"Starting
in 2007, a Children's Education Credit of $1,000 will be
put in trust for every newborn in B.C. for when they are
ready for post-secondary education. The credit will grow
with interest through their lives and contribute to their
choice of learning after high-school graduation." Those
two sentences are the fifth paragraph in a news
release titled "New Measures to Train, Attract
and Retain Workers", and they are all the government
has produced by way of explanation of one of the Premier's
strangest announcements. Apparently the Education Credit
scheme was so poorly thought-out that the government didn't
have enough information to issue a full news release on
just that announcement. A backgrounder
to the news release repeated the promise, but provided no
additional information; however, the backgrounder elaborated
on why some of the 25,000 new post-secondary "seats"
promised by the Campbell government will be converted to
graduate spaces: "It turns out that many of those 25,000
new seats may be under-subscribed, in part because
the economy is so hot." (emphasis added)
It is
probably true that college and university enrollment is
down partly because of low unemployment, but it is also
true that is only part of the explanation. The near doubling
of tuition fees is another part of the explanation. A stubborn
Premier Campbell is refusing to take responsibility for
that problem, and his promise of assistance 18 years from
now is bizarre.
The
$1,000 promise will do nothing to help students much before
the year 2025. Since there aren't any immediate benefits
flowing from the program, it is reasonable to suspect that
Campbell might be trying to extract some political benefit.
Don't be surprised if a certificate inscribed with the name
of every new born after January 1, 2007 is delivered to
happy parents. Of course, using Vital Statistics to harvest
the names and addresses would be a violation of privacy
rights, so it might be difficult to salvage anything as
crass as the old BCRIC share scheme.
Imagine
you are the civil servant assigned to fleshing out the Premier's
idea. Putting $1,000 in trust means that each new born will
have a different amount of interest accruing on the Education
Credit. Each child will be entitled to a different credit
depending on date of birth, length of time before using
the credit and rates of return during the period between
birth and attendance at a post-secondary institution. Will
partial months be credited? Were these administrative complexities
discussed before the announcement? Notice that the scheme
is described as a trust, meaning it must be administered
by the laws governing trusts or some alternative statute
adopted specifically for the Education Credit.
BC Stats
projects between 40,000 and 45,000 births per year between
now and 2025. Using an average of 42,000 and assuming 6%
annual interest, the fund will grow at the rate of $42 million
per year plus interest, reaching $1.3 billon in 2025. Entitlements
to the underlying fund will be as complex to administer
as a pension fund, but with relatively miniscule benefits
for any individual. At 6% annual interest, $1,000 becomes
$2,854 after 18 years. The Premier who nearly doubled tuition
fees is promising that 18 years from now the children of
those who suffered from his policies might get a six month
50% reduction in tuition, about one quarter of the amount
by which Campbell increased tuition.
Some
of those who receive Education Credits at birth will not
take advantage of them when they leave secondary school.
Will the Campbell government say today how long a young
adult will be able to retain a claim on the Education Credit
Fund, or will it leave that to the government of the day
in 2025? Unfortunately, some children will not survive until
they are eligible to claim their benefit. Will the fund
retain and redistribute those entitlements or will they
flow back to government? Those are the kind of considerations
that have to be made in pension plans, and a properly structured
Education Credit Trust will have to deal with the same issues.
If a
child is born in Kamloops on January 1, 2007 and the family
moves out-of-province on January 2nd, will that child retain
the right to return to BC in 2025, or any later date, and
claim the Education Credit? If a child is born out-of-province
on January 1, 2007 and the family moves to BC on January
2nd where they live until the child enters UBC at age 18,
why should this child not qualify for the benefit that the
child who spent but one day in the province is entitled
to receive?
Campbell's
political stunt is fraught with enormous practical problems
that someone must resolve if the plan is to be taken seriously.
In consideration of those problems and the very long delay
before anyone can receive a benefit, why wouldn't the Premier
simply increase scholarships and bursaries by $42 million
a year starting immediately?
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