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Employment Minister Jason Kenney outlined his social finance programs Oct. 3, 2013, in Calgary.Adrian Wyld/The Canadian Press

Employment Minister Jason Kenney is embracing the emerging field of social finance, launching training programs that will receive federal cash only if certain targets are met and private money is invested.

Ottawa will tie federal funding for two literacy and skills training programs to final test scores and the ability to attract outside investors. The amounts involved are relatively small – less than $6-million all together – but the minister says they are examples of a wide range of federal experiments that could be expanded if they succeed.

The first program, run by the Alberta Workforce Essential Skills Society, would help private companies such as hotels and grocery stores pay for the cost of upgrading the literacy and numeracy skills of current employees, in part so they can better understand written instructions. Details still have to be negotiated, but the society proposes that if employees reach certain test scores, Ottawa will fund 35 per cent of the training. If the employees retain their skills when tested a year later, Ottawa will fund a further 15 per cent, covering half of the total training cost.

The larger goal is to boost skills and increase productivity, an area in which Canada has been particularly sluggish in recent years.

"The thinking is that once it gets demonstrated that this works, firms will be lining up," said Scott Murray, who will manage the Alberta project.

The second project, run by the Association of Canadian Community Colleges, is aimed at training unemployed Canadians with money from private investors. Ottawa might pay investors a return if the trainees can meet specific test scores.

The projects are raising eyebrows, however, because they are similar in some ways to the proposed Canada Job Grant, which Prime Minister Stephen Harper has asked Mr. Kenney to implement. The grant idea is facing stiff resistance from the provinces because it would come from $300-million in transfers for existing provincial training programs.

Mr. Kenney outlined his plans Thursday in Calgary to a gathering of the Social Enterprise World Forum, saying he was "very optimistic" about social finance. Broadly speaking, social finance is a largely unproven concept that aims to attract private investment to fund social good.

Mr. Kenney addressed the main public concern of social-finance critics who fear the programs are about downloading government services onto the backs of the charitable and non-profit sector.

"Now there are some folks out there, thankfully not too many, but there are some who seem to believe that social finance and social enterprise is just a ruse to cut government social spending or to privatize government programs," the minister said, according to a transcript. "It's about the recognition of a fundamental principle that government programs and funds alone are not, cannot be the solution to face all of our pressing social issues."

The concept of explicitly tying government grants to performance is an idea that is well cemented in the United Kingdom, which is seen as a social finance leader. Mr. Kenney's predecessor, Diane Finley, had taken a personal interest in testing some of these ideas in Canada.

The July cabinet shuffle moved Ms. Finley to Public Works and put Mr. Kenney in charge of Human Resources with a new title as Employment and Social Development Minister. It was not clear until Thursday whether the department's interest in social finance would continue under the new minister.

NDP human resources critic Jinny Sims said Ottawa does seem to be privatizing government programs while scaling back traditional funding to social welfare groups. Ms. Sims also expressed concern that Ottawa appears to be sidelining the provincial responsibility for skills training.

"Minister Kenney says this isn't about privatizing programs, but in the same breath he announces funding for a private training initiative that to me sounds very much like the provincial skills training program the Conservatives have just slashed by $300-million," she said.

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