S3E30
· 26:49
Alex Usher: Hi everyone, I'm Alex Usher, and this is the World of Higher Education Podcast. Canada's heading into some pretty choppy waters in 2025. For a century or so, we've had a one track economic strategy, closer integration with the United States. Now, the Trump administration with its faith in tariffs as an instrument of both power and corruption, has essentially nuked that strategy, at least as far as the trading goods is concerned.
There's a lot of change coming to Canada, and it'll be costly. In much the same way that diplomatic evolution and defense needs are forcing European countries to look at higher education in a different light, Canadian universities are looking around at their new situation very nervously too.
In Canada right now, a few people are making the case for change as strongly as John Stackhouse. John's the ex editor-in-chief of the Global Mail. He's now a Senior Vice President at the Royal Bank of Canada, leading that organization's economics and thought leadership group. He's the lead author of a recent report called A Smarter Path, the Case for Post-Secondary Reform.
This report makes a number of, shall we say, uncomfortable observations about the relationship between Canadian higher education and the Canadian knowledge economy, in particular, between high spending and high graduate numbers on the one hand, and low productivity and significant levels of graduate underemployment on the other.
Though the report does not directly address the issue of Trump or tariffs — it was released 48 hours before Liberation Day — it has added to the sense in Canada that the higher education sector is headed for and indeed needs a shakeup. And just to come clean for a moment, we here at Higher Education Strategy Associates are in a partnership with John and RBC and the Business Higher Education Roundtable, putting together a series of events culminating in a policy summit on post-secondary education in late September of this year.
In the interview today, I talked to John about what the Canadian system's biggest challenges are, how universities and businesses can more effectively partner with one another, and why Canadian political parties are increasingly shy about betting on the knowledge economy. But enough for me. Let's turn it over to John.
Alex Usher: Okay, John why does a bank care so much about post-secondary education?
John Stackhouse: That's a fair question Alex and thank you for including us in the podcast here. If I can put it in terms of capital, let me do that, 'cause maybe that's what people would expect from a bank. So our economy and the society that depends in many ways on the economy, depends on capital. We have natural capital we have tech capital, technology capital. We have financial capital, which you'd expect from a bank. But it's critical we also have human capital. That's core to the economy. No, nothing new there other than to stress from RBCs perspective, when we look at Canada's prospects for out to the 2030s and the prosperity that we're going to need and that we want as a society, we need to think about how we harness all these forms of capital, our natural capital, our financial capital, our technology capital, but critically our human capital to create, to develop a more prosperous economy and society, but also to create the kind of vibrant society that yes companies want to be part of, but we as individuals all wanna be part of, we want to contribute to. As a bank that matters. Our purpose is to help clients thrive and communities prosper. Both of those require that human capital. We hear that from our clients, we hear that from our community partners. We hear it from our employees. So, those are some of the many reasons we as a bank at RBC are leaning into the post-secondary conversation.
Alex Usher: So in the paper that you co-wrote, you described Canada's post-secondary education systems being slow, costly, often out of sync with the economy. I think those are pretty common criticisms of the post-secondary education around the world. Do you think there's something specific to Canada about that? Is it, is there somewhere else you think has it right? Or is this a more general critique of, you know, modern higher education?
John Stackhouse: And, and, and there's probably some parchment from like a thousand years ago where some education critic says, you're too slow, you're too costly, you're outta touch with the uh, the economy.
Alex Usher: Yeah.
John Stackhouse: signed the monks of higher education. But yeah, it's it's fair to point out that Canada is not a class of one in these challenges. But maybe a couple of the things that we do need to realize are problems more in Canada than elsewhere. One is being a bit of a victim of our success. We have a lot of higher education, of post-secondary education, I should say in, in the country. And we haven't differentiated enough and we haven't differentiated the way others, Europe is the classic example, continental Europe certainly manages to continue to differentiate. So we're putting people out with degrees and diplomas that are not differentiated differentiated enough. We've not allowed the business model to evolve at the speed of the economy and society around us, and of the expectations, both of students, but also I would argue of teachers and people who are wanting to create the knowledge and share it.
They, among others know that the world is moving faster than, many of our institutions are. And then on the research side, which I'm sure we'll get to, wow, we really lag a, as an advanced economy, as a G seven economy. We're not nearly as good at post-secondary research. And I'm pointing to the private sector here as part of the problem integrating that with the private sector to the degree that an advanced economy will need to in the 2030s.
Alex Usher: So RB C's been a really strong voice on on this education work connection. So what are employers still not getting from the, the current system. And what responsibility do you think the employers themselves have to help improve it?
John Stackhouse: Yeah, there's a dual responsibility and thanks for mentioning RBCs commitment to work integrated learning. One of the reasons is our CEO Dave McKay is a product of the co-op system at Waterloo and has a deep conviction that work integrated learning not only improves the kind of lifecycle for the student it improves the education system by students being able to go back into the classroom, having applied some of their knowledge out in the uh, so-called real world. But it also improves organizations and that's what we see at RBC, we hire a couple of thousand co-op students a year, and they're not just programmers from Waterloo. Uh, We have fantastic interns from TMU, from all sorts of colleges and universities across across the country. We benefit from that. It improves how we work. It ob, obviously creates a talent pipeline but one of the things we've seen over the last decade is a breakthrough by giving our co-op students challenges to solve for us.
We put them on teams. We give them, some management support. And these are people who have never worked in a bank. And we say, here are our, some of our biggest problems see you in August. We have like literally a a bake off where they present to upper management their ideas. We've got something like a hundred patents out of this system because the critical thinking the fresh minds, the collaborative spirit that students actually develop in college and university, in post-secondary. They learn how to work together on teams better than we could teach them out of the gates and they can apply that to some of our problems. So we're benefiting from it.
So what do employers need to do? They need to see this as a really powerful investment in their own businesses. They need to see it as a way of injecting a bit of change into their organizations. And they need to, to understand that this all requires an investment, as I mentioned. Uh, So you've got hire people who are good at managing this. It just, students just don't walk in the door and do this on their own. It's not Lord of the Flies. It needs uh, that, that kind of organizational investment.
Alex Usher: So, but let's talk about what education institutions are doing, 'cause I certainly got the impression reading the report that you think they need to do more to align you know, educational outputs with labor market needs. I mean, they've done a lot over the last decade. You've got a big growth in work integrated learning. You're seeing the rise of microcredentials experiments and things like competency-based learning, but I get the impression you don't think that's enough. What more needs to happen?
John Stackhouse: Yeah, well, well, sadly, or depending on your point of view, it's, it can be exciting as well, none of us are doing enough um, technol, because of technology, but also because of some other global forces. The world around us is changing faster than probably most of us are changing. That includes large organizations, small companies, but also educational institutions. So the pace of change is accelerating and will continue to accelerate. Therefore, institutions need to be much more change minded in what they do. And that's hard in an educational institution for all the reasons that your listeners would know well.
So what do they need to do? Changing and adapting the business model is a big challenge because it has now into crisis territory where post-secondary institutions are not getting the funding that they need. They know that. I think everyone knows that, but they are losing the argument in the public square. For new funding. And given all the pressures on society, I can't imagine that changing favorably for them in a significant enough way. So they need to be freed up to uh, change, change their business models including their revenue models and that will require being more adapted to, and adaptive to the economy, the broad based economy around them and get into some of the opportunities there.
Alex Usher: We're gonna take a short break. We'll be right back.
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Alex Usher: And we're back. John, we've been talking so far mostly about human capital, which I know you said is your, your main concern I guess as, as a bank, as an institution. But what about research and the co-production of knowledge, right? Like what are the respective roles of post-secondary institutions and businesses here, and why don't we see the kind of close connection between business and, you know, enterprises and universities, the way we do, say, you know, in, in certain parts of Europe and in the United States? What's the missing link here? Why can't we, why can't we get there?
John Stackhouse: what a a thick, difficult nut to crack. And people who are way, way smarter than me have, have studied this and shared thinking on it for decades. The challenge lies as much in the private sector as anywhere else, and we've become, in some ways too much of a branch plant economy and a hinterland economy. Both at the same time and separately, where we're able to live off the wealth of the land quite literally. We're able to live off the wealth of access to the US market and we're able to live off the, the dividends of an innovation economy. All that, I don't wanna say it's coming to the end, that would be a bit hysterical, but is well into a sharp change in direction.
And, the, the, Trump challenge to Canada in an odd way, is a bit of a gift, to force us to say, okay we, we need to be less dependent on the US. That's probably a very strongly felt Canadian view now. And connect more with other parts of the world. Great. Lots of opportunities there, but business is going to have to invest more in R and D if we want to turn those branch plants into more independent facilities that serve Canada at an efficient way. But can also sell into seriously competitive European and Asian markets and adding the cost of distance to that we are going to need to apply, invest in and apply R and D in a way that we haven't probably in well over a generation. So new governments intentionally plural there 'cause it's federal and provincial, need to almost in an emergency way, get business together and say, what do we need to create that that it is not just one-off tax breaks, it's creating a culture and a dynamism between universities particularly, but universities and colleges and as well as polytechnics, to work with business to develop a kind of post-Trump Canadian economy and not do that in a status way, so that this is among the challenges. And, also not to think we can copy the Fran Hoffer model from Germany or the Japanese model, 'cause those are very particular to their cultures. So what can we develop that will be particular to the Canadian culture. But, this is not the time for a Royal Commission or a, a one or two year study. This will need to be done with a fair bit of urgency and I'd hope a new federal government would kind of see that opportunity to bring the provinces but also the private sector together with a bit of a crisis mindset.
Alex Usher: Okay, I'm gonna come back to the Trump issue in a second here. But going back to the report, you align a number of challenges in the sector, right? Outdated budget models, over credentialed, but under-skilled graduates, and so on. What do you think is the most pressing reform that Canadian post-secondary needs to deal with right now? What's the weakest link in the system?
John Stackhouse: that's a great question. Uh, And it's hard to pick one. I'll go back to the funding model, that post-secondary institutions need to be liberated in different ways to innovate with funding models to wean themselves from the strictures of provincial funding as an example to develop various approaches to tuition and fees as another example that are much more based on performance and outputs as well as outcomes. And to have more competition between parts of the sector. Most people I know in the sector are pretty enthusiastic for that. They probably want it set up so they have a good chance of winning,
Alex Usher: Yeah.
John Stackhouse: that, that model. But I think pro the provinces, need to be nudged and they probably don't need a lot of nudging to uh, up the doors to more innovation, more competition and a little, little more daring, on the institutional side.
Alex Usher: So that's, I think what I think the words you used in the report were reasonable deregulation. Tell me a about the, increased competition, like, are there things we could do to incentivize more new players in the system that might be more disruptive?
John Stackhouse: Yeah, there, there's nothing like new players. And I've studied enough sectors in terms of innovation over the years to see this that nothing quite works quite like the power of a vibrant, well-funded new player. So encouraging that will probably cover a number of miles in the journey and will allow creative players across the sector to come up with ideas probably that they're not even thinking of now. It's just the power of competition. So creating or reducing regulatory barriers to that as an example. I think on the employer side and on the business side, we can also think harder about sending the right market signals. and that can be something as basic as hiring. So, we tend to hire, it's convenient and there's lots of reasons for it from the same institutions and like tends to hire like, so how do we as employer send signals that maybe, a new en new entrant is going to have a good pathway to employment for their students and their graduates, because that will quickly be heard right down to, you know, the, the high school levels when students are making decisions.
Alex Usher: So outside the ambit of this report, you've been very outspoken the last couple months about the gravity of the threat that Canada faces from the US under Trump. You spoke at that Business Higher Education Roundtable event, and I know, I know people who listened to your speech were actually quite sobered by it.
You know, there are big changes coming to the country as a whole. What are the implications for universities? Like what changes do you think are now baked into the system of government subsidies and, and government regulation because of the new geopolitical situation?
John Stackhouse: So it, it's, it's unfortunate that colleges and universities are not more at the forefront of the, I'll call it the Trump discussion. We're hearing lots about pipelines, about export infrastructure ports. Great. Well, I mean, those are all critical or we hear lots about our trade exposed sectors, autos most of all, but steel and aluminum
Alex Usher: Yeah.
John Stackhouse: even pharm pharmaceuticals.
Well, guess what? All of those require post-secondary institutions and are dependent on post-secondary institutions. So how are we thinking about the steel plant of the future that may be exporting more to Europe or Asia? It's going to need a number of incentives to re retool perhaps or one could say the same of auto plants that may have to focus on manufacturing different kinds of products, including possibly defense products as we look to increase defense spending. What kind of talent if I can put it that way, are they going to need to do that? How are the schools in those regions adapting to that? But, to the research question, how can the research side of those schools be integrated more?
You'll need to come up with new models and let's incent them. Or incentivize them to to do that. The good news is I suspect there's gonna be a lot more money on the table for that, but it's gonna be kind of a different research funding and different institutional funding than perhaps we've seen before. That would be good if it's different.
How do colleges and universities step up to that plate where there, there could be tens of billions of dollars available for economic transition. And to step up and play a leading role in that and they'll
Yeah.
they'll be rewarded for that.
We're seeing interestingly, a a an enthusiasm and excitement to attract academic talent from the US, the sort of Trump intellectual refugees.
Alex Usher: Yeah.
John Stackhouse: We've, you know, I've both seen kind of cycles or variations of this over the uh, the years. I remember after 9/11 and during the Bush years, not quite like now, but there was the same sort of excitement and you had star academics move here as almost cultural votes on on Canada. That's tends not to be sustainable or even that interesting from a long term perspective. So how do we make it sustainable and interesting to create and this is someone else's idea, the kind of the Canada research chairs
Alex Usher: Yeah.
John Stackhouse: the late 2020s.
Alex Usher: Yeah.
John Stackhouse: attract, that, that talent, not as a play to say, Hey, you can escape the Trump crackdown, but rather say to the world, if you are a, an entrepreneurial, ambitious academic in fields that are important to Canada, there's no better place in the world to be right now than Canada.
Alex Usher: But I think,
John Stackhouse: kind of message I think we can send to the world.
Alex Usher: Yeah. I think one of the things you're touching on there though at, at the start of that answer was that all political parties seem to be responding to a set of aggressive tariffs on the export of goods by doubling down on producing goods, right? It's like, and I, I find this sort of weird, like surely one of the answers is, we should pivot to services, 'cause that's where we're, we're not very good at services. And that, in theory, I think, you know, I mean that's where universities in particular would have in theory some kind of strength. Why do you think we're pushing so hard on goods and, letting the services side drift a bit.
John Stackhouse: It, that's such a great observation because we've become Uh, services, but more maybe stated a different way, an intangibles economy, a knowledge
Alex Usher: Right. A better term. Yeah.
John Stackhouse: thing to say a decade ago. And then it sort of, became more, more derided. We need both, you can't, well, you can, but the best intangibles tend to come out of some sort of tangibles activity.
Alex Usher: Sure.
John Stackhouse: we need to play to our strengths, and that includes a resource economy. Back to what Canadian Universities missing, in our study I, I, I find it interesting that post-secondary does not map the resource economy of the country as well as it should. And this doesn't mean we just need to produce kind of miners and rig operators, although that's going to be important for a number of years. But there's all sorts of science and discovery, which we've been great at for generations that we need to amp up if we're gonna be a critical minerals leader in the world. It's not just about having critical minerals mines and processing plants. We've shut down a lot of our best mining schools in the country. And China has like a multiple number of great mining schools far beyond their population size that we have and should have.
So we need to invest in the intangible side the knowledge side of that tangibles part. It's not just manufacturing as you say, but it's processing, it's resource extraction that's actually incredibly sophisticated. It's given Canada of a slew of academic recognitions over the decades. But let we, we need to ensure that intangibles capacity that we're developing in our universities and colleges, as important as it is, is also tied to that um, so-called real economy. But certainly manufacturing and resource development.
Alex Usher: Best case scenario, 10 years from now, what does the Canadian post-secondary system look like? How is it different from today?
John Stackhouse: It has far more variation, in fact, something new maybe come outta this, that is neither a college nor university nor Polytechnique, that becomes a bit of a Canadian model. Just as we became of a pioneer of community colleges in the fifties and sixties, we have a chance to create a different echelon, and that doesn't mean necessarily at the expense of the others, but that is more appropriate. We have institutions that map that economy including the far north of the country. And we don't need to be geographically everywhere. We can do these things remotely as well, but we need to ensure that our institutions are better reflective of the country and its uh, its economy and that it is better connected with the world. You and I have talked lots about the sad story of international students in the country. And the real tragedy of what's been done over the last 10 years with international students would be, if we abandon it altogether. We have something that's largely good, it got mucked up and we need to, kind of address that mucking up. But we also need to be a place that students, the best students and most ambitious students from around the world want to come and study, preferably to stay, but also to go back and connect us with the world because what we're saying to ourselves as Canadians now, we're not saying it this clearly, but is that we want to be a more global country.
Alex Usher: Yeah.
John Stackhouse: And here's our opportunity through our post-secondary system to continue to be a more global country, but that's gonna require us to reach out to the world and there's no sector that does that better than post-secondary.
Alex Usher: John, thanks so much for being with us today.
John Stackhouse: Thanks, Alex. I've enjoyed it.
Alex Usher: And it just remains for me to thank our excellent producers, Tiffany MacLennan, Sam Pufek, and you, our viewers, listeners, and readers for following us. If you have any questions or concerns about today's episode or suggestions for future ones, please don't hesitate to get in touch with us at podcast@higheredstrategy.com. Run, don't walk to our YouTube page and hit subscribe. That way you'll never miss an episode of the World of Higher Education Podcast.
Join us next week when our guest will be Rómulo Pinheiro. He's a professor at the University of Agder in Norway, and we'll be talking about university's role in the economic development strategies of rural and remote regions. Bye for now.
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