By Ken Battle, Sherri Torjman and Michael Mendelson (Caledon Institute of Social Policy)
On February 13, 2014, the Caldeon Institute of Social Policy released The 2014 Unbalanced Budget, its response to the 2014 Federal Budget. The authors write that “[a] balanced Budget is the holy grail of finance – and of Finance. This year, it was not to be. The 2014 federal Budget was not in balance. Because the 2014 Budget has a $3.0 billion contingency fund and a $2.9 billion deficit, it is actually projected to be balanced from a fiscal perspective. But it is severely unbalanced in that it fails to address serious social problems currently plaguing the country.”
The following is the Caledon Institute’s response to the Canada Job Grant.
In its 2013 Budget, Ottawa announced that it would implement a new program called the Canada Job Grant. As the initiative was then described, it would provide up to $15,000 for short-duration training, paid one-third each by employers, the federal government, and provincial or territorial governments at a total cost of $900 million.
Ottawa proposed to finance its $300 million share by cutting funds it now pays to the provinces and territories for Labour Market Agreements. However, as the Caledon Institute noted in our 2013 Budget analysis, this $300 million is already being spent on an array of programs for groups that have trouble entering and remaining in employment – e.g., immigrants, Aboriginal peoples and older unemployed Canadians. Provinces would not only have been expected to cough up $300million for their share of the Canada Job Grant, they also would need to find $300 million to fund programs previously paid for through the Labour Market Agreement funding.
Needless to say, the provinces objected strenuously to the Canada Job Grant as did many of the organizations, communities and businesses now using services funded under the Labour Market Agreements. Evaluation of the programs under the Labour Market Agreements (done by a third party but commissioned by the federal government) showed that they were quite successful.
Yet after a barrage of government-paid advertising for the non-existent program, the response from Ottawa was silence. No meeting was called with the provinces and territories. No further design details for the program were released. No rationale or evidence for the ghost program was unveiled.
Finally, after about eight months, a new Minister of Employment and Social Development was appointed – Jason Kenney – apparently with firm directions to launch this ship. Minister Kenney has met several times with provinces and territories. The one concession he has made is that Ottawa would agree to pay the full $10,000 “government” grant per trainee with no provincial matching required.
Because Ottawa is not increasing the total size of its contribution, the federal government paying the whole grant for each trainee would presumably halve the total size of the whole program from $900 million to $450 million. The Canada Job Grant is so critical to the Canadian economy that no one has seemed troubled by or even noticed that the program has been chopped in half.
But the real catch to this ‘compromise’ is this. It would still be financed by cutting the Labour Market Agreements, leaving the provinces and territories $300 million in the hole and, more importantly, putting at risk a huge range of proven training and skills development programs grown with great care and difficulty by thousands of agencies over the last five years.
Not surprisingly, in view of the nature of this so-called compromise, provinces and territories continued to object. Perhaps uniquely in Canadian history, the provinces and territories have so far remained unanimous in their rejection of the Canada Job Grant.
Yet the 2014 Budget not only reaffirmed that the federal government was making no further compromises, it announced that Ottawa would deliver the program itself starting seven weeks from now in provinces that did not agree to deliver the program on its behalf.
The Budget claimed that the federal government had consulted widely and had broad support. In fact, it has systematically excluded all groups opposing the Canada Job Grant from its consultations. Not only all the major labour organizations but many local Chambers of Commerce and other businesses were not in favour and, as far as we know, not consulted. Among the little more than a dozen organizations publicly endorsing the Canada Job Grant, Alberta-based organizations and those with known partisan leanings are over-represented.
The irony of this mess is that the best critic of the unilateral approach now being undertaken by the current government is the previous Conservative government. Under long-standing Conservative policy, the federal government was to stay out of areas of provincial jurisdiction. Prime among these ‘areas of provincial jurisdiction’ were labour market programs, which had been an area of jurisdictional conflict for decades and had been critical in many constitutional discussions.
In its 2007 Budget, the then relatively new Conservative government clearly and forcefully articulated its principled exit from labour market programs and its recognition of provincial jurisdiction. And it restated this view in the Labour Market Agreements as recently as a few months before the unilateral reversal announced in the 2013 Budget.
Most ironic is that the implementation of the Labour Market Agreements proved that the previous Conservative government had been right. Overlapping and duplicative poorly thought-out programs were largely dropped as the provinces and territories worked hard to implement the Agreements in light of local labour market conditions. The Labour Market Agreements had been one of the (previous) Conservative government’s most successful employment initiatives.
And just for a final irony: Many of the criticisms now cited to defend the Canada Job Grant are of programs supposedly training people for jobs that do not exist – like the proverbial dozen hairdressers in a small Newfoundland town. But these are the very programs that were in place before the Labour Market Agreements resulted in widespread reform.
But even if the Canada Job Grant were to be entirely funded with new money and administered by the provinces, there is little reason to see it as a well thought-out program. The 2014 Budget points to deficiencies in labour supply in science-based occupations and in skilled trades. How exactly will short-duration training programs build skills requiring years to acquire?
We are at the top of the building cycle and within a year or two at most there is bound to be a massive slowdown in residential construction. Does it really make sense to train labour to meet demand for the very top of the cycle? In fact, the federal government has yet to produce a single study or any evidence that substantiates the design of this program.
The Canada Job Grant may turn out to be a reasonable program among an array of training measures, perhaps in more specific niches rather than being plastered across Canada. But even so, the program should be introduced with caution and care, testing outcomes, measuring results and making adjustments as we learn.
So what now? Our first prediction is that the federal government is headed for an embarrassing disaster if it indeed implements the Canada Job Grant itself, and especially if it tries to do so seven weeks from now. Service Canada staff is inadequate in numbers and untrained to implement a program such as this. If there is indeed very light paper work and little auditing, there will be lots of wasted money, some profiteering and likely a little fraud. Be prepared for many troubling stories about a year from now.
More seriously, the provinces will have to figure out what to do with the existing Labour Market Agreement-funded programs. Many of these worthwhile initiatives are going to have to go under because, while the federal government may be doing well fiscally, this is not true of most of the provinces. These new developments will cause great harm and much chaos within the training sector.
Our second prediction: a net loss in the training of skilled workers in Canada.
Read The 2014 Unbalanced Budget.