Ottawa offers changes to sway provinces on Canada Jobs Grant

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The Conservative government is offering to ease the rules on how provinces spend $2-billion in federal training transfers in the hope of gaining their support for the proposed new Canada Job Grant.

In an interview with The Globe and Mail, federal Employment and Social Development Minister Jason Kenney said Ottawa is prepared to remove a barrier that forces training dollars to be divided into two categories: money for people on Employment Insurance, and a smaller amount for people who are not. He said this might help provinces find the money they need to join the job grant program.

"This is at a high level now. We need to get into discussions with the provinces, and if they're interested in it, we'd like that to happen," Mr. Kenney said.

The minister is clearly trying to get ahead of a looming standoff with the provinces over the grant. Initial provincial reaction suggests the minister's new offer is welcome, but is not yet enough to move them off plans to boycott the program.

The proposed grant – first announced in the March federal budget – aims to entice employers into spending more on training and helping to decide where public dollars are spent. The Conservative government envisions a grant in which the cost of training for a specific job is split three ways, with up to $5,000 from Ottawa, a province and an employer.

One of the main objections from the provinces is that Ottawa plans to pull back $300-million of an annual $500-million transfer called Labour Market Agreements to the provinces to pay for its share of the job grants. That $500-million is currently used to train "under-represented" groups who are not eligible for EI, including immigrants, persons with disabilities, aboriginal people, youth and older workers.

Provinces also receive annual transfers of nearly $2-billion – called Labour Market Development Agreements – which are largely for training programs aimed at people who qualify for EI.

Mr. Kenney said he is prepared to be "flexible" when it comes to the program's rules, including allowing money from the $2-billion pool to be spent on programs that had been under the $500-million pool.

"These two things are linked and we're trying to take a kind of holistic approach," he said.

The Conservative government has already made a series of changes to the rules around EI, including making benefits less generous for repeat users of the program. It is not yet clear whether altering the rules around funding for EI-related training is a sign of larger changes to come for the EI program as a whole.

Mr. Kenney will deliver a speech to a Toronto business audience Tuesday in which he is expected to stress Ottawa's willingness to be flexible in implementing the grant.

Winning over the provinces will be a hard sell.

British Columbia Jobs Minister Shirley Bond said she welcomes Mr. Kenney's proposal, but the provinces are still primarily concerned about a large reduction in spending on programs that help vulnerable Canadians join the work force. "There are an enormous number of successful programs at risk," she said.

Ontario's Training Minister Brad Duguid expressed a similar view. "I think we still continue to have very deep reservations," he said.

Mr. Kenney's remarks to The Globe did get a positive response from Saskatchewan, which has been more open than other provinces to the grant idea. Economy Minister Bill Boyd called Mr. Kenney's comments "good news" because more training is needed to address Saskatchewan's unique labour shortage.

"We very much appreciate the federal government and Minister Kenney saying they will be flexible with provinces on the Job Grant program," he said in a statement.

In the interview, Mr. Kenney repeated that Ottawa is prepared to run the grant without the provinces if necessary. He also acknowledged that exerting federal control over job training marks a reversal of the Conservatives' 2007 budget, which transferred new training dollars to the provinces and lessened Ottawa's role in training decisions.

"We don't want to be foolishly consistent," he said. "We've spent billions of dollars between the federal and provincial governments in this area in the last few years. We have 1.3-million unemployed Canadians and hundreds of thousands of unfilled jobs, so at a macro level, it would seem that the status quo isn't really addressing the needs."