C HAPTER 1: T HE P ROSPERITY C HALLENGE
Ontario’s proportion is 72 per cent consumption and 28 per cent investment. The peer states show a markedly higher 36 per cent proportion of investment. This is a big deal. If our proportion were the same as the peer states, it would mean $6.5 billion per year in greater investment in the province of Ontario, or $65 billion per decade. That would mean a vastly different future, a future more like that of Massachusetts, which can spend three per cent more than Ontario per person on current needs while continuously spending 50 per cent more on generating future prosperity. I believe this is doable, but it will take the will of individual Ontario citizens, of Ontario corporations and of our governments – provincial, federal and municipal. It will take a new kind of will, the will to overcome the comfortable but unproductive, status quo. I will give an example of one such issue: university tuition, which is currently regulated at a level of $4,100 for everything except professional schools. And that level is in the middle of five years of increases regulated at two per cent — considerably below inflation, so that real tuition will fall steadily over the five-year period. And before the conclusion is jumped to that this is all about self-interest, I want to make clear that all the programs in my school are deregulated already, so what I am talking about would not help me at all. Thankfully, this government deregulated professional school tuition in the mid-1990s. Had they not done this, I most certainly would not be dean of the Rotman School, nor chairman of the Task Force on Competitiveness, Productivity and Economic Progress. When he was president of the University of Toronto, Rob Prichard first asked me to consider taking this job of dean of the Rotman School. My first reaction was to decline. A key reason was that I had been out of Canada for long enough to have been unaware of the deregulation of professional school tuitions. And my assumption was that they were still regulated. I felt that there was no reason to consider leading a school that had absolutely no chance to compete internationally. But fortunately, the current government made the change, and as a consequence we have taken on the challenge of building a globally competitive business school in Ontario – as have several of our fellow schools.
Let’s explore the facts regarding regulated tuition.
Level of education is tightly correlated with wages, productivity and prosperity. A better educated population makes for a more prosperous province. That notwithstanding, we invest only half the level of our peers states in higher education. We do this by having a system that, until very recently, has been a regulated monopoly – only public universities were allowed. And our provincial government, in addition to reducing real funding, maintained strictly regulated tuition at a low level and one that has been falling in real terms. So students and their parents are prevented from investing in the very universities that the government underfunds. This suppression of tuition is bad for the prosperity of our province.
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