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Around 300 students gathered on Feb. 28 to hear the former governor of the Bank of Canada, David Dodge, speak about the fiscal challenges that Canada will face in coming years, as compared to the current European crisis. The event was organized by McGill’s Economic Students’ Association (ESA) and is part of the ESA’s first annual speaker series.

“We decided that Mr. Dodge had both the experience and the foresight to come and discuss trending economic topics today, namely the anticipated future problems the government faces in providing social services,” Alexander Severance, U2 representative to the ESA, said.

Dodge, who served as governor from 2001 to 2008, began the talk by describing the economic crisis in Europe, citing increasing wages despite stagnant productivity as a key factor for the debt incurred by nations like Italy and Greece.

He then drew parallels between the European fiscal crisis and Canada’s current economic situation, focusing on Quebec and Ontario. He explained that both provincial governments have continued to improve the quality of the services offered to its populations although income growths, and thus tax collections, have slowed down.

“It’s not just a cyclical problem,” Dodge said. “It’s a big structural problem. In fact, we can’t go out and continue to borrow, we have to deal with the problem.”

Dodge offered some potential solutions to the escalating issue.

“We’ve got to get much better at doing what we do, and in addition, find new things to do where we can add more value. We have to make more airplanes, more pharmaceuticals,” he said. “At the same time, governments are not going to be able to deliver to you and me the same level of services that we have come to expect, because their revenues aren’t growing … [dealing with] the psychology of taking something away from somebody is very difficult.”

He ended his talk with an enthusiastic call for the economics students in the room to be the leaders who will bear these issues in mind when creating policy in the future.

“We need to continue to talk to governments about what some of these structural things are that we can do to improve our productivity,” he said. “Secondly, we need to pressure our government to make structural change in the way they deliver their services to us, and in the amount of services that they deliver so that they can cut their costs. This is very difficult … it means [increasing] pricing to the public.”

At the end of the question period that followed the talk, economics professor Christopher Ragan asked Dodge what he thought about raising tuition fees.

“That was one of my examples [of] where the right thing to do is politically very difficult,” Dodge said. “I guess I think that it is quite important that, whether it’s for healthcare or for education, [that] there be some recognition by the user of the service that they bear some part of the cost directly.”

Dodge also proposed an innovative idea for reforming the tuition system, suggesting that tuition fees increase as students advance through university, when the risks of a higher education are lower.

“I would set a fee scale that rose as you went through [university], because the risk to you as an individual and as a student goes down the longer you stay in university,” he said. “[We should set] the fee appropriate to the risk that you are undertaking.”

He developed his suggestion by describing a typical university student.

“[The risks of a higher education] are quite high in the very first year,” Dodge argued. “You come out of high school or CEGEP and you don’t know what the hell is going on at a place like McGill. You don’t know whether it’s going to be useful for you, if you’re going to like it … by third or fourth year, you should really have an idea of whether this is right or productive for you, or if you’re going to be successful.”

Students enjoyed the event and stayed for a cocktail with their peers.

“Overall, [the event] was a good learning experience,” Chloe Gosselin, U1 management, said. “It’s great that associations create events to apply what we learn into the real world. These give us a lot more interest and motivation [and] makes what we’re studying a lot more fun.”