How Canada is Paying for Ontario’s Higher Education Debacle
Alex Usher joins the Missing Middle podcast to discuss the coming "College Program Apocalypse"
After the federal government capped the number of international students it let into Canada, many colleges and universities saw a drastic decrease in enrolment. Without those tuition dollars colleges are slashing programs while universities struggle to balance their books. Why is this happening, and who is responsible? Alex Usher, a sector expert and higher education consultant, joins Mike Moffatt and Sabrina Maddeaux in this week’s episode of the Missing Middle podcast. They discuss the impact of international students on the housing crisis, the financial challenges faced by colleges and universities and the implications of recent policy changes, particularly in trades programs and apprenticeships.
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Below is an AI-generated transcript of the Missing Middle podcast which has been lightly edited.
Sabrina Maddeaux: So Alex, the last time we had you on, Canada was just starting to wake up to the fact that many colleges and universities were subsidizing their budgets and tuition from international students, and this influx of immigration had exasperated the housing crisis throughout southern Ontario, as well as some other regions of the country. Can you give us an update on what's happened since we last had you on?
Alex Usher: So, when you had me on, it was late January last year, so it's almost 12 months ago. And what had happened at the time was that the federal government had introduced a raft of measures to curtail international student movement towards Canada. What they did was they put on a cap. They then provided a cap to be managed by each province and each province then had to issue quotas to each institution. While they did that, there was about a 10-week period where effectively nobody was getting their visa processed.
And so everyone freaked out at the time. They said, “My God, how are we going to live on these, you know, these lower quotas?” Well, in fact, what happened was that because the minister accompanied those policy measures with a long speaking tour talking about how terrible Canadian universities and colleges were for doing this - used words like diploma mill and things like that - what happened was the demand dried up.
I was in Jakarta a few weeks ago and someone came up to me and said, “You're from Canada. Didn't they ban international students?”
So the government's comms were actually more effective in talking down students than their actual visa measures were. In fact, very few institutions met their quota. And of course, the other thing that changed was that effectively they closed down the - what were called the public-private partnership institutions. Those were private institutions that were teaching public college curricula. You know, and the public colleges were offering degrees or diplomas or certificates on the basis of that. Those effectively got shut down.
What happened this fall was something else. The government decided that the college numbers weren't falling fast enough. And so what they did was they imposed a new set of rules, not about student visas, but about postgraduate work visas. So it used to be that you could get a postgraduate work visa. And if you were here, if you met certain conditions, you could get a visa to work here. And in theory, that provided a pathway towards landed immigrant status and permanent residency.
What they did was they took away that right to students if they weren't studying in the right kinds of programs. So initially, basically they excluded about 70 percent of programs after some revisions. It's now about percent. So, you know, in the college sector, what's happened is that next year you're going to see international student numbers at about 30 per cent of where they were last year. Right. So, over two years, we can get about a 60 - 70 percent drop. It's lower than that in the universities.
But in the colleges, what's happened is - particularly in Ontario where colleges were very financially dependent on these [students] - losing 70 percent of your international students is equivalent to losing 35 percent of your income. And so you're starting to see some very big changes financially at those institutions.
Mike Moffatt: And I know this has caused pain for a lot of institutions, but I mean, I would argue that the federal government had to do something. Rents had been skyrocketing across Southern Ontario largely due to the colleges. Rents in my hometown of London went up 90 percent in just four years. Mayor Patrick Brown of Brampton - there were cases in his city where there were 25 international students living in one four-bedroom home. And if we look since these changes, because as you say, you were here a year ago and we can kind of look back year-over-year, rents in southern Ontario are down in most communities. Now it's only a couple percentage points, but when you change from going up 12, 13, 15 percent a year to going down three or four percent, you know, that's a pretty significant change. So looking back, do you think that the federal government made the right policy choices? I know there were issues on the comms side, but do you think that they at least generally had the right idea?
Alex Usher: Well, I don't disagree that they had to do something. I think the question that's being asked in large parts of the country is: why were similar rules enacted everywhere to solve a problem that was effectively constrained to Southern Ontario? I mean, I know that's a time-honoured Canadian tradition to make the rest of the country pay the price for Ontario getting things wrong, but I think that's the real issue.
So I think, you know, a lot of the Francophone colleges outside Quebec, for instance, they play a really big role in keeping up the Francophone population of Northern Ontario or New Brunswick, those kinds of things. And there were no complaints about the number of students that were coming in. All of a sudden they had to lose 30 - 40 percent of those students. You look at some parts of rural Canada, what's happening is because they've got 30 or 40 percent fewer international spots, they're closing programs - in health and in trades - I mean that's where the cross subsidies were going, right. Cause, governments love health and trades, until it comes to pay for them.
Mike Moffatt: A lot of those rural programs, weren't they propped up by, yeah, the school might've been in Northern Ontario, but the students were in Brampton?
Alex Usher: In Ontario, yes, that wasn't the case elsewhere. And it wasn't even the case everywhere in Ontario. There were a dozen non-GTA institutions that did that in Toronto. And those were the problem institutions. Elsewhere - like if I go to rural BC - I've got clients who they've got 30 percent, or did have 30 percent, international students. And a lot of them worked in the hospitality industry because that's what drives some parts of the economy of the interior BC. And you're starting to get businesses going “Wait a minute, I can't count on that stream of graduates anymore? Like that's a real problem for us.” And you have to explain why is this happening? Well, because Southern Ontario couldn't get its housing market right. So I think the government could have done a better job of creating rules that targeted Ontario and leaving the rest of the country alone. I understand why they did what they did. I think if there had been less of a panicked atmosphere…they could have said at the outset: we're just not going to let any institution go more than 30 percent international students. They could have done that. And I think that would have had a lot fewer side effects than what they actually did.
Mike Moffatt: So I've been hearing fears that this is going to affect trades programs, even though the fact is that international students were almost never taking these programs, right? That you look at - at least in Ontario the programs they were taking at the college level, was introduction to business, fundamentals of tourism, and so on. But there is concern that these changes are going to negatively impact trades programs. So can you walk us through that?
Alex Usher: The main reason is because trades programs are really expensive to put on and they require a lot of capital investment to make work, particularly if you're talking about construction trades. So those were not well designed for things like the PPP arrangements that a lot of those institutions had.
What institutions were doing was they were taking money from… introduction to global business and taking the net, the surplus from that and subsidizing the trades programs they did have. I've heard some people ask the question: why can't we get international students into the trades? And the answer is: you can kind of. I mean, there are, I know lots of institutions across the country who do. But the problem is, number one, as I said, there are capital constraints. So even in situations where international students want to they kind of have to give domestic students preference on those. So, you know, they would have to expand massively - there would need to be big investment and that can't really be done off current investment off tuition.
But the other thing you gotta remember is skilled trades in this country, that's mostly apprenticeships. How do you get an apprenticeship? You get a job. International students can't get jobs, right? Like they don't, they need the work visa in order to get the job. So that becomes really difficult.
We do have these trades programs - what we call pre apprenticeship programs - and those tend to be six months in length. And guess what? That's not long enough to get a postgraduate work visa. So you'd need to go through a process of rejigging… are there new pathways to construction trades for international, students? You could do it but you need to rejig all the programs and you need to go through all the approvals and guess what? I mean, one of the big things that would change is that you have to get labor unions in on that. And I'm not convinced that they would be… you know…the shortage of labor benefits them to some extent. So it's not entirely clear that they would be on board with that. It would be great if they would, you know, I could be wrong about that. There's a lot of structural change that you would need. I think there's a lot of individuals from overseas, in India in particular, who would come and do that if they had the chance. But our system doesn't allow it. We need to do the hard work to make it possible.
Mike Moffatt: Yeah, and on that, are there even enough apprenticeships out there to massively increase pre-apprenticeship programs? At some point, you have to ask where the bottlenecks are.
Alex Usher: Yeah. Maybe. So it's hard to tell, right? I mean, the thing about apprenticeships is it's hard to tell if it’s supply or demand that's restricting the numbers.
Our numbers are pretty close to as high as they've ever been, right? So we had a bit of a dip after the commodity-supercycle kind of burst, but, you know, in construction trades I think we're pretty close to an all time high in Canada in terms of numbers. You know, I think there's a lot of things that we could do to make more apprenticeships possible.
The big one is that there's a set ratio of journey persons to apprentices. People in companies who are overseeing the apprentices work, they have limits on the number of people that they can oversee. If we start to relax those…it's like in childcare, the ratio… of toddlers to teachers - It's exactly the same bottleneck.
Mike Moffatt: My dad's a sheet metal worker and I'm going to have to tell him that analogy.
Alex Usher: Okay.
Mike Moffatt: Sheet metal workers are exactly like toddlers. “Hi, dad!”
Alex Usher: No, no, they're like, they're like early childhood education workers, not the toddlers. The apprentices are the toddlers.
So I think … those are the kinds of things that you have to worry about.
I mean we make apprentices last a really long time. Stupidly long time. Like four years! That's far higher than in any other country in the world. We could shorten apprenticeships and that would make a ton of sense. And that would… free up more journey person time to supervise apprentices. But we're not talking about any of that.
Sabrina Maddeaux: So I mean this in the politest way possible, but why should your average person even care about the health of the college sector?
Alex Usher: Well, certainly if you're a parent, you want your child to have choice of programs, right? And I think that's the real, that's going to be the casualty here is that you're going to get colleges that just offer a lot fewer programs. And I think it's employers, in some fields, the ones that have been benefiting from the cross subsidies - they're going to be upset too.
Now we don't know exactly which programs those are because there's only two or three institutions that have really released their list of program cuts. But… I think we're going to see in Ontario - I would be surprised if we had fewer than about, 600 or 700 programs cut across the province. And that's a lot! And typically, you know, college students don't go outside the catchment area of their college to look for programs. So if that program doesn't exist, they move to another program. So we're just going to have less choice. And for the remaining programs, probably lower quality as well.
If neither of those things matter to you, I suppose that probably, maybe there's no problem with seeing the college sector get cut like this. That's not just an issue about international students. You've got to remember that in Ontario, if we're just talking about Ontario colleges, they get about…for every dollar per student that other provinces spend, Ontario spends 44 cents. Right? So the real root cause here is, you know, we have a fantastic college system in Ontario and the government just refuses to pay for it. And everything that's happened with international students is kind of a - it's a reaction to that problem.
Sabrina Maddeaux: Now you said there will be cuts in programs, but just how bad is this actually going to get for the sector? Are we going to see Laurentian style bankruptcies?
Alex Usher: Well, not in the community colleges because they're part of the government entity, right? They're under the government books. So I don't think you will see that.
What you will see instead is what I call the program apocalypse. They're just all sorts of programs that will go up in flames. Now universities, it's a different story. Universities have not been hit as hard, but they also have a lot more trouble managing their budgets than colleges do. They have tenure. Right.It's actually, it's hard… They can't move people around the way colleges can. Colleges can fire reasonably simply, on the university side you can't do that. So, you know, you can't - if there's fewer students in, I don't know, accounting, you can't redeploy them to be engineers. I think there's a number of institutions that are going to see some really significant cuts, not to programs necessarily, but I think you're going to see a lot fewer student services, I think you're going to see a lot more use of sessional lecturers going forward. I think there's going to be a lot of hiring freezes. I'm not saying this with any pleasure, and I think that's going to last for the rest of the decade.
Mike Moffatt: The feds take a lot of criticism for this, and rightfully so. Immigration is a federal issue. The federal government going back to the Harper years did for very good reason want to funnel more of our immigration system through higher education. You remember this better than anyone, but I remember Diane Finley talking about this when she was Harper's Minister. And to me, it actually makes a lot of sense,that instead of having people immigrate to Canada at 28 or 29 with some credential from a school that employers have never heard of, have them come over at 18 or 19, get a degree or diploma here, get four years of cultural experience and then when they do become permanent residents of Canada, they're going to have much better labor market outcomes. This is one of those things. And in theory, this made a great deal of sense. And in practice, things fell apart. So…I get why the feds are wearing this but the provinces, particularly Ontario, could have, at any time, built more student housing or put on international student caps, or limited the use of public-private partnerships, or removed tuition caps. That 25-30 percent cap you mentioned, Ontario could have done that at any time. So, you know, it doesn't require the federal government to do so. And in fact, that is squarely within provincial jurisdictions. Why is it that provincial governments, particularly the Ford government, have largely escaped scrutiny on this?
Alex Usher: Beats the daylights out of me. I mean... Ford particularly seems kind of Teflon on this stuff. So, you know, that's a factor.
Here's what I would say: Canada is not alone in this, but what we've seen since the financial crisis in 2008 - pretty much across the Western world with the exception of the US in the last four or five years or so - has been a long draining away of public investment in higher education. And some of that is demographically related, right? Like as you get an aging population, your budget priorities tend to go somewhere else. I mean, you know, our pension funding is up, what $40 billion in the last five years? You know, our healthcare spending is up 20 billion. Like that's a lot of money that could have gone somewhere else. And we're choosing to spend it on consumption of goods and services and healthcare for elderly Canadians, and it's not going to youth.
But I would say that the whole affordability agenda incentivizes governments to focus on policies that make people feel richer now, instead of creating investments for the future, which is what education is, right?
… We could have a government that says: “we really cares about what skills our young people have and we're going to put more money in and we're going to have the best teachers and we're going to have the best education programs.” Nobody does it. Nobody does it.
And, you know, I think you've talked about this, Mike, you've talked about your worries about Canada becoming a zero sum society. And I kind of feel in a sense, that's what's happening to higher education, right? You just, look at where the money's going and it's going..you know, in the last, what is it, in the last four years, provincial governments are up 40 % in real dollars in the last seven, eight years and post-secondary is down, right?
So we're making active choices to spend on things that are not investments. We're not spending on science. We're not spending on education. What are we spending on?... $200 checks going to everybody. It's a feel richer now environment. Canada is not alone in this, but it's still a problem that we have to solve.
Sabrina Maddeaux: Yeah, when you have election cycles that are four years or less, and then you have shorter media cycles than ever, I think that definitely incentivizes politicians to think about what's the headline for tomorrow or next week, not necessarily a decade from now.
So we know 2025 is going to be an election year. What are some things you'd like to see in future election platforms, whether on the provincial level or the federal level?
Alex Usher: Well, I think at the federal level, I think you want an immigration policy that focuses on growth rather than short-term labor market needs. This is really where we got caught up with the international students at the college level. At the college level, you know, we had this spiking inflation in 2022 and they're like, “Hey, students are cheap labor. Let's bring in more. Let's bring the price of labor down.” That was effectively, I think what happened in 2022 when Sean Fraser made some of the changes around work visas. That was never the point of this program, right? You know, when the Harper government created it, it was very much about how do we get some of those top graduate students? How do we make sure that those are the people who can ensure long-term growth … So the difference between prioritizing long-term growth and short-term labor market needs is a really big one.
I mean, this is not something I would talk about in an election campaign because it's boring as hell. It's not going to win you any votes, but I would love to see, in somebody's platform, that they're refocusing education and education marketing with a focus on talent. Let's have the best talent in Canada…
I was saying to someone the other day, it's so different, the conversation we're having now. Trump won. We all said, “Hey, cool. Look how many people are not going to go to the US! We can get all those people.” And that was effectively, you know, the Trudeau immigration plan for the first three or four years of his mandate. You know, take advantage of the Americans shooting themselves in the foot. No one's talking about doing that now. And a lot of it's because of housing, right? So again, it is that, you know, that link between immigration, talent, growth, housing, right? If you’re focusing squarely in that area, that's the right policy.
Sabrina Maddeaux: You're so right about that massive change just between the Trump administration's. I remember when Trump was first elected and there were all the headlines about Americans or asylum seekers coming to Canada and Trudeau actually tweeted, “Everyone is welcome here.” And now we see a very different public facing approach from the government.
Well, there'll definitely be something to keep an eye on over the next year and going forward. Thank you, Alex, for your time and thank you to our audience for watching and listening. And of course, to our producer, Meredith Martin.
Mike Moffatt: And if you have any thoughts or questions about international students or housing or the difference between the two Trump administrations, please send us an email to [email protected].
Sabrina Maddeaux: And we'll see you all next time.
This podcast is funded by the Neptis Foundation and is brought to you by the Missing Middle Initiative - a think tank housed in the Department of the Environment at the University of Ottawa
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