Why the so-called Canada Job Grant isn’t working

The Conservatives sweetened the deal to save their jobs plan. John Geddes explains why no one’s buying
Manning Networking Conference at the Ottawa Convention Centre in Ottawa February 28, 2014. Photo by Blair Gable for Maclean’s Magazine
Deborah Baic/The Globe and Mail/CP

Schemes to place hard-to-employ young people in jobs tend to come and go. BladeRunners is the exception. The British Columbia program has been around since 1994, long enough that even its managers aren’t entirely clear on how it got its name—and for the Organisation for Economic Co-operation and Development to single it out as a proven model. BladeRunners helps unemployed 15- to 30-year-olds—mostly Aboriginal, sometimes homeless, often with histories of substance abuse—learn basic skills and land several key weeks of job experience. Counsellors are on call around the clock when participants run into the inevitable problems.

It sounds like the sort of feel-good program any politician might rush to line up behind. But the B.C. provincial government cites BladeRunners as a prime example of the kind of training that the federal Conservatives are out to cut. At issue is the so-called Canada Job Grant (CJG), announced by Finance Minister Jim Flaherty with considerable fanfare in last year’s federal budget. Under the CJG, Flaherty proposed that the federal government, the provinces and employers each pay a third of up to $15,000 a year for every employee enrolled for training at an eligible institution. But there was a catch: The federal government’s $300-million share was to be taken out of the $500 million a year Ottawa transfers to provinces under existing labour-market agreements—the main source of BladeRunners’ $6-million budget.

Not surprisingly, the provinces cried foul. By bringing in employers as partners, the new CJG was designed to help train new hires those businesses see as most promising. But the funding the federal Tories propose to reduce is earmarked for trying to provide skills to those most deeply mired in unemployment. “That means we are going to have to cut programs that are working for Aboriginals, people with disabilities, people who need help with literacy and basic skills, at-risk youth, youth in general, new immigrants,” says Ontario Training, Colleges and Universities Minister Brad Duguid. “Those segments should not be left out in the cold.”

Almost immediately after Flaherty announced the CJG in his budget last spring, provincial opposition began to harden. By summer, the clash had emerged as a serious headache for Prime Minister Stephen Harper. In his July cabinet shuffle, Harper named Jason Kenney, who had proven his ability to get things done as citizenship and immigration minister, as the new employment minister. Taking on the CJG file, Kenney quickly served notice that Ottawa would not be abandoning the concept, but also signalled a willingness to negotiate.

On Christmas Eve, he delivered a proposal to the provinces that contained a big concession, clearly meant to break the stalemate that had seen not a single province agree to go along with the federal plan. Kenney said the provinces would no longer be required to put up their own money to fund a third of the new job grants. It was undeniably a show of willingness to bargain seriously, perhaps in a bid to wrap up the most glaring piece of unfinished business from 2013’s budget before the 2014 version, which Flaherty is expected to table early next month. “The federal government has listened to provinces’ concerns and significantly restructured the offer based on their feedback,” he said in a written statement.

But Kenney added: “We remain prepared to deliver the Canada Job Grant ourselves, if an agreement with the provinces is not met.” If he thought the provinces would gratefully fall into line, though, he was to be disappointed. The provincial ministers responsible for training held a conference call on the issue last week and decided to hold firm in demanding that the feds not pay for the CJG by cutting the existing labour-market agreements. Time to hammer out a deal is now running short, since those agreements expire at the end of March.

Kenney contends that the agreements should not be viewed in isolation from other federal transfers to the provinces. His office provided a list of related transfers to help those who have a hard time getting jobs, including hundreds of millions for older workers and disabled people, and billions, since the Harper government won power in 2006, for Aboriginals and youth. Perhaps even more central to the federal government’s case for the CJG concept is the way it brings employers to the heart of training. From the time the grant plan was announced, the Conservatives have touted business support as a key selling point. “The Canada Job Grant will ensure employers put more skin in the game, when it comes to training unemployed and underemployed Canadians,” Kenney said.

But business groups contacted by Maclean’s were split on the CJG. Dan Kelly, president of the Canadian Federation of Independent Business, said his small-business lobby group has long been skeptical about the effectiveness of government-run training. “When the feds proposed a different model, by having a heavier degree of employer involvement, that sounded good to us,” he said. So the federation has remained solidly in the federal camp, although Kelly said he still wants to see details of the program design, to make sure it won’t be too cumbersome to administer for small-business owners.

John Winter, president of the B.C. Chamber of Commerce, said his membership has already decided the CJG would be far too complicated for small firms. The federal proposal would require employers to sign up workers for training at outside institutions, such as colleges or private training companies. Winter said small businesses just don’t have the human resources capacity to manage those arrangements. “It just isn’t a realistic proposal,” he said. “It only subsidizes big businesses and big unions who are already doing training.” Kenney is proposing letting business groups form CJG consortiums, so individual small firms wouldn’t have to carry the administrative burden alone. As well, he has floated the idea of small firms being allowed to include wages paid to workers receiving training as part of their required employer’s contribution.

Despite such shows of flexibility, provincial business groups remain, on the whole, sympathetic with provincial governments in the dispute. The federal government boasts some support from national groups. Allan O’Dette, president of the Ontario Chamber of Commerce, said that’s because companies that have first-hand experience with provincial training programs, funded by the labour-market agreements, don’t see them as a waste of money. “Pulling funds out of existing programs that seem to be working well is not, to my mind, a good way to go,” O’Dette said.

Some companies also wonder why the federal government decided last year to reassert itself by designing and announcing the CJG alone. The move reversed a long-term shift toward the provinces running training, which culminated in 2007 with the labour-market agreements that the federal government now aims to shrink. Ontario’s Duguid has a theory about what happened. “I think the federal government didn’t have a lot of money to put together a strategy that actually creates jobs,” he said. “They thought, ‘Well, we have to be involved in jobs somehow, so let’s dive back into training.’ ” It’s turned out to be a plunge into rough waters.