THE BLOG

Canada's Economic Action Force Doesn't Help the Labour Force

10/31/2014 12:56 EDT | Updated 12/31/2014 05:59 EST

Canada's Economic Action Plan is approaching six years old. As is the case with most six-year-olds, there is still some significant work to do. It has served as a road map through the depths of the recession, infrastructure spending programs and was packaging for a number of other legislative reforms important to the Government.

Missing from the plan, however, are important policy enablers for the Canadian labour force. Canada is faced with a changed economy and the labour force has to be more flexible and mobile than ever to meet the demands of employers. The House of Commons Standing Committee on Finance listens to stakeholder groups and Canadians each year when providing advice to the Government on fiscal and budgetary policy. The below is a close representation of a part of the testimony provided on October 29, 2014.

Economists would argue jobs are essentially a private sector responsibility. However, Governments around the world are quick to take credit when new jobs are created and logically government does have a role to play. Governments set the rules of the game in any economy. That's what "Action Plans" are all about.

The Canadian federal government can easily improve stewardship of the economy by creating incentives for workers to be more mobile when seeking new work. Assisting with mobility measures in the Canadian labour market could encourage people who wouldn't otherwise go to where the work is -- and get them there when employers need them. This can be done a number of ways; either through new tax credits or a restructure of existing Employment Insurance benefits -- and do it all rather cheaply compared to other government spending. A mobility assistance measure would ease the strained (and politically charged) Temporary Foreign Worker program by transiting Canadians to labour markets where their talents are required. Even if the measure helps a Canadian take a short duration position it helps the economy and the country. A mobility measure could encourage people to get off Employment Insurance and start working again if work is available in other parts of Canada where their talents are required -- a noble cause on both fronts.

Canada's construction industry is a prime example of an industry not functioning at full speed because of labour market and fiscal policy constraints. All construction work is temporary. All construction work is transitory and skilled trades people are dispatched or travel wherever the work may be. The lucky ones get travel assistance from either the construction employer or a large purchaser of construction. The not so lucky ones are out of pocket for the entire travel cost before they even start working. The existing permanent relocation tax credit (in the Income Tax Act) doesn't make sense or apply to the mobile workers our country needs the most. No one is moving their family and home for a six week job on a large project being built in Saskatoon when your kids, wife and home is in Welland, ON.

Canada needs a change in incentive policy for in demand occupations when relocating for temporary work. It doesn't matter to industry if it is a tax credit or an EI grant -- industry is united in principle. Parliament had a chance to do something late last winter with Bill C-201, however, this Bill was handily defeated because of partisanship. Mobility and getting a job is a non-partisan issue to Canadians. The Government of Canada introducing a mobility assistance policy for in demand workers is not a partisan act. The Government expense getting them to jobsites today means tax revenues tomorrow from the worker, the capital asset they are building and the company doing the work.

A small (in government spending terms) $4 million dollar pilot project in forgone tax revenue (money the government never had in the first place by the way!) according to projections could return $12 million in income tax paid by individuals alone. A small pilot project doesn't need to radically alter the Income Tax Act -- Employment and Skills Development Canada Minister Jason Kenney could pick a few occupations most in need in need in the labour market and choose a few major projects in conjunction with the Finance Minister Joe Oliver, to determine eligibility in the pilot. Federal Budgets are about wise spending choices and this modest pilot certainly falls into the frugal category when you look at the breadth of public program spending in Canada. For example, Public Works and Government Services indicated recently the various departments in Ottawa spent about the same amount on polling in 2013 as this request.

This measure could also help Canadians get the training they need in a different market where there is work and an employer willing to tap into the Canada Job Grant -- so, use the mobility measure to get to where the training is for the job you are about to start. The Job Grant is dependent on an employer willing to hire you -- markets with hot employment markets will require more people to be trained. There is a natural link here. The Canada Job grant, despite the noise, is the single most important change to the training landscape in two decades. Let's use it to its full capacity.

It is up to the Finance committee, cabinet, the prime minister and the Minister of Finance to help a critical industry and help in demand workers. It doesn't matter to the industry if it is a tax credit or change to EI benefit payment schedules -- what matters to industry is having an available workforce wherever needed for Canada's economy. What matters to industry is project completion and labour force certainty for the marketplace. Did you know Canada's skilled trades workers are inherently less likely to travel for work than workers from the United States? Funny enough; the IRS allows deductions for travel to obtain temporary work against income. Here is an opportunity to make Canada's workforce more productive -- and reduce taxes for everyday Canadians.

Now that's what Canadians would call "Action".