McGill pours millions into Quebec economy

SYLVAIN COMEAU | While the Quebec government seems reluctant to provide McGill and the other universities with sufficient funding, a report by economics professor Jagdish Handa shows that McGill produces a good deal of money for the province.

According to The Economic Impact of McGill University on Quebec, a report by Handa and doctoral student Ossama Mikhail, McGill generated tax revenues of $92.5 million for the province in 1995/96, based on a tabulation of income from direct and indirect cash flows from out-of-province sources.

Direct cash flow includes tuition and living expenses paid by out-of-province students, research grants, contracts and private donations from sources outside Quebec, and miscellaneous activities such as conferences and on-location film shoots. These activities in turn generate indirect cash flow -- economic activity from spending by the recipients of the funds.

Handa places the dollar figure for all of this activity generated by McGill at $616.6 million in 1995/96. Thus, McGill is a large net revenue generator for the province annually and injected a total of $4.9 billion into the Quebec economy for the 10-year period 1986-1995.

"An average provincial tax rate of 15% on $616.6 million yields $92.5 million in provincial revenues from McGill's out-of-province activities," the report notes. The tax revenues are partially offset by the provincial grant to McGill related to out-of-province students, which was $63.9 million.

Handa began studying the economic impact of McGill in 1990, and produced a report specifically on revenue coming into Quebec from outside the province in 1993.

"When we started, I had no idea how many students came from outside Quebec, or how much in research funding and donations came in. It was a new ballgame. The intention was to find out what McGill did, and what the impact was, whether positive or negative. Of course, we were pleasantly surprised."

Handa's latest report notes a 60.9% increase in spending from out-of-province sources during the period 1985-1995, although that figure hides a slowing rate of growth in recent years.

Such spending increased 39.07% from 1985-90, but only 15.7% from 1990-95. Handa warns that government cutbacks are among the factors precipitating the decline.

"With the cutbacks, we cannot undertake expenditures, like increasing professorial staff, which would bring in increasing numbers of students. Fewer professors also means fewer applications for research grants. This can lead to a slowdown in McGill's contribution to Quebec's intellectual and economic wealth."

In an interview on Monday, Vice-Principal (Research) Pierre Bélanger said that the report topples certain myths about out-of-province students.

"Some people have said that out-of-province students are a drain on the Quebec economy, that they are educated at the expense of the Quebec taxpayer. We want to make the point that, far from being a drain, we actually spend less on them than they bring in. They make a positive contribution."

While the report demonstrates that McGill as a whole makes such a contribution, Bélanger says "We're not going to claim that this is unique to McGill. Certainly other universities, such as Université de Montréal, also bring in research dollars. But what is different about McGill is the amount brought in by students. We get many more students from out-of-province than the other universities."

Handa completed his report in September, but says it was officially released this month to coincide with government budget debates.

"This is the time that budget discussions are getting serious, and we want to bring the document to bear at the best strategic time."

The strategy in question is to provide ammunition for McGill's allies.

"Perhaps this will give certain people in the government -- those who think universities are important -- some arguments to use against other people who think universities are over-financed."

Although it retains a focus on McGill's numbers, Handa's report also steps beyond cool calculations of economics, pointing to McGill's less tangible contributions.

"McGill has an influence that extends beyond the scope of a purely monetary consideration. There is no doubt that McGill's contributions to the cultural, intellectual and historical evolution of Montreal and Quebec are very considerable."

In last week's interview, Handa explained that it was impossible to calculate the monetary value of these factors, but inappropriate to leave them unmentioned.

"One just cannot put a dollar figure on them. If we educate a student, and increase that student's earning power throughout his or her lifetime, that's an enormous contribution. But how do you separate that training from the student's own innate abilities? Economists are always tempted to calculate a dollar figure, but in this case it would be too difficult."

Adds Handa, "We felt that it was important to mention some of these contributions in our report. McGill is engaged in intellectual activity, and to some people, focussing only on the economic impact would seem to be downplaying our most important role."