With budget cuts the current focus of the BC Government, and many other provincial governments, the affects of such cuts are brought into focus in a just released report of the Organization for Economic Cooperation and Development (OECD), where the importance of education investments is reviewed in preparation for the expected economic recovery.   The report is a gold mine of comparative information on the commitment to and results of education policy in a large number of developed and developing countries.

The report establishes conclusively that education pays both for individuals and for nations as a whole.  While there are considerable differences in the net payoffs depending on types of education, gender groups and countries, it confirms without a doubt that cuts to education are short sighted and counter productive.

The best example is the case of post graduate (masters degree or higher) education, which pays the biggest dividends across the majority of countries, although there is quite a bit of variability between countries.  The ratio of benefits to costs for men exceeds 4 to 1 in Czech Republic, the United States, Belgium and Hungary and exceeds 2 to 1 in sixteen out of twenty one countries surveyed.  Canada is sadly in the latter group although the ratio is very close to the 2:1 cut off.

One of the notable features of the findings is that in Canada the payoff to the nation is relatively speaking much greater than the payoff to the individual. Canada is firmly in the second rank below eight countries such as the United States, the Czech Republic and Ireland in the return to the individual from post graduate education. The reason is also clear – Canada requires individuals to finance a larger proportion of the cost than most of the nations in this group.  This cost is made more burdensome given that the overall return to such education is also lower in Canada than all of the other countries mentioned.   In fact, Canada ranks 14^th out of the 21 countries examined.  More alarming, the benefits of a post graduate degree are less than one quarter of those in the United States and one third of those in Ireland.  And while in the US, each dollar committed by an individual will make them better off by $4.00, in Canada that dollar will make an individual better off by only about $1.50.  In British Columbia, the return to the individual is likely even lower given relatively high tuition fees.

There is a need for serious soul searching in Canada and BC about policies toward education.  Because education is primarily a provincial responsibility, it is the provinces that must pay closest attention.  Most of the questions have to do with investment and financing.  Education is one place where a reliance on financing by individuals undermines a country’s ability to realize potential benefits.  It is a classic case where generous taxpayer financing is essential if a country is to realize its potential.  One need only look to Ireland where post secondary education is free and innovation and technology driven productivity gains high to see the connection.

Too many of our provincial governments are missing this important point.  And it is not restricted to provincial governments.  Over the past 30 years, the federal government has progressively reduced its commitment to post secondary education in Canada.  The message is clear.  Education pays substantial dividends.  It is one of places where it can be clearly established that government expenditures contribute to the future productivity of individuals and the country as a whole.

And yet as we have seen governments are once again whacking away.  In BC the government has for instance just announced a big cut to its already under funded student aid programs.  And the budget for universities and colleges has been and continues to be tightly constrained with all of the universities wrestling with deficits and cuts.

An additional problem revealed in the study is that the return to education in Canada is much lower for women than for men.  The reason for this is that women continue to be paid much less than men for the same work.  As long as this pattern continues, the incentive for women to pursue advanced education in the face of high costs will be weak.  This just adds to the loss of potential productivity gains from investments in education.  Until this gaps is closed, education will never make the contribution it should to Canada’s future.  Canada can only prosper with a high wage, high value added, high productivity economy.  Developing and sustaining such an economy depends first and foremost on maximizing the gains from education.  Adequate funding of education is the most important thing governments can do to get us there.  Ensuring that women share equally in those gains is equally important.