THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, May 29, 2019
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study the subject matter of all of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019, and other measures (Training Credit - Part 1(g)).
Senator Percy Mockler (Chair) in the chair.
The Chair: Good evening. My name is Percy Mockler, senator from New Brunswick and Chair of the Standing Senate Committee on National Finance.
I wish to welcome all who are with us in the room and viewers across the country who may be watching on television or online.
[Translation]
I remind our listeners that the committee hearings are public and accessible online at sencanada.ca.
[English]
Now, honourable senators, I would like each senator to introduce themselves, starting on my left.
Senator Klyne: Good evening. Marty Klyne, Saskatchewan.
[Translation]
Senator Bellemare: Senator Diane Bellemare from Quebec.
Senator Forest: Good evening. Senator Éric Forest from the Gulf Region, Quebec.
Senator Pratte: André Pratte from Quebec.
[English]
Senator M. Deacon: Good evening. Marty Deacon, Ontario.
Senator Boehm: Good evening. Peter Boehm, Ontario.
Senator Neufeld: Richard Neufeld, British Columbia.
Senator Duncan: Pat Duncan from the Yukon.
Senator Eaton: Nicky Eaton, Ontario.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, honourable senators. Honourable senators and members of the viewing public, this evening we continue our consideration of the subject matter of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019, and other measures.
More specifically, we will consider Part 1(g) as listed in the summary of the bill, which introduces the Canada training credit. To discuss the matter we welcome, by video conference, from the Canadian Federation of Independent Business, Dan Kelly, President and Chief Executive Officer. We also have the following witnesses: Jennifer Robson, Associate Professor, Political Management, Kroeger College, Carleton University; from the Canadian Labour Congress, Larry Rousseau, Executive Vice-President; from the Canada West Foundation, we welcome Janet Lane, Director, Human Capital Centre; and finally, Cory G. Litzenberger, President and Founder, CGL Strategic Business and Tax Advisors.
I have been informed by the clerk that each witness has opening remarks. We will start with Mr. Kelly.
Dan Kelly, President and Chief Executive Officer, Canadian Federation of Independent Business: Thank you very much, senators. It’s a pleasure to be with you.
Just a quick reminder of my organization. Many of you know us. The Canadian Federation of Independent Business has 110,000 small- and medium-sized businesses as members, all of them independently owned and operated and spread right across Canada.
We are pleased, in some respects, to see government focus on building skills in Canada through this measure. It certainly responds to a need out there on the part of the business community. Right now, the shortage of labour is growing rapidly among small- and medium-sized firms across Canada. Of course, our unemployment rates are quite low. There are, among small- and medium-sized firms right now, 409,000 positions that have been vacant for three months or longer. This is a new high for us in Canada in the SME sector in terms of labour shortages.
On slide 4, I share with you that the primary concern is the shortage of skilled labour, but behind that is an increasing shortage of unskilled or semi-skilled labour that small- and medium-sized firms focus on.
Small firms are big in the training game. Right now, we estimated that small firms spend about $14 billion on training. Most of that is informal, on-the-job training, which is incredibly costly to the business but, of course, very valuable to the receiver of that training, the employee in question. Small firms spend, on their own, about $5 billion in formal training, the type of training that may be incented by the measure in question.
I want to note that small firms also hire a large number of inexperienced workers. They play a big role in training people who don’t have a lot of experience and give them their first foot in the door to the labour market. When many of us think about our own backgrounds, we start out in a small- or medium-sized company.
Small firms recognize that training is important to them. About 70 per cent of small firms say that training in their workplace is an important measure. Looking more specifically at the Canada training benefit, and specifically the Canada training credit, we don’t have any major issues with the credit itself, the government’s provision of $250 per year in an account essentially for those receiving training. We want to make sure, of course, that the training has some form of connection to the workplace in question.
Our bigger area of concern — outlined on slide 8 in my deck — is with the other companion measures that the credit would be teamed with. Those are the EI-related elements, the EI training support benefit. Right now there is no need for the employee, it appears, to have any kind of employer permission to take whatever kind of training they wish. As an example, a welder who wants to study interpretive dance could ask and receive four weeks away from the workplace, where the employer would be required to hold that job open and give them that leave. They would receive EI benefits during that period of time with the employer not being able to do much about that. We want to make sure that whatever benefit is provided through the Canada training credit or the EI training and support benefit has a built-in connection to the needs of that individual company.
Right now, there is no role for the employer. The employer would be required to provide that leave regardless of whether there is a business-related benefit. The government, to its credit, has designed an EI offset, a small business premium rebate, but it’s very small. In fact, we expect it to be about 2 cents per $100 in premiums. We believe this could be converted. We have major concerns about the plan as currently constructed.
We believe that, with some modifications, this could actually be something pretty good. We believe, and we recommend, that the employer and employee together develop some form of training proposal that is then funded through the training credit, and then they would receive the companion EI training support. There would be a requirement on the part of the employee to get the permission and buy-in of the employer to go ahead with the kind of training, especially if it requires time away from work.
We also believe that EI small business premium rebate that the government has developed should be expanded to ensure that the employer, small business, is paying the same rate of EI as the employee on the first $20,000 in premiums. We also then recommend that the one-week waiting period that people typically have to receive EI benefits be waived and that the employer be allowed to top up those provisions.
In summary, we do not support the training benefit and the training credit in its current form but, with some reforms, particularly about the use of employment insurance dollars and leave provisions, we think this actually could scratch an itch pretty well that small- and medium-sized firms have in dealing with their shortage of skilled labour.
I have lots of other ideas and thoughts on this, but I’ll save that for questions later.
The Chair: Thank you. Professor Robson, please.
Jennifer Robson, Associate Professor, Political Management, Kroeger College, Carleton University, as an individual: Thank you, Mr. Chair and senators. I have been invited to speak to you regarding a specific portion of Bill C-97; namely, the provisions creating a Canada training benefit.
[Translation]
I am very grateful for the invitation today.
[English]
Before joining Carleton University, I had the privilege of working on one of Canada’s largest ever social research projects called learn$ave. That project asked whether low- and modest-income Canadians would use a learning account and invest their own money in their own training and education. My comments to you today are heavily influenced by that work.
Bill C-97, as you know, would create a new federal tax credit for resident tax filers aged 25 to 65 who meet a minimum and maximum income test.
[Translation]
The Chair: Ms. Robson, can you slow down? Thank you.
Ms. Robson: With only five minutes, it’s sometimes difficult.
The training credit would be $250 per year up to a limit of $5,000 per person. An individual could therefore claim 50 per cent of the amount paid for training, which would be tax deductible. In a sense, it is a new allowance for training and learning expenses.
[English]
While the government’s budget did not offer clear projections on the number of Canadians likely to be eligible for the new credit, I estimate that approximately 14 million Canadians might meet the age and income eligibility criteria. If we assume a 5 per cent take-up rate at maturity, we should expect some 700,000 adults to claim the credit per year. The government is projecting an annual cost of $230 million per year at program maturity, so either they are projecting a mean claim of just $380 per person or they are projecting a somewhat lower take-up rate than the 5 per cent seen, for example, in countries like Singapore that have had learning accounts for some time.
One question is whether $380 or twice $380 is enough to buy you any meaningful training. In preparation for this evening, I looked at a handful of examples and learned, for example, that a short walk away at the University of Ottawa you can get a course on effective writing for the low cost of $695. Algonquin College, a short drive away, offers courses on nutrition or driving with air brakes for $284 or $405 respectively. So there is supply.
My own home institution likewise offers certificate training programs at a somewhat higher price point — I’m not going to lie — and I suppose out of institutional loyalty I should say it just reflects great quality.
The fact of the matter is that all education and training providers are working in a market, and markets adapt to demand. I expect that, as a result of the creation of this new tax credit, more training and education providers will be finding ways to offer high-quality, lower cost, perhaps shorter duration training and certification programs. I also expect that the government will not have a very difficult time figuring out which training and education providers should be certified to provide recognized training under this credit, and I’m pleased they’ve committed to working with provinces in this regard.
I’m a little more sanguine about the government’s own projections on returns to education leading to direct increases in tax revenues in the very near future. I think there is a good policy case for a portable benefit that lets workers choose their own training. Currently, one in six working-age Canadians report investing their own money in formal training, which is lower than some other OECD country: for example, France.
Employers, of course, as we heard earlier, will report spending a great deal on employee training, but the available evidence suggests that most of that training is going to already better skilled, higher-educated workers. Those are the same higher-income workers who are actually in a position now to invest their own funds. In fact, the two existing account-based mechanisms that can support adult education and training are very underused in this country and are disproportionately set up to reward financially already higher income and better off Canadians. So we have room for improvement.
Moreover, the nature of the labour market seems to be shifting with the growth of gig employment. Self-employed and gig workers can’t count on an employer to sponsor or provide training and upskilling. An account-like system that allows for flexibility and portability throughout working life is, in my view, an appropriate new policy instrument within a broader mix.
In closing, I’d like to offer four areas for clarification or improvement for consideration by senators.
First, while the budget documents describe the new credit as a refundable tax credit, the wording of Bill C-97 suggests the credit will be inserted in the list of non-refundable credits in the Income Tax Act. Refundability is a key feature for reaching lower and modest income workers, so I urge the committee to ensure the budget’s intent and legislation are aligned on this important point.
Second, my experience in learn$ave suggests that many lower and modest income adults will be motivated to take the training and put their own money towards it. But they will have to wait until tax time to be reimbursed for their training costs under the current design, and that can make the credit far less attractive to them. Another refundable tax credit, the Canada Workers Benefit, can be partially paid in advance. The committee could recommend an amendment to Bill C-97 to allow for advance payment using wording in the Income Tax Act similar to paragraph (6) of section 122.7.
Third, there are often non-tuition mandatory costs related to even short-duration training courses, such as mandatory tools or course materials. Those should be eligible expenses for the credit as well.
Finally, I would call on the government, as it works towards implementation of the credit, to support third party service delivery to help lower and modest income adults find eligible training and education programs and apply for the new credit.
I would be pleased to expand on my remarks.
[Translation]
I would be happy to answer any questions you may have. Thank you.
The Chair: Thank you very much.
Larry Rousseau, Executive Vice-President, Canadian Labour Congress: Mr. Chair, thank you for the opportunity to join you this evening. I will make my presentation mainly in English, but I can answer your questions in the language of your choice, of course.
[English]
The CLC is Canada’s largest central labour body, advocating on behalf of 3 million workers across Canada, and it welcomes the enactment of the Canada training credit and the initiative to support lifelong learning in Canada.
Historically, government training programs in Canada have been directed at the unemployed. Adults with limited formal education and working in lower-skilled and low-paid jobs have historically had relatively few opportunities to access training. However, technology and skill needs continue to evolve — sometimes rapidly. Canada’s aging society makes it imperative that everyone, including older workers, have a chance to contribute. It is also vital for productivity growth and equity that workers with lower levels of education have the opportunity to improve their skills.
Canadian research suggests that mid-career investments in training pay off in higher wages. Better educated individuals earn higher wages, have higher earnings growth over their lifetimes and experience less unemployment. Yet workers with limited schooling are the least likely to take part in adult education.
Canadian research also shows that racialized, low-skilled and shorter tenured employees of smaller firms are less likely to take part in employer-supported training than are White, highly skilled and longer tenured employees in large firms. We must not allow lifelong learning to simply mean even more education and training for those who are already highly educated. Workers with less than a high school education have the greatest need to upgrade their skills.
Individuals with relatively low levels of educational attainment are more likely to face low wages and a higher likelihood of unemployment over the course of their working lifetimes. Adult learners may not participate in lifelong learning due to lack of awareness and a lack of confidence.
However, cost and time commitments are also significant barriers. Working adults may feel unable to return to school or participate in training courses because they lack the means to support themselves and their families while they are studying. Heading back to school or participating in a training course involves sacrifice and uncertainty. Adults who return to school must rely on family and friends, combine work and school, take on more debt or juggle some combination of the three.
By covering no more than half of tuition and course fees, the Canada training credit may ease this hardship but will not eliminate it. Combining work and family responsibilities is challenging in the best of circumstances. It’s no surprise that workers interested in training report that being too busy at work is the most significant obstacle to getting additional training or education, and child care challenges are nearly as pressing a concern as cost of training.
The federal government has signalled that it will coordinate with the provinces and territories to ensure that leave provisions in employment standards protect workplace entitlements while individuals are away at training. However, details regarding the circumstances under which workers will be able to take training leave — for instance, subject to operational requirements — have yet to be released. A robust and carefully maintained government list of accredited training providers will be essential in preventing fraud and abuse caused by unscrupulous and fly-by-night providers.
Beyond this, we urge the government to provide support to adult learners by investing in literacy, numeracy and digital skills for workers who need to strengthen their essential skills; ensuring that prior learning assessment and recognition is available for workers assessing their learning needs and options; making sure that adult learners have the information they need to make informed decisions about their learning options; providing accessible information about the range of learning options available, and readily available and understandable information on how to access the learning opportunity that is best for them; and supplying information about the cost and benefits of skills upgrading to make an informed decision in their best interests.
In this respect, government-provided information over the Internet is important, but so is in-person, face-to-face contact with well trained and equipped skills-development counsellors.
[Translation]
Thank you, Mr. Chair. I am ready to answer your questions.
The Chair: Thank you, Mr. Rousseau.
Ms. Lane?
[English]
Janet Lane, Director, Human Capital Centre, Canada West Foundation: Good evening, and thank you for the opportunity to provide my thoughts on the Canada training credit. For those of you who do not know us, the Canada West Foundation is a non-partisan, independent think tank based in Calgary. We work on issues of interest to the West and, by extension, all of Canada. My work in the Human Capital Centre is devoted lately to skills development and the competency-based approach to workforce development and deployment.
I believe that the Canada training credit is a good idea in principle. As technology, work processes and global influences cause jobs to change, people who are already in the workforce will be under increasing pressure to upgrade their skills or re-skill altogether if they wish to remain employed. The credit is a terrific incentive for people to do so. However, I’m not convinced that the credit, as described in Budget 2019, will achieve the goal of helping Canadian workers be better prepared for the changing workforce. I have four reasons for this.
My first reason is that the amount is too small. The credit is $250 per year to offset up to half of eligible tuition expenses, yet tuition for both credit and non-credit courses at eligible post-secondary institutions run in the range of $400 to $800 per course. At $250 per year, it could take 20 years in the workforce to be eligible for coverage for one diploma or half of the cost of a diploma. Re-skilling and up-skilling are likely to be important and needed sooner than that. The very people who will need to re-skill the most, those in lower-skilled and lower paid jobs that are most likely to disappear or be disrupted by technological change, will be the least able to afford to re-skill through this credit.
Budget documents indicate that the government expects that this program will be used by only a small percentage of the population, while the truth is that technological change is disrupting work processes and as much as 50 per cent of the workforce may need to either upgrade their skills or re-skill altogether in the next few years.
My second reason is that the credit is for tuition paid to eligible institutions, and these providers are not able to offer much of the training that is needed. Full programs at eligible institutions are expensive but, more to the point, they may not be what people need. Much as the supply chain has moved to just-in-time delivery of goods, the workforce needs to move to just-in-time delivery of the skills, knowledge and attributes, known as competencies, required to complete the various tasks of ever-changing jobs.
The vast majority of eligible institutions offer, for the most part, courses and programs that are semester-based or offered one time per week over a period of weeks. They may not be offered when people working full time can be available for classes.
In many cases, the best solutions to workplace needs are short, online courses available 24/7, targeted to filling gaps in specific competencies. They are offered through private, online training providers. Recognized post-secondary institutions and training providers must quickly find ways to better duplicate this kind of training, or these private training providers need to be assessed for their eligibility for this credit. For many education and training providers, the problem is getting a handle on exactly which competencies are needed.
This brings me to my third reason. Canada needs better labour-market information. To get it, employers need tools to help them articulate the competencies they require currently and into the future. Individuals need better access to information about which competencies they will need to have, which they already have, which competency gaps they need to fill, and the fastest, most efficient ways to fill them. Education and training providers need this information. I say “now” in my notes, but I think I mean yesterday.
Canada does not have yet these kinds of tools known as competency frameworks. We need to build them quickly. We need to take the time to work with employers across the country to help them define the tasks of their jobs, especially the new jobs they’re creating, and the competencies needed to perform those tasks well.
Meanwhile, industry associations, human resources professionals and career developers should be encouraged to upgrade their own knowledge about competencies and help the people they serve to dig more deeply into what exactly it is that they need to learn.
My last reason for thinking that the Canada training credit may not succeed is that too many people lack the skills to learn. More than 40 per cent of the workforce has poor literacy and numeracy skills. These skills are at the heart of all learning, and good levels of these are needed for efficient building of advanced cognitive and technical skills. People who have been in low-skilled, low-paid jobs for a long time are the most likely to have lost some of their most basic cognitive skills since they left school, and they are most in need of learning new technical skills. They should be encouraged to upgrade their learning to learn skills prior to investing in new technical training, and their Canada training credit should be eligible for this upgrading too.
That ends my presentation, Mr. Chair. I am more than happy to answer any questions from the committee.
The Chair: Thank you.
Now the chair will recognize Mr. Litzenberger.
Cory G. Litzenberger, President and Founder, CGL Strategic Business and Tax Advisors, as an individual: Good evening, committee members. I thank you for the invitation and opportunity to appear before this committee to discuss Bill C-97 and the Canada training credit. My name is Cory Litzenberger. I am a Chartered Professional Accountant, a Certified Financial Planner, a Chartered Manager and the President and founder of CGL Strategic Business & Tax Advisors in Red Deer, Alberta. For almost two decades I have been serving the Canadian tax profession through past service with the Canada Revenue Agency, professional committees and in public practice.
I have several concerns with Bill C-97 and the Canada training credit in its current form, not the at least of which is the increase in complexity to our tax system that this creates. I am sure it is not every day a professional speaks to you saying they wish to be able to lower their fees. With the ever-increasing complexity in our system, I have seen many incorrect filings by non-professionals and laypeople. This complexity is causing strain on our tax system. It increases the costs of compliance by Canadians and the cost of enforcement by the Crown.
With all of that said, the $250 credit won’t be available to Canadians until they file their 2020 income tax return in April of 2021. If a person were born in 1995 or later, they wouldn’t qualify yet. If a person were born in 1954 or earlier, they will never be eligible. The maximum benefit anyone can receive is $5,000 in a lifetime, which will take 20 years to get, and this benefit can only be used to a maximum of 50 per cent of eligible tuition costs. According to a September 5, 2018, publication of The Daily by Statistics Canada, the average Canadian undergraduate currently pays $6,838 in tuition per year.
Consider someone who is currently 25 years of age making $27,000 a year who assumes they will have access to $1,000 of the credit after four years, in 2023. If this person leaves work for two semesters in January of 2023, they would only make $9,000 of income and would not qualify for the $250 credit that year. This is because it is less than the required $10,000 threshold. Therefore, this person would only have access to a $750 total credit.
This credit reduces the amount this individual can claim for tuition credits as well, which changes the future tax benefit by 15 per cent, or $112.50. The result is that this actual net cash benefit is $637.50 to this individual. Further, this same Statistics Canada report says that tuition is increasing at 3.3 per cent per year. As a result, by this individual waiting four years so they could get $637.50, their annual tuition has likely increased by $948.
This credit provides false hope to Canadians into thinking they are receiving $1,000 by waiting four years when in fact they are getting less than the amount of inflation. Now, if the individual is a parent who decides to stay home with their young children until they are in school as an economical form of child care, and then they proceed to go back to school so they can re-enter the workforce, they will not qualify for support because they did not earn more than the income threshold while they raised their children. Further, if the individual is someone who was laid off early in the year, collecting regular EI benefits, and wants to further their education so they can make themselves more employable, they will not qualify for that year’s credit, because regular EI benefits do not qualify for the threshold.
Lastly, if the individual is a small business corporation owner who pays themselves dividends, they would not qualify. Usually for cashflow reasons in a downturn, small business owners pay themselves dividends instead of a salary to avoid the nearly $5,500 in annual CPP contributions. This jeopardizes their future retirement savings just so they can stay in business. However, even if they are low income, making $10,000 a year, they still will not qualify for the credit to perhaps gain assistance in choosing an alternative career path.
In summary, those who qualify will not see anything until April 2021. The actual net amount of what they will see is less than the amount of inflation.
Students under the age of 25 will see nothing. People over the age of 25 who have less than $10,000 of earned income will see nothing. Seniors will see nothing. Struggling small business owners looking to make a career change may see nothing. Parents looking to further their education and re-enter the workforce will see nothing. People who have been laid off early in the year and unable to find work will see nothing.
This provision adds a lot of complexity to an already complex tax system and increases the administrative costs for both the Crown and Canadians for no real benefits to those who need it most.
I thank you for your time and look forward to responding to any questions on this matter.
The Chair: Thank you. We will go to questions from senators.
Senator Marshall: Some of you have already addressed some aspects of my question, but I’m hoping to get consensus on the answer. Could each of you address the parameters of the program? That would be the earnings of $10,000, the amount of $250 a year with the $5,000 lifetime cap and also the age parameter of 25 to 64.
Mr. Litzenberger, I think you mentioned that under 25 you get nothing, and over 64 you’re not entitled to anything. It’s the number parameters outlined in the program. It seems like there’s almost a consensus that the numbers aren’t high enough or low enough, depending. If you could just address that, it would be very helpful.
Mr. Kelly: I certainly agree with the concerns that have been expressed with respect to the size of the credit and some of the limitations of the credit. Our view at CFIB is that you have to start somewhere and that governments often start out with very small thresholds to try out a new public policy area. I wouldn’t reject the concept based on those parameters, senator. I would suggest that there needs to be some tweaking of it.
As I outlined before, there is lots of other public money supporting other types of training. Post-secondary education institutions, universities or colleges, there’s money for that. There’s money oriented at students through student loans and subsidies for that and education credits. There’s a whole host of ways that provinces and the federal government support training.
What doesn’t exist is support for people who are in the workplace in low- or semi-skilled occupational categories who are looking to upgrade their skills. That is deserving of some attention on the part of government, and that’s why we haven’t rejected out of hand the proposal the federal government has made.
In its current construct, though, we do believe that it falls short on a bunch of bases, most notably that it doesn’t require any connection to the workplace whatsoever, as far as we can tell.
I think this would be used, as I think other speakers have hinted at, by a lot of people who might want to go and, say, take a continuing education program at a university, because they’ve always wanted to learn Latin or they’ve always wanted to study an art. They’re not looking to make a career of that, but they’re thinking that might upgrade their skills.
Again, I think all forms of education are of value, whether that’s an artistic or sporting endeavour. I believe this program should be targeted more at training for workplace-related needs. That’s the way it’s been sold, and I think that’s what it should deliver.
Ms. Robson: I’ll do my best to answer the question around parameters. My understanding is that the intent here is to target working-age adults. I think there are good questions to ask about the upper limits. I realize the budget documents say age 64; the actual text of the legislation itself says until the person turns 66 within the tax year. Technically, some 65-year-olds could claim this.
But age 25 is, for better or worse, the age at which the majority of Canadians move from being full time in school to being full time in the workplace. It is one way to think about the lower age range when people tend to transition from school to work. Is that an age range that we ought to keep an eye on and perhaps make subject to review? I would be open to that.
I find myself agreeing with Mr. Kelly that there is merit to the idea of laying the plumbing and then kind of turning up the taps as you see how the system is working. I hope my illustrative examples show that there are skills-training programs that may be of interest and already available. I said in my remarks that I think this credit could also spur more market supply.
I would also echo Mr. Kelly’s remarks that there are other programs that are really intended to reach people who are recently unemployed. There are programs intended to support people who are going to school full time, whether through loans, non-repayable grants and so forth — other forms of tax credits.
Learning Latin or studying interpretive dance is not necessarily a waste of public money. Those are also going to build critical and essential skills that have market value. I worry that if we try to impose some kind of workplace definition, we will be planning for the labour market as we have it today, not the labour market as it will be down the road.
Again, for those one in six workers who are self-employed, for the one in eight workers on temporary contract, what is their workplace? How would we define what skills they ought to have? Thank you.
Mr. Rousseau: Certainly, I would echo my colleagues’ preoccupations, except we see it as having set the table. Of course, $250 a year, and you’re only allowed 50 per cent of that, what’s going to really incentivize workers to go out there and get the training? We don’t feel we’re there yet, but we see that this is a good step. At least you’re setting the table and the foundation, so that’s important.
For our 3 million members, earnings of $25,000 a year is $12.50 an hour. We advocate for $15 an hour minimum wage, of course. We have less of a concern that people would fall below that.
I don’t see low-income workers really taking two semesters off to go to school, if that’s the only kind of income they have. If they do, more power to them if they’re able to get those resources. But we think lower-skilled, lower educated workers will still have difficulty in trying to access this program to increase their skills and earning opportunities.
Ms. Lane: I don’t have too much to add, except I think that upper end will become a problem as more and more people are working beyond the age of 65. If their bodies haven’t given out and their brains are still active, they may be training as well.
Mr. Litzenberger: My biggest comment would be that when we look at pool-based incentives for tax credits where you’re providing an incentive to wait one more year and wait one more year for another $250, and it is potentially less than the rate of inflation, it could be misleading and put people into a position of financial hardship that they don’t realize and put them off, because they want to get that extra $250 so it will be cheaper. Not to mention that there are administrative costs for both sides, for the Crown as well as for the accounting profession in dealing with this, and I assume the Canada Revenue Agency in the administration of that. Somebody has to write the software to make that happen.
I wonder if the $250 per person per year would be better utilized in a more direct form for those individuals, rather than by implementing another series of credits.
The Chair: Thank you.
Senator Pratte: There are so many questions. My concern is inspired by what all of you have said. The people who will tend to use this new benefit will be people who are already highly educated, maybe not earning the highest wages but good wages. Some of them may be tempted to learn Latin or whatever. People who earn a lower wage and who may not have the skills to learn, as Ms. Lane mentioned, would not have much use for this; it may appear inaccessible to them.
What could the government add to better reach the lower-skilled, lower wage workers?
Mr. Kelly: I would love to jump in on that front. Our recommendation to address that important question is to ensure the employer has a direct link in choosing the type of training that goes on in the workplace. Again, I don’t take issue with the idea of the tax credit being available to people to take whatever program they want, whether that is Latin or interpretive dance. However, if you’re going to require the employer to allow that person to potentially take a month away from work, perhaps at their busiest time of year, then there needs to be a link drawn to the workplace itself.
That would help ensure the training is then targeted at that group of lower wage, lower-skilled employees who are in need of training. Often that kind of training is very expensive for the employer to deliver.
In my head — and our recommendation has already been submitted to government — is the idea that this be redesigned to have the employer and the employee together design a proposal for some form of skills upgrading or building. Then the employer would be allowed to top up those wages. Perhaps EI would cover off the wages. They would have the $250 credit to help pay for that. EI would replace some of their salary while they’re away doing that training, and the employer would be allowed to top up their wages during that training period.
Right now, those expectations for any kind of training in the workplace are entirely up to the employer. A small business often doesn’t have the resources to do that. This would allow the credit to be used that is in the hands of the employee, the employee to have EI benefits and the employer to top up, therefore cost-sharing the training, allowing more of it to target the very group in question.
Ms. Robson: How to make this more attractive to lower-skilled, low-income workers? I would emphasize that the current design of the credit says it will not be eligible to people who have income above the upper end of the third bracket. That’s a positive start in terms of making sure we’re not reaching those already highly skilled and highly educated. There are other measures they can use, right?
I made a point in my presentation about making sure this is a refundable credit that can be accessed not just at tax time, rather than paying out-of-pocket and waiting several months to be reimbursed. That is one thing I learned in learn$ave. In that project it was very important for people know they could be reimbursed for their costs very quickly.
I would also emphasize that, of course, culture eats policy. We can design the best-laid policy but, until we also have a cultural shift to promote lifelong learning, to promote ongoing education, there will always be an upper limit to take-up on programs like this. I would say, though, that at least this is a step forward in terms of no longer waiting for somebody to be out of a job before the federal government steps in to say they can help with some training.
We should make sure as well that the eligible training programs and courses will cover some basic and essential skills. That would be another measure to consider. Both Mr. Rousseau and I have emphasized that there is a role for non-profit, third-party agencies here in terms of providing individualized and personalized services to locate training and help people actually access this credit. Those are some of the points I would leave with you.
Mr. Rousseau: The glass is half-empty, but I have some concerns. In an ideal world, every employer, even small employers, should have a plan for their employees to assess their skills base and what they need. Unfortunately, the reality is quite the opposite. Even with large employers, we constantly see fights at the union table, at the bargaining table, to ensure plans are in place and to have employers follow up. Unfortunately, they don’t.
The other problem is that, once employees are trained, we hear employers saying — as they always have — why train this employee only to see them go off and find a better job somewhere else? That is a real problem. When we talk about the culture of learning and the culture of training, we have to take that into consideration.
Ms. Lane: The changes that are already happening in the workplace will come faster and faster with technology and changing work processes. Employers will have the best understanding of how they either need to get rid of current employees and rehire, or train the ones they have. As the demographics shift, and with the world being what it is, employers will find they are better off helping train the people they already have to fit in with the next level of job.
As the low-skilled, low-paid jobs start to disappear through automation, employers who want to keep those employees will want to train them. That is where those plans might actually start to happen. It might be a bit Pollyanna on my part, but I agree with Mr. Kelly that employers will want an active part in this.
I agree that we don’t want employees to be forced to do something. They should have some choice in what they’re taking, but I think employees will want to stay in jobs and so will be interested in taking those just-in-time boot camps or short courses or competency-filling, gap-filling programs that will help them stay employed.
The incentive will be the desire to continue to work. That will become more and more of a situation as some of these low-skilled jobs disappear. Therefore, working with your employer to figure out what you need to learn to stay employed is what will happen.
The Chair: Mr. Litzenberger, any comments?
Mr. Litzenberger: I have some concerns about the way it’s worded. One, there is a tuition grind in the legislation. Really, if we’re trying to help somebody, why are we doing that? Regular EI does not qualify. The only people who would qualify would be people currently working. If they have lost their jobs, they do not earn the $250 credit that year. That’s a concern from my perspective.
Obviously, the last is dealing with inflation. I’ve already talked about what the Statistics Canada reports have said. In addition to that, obviously an increase in demand for schooling would raise costs. One only has to look to my home city where Red Deer College has only 7,500 students and a dean making over $300,000 a year to find out where the money is going. Those would be my thoughts on that.
Senator Eaton: Educate me. If I lose my job tomorrow at age 50 and I’m receiving unemployment insurance, can I get training at the government’s expense? I can. How does this credit compare? Would it serve me better to quit my job and get training at government expense? Would I get better training than if I stayed in my job and applied for this credit?
The second part of my question is, instead of giving it to employees, Mr. Kelly, why wouldn’t you say to companies that if you have employees who need retraining, up-skilling, whatever, we’ll give the company the tax credit. So the company decides okay, Pat, you need retraining and up-skilling, we’ll pay for it. And they then apply to the government for a tax rebate or whatever they do. Would that not be more efficient than having a person in an office apply and go through it and deal with the employer?
The Chair: To the witnesses, if we can be succinct in our answers. We’ll start with Mr. Litzenberger and we’ll do the reverse.
Mr. Litzenberger: I’ll be short. As far as the EI, I’ll have to defer on that one. I’m a tax nerd, plain and simple, so I’m not sure where the benefit would be in relation to the credit as far as the economics on that.
As for whether the employer side of things, I can say firsthand as an individual, I have used the original credit where the feds put in, the province puts in and the employer puts in the other third. We’ve used that to train people into supervisory roles in our firm. It was quite a simple process.
Senator Eaton: So it has worked for you?
Mr. Litzenberger: It has worked for us, yes.
Mr. Rousseau: I’m just thinking of the example of the 50-year-old who’s going to quit their job to get training under EI. I think that’s a catastrophic kind of decision for someone to make, especially for someone who is mature in the workplace. I see this as basically something trying to —
Senator Eaton: But would I get a better option? Would I get better training?
Mr. Rousseau: That’s a debatable question. It depends on where you live and what’s available. I see this more as something coming to complement what’s out there already. We need to put into workers the incentive to go out there and do it. This is just another incentive to go out there and get training.
Senator Eaton: My second point was employers. Would it be better or easier for employers to manage rather than employees?
Mr. Rousseau: From our point of view, of course, when we put that kind of power into the employers’ hands, we find the employers are really mostly looking at their own bottom line as opposed to the complete welfare of the workers.
Senator Eaton: Thank you.
Ms. Robson: In terms of the EI comparison, I think Mr. Rousseau has already answered. It will depend a lot on where you happen to live. I would also emphasize, though, if you’re voluntarily separated from your job it’s not entirely clear that you would qualify for EI and all of the subsidiary benefits. Older workers who are separated from the workplace have some of the poorest re-employment outcomes. Making the choice to quit in order to get a little bit of EI is probably not a good economic decision over the longer term.
The program that was mentioned earlier is called the Canada Job Grant. It’s still in place. There is also, for example, the Apprenticeship Job Creation Credit. There are employer-focused measures.
Again, I come back to the point that there are one in six workers in Canada who are self-employed. There is no employer we can go to and say, come on, we’ll give you the credit and you do the training. They are the employer. There are another one in eight who are employed on temporary contracts. They don’t have an enduring relationship with an employer. If we make everything employer-focused, we will be missing out on an important and increasing share of the labour market.
The Chair: To conclude, Mr. Kelly.
Mr. Kelly: Thank you. Employment Insurance already spends billions of dollars on training in Canada, so there are a myriad of programs. The assessments of many of those programs are actually quite poor in delivering proper outcomes for those receiving them. Unemployed workers can receive a probably far better deal, far more in training than this measure would apply. Does that mean we shouldn’t go down the road of the Canada training benefit or EI credit? No, because a lot of the programs do not target workplace training for people who already have jobs and need to increase their skills.
With respect to the question of whether the credit should be in the hands of the employer, at CFIB we have pushed for governments to find some form of EI-related training credit. Most notably, we’ve asked government to try to reduce the amount of the employer contributions to Employment Insurance, particularly for small companies, as one way of achieving that outcome in a different way.
I like the idea, though, of a joint program, where it’s actually the employee and employer who both have to turn their keys. They both have to be supportive of the type of training before it, in fact, receives any kind of government support. With some reforms, this actually might scratch that itch out there.
I agree, and I appreciate that Mr. Rousseau made the comment, that employer poaching is a big deal. He’s absolutely right. It is an impediment to engage small employers to fund training because they’re afraid they will be spending their dollars to benefit a larger company that will then steal their employees. In fact, many larger companies have people stationed outside formal training institutions to poach workers from the small companies that are struggling to afford to put their employee in that situation. That’s why I think a training credit that is jointly determined between the employer and employee just might work.
Senator Klyne: Thanks to our panel of witnesses for their presentations. Very good.
As my colleague Senator Pratte said, there are a lot of questions here. For me there is something that’s inextricably linked in a bundle here, and it’s that whole labour market information, competency framework and a workplace definition. I’ll come back to that workplace definition.
The other thing I can’t believe is that this is not regional-workforce-needs driven, collaborating with the provinces and territories. Just trying to unpack this, without that labour market information and competency frameworks and an employer-employee agreement with a plan, I don’t see how businesses are going to benefit from this, especially if the employee gets to go away and do something unrelated instead of advancing their career.
In terms of workplace definition, fixing a car, these things are smartphones with wheels and a steering wheel and need new skills training. Building a new passive house requires new training. Employers should be wanting to advance careers with their employees. Engaged employees will stay. Someone who says, “I don’t want to train them because I’ll just lose them to someone else,” you just hang on to that untrained worker that way.
The thing is, when I look at this through the lens of where I come from in Saskatchewan, we may only represent 3 per cent of the population in this country, but I bet you we represent 10 per cent of that skilled workforce shortage. We are in a false plateau right now, but when demographics kick in we’re going to be way behind.
Were you consulted by any of the people who crafted this, especially related to regional workforce needs?
The Chair: We’ll start with Mr. Kelly.
Mr. Kelly: There was zero consultation whatsoever.
The Chair: Ms. Robson.
Ms. Robson: I was not consulted, no.
The Chair: Mr. Rousseau.
Mr. Rousseau: No.
Ms. Lane: No.
Mr. Litzenberger: No.
Senator Neufeld: Senator Klyne asked one of my questions, which was if any of you were contacted by government before this was designed. All of you have said no. What worries me in this whole process is that basically all of you said in different words that those who need it most and workplace needs are not there. I more or less got that, and that’s what made me think that the government never contacted anybody.
Mr. Litzenberger, you talked about credits and all of those things. I know that tax forms are tough enough already, so I don’t have any problem with what you say there. Is there a better way? It is $250 to a total of $5,000 in a lifetime.
Where I worked, people I worked for actually trained me. There wasn’t a discussion about whether you could get $500 from the government or not. They needed you so they just trained you. I guess I’m a little older and the world has changed dramatically.
Is there some way this could be incorporated in the other programs out there, like the Canada Job Grant, those kinds of things? Why lay more stuff on just to make the table look great to the people out there working and trying to get trained? I find it to be unbelievable that the government would decide to do something like this for, like I say, $500, $5,000 in a lifetime, and create this kind of process that results in, from what the experts tell us, those needing it most not getting it and workplace needs not being met. It’s really disturbing for me to hear that the government would actually do that. Maybe, chair, it’s more of a statement than it is a question.
I have one quick question: Is there another place where something like this would be incorporated and actually add value rather than just serve as table dressing?
Mr. Litzenberger: Quite simply, senator, my thoughts are that if you want something simplified in tax law and you are looking to move this credit forward, going back to the system where we have it somewhat tied to the tuition credits themselves or the months full-time/part-time back in school the way we used to have it with the education credits, would probably be a simpler way to approach it. If you want to make it refundable, you can do it the same way. You can put in a refundable credit based on tuition attendees and things like that.
Speaking of old school, I’m proud to say we still train our employees 20 to 40 hours per year regardless of government support. I just took advantage of the fact that we were going to promote somebody and they were offering, so it worked out well.
Ms. Lane: I think the key is knowing exactly what it is that you need to learn. You can cast around thinking that I’m not doing well in this job, so therefore I’ll take this course and maybe that will help. I think we need to work much more closely with employers to figure out where that employer is going, what is happening in that workplace and what it is that people will need to know.
If this credit could be used for that just-in-time gap filling that I was talking about, I think that would make a real difference. Rather than saying, “I’m sorry, I can’t keep you anymore, you can’t do what this job will be next week,” employers should be saying, “If you take this training.”
Mr. Rousseau said we need some help in figuring out where the best place is to get that training. We need counsellors trained in that kind of thing. We need people working with employers to say where they’re headed and the kind of training their employees need. This is how they can get it.
If all of that was done and the credit for the tuition was given to the employee, I think that would help. Again, I would want it today, not next tax year. It has to be immediate, especially for those people who are paying out of pocket right now. More importantly, it’s knowing what I need to learn. That’s the idea Senator Klyne expressed about the workplace needs and competency frameworks needed. That is where the money needs to go first, and then we’ll be able to make the system really sing.
Mr. Rousseau: We need a holistic and integrative approach to the whole thing, to get to your point about why this and how it works elsewhere.
One thing that Mr. Kelly has emphasized is employer-employee approaches. Canada’s unions have apprenticeship programs. We have training programs but, of course, not everybody is unionized. We are at one of the lowest unionization rates since the 20th century.
However, if I look at Canada’s building trades, Senator Klyne was talking about building houses with new technology. We have good examples of how we train people. We need to take those kinds of examples and models and try to bring them in and say that this is something that could be a solution. But we need an integrated and holistic approach to this, without a doubt.
Ms. Robson: I think it is about finding the right policy mix. There isn’t going to be a single policy instrument that we can use that will resolve all training needs for all time for all workers and employers. I don’t see this as a replacement for those other employer-focused programs. I see this as very much complementary. As I said in my remarks, I think there is room, given changes in the labour market and given the gap in the existing instruments, for a program that is more individually based, more portable and flexible. I think the question around whether the amount of funding that has been earmarked for this is adequate is an excellent one. As I said before, there is a way of looking at it as we lay the plumbing and then we see whether or not we need to increase the taps based on how it works. I’ll leave it at that. Thank you.
Mr. Kelly: I agree with many of the other interventions on the part of the other speakers. I think this could fill a gap.
Look, the best way for employers to step up and do more training is for government to leave a few more dollars in their pockets to pay for that training. One way to do that would be to reduce the EI rate for small- and medium-sized firms back to the employee rate so they’re paying on a one-to-one basis.
I think this could fill a gap if the employer was involved in the discussion. The way it’s currently designed, though, it is entirely in the hands of the employee. I am not suggesting that it be shifted so it’s entirely in the hands of the employer, but I could imagine where you would get lower-income workers to pay attention to the credit they might have available. They might not otherwise notice it if the employer said to them, “Look, I need somebody to be able to use this piece of equipment and currently you don’t have skills. There is a course over there. You will have EI for that period of time. I’ll top up the other half of your wages and you’ll have the credit to help pay for part of your training.” Then the employee has some skin in the game, as does the employer. I think that’s the way we may be able to build a better training culture in Canada, particularly for on-the-job training which is so incredibly vital.
[Translation]
Senator Forest: Thank you very much for your presentation. I am deeply concerned about one issue. “From coast to coast to coast”, the challenge is to ensure renewal within our organizations. We see it now, according to the Canadian Federation of Independent Business, which talked about 409,000 vacant positions... I was approached today... There are in fact very, very small businesses that do not have the organizational capacity to communicate their needs because the owners often work almost 24 hours a day, seven days a week. When we talk about “wall to wall” or universal programs, the more educated are generally the ones who will benefit. However, we should be targeting the client base, the most marginalized or vulnerable people.
In order to more specifically target the marginalized clients, who do not even have this information because the company is often too small or because it simply does not have access to the information that would allow it to benefit from the program, based on your experience, what changes would you propose to the eligibility criteria?
[English]
Mr. Kelly: I actually think the program does a reasonably good job of targeting the population that may need it with the addition of the employer as part of the equation. There are lots of support programs for post-secondary education. There are lots of support programs for colleges, universities, the K to 12 system, of course. There are billions of dollars spent on EI-funded training for unemployed Canadians, but there is very little for on-the-job workplace-delivered training to take skills to the next level. That’s the piece I think this program could target, with some adjustments made to involve the employer as a party to the training.
Ms. Robson: I’ll reply in English. I just want to make sure I get the technical pieces right.
As I mentioned, I think there is room for some amendment to the legislation to allow for advanced payment of the Canada training credit so that it arrives more on a just-in-time manner rather than waiting.
I don’t think the design of this credit is reaching the very lowest income people in the country. I don’t think that’s what it’s designed for. So at a minimum of $10,000 you’re reaching about one third of median individual income.
That said, making it more available, just-in-time and outreach. We have so many programs and benefits in this country that have high rates of eligible non-participation. People are eligible for them, but they don’t apply and don’t know. I’m sure you’ve seen evidence of those with, for example, GIS, the Canada Workers Benefit or the former WITB.
Again, making sure that there are community organizations that are equipped, funded and resourced to do that outreach and that personalized education, training and planning will be critical.
[Translation]
Mr. Rousseau: One improvement would be to eliminate the 50 per cent deduction and increase it to 100 per cent, as well as to double the $250 training.
The competitive edge of small businesses will depend on the ability of employees to keep up with technological advances. There might be a way for part of the program to be directed at small businesses. Why adopt the same approach for large companies, which have greater resources? I think that might be a good idea. I am not saying that this is our position, because most of our workers are with large companies. However, as you mentioned, there may be a way to tailor the program to small businesses.
[English]
Ms. Lane: A lot of the low-skilled, low-income people who have been making maybe $20,000 or $25,000 a year have low essential skills and low soft skills. When the government is talking about eligible institutions and being able to pay tuition to them, we think about post-secondary institutions and other major training providers like unions and so on.
We need to think in terms of these local community organizations that Professor Robson has mentioned that actually provide training as well. Sometimes they’re funded through EI programs, but if you had people in the workforce but needed to upgrade those kinds of skills, many of these people don’t see themselves as learners in the first place. They don’t see themselves as even having the capacity to take on higher level technical skills.
If we could take that $250 credit — and let’s hope it’s a little bit more down the road — and put it towards some of these really basic skills, that would help people to start thinking of themselves as learners, and then they would develop the skills that would help them to learn. That’s what we’re talking about with lifelong learning. It’s not necessarily the people who have one degree who are going on to get the next one. It’s the people who dropped out of high school but now need to be able to get a diploma in the end. They need to start small, and we need to make this credit available to that kind of learning.
Mr. Litzenberger: As far as vulnerability, one of the questions I would have is: Why is there a $10,000 minimum? If somebody really wants to further their education and they don’t meet the income requirements because they can’t find work or they’ve run out of employment insurance — we’re seeing a lot of that in Alberta right now — they’re not able to have anything added to the pool. I’m wondering why that is.
We talked many times about trying to create affordable child care spaces when the most affordable one is having a parent stay at home and raise the child before they go to school. Then they want to re-enter the workforce but they’re not eligible to be trained or get any credit for that, so I think we’re missing a key sector of our market as well.
Senator Duncan: Thank you very much for the presentations. I appreciate it.
There’s a missing element to all of these discussions, and I understand why. That’s workplace safety. Core certification requires that your workplace and your workers be trained annually: following up on the safety plan and, for example, workplace hazardous materials training that you have to redo because the federal government keeps changing things.
The courses that are offered to do this upgrading and the required training are within the $250 range. I appreciate that safety isn’t a federal responsibility per se, it’s more provincial, but there was talk of working with provinces and territories on a holistic approach.
If we were asking for ideas, is there some thought, perhaps, at the union level or elsewhere? Mr. Kelly talked about combining the EI dollars with employers and the federal government and this tuition tax credit. What about involving the health and safety boards of the provinces and taking that holistic approach?
Nobody has mentioned safety training, which is so vital, especially for our young workers entering the workforce. I just wanted to put that out there.
Mr. Kelly: For our 110,000 members, CFIB provides free online training courses for both the employer and employees on workplace safety issues. You’re quite right; it is a challenge for employers to properly fund these arrangements. I could imagine other parties participating in this mix, senator, so that’s a good idea that I’ll take away for further reflection.
Mr. Rousseau: Thank you for raising that. In fact, we could have thought of that ourselves, but thanks for reminding us that you’re the chamber of sober second thought. That’s a very good point.
The Chair: Thank you.
Senator M. Deacon: Mr. Litzenberger, when you spoke earlier you had a number of issues and a number of concerns. I think I stopped at nine. They were very clear and concise.
From your world — this has been asked in a few ways tonight — looking at all of the considerations and concerns, what are the one or two things that you think would make this bill a better one?
Mr. Litzenberger: Very bluntly, as with a lot of provisions like this, it shouldn’t be in the tax act. It should be something completely different.
In 1917 we had 11 pages, and we now have well over 3,200. To put that bluntly, when we’re talking about workplace safety, I’m not allowed to have my staff lift more than 50 pounds. The Income Tax Act is getting a little heavy and if we keep going on this path it might get worse.
If we are going to go down the path of keeping this credit, I would say we can look at it from a refundable standpoint. If it’s not in the Income Tax Act, another option might be to have a credit that would be targeted towards the Canadian institution itself. I hear talk about having $250 on the front end. Instead of having an entire application process and the bureaucracy that can go with that, perhaps we have it attendee-based, based on certain age requirements that are being put in the act, and having that $250 going directly to the Canadian institution that would be funding or helping with that training.
Senator M. Deacon: Ms. Lane, you talked earlier about the need for better labour market information, of course, and that’s been highlighted in different ways this evening. I know we’re looking at, perhaps, a particular section of our labour market, but when we referred to these skills and competencies before, the Conference Board of Canada usually puts a fair bit of energy into this. Part of the work the Conference Board of Canada is trying to be progressive in filling that gap and identifying the skills and competencies we need.
In light of pre-existing opportunities, is that something that you’ve looked at? Is it something that’s too far away from the folks who may be targeting this? I think there are some existing pieces out there that can help us define and refine what these labour market skills and information are. I’m just wondering how those that the Conference Board of Canada works on every few months fit in.
Ms. Lane: There are all kinds of work going on all over the country, but specifically there are hundreds of millions going into the future skill set that it was designed to figure out. There’s lots of work going on, and the Conference Board is only one place.
There are two kinds of education in my mind. One is that undergraduate education when you come out of high school. What do I need to learn so I can get my first career? We think of kids going on to post-secondary and getting diplomas or degrees. There’s going to be a bigger market in re-skilling and up-skilling for people who have been in the workforce for a number of years.
Sometimes that will mean going back to school for a long period of time. That’s where the Conference Board of Canada information around the trends that we’re seeing — and we’ve heard we will need more people in the digital skills, for instance. But I think there is a huge market in just-in-time delivery for competency gap filling that will also be needed. We don’t have that kind of granularity in our labour market information. That can only come from working directly with employers and starting to look at the tasks of the jobs that you have today and are coming down the road. What do you need to learn to get from where you are to where you need to be? That isn’t going to a two-semester course; it’s going to be a weekend or a two-week boot camp, for instance.
Senator M. Deacon: Thank you.
[Translation]
Senator Bellemare: I agree with everything that has been said here. Training the workforce and people in the labour market is a huge undertaking. I also support the idea of a holistic approach. I myself have proposed two bills to try to sort of move the issue forward: one to promote culture in continuing education, and another to establish frameworks and develop a strategy. I am very pleased to hear Mr. Kelly say that this requires co-operation between employers and employees.
In one of my bills, I propose that the federal government take the initiative to invite the provinces and labour market representatives—employers and employees—to work on developing a common language to meet the skill requirements of today and of tomorrow. This would ensure that skills training is recognized and certified; it would then be possible to develop short training courses and address the problem of undereducated people who do not meet the OECD skills assessment levels required for the jobs of the future.
What do you think about working together to build a national approach to workforce training? Is this possible, given that training is under provincial jurisdiction? Is it possible to bring employers and unions together to talk about this issue? This is done elsewhere. I would like to hear what you have to say about that.
[English]
Mr. Kelly: Absolutely, there’s no question that employers, unions, governments and training institutions can come together in a better way than we have in the past. There is work happening on that front, and even by witness of the testimony tonight I think there are more areas of agreement than disagreement with respect to some of the submissions you have heard.
It was Ms. Lane who actually said it best with respect to the use of this particular credit and its potential. This credit would help fund not ongoing training of a major nature to completely retarget your career, but specific skills that you may be lacking today to get to the next level at that workplace. If we target it in that fashion better than it is today, we don’t support the plan as it is written, but with some changes I think it could form a useful part of Canada’s training infrastructure.
Ms. Robson: I think the sector councils are an interesting body to consider and look at. They have had varying degrees of success over the years, but that is one form or example in Canada where we have made some progress in terms of bringing together federal representatives, provincial bodies, as well as representatives of labour and employers.
[Translation]
Senator Bellemare: What councils? I missed that.
Ms. Robson: Sector councils.
[English]
If you happen to have a moment, if you go on to the Singapore government website for skills future, I think, they are a portal for demonstrating the different competencies, not just at a sector level, but at an actual occupational level and beyond. It’s phenomenal. This represents a huge infrastructure in terms of enabling individual learners to do a lot of that way-finding and being able to find the kinds of training through an account-based mechanism that I think informed what the government did here.
That’s a really interesting way of thinking about where we could end up.
[Translation]
Mr. Rousseau: Literacy is about cellphones. It’s not complicated. If we are not familiar with that... Apps will control more and more things. What makes me happy is to see a five-year-old child show his grandmother how to use Facebook. That’s how the grandmother will communicate with her five-year-old grandchild. She has never touched a computer before, but she is now able to use one. That is the hope. If they are able to do that, we are quite capable of finding solutions for employers and employees.
[English]
Ms. Lane: I draw your attention to some work that is happening in the United States right now. The U.S. Chamber of Commerce Foundation is working on what they call “Talent Pipeline Management” and the Job Data Exchange, where they’re actually bringing together groups of employers in either geographical areas or in sector areas to define the competencies they need and then how to go about getting those competencies.
They’re using supply chain management kinds of techniques in the talent pipeline. First of all, you have to define what it is that you need, then you have to figure out how you best get that. How you find that from the post-secondaries or other training providers, and then certify that to standards for those employers.
Working together that way is something Canada could learn from.
Mr. Litzenberger: I’m hoping it wasn’t a mistranslation, but I would hope that the Senate would not consider overriding the provinces in dealing with education. I am originally from Saskatchewan and now living in Alberta, we feel that we’re overridden quite a lot. So we don’t want that anymore.
As far as targeting specific needs, again, going to the education being implemented by the provinces themselves, the same could apply in going back to what I had said earlier about the $250 going straight to the Canadian institution that is providing the training. This would then follow the enrolment of that individual, as opposed to creating several pages in the Income Tax Act to deal with the bureaucracy of that $250.
I think it would be simpler to have the public institution that is already being audited by our profession — or somebody in it — to be responsible for getting that $250 for that age they’re targeting, as well as the provinces being able to then target specific types of courses that would be eligible for that $250. If they have a shortage in a certain area of employees or workers, they could then have that training specifically targeted to be eligible for that $250.
Senator Boehm: I’ve been listening very carefully. I’m the sponsor of this bill in the Senate, so I have been briefed by officials on this measure. Since none of you have been consulted in this process, would you have anything to offer about best practices in other jurisdictions and in other countries?
Professor Robson, you mentioned Singapore. Singapore is the size of our National Capital Region, so it’s an interesting example. The U.S., Ms. Lane, is the largest economy in the world, as we know, and, of course, it works differently.
Mr. Rousseau, the last time we saw each other was at the Labour 7 meeting here in Ottawa last year when I was in a previous incarnation or career. As I recall those discussions, it was all about the workforce of the future, the impact of artificial intelligence and how to retrain.
There are other countries that also have federal structures. I’m thinking of Germany, Australia and a few others. Is there anything somehow that we or our government have missed in the policy formulation that you could suggest that you may have heard about?
Mr. Kelly: I don’t have a lot of value to add with respect to the international outlook or on similar credits that have existed. We have experience with some provincial credits that have some parallels to what is going on.
Mr. Litzenberger makes a very good point: We’ve gummed up our tax system with all sorts of credits for all sorts of things with limited success. I have to tell you, I think the take-up of this kind of credit will actually be quite low, because it would be application based and a lot of the people who might be otherwise inclined to take it would probably not know about it at all. That’s why I am pushing so hard for an employer role in the design.
Senator Boehm: Would that include new Canadians who might not be as well informed as they could be?
Mr. Kelly: Absolutely. New Canadians would not likely be well informed of this credit. I think the people who will be well informed are kind of married middle-income earners where one spouse may wish to take some personal interest activity and take some time to do that over a summer in something rather obscure and unrelated to the workplace. My worry is that if with we don’t design this properly, it will be used by people who really don’t need it.
Ms. Robson: I will actually talk about our own jurisdiction. I’ll come back to that learn$ave project I mentioned. That was a test of what are called individual development accounts. These have also been piloted in the United States.
We learned in that project that demand was a lot of higher among new Canadians. Why? Because they have come to Canada and are often faced with having to up-skill, re-skill or re-certify. My understanding is that the current wording of the legislation also allows for professional training required. So it’s not just courses provided by universities, colleges and so forth, but there is a recognition for professional certification as well.
We learned in that project that not everybody who even becomes aware of the program is necessarily going to be successful in it, but 80 per cent of our clients were. By “success” I mean that they actually accumulated something in their individual learning account and made use of it. They were also more likely to complete not just short-term courses but longer-term ones as well.
Unfortunately, the funding was cancelled, so we don’t know what happened to them afterwards in terms of longer-term labour impacts. However, the final results, when we were able to look at them, suggested that actually low- and modest-income people will be motivated to invest in their own training and learning.
We know from the existing programs available in Canada now — such as funding your own learning by withdrawing from your RRSP — almost no one uses that. Being able to open up a Registered Education Savings Plan, which you can do as an adult learner — again, almost no one does it. Why? Because all the incentives are targeted towards kids, which is great. The evidence suggests that having an individual account-based mechanism can work.
Singapore’s program has been around for several years now. They’re at about 5 per cent take-up. France is moving most of their training programs to more account-based mechanisms. I think this is an important policy instrument. Again, it’s not a silver-bullet solution, but it is part of the mix to think about.
Mr. Rousseau: What could be missing here is the whole piece that you’ll have to look at as far as evaluation and assessment of the effectiveness of this program. We can look at other jurisdictions, but the fact of the matter is that we have all levels of government involved here, whether it’s municipal governments offering training, school boards offering training, provinces, and this is a federal program. We need to know that we have mechanisms within the legislation — probably at the regulation level and certainly at the policy level — so that people in charge of this program will have to report back to you and say, “Here’s where we’re falling down and failing, where we are not meeting expectations and why.” Those aspects have to be addressed.
It could be a great program and it might be on a shelf in five years if nobody’s using it and you’re not getting the uptake or meeting expectations. Was it a political thing? We don’t know at this point. Make sure that it works.
Mr. Litzenberger: I don’t have comments on the international front. I don’t have any experience in that area, but as an accountant I’m always looking at cost-benefit. I’m just looking at the way this is being implemented. The benefit to an individual can be found a different way than the cost of implementation of how this will be rolled out.
We’re talking about cellular phones. One of the concerns is that digitization leads to demonetization. Our profession has evolved from abacuses to advisory. As you see increased technology over the next 20 years, the training will have to come for everybody as they go down that path. You have to make sure we’re looking at who’s being informed.
You mentioned new Canadians, and I would beg to differ. I find that new Canadians, at least in our office, seek advice because they’re new. We’re not seeing the existing ones being aware of the credits because they’re used to the point-and-click filing of the returns and not being aware that they’re missing a lot of the things that might be out there.
The Chair: Honourable senators, we will conclude with a second round.
Senator Neufeld: My question has been answered.
[Translation]
Senator Bellemare: Mr. Litzenberger, I am very happy with what I heard this evening. I think your viewpoint is fascinating. My question is not related to Bill C-97, but it is related to what I’ve read and, since you are an accountant, I would like your opinion.
I have read a report from the Adecco Group on workforce training, which identified individual training accounts as the best way to improve workforce training. It also proposed a change in accounting standards. The argument is that, if officially recognized accounting standards were changed to treat investment in workforce training the same as tangible capital investment, there would be a positive impact on companies, at least on the larger ones. I wanted to know whether you are familiar with that report. It said that it would actually require a change in culture for accountants, so that they could propose those changes in accounting standards themselves. Did you understand my question?
[English]
Mr. Litzenberger: I’m sorry, I didn’t quite get all of it.
Frankly, I don’t speak for the profession. I speak for myself and from my experience. I would not be in a position to comment on behalf of CPAs. From my perspective, I have not read or seen what you’re referring to in that respect, so I wouldn’t be able to comment at this time.
Senator Bellemare: Okay. Maybe I’ll send you the report on Adecco so you can think about it, because I’m not an accountant either and I don’t know how to go about making those changes happen.
The Chair: Before I thank all the witnesses, I’d like to take the opportunity as chair to pass a message along from all senators present to say a special thank you to Professor Robson for being here. I have been informed that you are on sabbatical until July 2019 and you took the time to come and see us. Thank you for your dedication.
To the witnesses, you have demonstrated knowledge and been very informative, instructive — and in my case I must admit educational. Thank you very much for sharing your visions, your thoughts and your opinions.
Honourable senators, we will meet to continue our study of Bill C-97 tomorrow afternoon at 1:30, room B30 in the Senate of Canada Building.
(The committee adjourned.)