings together research institutions, governments and the private sector to set priorities and share resources.

The Perimeter Institute for Theoretical Physics in Waterloo, Ontario, which is devoted to the study of foundational issues in theoretical physics, is an example of such a world-renowned research institute. Since its creation in 1999, the Perimeter Institute has become a leader for Canadian research in the emerging field of quantum physics and a model for science education and outreach. The Perimeter Institute has demonstrated outstanding scientific merit, has a national reach and has received significant funding commitments from the private sector and the Government of Ontario. Budget 2007 provides $50 million to the Perimeter Institute in 2006-07 to support its leading research, education and public outreach activities.

Canada needs more research and commercialization centres capable of global leadership. Canada's New Government is prepared to invest in partnership with other levels of government and the private sector to create centres that operate at international standards of excellence and put knowledge to work for the social and economic benefits of Canadians. The Government is also targeting resources to areas where Canada has the potential to be a world leader, such as energy, environmental technologies, information technologies, and health sciences. As a first step, the Government is moving to provide immediate funding to seven centres of excellence focused on priority areas of research and commercialization for Canada:

• The Brain Research Centre at the University of British Columbia.


• The Canada School of Sustainable Energy at the University of Alberta, the University of Calgary and the University of Lethbridge.


• The Li Ka Shing Knowledge Institute at St. Michael's Hospital, affiliated with the University of Toronto.


• The Heart and Stroke Foundation Centre for Stroke Recovery, affiliated with the University of Toronto and the University of Ottawa.


• The Montreal Neurological Institute at McGill University.


• The National Optics Institute in Quebec City.


• The Life Science Research Institute in Halifax, affiliated with Dalhousie University.

Budget 2007 is providing $105 million in 2007-08 to support the operations of these centres. It is expected that the institutes will raise matching funds from other sources.

These seven centres, along with others that are achieving global leadership for Canada and translating knowledge into significant commercial advantage, will be eligible for a new Centres of Excellence in Commercialization and Research program. Through this program, the Government will identify the best initiatives based on international peer review and advice from the private sector, and make investments in partnership with others, such as the provinces and businesses.

This program will complement the research and science infrastructure funding available through the granting councils and the Canada Foundation for Innovation. Budget 2007 provides $195 million over the next two years to support competitions under this new program.

The Canada Foundation for Innovation

Conducting world-class research and providing training at the cutting edge depends on access to state-of-the-art equipment. The Canada Foundation for Innovation (CFI) is a not-for-profit corporation that supports the modernization of research infrastructure at Canadian universities, colleges, research hospitals and other not-for-profit research institutions across Canada. The CFI ensures that its investments support excellence by allocating funding through international peer-reviewed competitions and investing jointly with other stakeholders.

Budget 2007 provides $510 million to the CFI to enable it to undertake another major competition before 2010. The Government will account for the funds as they are disbursed by the CFI to institutions. It is anticipated that $70 million will be provided to institutions in 2008-09. The new resources provided in this budget are expected to lever close to $600 million from others in support of state-of-the-art science infrastructure at universities, colleges and research hospitals.

CANARIE

CANARIE Inc. is a not-for-profit corporation that manages CA*net, a sophisticated research broadband network that links Canadian universities, research hospitals and other facilities to each other and to leading science facilities in other countries. CA*net enables Canadian researchers to benefit fully from the research being undertaken elsewhere in Canada and abroad by collaborating and sharing results in real time, and provides opportunities for Canadian students to access knowledge generated across the globe.

Budget 2007 provides $120 million to CANARIE in 2006-07 to maintain CA*net over the next five years and to develop the next generation network, CA*net 5.

The Canadian Institute for Advanced Research

The Canadian Institute for Advanced Research (CIAR) is a private, not-for-profit organization linking Canadian researchers with top researchers in other nations. Its main priority is to establish and maintain global networks for top researchers and students, enabling Canadians to participate in and lead groundbreaking research on the international stage. Linkages with global academic networks represent a significant knowledge advantage for Canadians.

To enhance CIAR's activities and enable it to raise funds from other stakeholders, Budget 2007 provides $10 million for CIAR over the next two years.

Transferring Management of Federal Laboratories

Federal departments and agencies undertake important science and research activities related to health, safety and regulatory functions critical to core federal responsibilities. Other federal research activities target broader social and economic objectives.

Natural Resources Canada's CANMET Materials Technology Laboratory is the nation's leading materials research facility, supporting excellence and innovation in the Canadian economy. The Government of Canada will relocate the laboratory to new state-of-the-art facilities at the McMaster Innovation Park in Hamilton, Ontario. This new location, in the heart of Canada's automotive and steel manufacturing industries, will foster synergies among industry, academia and government research. Budget 2007 provides $6 million in 2008-09 to implement the relocation.

Other non-regulatory federal scientific activities could also be better placed in universities to increase linkages with research leaders and allow enhanced training for young Canadians. The Government will launch an independent expert panel that will consider options for transferring federal laboratories to universities or the private sector. The panel will report to the President of the Treasury Board in the fall of 2007 on the type of non-regulatory science that should be transferred, which partners should be involved and an appropriate governance framework. The panel will also be asked to identify up to five laboratories that could be early candidates for transfer.

Targeting Research to Priorities

The Granting Councils

Advantage Canada committed to maintaining our G7 leadership in public R&D investment, while maximizing the impact from research by targeting new resources to areas where Canada can be a world leader. The three granting councils-the Canadian Institutes of Health Research (CIHR), the Natural Sciences and Engineering Research Council of Canada (NSERC) and the Social Sciences and Humanities Research Council of Canada (SSHRC)-together provide $1.6 billion in annual support for research and training of our scientists, engineers and students.

The Government recognizes the importance of a strong primary research environment and will increase its support for post-secondary research. To realize the greatest impact, new resources must be focused in areas where Canada is poised for global leadership. This requires that the councils adopt a more strategic approach and increasingly support multi-disciplinary collaborative research to address complex issues and create a real advantage for Canada.

Budget 2007 is providing $85 million per year in new resources for the granting councils. This will include:

• $37 million for NSERC, targeted to research in energy, the environment and information and communications technologies.


• $37 million for CIHR for research in the health sciences.


• $11 million for SSHRC, targeted to research in management, business and finance.

The councils will collaborate in managing these targeted resources, in order to combine the strengths of various disciplines and achieve the greatest impact. The Government will strengthen the governance of the councils and improve tracking and reporting on the impacts of research expenditures to enhance accountability and value for money.

Indirect Costs

The indirect costs of research include operating and maintaining facilities, managing information, meeting regulatory requirements and supporting knowledge transfer. By undertaking these activities, institutions provide the environment needed to realize the greatest possible benefits from the direct research support provided by the granting councils. To ensure that its research investments bear full fruit, the Government supports indirect costs associated with its direct research funding at post-secondary institutions.

Budget 2007 is providing an additional $15 million per year to the Indirect Costs of Research program. This enhanced funding will help institutions to adequately support the additional research activities enabled by the new resources provided to the granting councils.

Genome Canada

Genome Canada is a not-for-profit corporation whose mandate is to support Canadian research leadership in genomics, a powerful emerging field with the potential for significant advances in health care, sustainable development and the environment. Genome Canada invests in partnership with provinces, the private sector and other domestic and international organizations to support leading-edge genomics research in Canada through six regional genome centres located in British Columbia, Alberta, the Prairies, Ontario, Quebec and Atlantic Canada.

Since its creation, Genome Canada has been very successful at strengthening the genomics research environment in Canada by attracting leading scientists, putting in place the advanced technology needed for genomics work and ensuring that Canadian researchers can take the lead in large-scale international research collaborations.

Budget 2007 provides Genome Canada with an additional $100 million in 2006-07 to sustain funding for the regional genome centres and related technology platforms, extend promising research projects and support Canada's participation in strategic international research collaborations.

The Rick Hansen Man in Motion Foundation

The Rick Hansen Man in Motion Foundation is a not-for-profit organization dedicated to accelerating the discovery of a cure for spinal cord injury and improving quality of life for people with spinal cord injuries.

This year marks the 20th anniversary of Rick Hansen's Man in Motion World Tour, which saw him visit more than 30 countries and raise more than $26 million for spinal cord research. To support research that will improve the lives of Canadians with spinal cord injuries, Budget 2007 provides $30 million in 2006-07 to the Rick Hansen Foundation for the Spinal Cord Injury Translational Research Network (SCI-TRN). The SCI-TRN will support research on spinal cord injuries, promote the development of best practices, and help build the infrastructure needed to keep Canada on the leading edge of spinal cord research.

Linking Research to Business Needs

Technology Support for Firms and Colleges

The applied research and training capacity at colleges and polytechnics is a tremendous potential resource for building a more knowledge-driven economy. Our 150 colleges and polytechnics, with locations in over 900 communities, are uniquely placed to work with local businesses and industries to address real-life market needs and opportunities. More knowledge-based collaborations between businesses and colleges will help our private sector become more competitive and provide rich learning opportunities for students.

Advantage Canada committed to help strengthen the links between colleges and the private sector. The College and Community Innovation Program (CCIP) is a pilot project administered by the Natural Sciences and Engineering Research Council of Canada that supports research collaborations between firms and colleges. To date, the program has supported six such collaborations. For example, the program enabled a joint project between Manitoba's Red River College and a leading motor coach manufacturer to integrate a modified heavy-duty diesel engine into an existing vehicle in order to meet reduced emission requirements.

To build on the success of CCIP, the Government will make the program permanent and expand it to additional colleges across the country. Budget 2007 provides $48 million over 5 years to launch the next round of projects. When fully in place, CCIP will support up to 25 college-industry partnerships.

Business-Led Networks of Centres of Excellence

Canada has a strong research base at our universities, colleges, research hospitals and federal laboratories. The challenge is to increasingly translate this strength into economic advantage.

Advantage Canada committed to help strengthen the links between universities, colleges and the private sector through mechanisms such as business-led Networks of Centres of Excellence (NCE) in order to enhance the commercialization of Canadian ideas and knowledge. Through competitive awards, the NCE program fosters research partnerships between research institutions, government and industry. To ensure that new networks truly meet the needs of businesses, the NCE program will establish a private sector advisory board. Budget 2007 also dedicates $11 million in 2008-09 to accelerate the creation of new networks, to be proposed and led by the private sector. The funding is expected to support up to five new networks, beginning in 2008-09.

Industrial R&D Internships

Advantage Canada committed to exposing more students to private sector research challenges through collaborative internships. Internships allow host firms to benefit from the latest knowledge and skills developed in our universities' world-class laboratories, while providing students with valuable applied research experience.

To meet this commitment, Budget 2007 provides $4.5 million over two years to the Networks of Centres of Excellence program to establish a new Industrial R&D Internship program. Modelled after the highly successful internship program developed by the Mathematics of Information Technology and Complex Systems (MITACS), an existing network, this initiative will partner graduate students and post-doctoral candidates with businesses to undertake applied research aimed at meeting the innovation needs of the host firm.

By participating in these one-semester internships, businesses will benefit from the knowledge and skills brought by students, while interns will acquire hands-on research experience and greater exposure to research challenges and opportunities in the private sector. When fully in place, the new program will support up to 1,000 internships each year.

Scientific Research and Experimental Development

Canada's scientific research and experimental development (SR&ED) tax incentive program is one of the most advantageous systems in the industrialized world for promoting business investment in R&D, providing over $3 billion in tax assistance to innovative Canadian businesses in 2006. It is the single largest federal program supporting business R&D in Canada, and it will continue to play a leading role in fostering a competitive and dynamic business environment in Canada. Yet we can and will do better.

Over the coming year, the Government will identify opportunities to improve the SR&ED program, including its administration, to further encourage research and development within the business sector in Canada.

Stronger and More Affordable Post-Secondary Education

 

Post-Secondary Excellence in Canada

Canadians want a high-quality post-secondary education system to be there to meet their own learning needs and goals, as well as those of their children. They understand that a strong system of higher education is a crucial source of ideas and innovation-a source of creative energy that drives the economy and fosters a shared, national prosperity. Canadians also know that having a post-secondary education contributes to their own well-being and that of their communities. A well-educated population provides an important competitive advantage for Canada and is vital to sustaining a growing standard of living for all Canadians.

Canada is starting from a strong foundation. It has the highest post-secondary attainment rates among OECD countries and is ranked second and nearly on par with the United States in terms of total post-secondary expenditures as a percentage of GDP.

Yet Canada's success must never be taken for granted. As pointed out in Advantage Canada, the global, knowledge-based economy and changing demographics are presenting Canadians with major new challenges. At a time when the growth of the country's population is slowing, Canadians must learn to adapt to changing technologies and meet the new knowledge and skills requirements of the labour market. Investments in post-secondary excellence are key to meeting these challenges and building Canada's Knowledge Advantage.

Canada's New Government is prepared to meet these new challenges. The Government already provides significant support for post-secondary education through transfers to provinces and territories. Spending and tax measures also directly support students and their families and Canada's universities and colleges. Further investments are being made as part of restoring fiscal balance (see Chapter 4).

Budget 2007 will uphold and strengthen the key role this Government plays in ensuring a high-quality post-secondary education system by supporting provincial and territorial investments in post-secondary excellence and by enhancing Canadians' access to higher education opportunities, including graduate studies.

Investing in Stronger Universities and Colleges

In support of its commitment to post-secondary excellence, Budget 2007 proposes to increase the Canada Social Transfer (CST) by $800 million per year. This increase will take effect in 2008-09, allowing discussions with provinces and territories on how best to make use of this new investment and ensure appropriate reporting and accountability to Canadians. It will grow at 3 per cent per year thereafter. This represents a significant increase in support for post-secondary education and will give provinces and territories the increased resources they need to maintain and strengthen Canada's universities and colleges. It will help ensure that Canada's post-secondary education system meets the needs of Canadians and contributes to Canada's future economic and social success.

This funding will strengthen Canada's universities and colleges by supporting the objectives of improving the quality of teaching and learning, providing better access for under-represented groups, renewing institutional capacity at the undergraduate and graduate level-supported by first-rate infrastructure and investments in research and development-and improving the flexibility of the system to meet the needs of adult learners and students from across the country and around the world.

There is a growing expectation among Canadians that all governments account for their spending. All governments also recognize the importance of informing Canadians of the results of these investments. Consistent with the Government's Advantage Canada commitment and the principles underlying restoring fiscal balance, the Minister of Human Resources and Social Development will, working with provinces and territories, identify priority areas for investment in order to achieve these objectives. The Government of Canada welcomes the work already undertaken by the Council of the Federation in this regard.

Canadians want to know how governments are supporting education and what results they are getting for these significant investments, such as how many students are completing their studies and the benefits of post-secondary education. This Government is committed to working with its partners-provinces, territories, universities, colleges, students and employers-to strengthen accountability to Canadians by ensuring reporting on results and opportunities and making these reports more readily accessible to Canadians.

Enhanced Support for Graduate Students

The ability of Canadian firms to be at the forefront of research and innovation depends crucially on their access to highly skilled personnel. To encourage more Canadian students to acquire advanced skills, Advantage Canada committed to increasing graduate scholarship support.

To encourage Canadians to pursue advanced studies, the granting councils provide internationally competitive financial support to the best Canadian graduate students through Canada Graduate Scholarships. These scholarships are provided to the top 2,000 masters and 2,000 doctoral students each year. Students at the master's level receive one-year awards worth $17,500, while doctoral students receive three-year awards worth $35,000 per year. To recognize the outstanding contributions of Canadian researchers and entrepreneurs who have made a real and lasting impact on our lives, Canada's New Government will be dedicating Canada Graduate Scholarships to the memory of Sir Frederick Banting and Dr. Charles Best, Alexander Graham Bell, and Joseph-Armand Bombardier:

• In health-related studies, through the Canadian Institutes of Health Research (CIHR).


• In natural sciences and engineering, through the Natural Sciences and Engineering Research Council of Canada (NSERC).


• In the social sciences and humanities, through the Social Sciences and Humanities Research Council of Canada (SSHRC).

To enable additional young Canadians to pursue graduate-level studies, Budget 2007 provides $35 million over two years to expand these scholarships. When the new scholarships are fully in place, the councils will support an additional 1,000 graduate students each year, including 400 new scholarships delivered by each of CIHR and NSERC, and 200 delivered by SSHRC.

Attracting Talented Students to Canada

Attracting the brightest minds from around the globe will keep Canada's universities and colleges at the forefront of leading-edge research. To give Canada a competitive edge in attracting the best and the brightest foreign students, the Government will launch a new international education marketing campaign to promote Canada as a destination of choice for post-secondary students. This campaign will establish a brand for Canadian education abroad and complement Canada's efforts to enhance the visibility of Canadian post-secondary institutions in priority markets such as Brazil, India and China. Budget 2007 provides $2 million over the next two years for this initiative, which will build on existing partnerships with provincial and private partners as well as with post-secondary institutions.

Modernizing and Simplifying Student Financial Assistance Programs

Currently, students have access to a myriad of supports to finance their post-secondary education, including assistance provided by the federal and provincial governments, as well as private lenders and personal resources. For its part, the Government of Canada makes an important contribution towards helping students deal with the cost of post-secondary education by spending some $2 billion each year through the Canada Student Loans Program and other grants, bursaries, and scholarship programs. This is in addition to federal tax support for students and their families, and the substantial support provided to students through provincial and territorial student aid programs.

Although these student financial assistance programs have been effective in supporting access to post-secondary education for hundreds of thousands of learners, students are faced with a patchwork of federal and provincial programs that are often difficult to understand and access. This complexity may keep potential students from obtaining financial help or may even seriously affect their decision as to whether to participate in post-secondary education. Addressing this complexity will become increasingly important as demand for post-secondary education and student financial assistance increases.

In Advantage Canada, the Government committed to working with the provinces and territories to modernize and simplify the administration and delivery of student aid in order to make supports more effective, transparent and predictable. Budget 2007 launches a review of the Canada Student Loans Program (CSLP), in consultation with provinces, territories and stakeholders. The process, to be led by the Minister of Human Resources and Social Development, will result in changes that will be announced in Budget 2008 to simplify CSLP instruments, make them more effective, and ensure integrated administration and efficient delivery.

Making Registered Education Savings Plans More Responsive to the Changing Needs of Education Today, and Encouraging Parents to Save

The Government of Canada helps parents to save for their children's post-secondary education through registered education savings plans (RESPs), the Canada Education Savings Grant (CESG) and the Canada Learning Bond. Each year, the Government provides about $600 million in tax and grant assistance to encourage saving in these plans.

Budget 2007 proposes changes that will provide additional flexibility and encourage greater savings in these plans by:

• Eliminating the $4,000 limit on annual RESP contributions.


• Increasing the lifetime limit on RESP contributions-for the first time since 1996-to $50,000 from $42,000.


• Increasing the maximum annual amount of CESG that can be paid in any year to $500 from $400 (and to $1,000 from $800 if there is unused grant room from low contributions made in previous years).

Each child will continue to be eligible to receive up to $7,200 in CESGs.

Many students pursue post-secondary education outside of the standard full-time college or university programs: some choose to study part-time, while others enrol in apprenticeships for a career in skilled trades. Currently, students can only access their RESP savings if they are enrolled in a program that involves at least 10 hours of classroom study per week.

Budget 2007 proposes to improve access to RESP assistance for part-time post-secondary students by allowing these students to access up to $2,500 of their income and grants for each 13-week semester of study. Students will be required to spend at least 12 hours a month on courses, in a course lasting at least 3 consecutive weeks.

This change will be effective for the 2007 tax year. It is estimated that these changes will cost $5 million in 2006-07, $15 million in 2007-08 and $20 million in 2008-09.

Fostering Academic Excellence

Budget 2006 fully exempted scholarship, fellowship and bursary income received by post-secondary students. Budget 2007 proposes to extend this treatment to elementary and secondary school students effective this year. The combination of these measures will help ensure that no Canadian is deterred from accepting and experiencing exceptional education opportunities.

This measure will benefit about 1,000 Canadian children and their families. It is estimated that this measure will have a small fiscal impact.

Creating a More Skilled and Inclusive Workforce

Advantage Canada recognized that to compete and to deliver a strong economy, Canada must have an adaptable labour force with the right skills demanded by employers. This is particularly important as an aging population will put pressure on the size of the labour force. Meeting this challenge will require creating the best-educated, most-skilled and most flexible workforce in the world and increasing labour force participation rates to meet demand. This means that Canadians must be able to easily access the training they need.

 

Budget 2007 takes decisive action with a new, comprehensive labour market training architecture that reflects these current labour market realities and clarifies roles and responsibilities, along with initiatives designed to better align the immigration program with the needs of the labour market.

A New Labour Market Training Architecture

Canada already has a well-educated, highly skilled and mobile workforce, which has contributed to one of the most flexible and adaptable labour markets among OECD countries. Employment growth continues to be strong, participation rates are at record highs and the unemployment rate is at its lowest level in over 30 years.

Labour shortages are becoming apparent in some sectors and regions. This will become an even more pressing problem as the population ages and the growth rate of the labour force slows. One of the most effective means to counter this demographic challenge is to maximize the contribution of the existing labour force and to increase the participation of those groups currently under-represented in the labour market, such as recent immigrants, persons with disabilities, Aboriginal Canadians and older workers.

Existing federal labour market programs were designed over a decade ago to respond to the challenges of higher unemployment and have been largely focused on those who were eligible for Employment Insurance (EI) Part II benefits. EI Part II now provides $2 billion in employment benefits and support measures, which help more than 600,000 Canadians a year. The Government has given eight provinces and territories full responsibility for the design and delivery of these programs. The other provinces and territories share the responsibility for delivering these programs with the federal government through co-management agreements.

In addition to the support provided to EI clients, a number of other federal, provincial and territorial programs have evolved to address specific labour market needs and priorities. This has resulted in a patchwork of programming, particularly for non-EI-eligible individuals, where the resulting gaps have meant that some Canadians have not been able to access the programming they need to participate and succeed in the labour force.

Recognizing the need for a more comprehensive and coordinated approach, Advantage Canada committed to work with the provinces, territories and private sector to make training and skills development more widely available to Canadians and better aligned with the current and future needs of the economy.

Budget 2007 delivers on that commitment through a comprehensive new labour market training architecture that will provide labour market programming to those who need it, including under-represented groups, and encourage employers to provide more training, while clarifying roles and responsibilities by recognizing that provinces and territories are best placed to design and deliver this programming. It will do so by:

• Completing the transfer of Employment Insurance Part II programming.


• Creating a new labour market program.


• Further clarifying roles and responsibilities.

Completing the Transfer of Employment Insurance Part II Programming

The Government is taking steps to complete the process of clarifying roles and responsibilities regarding the delivery of Employment Insurance (EI) Part II employment benefits and support measures by offering to negotiate full transfer Labour Market Development Agreements with those provinces and territories that currently have co-management agreements-Prince Edward Island, Yukon, Nova Scotia, British Columbia, and Newfoundland and Labrador. This would mean that all EI Part II programming would be delivered across Canada by the provinces and territories.

Creating a New Labour Market Program

Canada's New Government is taking action to increase the quantity and enhance the quality of Canada's labour force. The Government will introduce, beginning in 2008-09, a new program to address the gap in labour market programming support for those who do not currently qualify for training under the Employment Insurance program and to encourage employers to provide more training to their workers. The new program will ensure the availability of training and other labour market programs that are appropriate to changing labour markets and the evolving needs of Canadians.

The objectives of this new program include increasing participation by under-represented groups to help meet current and future skill shortages, ensuring that Canadians have the skills to compete in the future, and that employers provide more training to their workers.

Recognizing that the provinces and territories are best placed to deliver this training, the Government will enter into bilateral arrangements with each province and territory to deliver these new investments. Provinces and territories will have primary responsibility for the design and delivery of programs, thus providing more flexibility to meet specialized needs and address local and regional labour market realities. The Government will invest $500 million per year in this new program, which will be allocated to provinces and territories on an equal per capita basis. Moving forward, this fulfills the labour market training commitments under the Canada-Ontario Agreement.

Working with his provincial and territorial counterparts over the coming year, the Minister of Human Resources and Social Development will determine how governments can best make use of the new investments to achieve these objectives and ensure appropriate reporting and accountability to Canadians. This will result in new programming that will, among other things, provide opportunities for literacy and basic skills upgrading, job readiness assistance, wage subsidies, on-the-job training and workplace-based skills upgrading. This will help Canadians develop the skills they need and employers want.

Further Clarifying Roles and Responsibilities

There are currently a number of federal labour market programs that target some under-represented groups, such as youth, older workers and persons with disabilities. The Government is also proposing to explore with provinces and territories the feasibility of transferring, within the context of the bilateral agreements, the responsibility for delivering these programs and the funding associated with them, which currently totals well over $500 million per year. Combined with the new investment of $500 million, this would mean more than $1 billion annually for provinces and territories to deliver labour market programming.

With the full implementation of this new architecture, in combination with existing provincial and territorial labour market programming, Canadians will have access to integrated labour market programming delivered by provinces and territories that can be tailored to their specific needs. Accordingly, provinces and territories will be provided with predictable and stable long-term funding.

Aboriginal Labour Force Participation

Aboriginal Canadians are under-represented in the labour market, having a significantly lower participation rate and higher unemployment rate than the general population. Given the relative youth of the Aboriginal population, its share of the working-age Canadian population will increase in the coming years. This makes it particularly important to take immediate measures to increase sustainable Aboriginal employment.

By fostering partnerships with provincial and territorial governments, Aboriginal organizations and the private sector, the Aboriginal Skills and Employment Partnership (ASEP) initiative has helped ensure that Aboriginal Canadians receive the skills and employment training that will lead to their increased participation in opportunity-driven economic development projects across Canada.

With a current budget of $85 million over six years, the ASEP initiative supports nine projects across Canada, which are expected to result in training for approximately 7,000 Aboriginal Canadians and sustainable employment for more than half of them. The Government will extend and expand this successful program by providing an additional $105 million over the next five years, including $35 million in the first two years. This will more than double funding for the current program, and thus ensure that an additional 9,000 Aboriginal individuals receive skills training and an additional 6,500 secure sustainable skilled jobs over the next five years.

 

Helping Immigrants Succeed

Immigration has played an important role in building the strong and vibrant economy that Canadians have come to enjoy. To stay competitive in the global economy, Canada needs to continue to draw on the talents and skills that immigrants bring with them.

Budget 2006 invested $1.3 billion over five years to enhance settlement and integration programs for newcomers. This investment will provide an additional $342 million per year at maturity for programs and services such as language instruction and employment-related support to help immigrants participate in the workforce as quickly as possible. Many of these immigrants will fill current and future labour shortages.

Advantage Canada stressed the importance of welcoming more immigrants who are most likely to succeed in the Canadian economy. Budget 2007 delivers on that commitment by putting in place measures intended to ensure that Canada's immigration policies are more closely aligned with the needs of the labour market and newcomers are able to more quickly find employment that uses their talents, skills and experience by:

• Helping employers meet their immediate skill shortages through improvements to the Temporary Foreign Worker Program.


• Selecting immigrants with the skills and experience Canada needs and who are ready to participate in the labour market.


• Creating the Foreign Credential Referral Office to help immigrants get started.

Helping Employers Meet Immediate Skills Shortages

The Temporary Foreign Worker Program is the Government's principal tool to help employers meet immediate skill requirements when qualified Canadian workers cannot be found. Employers may recruit workers for any legally recognized occupation from any country. As a result of labour shortages in certain sectors and regions of the country, e.g. in the Alberta oil sands and the construction sector in British Columbia, the program has become increasingly important for businesses in their efforts to remain competitive in Canada's booming economy.

Budget 2007 proposes a series of improvements to the Temporary Foreign Worker Program designed to reduce processing delays and more effectively respond to regional labour and skill shortages. New measures such as expanding the online application system, maintaining lists of occupations where there are known shortages of workers, and processing work permits more rapidly will ensure that the process of hiring skilled foreign workers for not only large, but also small and medium-sized enterprises, is easier, faster and less costly for employers. At the same time, the Government will ensure that these improvements do not result in reduced employment opportunities for Canadians. Budget 2007 provides $50.5 million over the next two years to support these improvements.

Selecting Immigrants With the Skills and Experience Canada Needs

With the current demographic challenges, slowing labour force growth and increasing labour shortages, Canada must take steps to ensure that it can attract and retain skilled individuals to sustain a competitive knowledge-based economy. As noted in Advantage Canada, Canadian-educated foreign students with Canadian work experience and skilled temporary foreign workers can adapt quickly and easily in the Canadian economy.

To ensure that Canada retains the best and brightest with the talents, skills and knowledge to meet rapidly evolving labour market demands, the Government will introduce a new avenue to immigration by permitting, under certain conditions, foreign students with a Canadian credential and skilled work experience, and skilled temporary foreign workers who are already in Canada, to apply for permanent residence without leaving the country. Recent international graduates from Canadian post-secondary institutions with experience and temporary foreign workers with significant skilled work experience have shown that they can succeed in Canada, that they have overcome many of the traditional barriers to integration, and that they have formed attachments to their communities and jobs.

It is expected that each year some 25,000 Canadian-educated foreign students and skilled foreign workers will be able to apply to stay in Canada permanently. This will be accommodated within current immigration levels.

This initiative, along with the improvements to the Temporary Foreign Worker Program, will increase the number of individuals wanting to come to Canada. Budget 2007 provides $33.6 million over the next two years to ensure that those who come to Canada through these avenues have the valid documentation and meet Canada's health and security requirements.

Helping Immigrants Get Started

Many newcomers, even after considerable search effort, have difficulty finding work that is commensurate with their education, skills and international work experience. These circumstances highlight the importance of foreign credential recognition and the need to ensure that immigrants can use their skills and talents.

Budget 2007 confirms Advantage Canada's commitment to facilitate the assessment and recognition of foreign credentials through the creation of the Foreign Credential Referral Office, which will be located at Citizenship and Immigration Canada. The new Office will provide prospective immigrants overseas and newcomers already in Canada with information about the Canadian labour market and credential assessment and recognition requirements. As well, it will provide immigrants with path-finding and referral services to identify and connect with the appropriate assessment bodies. The services provided by the Office will complement the programs and services currently provided by provincial governments and by provincial credential assessment agencies. With an investment of $6.4 million per year in support of its ongoing operation, the new Office is expected to be fully operational by late spring of 2007.

Table 5.6
Knowledge Advantage (millions of dollars)

	2006-07	2007-08	2008-09	Total
Science and Technology Leadership
World-class research leadership
Centres of Excellence in Commercialization    and Research	50	270	30	350
Canada Foundation for Innovation			70	70
CANARIE	120			120
Canadian Institute for Advanced Research		5	5	10
Transferring management of    federal laboratories			6	6
Subtotal	170	275	111	556
Targeting research to priorities
Granting councils		85	85	170
Indirect costs of research		15	15	30
Genome Canada	100			100
Rick Hansen Foundation	30			30
Subtotal	130	100	100	330
Linking research to business needs
Technology support for firms and colleges			3	3
Business-led Networks of Centres of Excellence			11	11
Industrial R&D internships		2	3	5
Subtotal		2	17	18
Subtotal-Science and Technology Leadership	300	377	228	904
Stronger and More Affordable Post-Secondary Education
Enhanced support for graduate students		15	20	35
Attracting talented students to Canada		1	1	2
Registered education savings plans	5	15	20	40
Subtotal-Stronger and More Affordable PSE	5	31	41	77
Creating a More Skilled and Inclusive Workforce
Aboriginal Skills and Employment Partnership program		5	30	35
Temporary Foreign Worker Program		23	28	51
Selecting immigrants with the skills and experience Canada needs		7	27	34
Foreign Credential Referral Office		7	6	13
Subtotal-Creating a More Skilled and Inclusive Workforce		42	90	132
Total-Knowledge Advantage	305	449	359	1,113
Less: Funding included in previous budgets1		7	17	24
Net New Cost of Knowledge Initiatives	305	443	342	1,089
Note: Totals may not add due to rounding. 1 Business-led Networks of Centres of Excellence and the Foreign Credential Referral Office are funded from existing sources of funds.

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