The discrepancy between the forecasted and actual deficit has raised some alarm for Canada’s long-term economic outlook. The cause for concern, according to David Johnson, a professor of economics at Wilfrid Laurier University, is rooted in the source of the recession.

?Most recessions in the past 30 years have had really clear causes. They have been caused by short term tightening by monetary policy . . . because it was perceived that inflation was a problem,? Johnson explains.

Policy and inflation are not, however, the cause of the current recession that mimics the Japanese recession of the 1990s, in which there was a large price fall in real estate and stocks.

?We don’t have very many periods [in Western countries] in which asset prices have experienced the kinds of declines that they have,? says Johnson.

Thus, the fear becomes a similar experience to Japan’s ?lost decade? where recovery was a long and slow process.

Despite these concerns, Canada’s situation is not dire because of the economic stability the country had entering the recession.

?When the recession started, the budget was approximately balanced,? says Johnson. ?It’s actually the Americans that have a big fiscal problem; we have a relatively minor one.?

With Canada’s deficit only reflecting about three per cent of the GDP, in comparison to the United States? deficit estimated to be between nine and 12 per cent, Johnson says that the recovery will be manageable.

Nevertheless, Canadians will eventually have to pay off the accumulated debt.

?In order to return to budget balance . . . you have to raise taxes slightly,? says Johnson.

Regarding the discrepancy between the forecast and actual deficit, Johnson again explains it in relation to Canada’s GDP.

?When You’re forecasting a really big number, being off by, say, $5 billion, is just not that big a deal because It’s simply a percentage of GDP.?

The new requirements only permit students who qualify and receive the Ontario Student Assistance Program (OSAP) to receive the grants.

This decision was made in light of the provincial budget released in March, which takes the world’s current economic situation into account.

?We are going through some pretty extraordinary economic times,? said Milloy during a conference call with the Canadian student media. With the new change to the grants, the provincial government will save just over $100 million. Cuts are not isolated to the education sector.

?Certainly each ministry, including my own, took a hard look at where the pressures were and the resources that were available and we had to make tough decisions,? said Milloy.

In addition to the requirement changes for the grants, the government will not be increasing the amount given. Originally, the Textbook and Technology Grant was meant to increase to $250 per student annually as of the fall 2009. ?The Textbook and Technology Grant will continue at the $150 level, we will not be able to increase it,? said Milloy.

Saad Aslam, chair of the Wilfrid Laurier University Students’ Union board of directors, expressed his concern for students whose families have been affected by the recession. ?There are a number of students whose parents may have lost jobs…. If they lost their jobs in May or over the summer they wouldn’t be eligible for OSAP.?

Aslam, who has also been involved with the Ontario University Students Alliance (OUSA) and the Canadian Alliance of Students Association (CASA), is concerned with ensuring that post-secondary education is accessible to all students regardless of their financial situation.

?It’s not great to be cutting any sort of funding for post-secondary education and student assistance in a recession.?

The effects that the grant changes will have on students will not be clear until the fall. They do, however, reflect the impact of the economic crisis on funding for post-secondary education. ?We quite frankly don’t have all the resources that we thought we had,? said Minister Milloy.

However, Milloy maintained a positive attitude in addressing the issue, stating, ?we’re certainly trying to do everything we can to support students.?