Ottawa is starving an industry bigger than the oil sands

Universities and colleges pump $61 billion into our economy. It’s time to start treating them like the economic powerhouse they are

After decades of chronic underfunding, the post-secondary education system is in crisis but, confoundingly, the federal and provincial governments are doing shockingly little about it.

Most post-secondary education institutions are struggling after the loss of international students, who, for years, have paid significantly higher tuition fees to help compensate for provincial government funding shortfalls.

With continued underfunding, layoffs are becoming more common in the sector—and jobs that were once among the most secure in the country are becoming more precarious.

Young people are actively encouraged to go to university or college in order to compete in a challenging job market, but the government itself doesn’t treat the sector as though it has value. Nothing could be further from the truth.

The post-secondary education system is actually more powerful at driving economic growth than many key sectors, even mining or the oil sands.

But here’s the difference: Whenever either of those sectors are in economic trouble, governments come rushing to their rescue. Why not do the same for universities and colleges—especially since government policy decisions are responsible for the sector’s struggles.

Last year, universities’ and colleges’ economic output was worth $61 billion—considerably more than all oil sands extraction ($49 billion), and almost twice as much as mining or transportation manufacturing ($33 billion each).

The ongoing threats to the stability of post-secondary education directly endanger the livelihoods of hundreds of thousands of people employed in the sector and, ultimately, those enrolled in university or college programs. And this can hurt entire communities.

Ask any university or college town: The post-secondary education system is an important job creator. Universities and colleges employ more than twice as many people as the transport manufacturing industry, nearly four times more than the oil and gas extraction industry, and almost six times more than the mining industry.

University and college workers are a large workforce and, as such, create significant economic demand. In 2024, university and college workers’ compensation contributed 2.3 per cent of Canada’s total pay pie. That’s an even bigger contribution to the economy than the oil and gas industry’s workers’ pay (1.7 per cent). These wages have a direct impact on economic growth—especially in university and college towns, where workers spend their money locally, supporting small businesses, and the local arts and culture. This should give institutions pause when looking at layoffs.

It is, further, another argument for why increased reliance by institutions on precariously employed and lower-paid contract workers as a cost-saving strategy not only exacerbates inequality across the sector — it makes bad local business sense because those workers have less money to spend in their community.

University and college procurement—the stuff needed to keep those institutions running—creates demand in other industries.

In 2022, the most recent year of available data, universities and colleges spent $16.5 billion on purchases from other industries, including $1.4 billion on gasoline, $1 billion on repair construction services, $895 million on building services like landscaping, $560 million on electricity, $481 million on IT services, and $388 million on prepared meals.

In addition to educating generations of workers and citizens, universities and colleges themselves produce vital knowledge. In 2023, over $18 billion was spent on research and development activities in Canada’s post-secondary education sector. Despite only making up about two per cent of Canada’s economy, the post-secondary education sector represents over 34 per cent of all research and development—much higher than Canada’s peer countries and, any way you look at it, returning to us an outsized bang for the buck.

Universities and colleges are also solid taxpayers. Post-secondary institutions paid $1.1 billion in taxes on products in 2022, which was mostly federal and provincial sales taxes, but also includes items like fuel taxes and import duties.

Additionally, they paid $683 million in  taxes on production, such as capital, payroll, land or property taxes. That’s not even counting the income taxes paid by employees of post-secondary institutions.

The post-secondary education industry is an economic powerhouse. Particularly during this time of global instability, governments can’t let this vital industry atrophy.

Ryan Romard is a researcher at the Canadian Centre for Policy Alternatives (CCPA).