Job Training Is Best Left to the Provinces

03/19/2013 12:43 EDT | Updated 05/19/2013 05:12 EDT
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The federal government appears poised to withdraw funding for provincial job training programs. This may seem slightly odd, as the ruling Conservative Party shifted responsibility for running these programs to the provinces in 2007 while continuing to provide the necessary funding. The rationale behind the initial shift was that the provinces are better placed to deliver such programs. That logic was correct. One might argue that this most recent decision is the logical extension of the 2007 reform: first shift responsibility for service delivery, then shift responsibility for service funding. That would be both a logically coherent approach, and good policy.

As Justin Trudeau pointed out in Question Period, "you cannot run effective training for people in Kamloops or Rimouski from downtown Ottawa." However, downloading service delivery requires downloading of fiscal capacity. Otherwise, this move is nothing more than a funding cut. While it may be the case that this funding is not necessary to begin with, it would be better to free up tax room for the provinces to make such decisions themselves.

Social services such as job training are best left to the provinces. The constitution grants responsibility over education and healthcare to provinces for the same reason: it is the level of government best able to administer social services. They are large enough units to handle the administrative cost, yet small enough to ensure that policies are tailored to specific regional conditions and challenges. Job training needs vary far more dramatically than either K-12 education or healthcare, which provides a greater rationale for decentralization. But these programs cost money. Cutting funding without also cutting federal taxes makes it difficult for provinces to replace that funding through new own source revenue.

At the root of this problem is the fact that the federal government collects far more revenue than it requires. Studies show that the more one level of government taxes, the less others can. Since the federal government currently collects 43 per cent of all government revenue (despite the fact that education, healthcare, and social services account for nearly two thirds of government spending), other levels of government don't have the capacity to increase revenue. Federal taxes "crowd out" provincial revenue generating capacity, leaving provinces dependent on federal transfers. This doesn't have to be the case. According to a recent Frontier Centre study, the federal budget could be reduced by roughly a third, if the government decided to end provincial transfers and direct spending in policy areas of sub-national jurisdiction.

Though "downloading services" is typically considered a pejorative term, it really shouldn't be. There are many services the federal government should retreat from. Having multiple levels of government involved in the same policy areas can lead to a breakdown of accountability. It's easy for one level of government to blame another when they're both involved -- think of the constant healthcare squabbling between the federal and provincial governments -- and two levels of bureaucratic involvement leads to undue administrative complexity and wasteful duplication of effort. Downloading, or, more properly termed, decentralization, can lead to better service delivery. But only if both responsibility, and fiscal capacity are downloaded.

Perhaps job training programs are overfunded. Perhaps they are underfunded. That is something that the provincial governments should have the means to decide for themselves. The federal government, led by a party that once expounded the virtues of decentralization, should work towards ending the mess of inter-governmental transfers, and shift taxing powers to the levels of government better positioned to deliver services.