Bill C-207 (Historical)

An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions)

This enactment amends the Income Tax Act to give every new graduate who settles in a designated region a tax credit equal to
(a) the lesser of 40% of the individual's salary or wages;
(b) $3,000; and
(c) the amount by which $8,000 exceeds all amounts paid to the Receiver General.
The purpose of this measure is to encourage new graduates to settle in designated regions, thereby curbing the exodus of young people from those regions and promoting their economic development.

Income Tax Act

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, it is a pleasure to stand and speak to Bill C-207, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions). The bill would give each graduate who settles in a designated region a credit equal to 40% of the individual's salary, up to $8,000. This would encourage new graduates to settle in designated regions.

This is an important concept but it only goes so far in the whole context of what is happening in the northern regions of Canada. I also have full sympathy for northern students because almost all of them must travel to institutions in different cities to get a degree in a particular subject. In my own riding in the Northwest Territories, the government invests heavily in community colleges, to the point where students can now stay in the Northwest Territories and get a degree in education or in nursing, but that is about it.

In order for students in a designated region to get the education they want, they need to travel. The expenses are greater for them at the beginning. They also do not have the luxury of living at home when they are going to school. Once again the burden is greater on students from the far reaches of our country in achieving the education they need. These things all add up and make it very difficult for students.

When I went to school, our federal government at that time--

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to rise during private member's business to speak to Bill C-207 put forward by the Bloc member for Chicoutimi—Le Fjord.

As has been covered in the debate, and I do not want to spend too much time describing the bill, it prescribes a tax benefit through a tax credit to allow employees, in areas which have economic challenges, who may have skills needs but may not be able to compete with some of the more attractive centres, an opportunity to work in those centres.

I can only imagine what Canada would be like if some of the smaller, economically challenged regions and communities in our country were to continue to fall behind. The population and businesses would decline, people would move away, jobs would be lost, and companies would shut down.

I believe this bill is important for Canada because it has to do with the shared value of the need for regional economic development. There are areas within our country that need some assistance from time to time to ensure they have some of the tools they need to continue to be economically vibrant.

We can imagine new graduates with the needed skills having opportunities to go to work in Quebec City, Montreal, Toronto or Vancouver. What about a place like Abitibi-Témiscamingue? Is it going to be able to compete with the fancy job in Montreal? Is it going to be able to pay the same money to attract a skills set to that area?

When I look around the country, I feel like saying that Canada is a picture or painting which has many aspects to it. How many of those parts of the picture can be taken away and still retain the integrity of the picture? It is very easy to imagine that Canada could shrink to urban economic centres. Eighty per cent of our population lives within 100 kilometres of the U.S. border.

There is a real threat and it affects not just agricultural communities, not just resource communities but thriving communities that have good fundamental economic bases, and they are at risk. That is why we have regional economic development programs because we need to ensure that there is a continuation of operations and the sustainability of communities.

When I spoke to the hon. member for Chicoutimi—Le Fjord, I looked at some of the names of the places. I do not know how many members may have been to places like Avalon Peninsula, Newfoundland and Labrador; Cape Breton; the north shore of Nova Scotia; Miramichi or Edmundston in New Brunswick; Gaspésie; Îles-de-la-Madeleine, Quebec; Estrie, Quebec; Laurentides; and Abitibi-Témiscamingue.

Windsor-Sarnia right now is undergoing a tremendous downturn in its economic outlook. Housing has gone down and unemployment has gone up. This was not the case a long time ago. Communities like Windsor were vibrant. The economic spin was going very well. Now, Windsor is becoming a have not area. It is just like a number of other communities across the country, whether it be in eastern or western Canada, northern Ontario or within Quebec. Circumstances change.

In fact, we are experiencing a significant shift in wealth and economic activity in Canada right now. Resource provinces are doing extremely well: Alberta, Saskatchewan and now Newfoundland. But 60% of the economic activity in Canada is in Ontario and Quebec collectively. That is where there is a lot of manufacturing going on and that is where there are going to be great pressures in terms of both employment and population dropping.

Populations are shifting where the resources are. I do not know what happens when finite resources start to disappear. I assume that people will migrate back again to the next best opportunity.

In the meantime, what will be the consequences? What areas will have to be sacrificed because we have not taken the initiative to provide certain incentives to allow them to sustain themselves when there are significant economic challenges.

We need our young people to be proud and to continue to be part of the communities in which they were raised. We do not want them all to stay in that community. We need to allow them to be as good as they can be. It may be a matter of graduates being able to go into another community which may be very similar, maybe not an urban centre, but chances are the economic advantages will not be there and will not be attractive enough for them, compared to other opportunities.

This particular bill provides at least initial economic assistance for these individuals to go, to take that job in a community that they know is the best fit for their skills, or is in an area in which they feel most comfortable. It is a win-win situation, not only for these individuals but also for the community and for the country as a whole.

I looked at the evidence presented at the finance committee. Everybody thinks that the committee did a very good job on this. I must say that I was a little concerned because one of the members of the committee, and I will not name the member or his party, but the member did say:

So the goal of your bill is to get young people to stay where they're from; it has nothing to do with making sure that the skill sets are meeting the needs of certain areas.

That tells me that this member did not even read the bill nor even understand the bill. In fact, the objective of the bill is quite the opposite. It is not to ask people to stay where they are, it is to give them the opportunity to go where they have the best opportunity to get that job and to develop those skills.

Then I hear another member over here saying, “You give them a tax benefit for one year, and then what are they going to do?” He has a lot of studies. I did not see any, but I can only assume. He can make that assertion. He asks, “After one year, what will they do?” He would say that they may leave because they are just there for the little tax credit, but once the tax credit ends, they are gone.

I know of members, even in my own caucus, who said, “My kid went to a community. He said he is going there for a year or two years”. That was eight years ago and that individual is still there doing that job because when a person gets that first job and develops that skill, his or her career is starting to build. People do not build careers by bopping around, job to job, every year, looking for a tax credit. We have to respect people's intelligence a little bit more than that.

I see that my time is up. I have a few more things that I really would like to say about the bill, but let me just say that I have taken enough time to look at it and I believe that the approach of the bill is sound.

There may be some disagreement or some discussion about the mechanics, but Quebec has had such a program since 2006. I understand that about 10,000 graduates were eligible. It is estimated that some 30,000 Canadian students, graduating with good skill sets, ready to serve Canada no matter in what region they choose to, would be eligible for such a program.

How can we be against that? It is the right thing to do. I support it and I will encourage my caucus to support the bill.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, you can hear them, too. I would like the members to listen to me. I had enough respect to listen to them and I would like them to do the same.

This is yet another in a slew of disappointing and really poorly thought-out economic proposals coming from the Bloc Québécois, proposals that really do not address the priorities of Quebeckers in any meaningful way. It is such poor proposals that have even led the sponsor’s Bloc colleague, the member from Longueuil—Pierre-Boucher, to admit, and I quote:

The economy is constantly an albatross for us. We are profoundly uncomfortable when it comes to discussing the economy.

The Bloc members had the chance to support budgets that included concrete measures to help Quebec's economy, but they remained seated. Other colleagues, such as the member for Roberval—Lac-Saint-Jean, rose in this House and stood up for the people of Lac-Saint-Jean by supporting these measures. Colleagues like the member for Charlesbourg—Haute-Saint-Charles rose and stood up for Quebeckers. They are working here, proud to be both Quebeckers and Canadians.

Why did the majority of the members of the Standing Committee on Finance vote against this bill? Because of its many serious and glaring flaws and the fact that it does not hold water.

First, the designated regions referenced in the bill are drawn from a list that has not been updated in over 20 years and does not account for the economic changes that have taken place during that time.

Second, the tax credit would also introduce inequities in the tax system: inequities between recent graduates and those who graduated earlier, and inequities between new graduates who work in different regions.

Third, the credit would be exceedingly expensive. The money could be invested elsewhere to support our manufacturing sector, which would create jobs and keep our young people in regions such as Bellechasse, Les Etchemins and other regions throughout Quebec.

Bill C-207 tries to use the tax system to encourage new graduates to work in certain regions of Canada in order to address perceived skills shortages, but attempts to do that in ways which, in the end, would make the tax measure ineffective. It would, for example, only provide tax relief to a new graduate's first 52 weeks of qualified employment. What happens after the initial 52 weeks when there is no longer a credit available? Clearly, this type of measure cannot yield long term benefits to regions, and I am not even sure it would have an incremental impact in the short term beyond reducing taxes for a selected group of workers.

Another concern with the bill is that it does not make any attempt to target skills sets that are in short supply in a designated region or that could benefit its development. As I just mentioned, it has been 20 years since the list of designated regions was updated.

That is not all. There are other flaws in the bill. As I said, it would create severe inequities by discriminating between regions, and between groups of graduates.

Graduates who finish their programs around the same time, but who live and work in different regions, could face entirely different income tax burdens during their first year of employment. That would result in inequities and create two classes of graduates. As well, two graduates working in the same job and region, but whose graduation dates are a year apart, would face an $8,000 gap in their respective tax burdens. This, too, is patently unfair.

Finally, this bill would be incredibly expensive. Not only would it be ineffective, it would be costly. Estimates suggest that the credit could cost up to $600 million, money that would be taken away from other areas on a tax measure for which the outcome is uncertain.

This bill is the wrong way to go.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, I am very pleased to rise today to speak to Bill C-207.

Unfortunately, I cannot support this bill, because it is flawed and expensive.

However, I supported a bill that created a fund for the manufacturing industry and I supported a budget that creates a package through which manufacturing businesses throughout Quebec can expand and create good, well paying jobs.

As usual, the sponsor of the bill introduces bills to impress the gallery, but unfortunately, he did not act at the right time. He did not stand up for Quebeckers, to support concrete measures for Quebec industry.

I would simply like to remind the sponsor of this bill that the economic outlook is very encouraging at this time. The manufacturing sector in Quebec saw an employment increase in the last quarter. Imagine that. These are encouraging numbers in terms of job creation in the manufacturing sector. There was also an increase in the net number of jobs created in Quebec.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I am pleased to speak on behalf of the Bloc Québécois about this excellent private member's bill, introduced by my colleague from Chicoutimi—Le Fjord, a member who does an excellent job. I would also like to say that the member for Chicoutimi—Le Fjord is an example for everyone in the Saguenay—Lac-Saint-Jean region, a region that, for various reasons, is not always favoured economically. One of those reasons is the current serious forestry and manufacturing crisis.

Obviously, one way to deal with the forestry and manufacturing crisis is to encourage businesses to hire young people. That is what this wonderful bill, Bill C-207, introduced by my colleague for Chicoutimi—Le Fjord, seeks to do.

I will summarize the bill for you. The Bloc Québécois does not reinvent the wheel. Our goal in this House has never been to claim that we are all-knowing. We are able to look at what other parliaments are doing and borrow their positive initiatives. One of those positive initiatives came from the Quebec government, which implemented a similar credit in 2003. Their goal was to curb the exodus of young people—this bill has that same goal—as well as to deal with the shortage of skilled labourers.

This bill would introduce a tax credit for young graduates who accept jobs in a resource region. Under the bill, this credit would be equal to 40% of the young graduate's salary for the first year, to a maximum of $8,000.

In 2003, the first year the Government of Quebec instituted a similar credit, 2,500 young workers applied for it. In 2004, the number rose to 9,700. There was a tremendous increase of 7,000 young workers between 2003 and 2004.

This applies to all designated regions, which are regions with a declining population. That is the bill's objective. As I have already said, and will continue to say, my colleague from Chicoutimi—Le Fjord is being practical. He looked at the situation in Saguenay—Lac-Saint-Jean, decided to take the bull by the horns and deal with depopulation.

There is not one member in this House who can afford to ignore such situations. When areas such as Saguenay—Lac-Saint-Jean experience an exodus of youth we must try to find solutions. The member for Chicoutimi—Le Fjord has made a good attempt, in tabling Bill C-207, to do something about the exodus of youth and the shortage of skilled labour.

This tax credit for designated regions will not apply to just the Saguenay-Lac-Saint-Jean area. The bill will apply to all Quebec and Canadian regions that may experience depopulation so that we can retain our youth and deal with the shortage of skilled labour.

We will see, in this House, those members who care about the regions. We will see where political parties stand when they vote on Bill C-207. I cannot fathom that there would be a Conservative member who would vote against. The former mayor of Roberval is from the Saguenay—Lac-Saint-Jean region and the member forRoberval—Lac-Saint-Jean. I met this member when he was mayor of Roberval and he had a backbone. It seems that he has become spineless since becoming a member of the Conservative Party. We will see what he does and how he will react to the vote on Bill C-207.

Once again, the minister responsible for this region, the member for Jonquière—Alma, has already said he opposes this bill. That is not surprising because he was already a spineless Conservative. He only has himself to blame.

There is one thing, however. Once again, this bill, which was introduced by my colleague, the hon. member for Chicoutimi—Le Fjord, simply duplicates a measure adopted by the National Assembly of Quebec in 2003 that produced positive results. I invite people to listen to the figures once again. I am pleased to repeat them, since some of my colleagues in this House seem to prefer to hold the party line. They will be given documents prepared by their research staff and what I have to say will certainly not appear in their documents.

With respect to the program instituted in Quebec, in 2003, 2,500 people took advantage of it and in 2004, that number rose to 9,700 people. It continues to increase all the time. This therefore allows businesses to hire young people and allows the regions to stop the exodus of young people. It does not apply to all regions of Quebec. Some regions of Quebec are seeing a growth in population, like elsewhere in Canada.

The regions that are experiencing growth do not warrant such assistance, but we must do everything we can to keep young people and jobs in the regions with declining populations. We must stop the decline of the regions. That is the major problem created by the current crisis in the forestry and manufacturing sectors. We run the risk of losing our entire work force in the regions, of losing all the expertise and experience of those men and women who were the economic driving force of our regions.

And this is all because the Conservative Party decided not to give businesses direct assistance. They offer tax credits, but those are not refundable. A forestry or manufacturing business that is not turning any profit will not get any tax credits and cannot benefit from the advantages of the budget that was tabled. The Conservatives do not seem to understand that if a business is not paying taxes, tax credits must be refundable.

We also need a plan to help companies modernize. In the case of the forestry sector, trees will continue to grow. It is not a matter of telling people, as the Conservatives are doing, to try to find a new career, when forestry workers have experience in that field. They are being told to go into computer technology or into other economic diversification sectors. Meanwhile, the trees will continue to grow. If we want to compete, we need to modernize our companies and help them purchase state-of-the-art technology so that they can become more competitive and regain their position on the market.

The Conservatives decided to leave it to the free market. They saw that smaller companies had been taken over by larger ones, and that the larger ones will not make it through the crisis. The situation will play out as they want it to. There will be regions living off the forest that will no longer have an economy, and the people will move to larger centres. That is not what the Bloc Québécois wants.

My colleague from Chicoutimi—Le Fjord is doing excellent work. I am always surprised by what I read in the news in his region. Even the media, which is often rather tough on the Bloc Québécois, believe that he is doing excellent work. That is to his credit, but not to the credit of the two Conservative members from the Saguenay—Lac-Saint-Jean region.

I am anxious to see how the Conservative members will vote on this bill. I thought that the former mayor of Roberval, the member for Roberval—Lac-Saint-Jean, found it interesting. Then he realized that there is the Conservative Party line to toe when the minister, the member for Jonquière—Alma, said that he opposed the idea. He is probably about to vote against a measure that would help young workers in his region and stop them from leaving the area.

I always find that surprising. I am always amazed to see a Quebecker buckle before the Canadian right and to give in. I have a great deal of difficulty with that. He is repudiating our values, the interests we defend and our citizens for the sake of the future of a political party that no longer has a future and that will see what happens in the next election. Perhaps the time has come for Quebec MPs to rise and defend the regions of Quebec, whether they are Conservatives or Liberals.

They will be in a position to say to Quebec's designated regions experiencing depopulation and the exodus of their youth that, for once, they will implement a positive measure on their behalf—one that produced results in 2003 when implemented by a similar law by the Quebec government. Quite simply, it would give this opportunity—

The House resumed from April 7 consideration of Bill C-207, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), as reported (with amendment) from the committee, and of the motions in Group No. 1.

Bill C-207

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, today I am presenting a second series of signatures from Quebec citizens who support Bill C-207. There are several hundred citizens in Quebec regions who support Bill C-207. This bill would give an income tax credit of up to $8,000 to recent graduates who accept employment in a region that is facing economic difficulties.

I would like to read a few words from the petition: “Considering that Bill C-207 would come to the aid of regions [facing economic difficulties] and that a similar program exists in Quebec and has proved successful. We [,the citizens,] are calling on the House of Commons and all members of Parliament to support Bill C-207.”

I present this petition on behalf of these citizens.

Income Tax Act—Bill C-207

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I am honoured to present a petition on behalf of citizens from various regions of Quebec who support Bill C-207. This bill would give an income tax credit of up to $8,000 to recent graduates who accept employment in a region that is facing economic difficulties. The bill is designed to keep our young people in the regions, to develop a skilled labour force and to reduce or stop the exodus of these young people.

There will be a vote in the House in early June. I hope the members across the floor, particularly the Conservative members, will vote in favour of this bill. I am optimistic that this bill will pass.

Motions in Amendment

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, it is my pleasure today to talk about Bill C-207.

Canada's Conservative government takes seriously the challenges of ensuring that Canada is equipped to succeed in an increasingly competitive world. Our vision for success includes all regions of this great country. This vision is set out in our “Advantage Canada” economic plan and has been acted on in real terms.

“Advantage Canada” sets out a blueprint for the best educated, most skilled and most flexible workforce in the world, and it does so on the understanding that all of our young people need to be given the opportunity to acquire the skills and training they need to give Canada the knowledge advantage it needs to succeed.

When Canada succeeds, we all succeed. That is why Canada's Conservative government brought forward its vision in “Advantage Canada” and that is why we are acting on that plan in real terms, delivering real results for Canadians.

Our plan is about achieving a higher standard of living and a better quality of life for Canadians as the world economy continues to transform. It is about helping people reach their full potential and ensuring that they have the incentives, opportunities and choices they need to achieve a better quality of life.

This government understands that high taxes limit Canadians' opportunities and choices and hinder economic growth. With a more focused government, we can lower taxes to create incentives for all Canadians to succeed, regardless of where they live and work.

An essential element of our “Advantage Canada” plan to secure Canada's economic future involves attaining one of the most competitive business tax regimes in the world. The Government of Canada has made enormous strides in this regard.

With the $60 billion in tax cuts announced in our fall economic statement, including another one percentage point reduction in the GST, the total actions taken by this government to date are approaching $200 billion in tax cuts over this and the next five years. This will bring federal taxes to their lowest level in nearly half a century. The federal tax burden measured by the total federal revenues as a share of the economy will fall to 15.1% by 2011-12, the lowest ratio in nearly 50 years.

Key to our objectives for a strong business environment is the reduction of the federal corporate income tax rate from 22% to 15% by 2012. This will make Canada's corporate income tax rate the lowest among the world's major developed economies. This will give Canada a substantial tax advantage over the United States, with a statutory tax rate advantage of over 12 percentage points and an overall tax rate on new business investment advantage of more than 9 percentage points by 2012.

Along with a reduction in corporate income tax, we also have eliminated the corporate surtax for all corporations. This not only reduced the corporate tax rate by 1.12 percentage points in 2008, but also simplified the tax system.

We eliminated the federal capital tax two years ahead of schedule.

We provided an incentive to encourage provinces to eliminate their capital taxes.

We reduced the small business tax rate to 11% from 12% beginning in 2008.

We increased the small business limit to $400,000 from $300,000.

This competitive tax regime will be a powerful brand for Canada globally and will leverage economic growth and the creation of employment opportunities for all Canadians, regardless of which region of Canada they choose to live and work in.

Bill C-207 proposes to use a tax credit to encourage young people to stay in a particular region. Yet, unlike “Advantage Canada”, it would not help to create the types of employment opportunities that would provide an incentive for a young person to stay.

The bill ignores the very nature of Canada's economy. Economic adjustment is an ongoing reality of a healthy, dynamic, diversified economy.

The Government of Canada supports regional economic development and devotes significant resources to programs that are responsive to local needs, make strategic partnerships with other stakeholders, and are multi-faceted in their approach. Our government proposes a visionary plan to improve the standards of living and quality of life of Canadians and to make Canada a world leader for today and for future generations. Bill C-207 would do nothing like this. Instead it proposes to spend up to $600 million on a tax credit that does not help create a single additional job.

For these reasons, I am unable to support this private member's bill. I encourage hon. members to similarly reject it as the significant financial resources that it entails could be more effectively dedicated to meeting the priorities of Canadians.

With the time I have left, I want to go over some of the issues we had with the bill. As a member of the finance committee, I had the opportunity to discuss the private member's bill with the member who brought it forward and with some of the staff he had brought forward to help with those decisions.

There were four or five key points that were made during those meetings. As we can see, the bill has been changed considerably since being brought to committee. I will explain the reasons why we believe those changes are important.

For example, no particular professions or skill sets are targeted. The bill said that no matter what the job was, if people worked in the region, they could get the credit if they came from that region. If people were in a profession that was well represented in the area and there were no particular skills set that they brought to the table, the bill did not address that. The credit would effectively go to all post-secondary and university graduates.

The bill did not do what the member wanted it to do in terms of creating jobs in the home area from where the young people came. If the area is already saturated with that type of employment and has those opportunities, there is really no need for that tax credit. That money could be used to target, as we have done “Advantage Canada”, opportunities for people across the country and not in specific areas. Since regions with high economic growth are also likely to witness shortages of skilled workers, encouraging graduates to remain in economic depressed regions could aggravate these shortages.

That is exactly one of our points. I come from an area in Ontario that is doing well. There are areas in the country that are not doing well. However, I have always believed in the mobility of labour. I want young people from my region to be able to work in any region in Canada where they find satisfactory and challenging work. This has economic benefit not only to them, but to the country as well.

The bill does not encourage that. In fact, it does the opposite. That is another reason why, at committee and here in the House, I did not support the original bill brought forward by the Bloc member. The credit would provide tax relief only with respect to the first 52 weeks of qualified employment and would not necessarily provide long term solutions. This is the specific comment I made at committee. It is a very short term, short-sighted solution. Areas that need help do not need it for only 52 weeks. They do not need people who are just there to get a tax credit. They need a longer term vision.

I would hate to see young individuals, who make these moves to these areas to get these jobs, stay at home for 52 weeks for the tax advantage. I do not think it does anything for the economic development.

Those are just three of the things I spoke to at committee. There is a variety of others.

I will not support Bill C-207 when it comes to a vote in the House of Commons. I did not support it at committee. There are better ways to proceed, such as what the Conservative Government of Canada has done. We will proceed with “Advantage Canada”, making a difference for all Canadians in all regions of the country.

[Denise Savoie, NDP, Victoria, BC]

Mr. Speaker, I am pleased to speak to Bill C-207, which seeks to amend the Income Tax Act in order to encourage new graduates to return to their region of origin, and therefore better support the regions and curb the exodus of young graduates.

I am a little bit confused by my Liberal colleague's speech because he does not seem to agree with his colleagues on the Standing Committee on Finance where, unless I am mistaken, the Conservatives and the Liberals attempted to gut this bill.

I support the original bill which provided a non-refundable tax credit of 40% of the graduate's salary to a maximum of $8,000 for the first 52 weeks of employment in the region.

This bill is based on the Quebec tax model that has helped 1,300 people a year in that province at an estimated cost of $21 million. The amount that was cited by my Conservative colleague seems to be an exaggerated amount if extended across Canada.

There were, indeed, problems with the bill but none of those problems were insurmountable.

It is said that there is none so deaf as he who will not hear. I am afraid that the Conservatives simply did not want to have anything to do with it. I will speak about this in more detail later.

First, I would like to talk about a few problems with this bill, including the definition of the regions. As pointed out, the definition is based on an act that has not been amended for a number of years, specifically since 1982. That is a problem. When we refer to new graduates, do they have to have graduated very recently or could it simply mean graduates?

As I mentioned, these are not insurmountable problems. They could have been fixed in committee.

It does not surprise me that the Conservatives did not understand the possibilities of this bill. It could be a step, in my view, in the right direction in terms of levelling the playing field and possibly bridging the divide between rural and urban areas which have a significant advantage right now in attracting qualified workers.

For example, we know that urban areas depend on good food. Concerns about food security are increasing in Canada. This would be a way of encouraging value added industry related to food production in rural regions by motivating young people to go back to rural areas.

This bill could have had a positive effect on low and middle income families in those regions. Canadian communities need the economic and social conditions to thrive. All regions in Canada need those conditions.

One of my colleagues on the finance committee made a statement.

I have a copy of the document, from which I will quote. He indicated that Canada presently has a productivity problem, according to the statistics. He said, “Now, typically speaking, Canada is a country that suffers from a productivity challenge.” I do agree with that.

And then he continued, “We have economists come forward and talk to us about that all the time. This bill would seem to set up a counter-intuitive incentive to improving Canada's overall productivity.”

I do not agree with that. It may not be an intuitive solution but if our goal, in Canada, were simply to send workers to the regions that are already thriving, this would not help all Canadian regions to flourish, and that is the point of this bill.

In my opinion, the role of government is not simply to send workers as widgets to fill a need for industry. It is also to ensure that all regions in Canada develop and are allowed to maintain their integrity. This is where a law such as this would help assist workers to encourage them to go back to their region.

In British Columbia there is a very strong economic growth right now but that there are also smaller regions, for example, forestry regions where workers are unemployed and suffering from the beetle kill, where this law would assist those small regions.

I would ask my colleagues to think about this, and those in Alberta perhaps know it better than anyone else, the impacts of the tar sands and the development of the oil industry, which has produced riches no doubt, but it has also created terrible social and economic problems.

I do not think the objective that we should have as government leaders is to only feed those industries, continue to feed that one part of Canada that is going full steam. Certainly that should be part of it but there are other regions in Canada that should be better supported.

The bill offers one small piece of the puzzle. It is not the total answer but it would help encourage graduates to go back to regions or to go to rural areas and provide some of the technical knowledge they have acquired at university, the expertise, the ingenuity, the creativity that would bring an enrichment and renewal to these regions that may be economically depressed.

Therefore, I am pleased to support the amendment to re-establish the integrity of the bill and to reject the amendments of the finance committee. I understand that there is a new amendment that will be coming forward to further make this bill more acceptable. I hope my colleagues from the Liberals and the Conservatives will be supportive.

We did not support the gutting of the bill at committee. As I said, we saw it as a first step to draw young graduates to economically depressed regions. It could act as an incentive to motivate regions toward greater economic development within the context of an overarching regional government strategy.

As I said at second reading, when I spoke to the bill, it does require a regional development plan but I could see very easily where a bill of this kind could be paired with a good regional development plan that would really allow the region to grow in a way that it would not without the bill.

In conclusion, we support reinstating the bill's content. We would have proposed that it could have been strengthened with specific definitions but that in itself is not adequate to vote it down.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, it gives me great pleasure to join the debate this morning on private member's Bill C-207, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), in other words, particularly in rural regions or regions of the country that have economic challenges, that face real problems in terms of people leaving those regions for other parts of the country, moving to, for instance, urban areas or other provinces to find work and opportunities.

These are also communities that are losing some key people they need, whether it be doctors or other professionals whom they need in those communities. We need to have measures to encourage young people to go back to those communities to work in those communities.

I am actually speaking today as a replacement. I am here because I received a call on Friday from my good friend and colleague, the member for Dartmouth—Cole Harbour, who sadly had to remain in the riding for a very good reason, and that is for the funeral of Mr. Jim Connors.

All members from Nova Scotia would probably know Mr. Connors as a very distinguished person in Nova Scotia, a very well liked person, who fought a hard struggle with cancer over the past while. I know that colleagues will all join me in expressing our condolences to the family of Mr. Connors and his friends, who are gathering today, as is my colleague from Dartmouth—Cole Harbour, for that funeral.

I am pleased to be here on my colleague's behalf to talk about the bill. Let us recognize that clearly there are hot spots in our economy.

For example, in large cities, the economic situation is usually stronger, and the economy is growing. We often see youth leaving their small rural communities for urban centres such as Montreal, Toronto, Vancouver and so on. It is their right to decide where they want to live, where they want to stay. However, at the same time, we need to have young people in rural communities, in the regions. It is very important to have young professionals and youth with a lot of skills. They have gone to university or community college, and we need to recognize that taxes paid by both rural and urban taxpayers help universities and community colleges to exist, to pay their costs. They have the same interest in seeing the graduates from these institutions return to their communities.

We should be looking at this measure because we have seen across the country a movement from rural to urban, out of regions like mine in Atlantic Canada to other parts of the country.

There are two challenges. One of the challenges that the bill does not really address directly is the challenge of economic development in the regions of this country, particularly regions that are facing greater challenges. This bill does not respond to that challenge but proposes a measure that would assist in getting young people to go back to those communities. The way it does that is by providing a 40% tax credit up to a maximum of $8,000 for the first 52 weeks a young person works after getting a degree.

I am concerned about some aspects of this bill. There is a question about whether young people would actually go for one year, then depart and take advantage of the $8,000 or the 40% tax credit to lower their tax payable and to have that benefit in the one year. The intent is that they would be active in the community, get jobs in the community because of this and would stay there.

It is reasonable to assume that many would in fact stay in those communities because of the encouragement and incentive to go there to begin with, where they could get jobs and further the contacts they have had from their youth. This could be a beneficial instrument, although perhaps it would be better if it were a longer period. I am not sure that one year is adequate.

I suppose one way to do this could be to have a declining level of some sort, a process where they could get so much in the first year, maybe the next year 30%, then 20% and so forth so that it encourages young people not only to go to a community or region of the country to begin with but to stay there a longer term. We also need to have in those communities the kind of job creation that makes young people want to be there.

It is important to recognize that in the less developed or challenged regions of this country there are communities that are thriving. Rural communities are thriving, although there are not enough of them. A lot of communities in Atlantic Canada have seen many people go down the road, as they say, to Toronto, Alberta and so forth, for opportunities. We need to be very concerned about that.

A few years ago I had the occasion to visit the riding of Labrador with my hon. colleague, the member for Labrador. We visited his home community of Williams Harbour which has a population of 40. They are 40 of the friendliest people one would ever meet. It was a wonderful, short visit. In fact, as we flew in to Williams Harbour in a little twin prop plane, it looked like the runway was not nearly long enough. The landing strip looked like it was not nearly long enough to actually land and stop. It made us feel like the plane was going to fall into the water after the short runway, but we managed. It is a bit like Pangnurtung in Nunavut. Once one is on it, it is longer than it looks like from above, thank goodness, and planes can land there.

The same day we also visited the community of Black Tickle, Labrador, which, 15 years ago, had a population of 400. Today, it is 200. It is a community that has clearly suffered because of the downturn in the fishery.

Throughout Atlantic Canada, we have seen many communities suffer because of the decline in finfish, particularly the cod of course. We hear a lot about groundfish and cod is the prime example. What that has meant is that with less cod there have been more shellfish.

When one catches a lobster, generally speaking there is not a lot of onshore processing. In other words, what often happens is that lobster goes in a box, which is shipped off to Boston, New York, Paris or wherever and it does not create the kinds of jobs where, for instance, cod would go onshore to a plant where it would get gutted, filleted and processed in various ways, which involved a lot more work in those coastal communities that today are not seeing nearly as many of those kinds of jobs. They are seeing a decline. There are people there still who need doctors and young people to be the bankers and to do the many important jobs that are still required in those areas.

It seems to me that this bill would assist in encouraging those young people who want to reside in one of those areas. It is really a question of choice. They have the right to go where they wish. A very important part of our Charter of Rights and Freedoms is to have the freedom of mobility.

However, the idea of offering young people a little encouragement if they choose to reside in one of these economically challenged areas makes absolute sense. It will not mean they will go if there are no jobs there. We need to do more to support the development of jobs in those areas. However, it will mean that some of those young people will try to go back to their home communities or other communities in rural and less developed parts of this country to give it a shot and get involved in that community where they can make a difference.

It is not only those communities. It is this country as a whole in terms of the fabric of our society that benefits when our rural and remote communities are thriving.

The feeling I got in the communities of Williams Harbour and Black Tickle was a very warm one. Those are wonderful people and they are an important part of the fabric of this country.

[Ted Menzies, Conservative, Macleod, AB]

It is wonderful to be back here and hear the accolades coming from the other side so early in the morning. It is nice to see that they are up and atom.

I do welcome this opportunity to continue the debate on private member's Bill C-207, on which, by the way, we heard the witnesses who appeared and we debated at the finance committee, so we do actually understand what is in this legislation.

This bill is sponsored by the hon. member for Chicoutimi—Le Fjord. As the hon. members are aware, it proposes an income tax credit for new graduates taking employment in certain regions. The credit would be equal to 40% of earnings from the first 52 weeks of qualifying employment, to a maximum credit of $8,000.

Qualifying employment would be employment in a designated region and employment duties would need to be related to the graduate's education. A designated region for purposes of the credit is an area defined in section 3 of the Regional Development Incentives Act.

While I can appreciate the intent of this proposal to a certain degree, I have to make it very clear that I consider there to be a number of significant practical problems associated with this bill, issues that should be of concern to members of this House and which should preclude them from supporting it.

One of my first concerns is that there appears to be no coherent rationale or specific identifiable necessity underpinning the proposed tax credit. In other words, the hon. member for Chicoutimi—Le Fjord has not demonstrated that there is in fact a shortage of skilled workers in the designated regions targeted by this bill.

Is there any evidence, for example, that employers in these regions cannot find the skilled workers they need, even if they offer competitive compensation and working conditions? Even if there is, why then would the measure only target new graduates and not all qualified skilled workers relocating to these designated regions? Why propose a credit available to all recent graduates, regardless of occupation? Above all, what is the rationale for providing significant federal government support to entice recent graduates to work in certain regions instead of others?

The designated regions that the bill references are drawn from a list that has not been updated in over two decades and which simply does not account for economic changes that have taken place in the interim. The credit proposed in this bill would also introduce very serious inequalities in the tax system between recent graduates and those who graduated earlier, and inequities between new graduates who work in different regions.

Finally, the credit would incur a substantial fiscal cost to taxpayers in terms of forgone revenue for a tax measure that may ultimately not result in any new jobs for any new graduates anywhere in the country. This is simply not consistent with the government's approach of dedicating federal resources to where they will have the greatest positive economic impact.

If anything, this bill would, if passed, divert fiscal resources away from programs that actually do support regional economic development and that do foster the kinds of economic conditions under which all regions of Canada can grow and prosper.

This bill would only provide tax relief with respect to a new graduate's first 52 weeks of qualified employment. This raises a fairly obvious question in my mind. If the proposed credit were actually needed to encourage new graduates to work in designated regions, what would happen after the initial 52 weeks when the credit is no longer available? Moreover, why not provide incentives to other skilled workers who are not new graduates, if the member's concern is truly skills shortages in these regions?

All of these issues raise significant questions about whether this bill would yield long term benefits to the intended target regions and whether it would even have an impact in the short term beyond reducing taxes for certain groups of workers.

The bill is inadequate in meeting its intended objectives in a range of areas. It, for example, does not even make any attempt to target skill sets that are in short supply in a designated region or which could assist in its development.

I would like to take a moment to return to the concerns I outlined at the outset with respect to the bill's definition of “designated region”.

As we all know by now, the credit is only provided to new graduates who take up work in a designated region, a term taken from the Regional Development Incentives Act. The term refers to a region in which, to quote the act, “existing opportunities for productive employment in the region are exceptionally inadequate”.

As I said, the list of regions specified in the act has not been updated in over 20 years. This list simply does not reflect the current economic reality of Canada's regions. I might add, as an example, 20 years ago the oil sands projects were very much in their infancy, and that is one of the highest demand regions for skilled labour that we have in this country now.

Let us take a couple of glaring cases in point.

I will draw hon. members attention specifically to the fact that the provinces of Saskatchewan and Manitoba are included on this list in their entirety, yet both provinces have recently displayed unemployment rates that are below the national average. If anything, Saskatchewan is one of the country's recent economic success stories with its economy booming as a result of the ongoing development of its extensive energy reserves.

That being the case, and given the significant economic challenges being faced elsewhere in the country, it would be inappropriate to dedicate limited federal resources to ensuring new graduates in these provinces pay up to $8,000 less in federal income tax than those not working in regions designated as having inadequate opportunities for productive employment 20 years ago.

Clearly, Bill C-207 would lead to some unfair and almost surreal regional de facto subsidies if it were adopted.

The bizarre inequities introduced by this bill would not only occur between regions but also between individuals or groups of graduates. For example, graduates who finish their respective programs roughly concurrently but who live and work in different regions could face completely different income tax burdens in their first year of employment. At the same time, two graduates working in the same job and region but whose graduation dates are a year apart would also face that $8,000 gap in their respective tax burdens.

Canadians simply cannot and should not be expected to support a program that introduces such inequitable outcomes into our tax system.

What is more, the tax credit proposed under Bill C-207 is also incredibly expensive. Estimates suggest that it could represent up to $600 million in forgone revenue each year to the federal government. As I have suggested, these are funds that would no longer be available to other priorities for which there is a great deal of public support.

In the real world, the conditions that Bill C-207 is trying to address would not be solved through temporary and arbitrary tax benefits like those proposed.

For these reasons, I am unable to support this private member's bill and would encourage hon. members to simply reject it, so that the significant financial resources that it entails can be more effectively dedicated to meeting the priorities of Canadians.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

propose:

Motion No. 1

That Bill C-207 be amended by restoring the title as follows:

“An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions)”

Motion No. 2

That Bill C-207 be amended by restoring clause 1 as follows:

“1. The Income Tax Act is amended by adding the following after section 118.7:

118.71 (1) The definitions in this subsection apply in this section.

“base period” means the first 52 weeks of the aggregate of all periods each of which is a period during which the individual

(a) holds qualifying employment; and

(b) ordinarily performs the duties of the qualifying employment at an establishment of the individual’s employer situated in a designated region or is ordinarily attached to such an establishment.

“designated educational institution” has the meaning assigned by subsection 118.6(1).

“designated region” has the meaning assigned by section 3 of the Regional Development Incentives Act.

“qualifying employment” means an office or employment that the individual begins to hold in the 24-month period that follows the date on which the individual successfully completes the courses and, where applicable, the internships leading to the awarding of a recognized diploma, or the date on which the individual is awarded a recognized diploma that is a master’s or doctoral degree under an educational program requiring the writing of an essay, dissertation or thesis, if

(a) the individual begins to perform the duties of the office or employment after January 1, 2007;

(b) at the time that the individual takes up the office or employment, the establishment of the individual’s employer at which the individual ordinarily performs the duties of that office or employment, or to which the individual is ordinarily attached, is situated in a designated region; and

(c) the knowledge and skills obtained during the individual’s training or educational program are related to the duties performed by the individual in connection with the office or employment.

“recognized diploma” means a degree, diploma or attestation awarded by a designated educational institution.

(2) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount equal to the lesser of

(a) the amount that is 40% of the aggregate of all amounts each of which is the salary or wages of the individual for the year from qualifying employment and attributable to the individual’s base period; and

(b) the amount by which $8,000 exceeds the aggregate of all amounts each of which is an amount that the individual is deemed to have paid to the Receiver General under this section for a preceding taxation year.

(3) For the purposes of paragraph (2)(a), an individual who was resident in a designated region in Canada immediately before the individual’s death is deemed to be resident in a designated region in Canada at the end of December 31 of the year in which the individual died.”

He said: Mr. Speaker, I am very pleased to have the opportunity to discuss Bill C-207 again today at the report stage and I would like to thank everyone taking part in today's debate.

Bill C-207 is designed to fight two problems that affect the regions facing economic challenges: the exodus of young people and the shortage of skilled labour. Briefly, Bill C-207 would give an income tax credit of up to $8,000 to recent graduates who accept employment in a region that is facing economic and demographic difficulties.

I would like to use the short time I have to respond to some of the concerns regarding Bill C-207 raised by my colleagues at the Standing Committee on Finance meeting held on February 27, 2008. Above all, I would like to appeal to the two Conservative members from Saguenay—Lac-Saint-Jean, who are fully aware of the benefits of this measure, to support Bill C-207, which will hopefully help convince their colleagues to also support this bill.

All the members of this House know that the most isolated regions are the ones losing the most residents. In many cases, they depend on one type of industry—we call these single-industry regions. There is often little room in the traditional economic base of these regions for skilled jobs. So with the forestry crisis, the economy of a single-industry region will experience distinct ups and downs.

To compensate, new businesses in other fields must be developed to diversify the economy. Unfortunately, there are not enough workers in these regions to make it possible to create new businesses in new fields.

When the Government of Quebec examined the regions that depend on a single industry, it set three criteria: a decline in the economy, a shrinking population and the need for diversification. It looked at six administrative regions, in addition to some regional county municipalities that are part of certain administrative regions. For example, the RCM of Mékinac, in the north of Mauricie, was included because it is a single-industry community, its economy is declining, its population is shrinking and it needs diversification.

In Quebec, the total population of the regions where the tax credit for new graduates would apply is approximately 900,000 people, out of a total population of 7.5 million.

There is no denying that other areas, such as northern Ontario, are experiencing economic hardships. That region has lost a lot of young people in recent decades. These regions have a hard time staying vibrant and strong. Northern British Columbia is also experiencing economic difficulties, as well as the Cape Breton region of Nova Scotia, and northern Manitoba, an area where the economy is weak. This proposal would not apply only to Quebec. On the contrary, almost all the provinces could benefit from it.

This bill is not designed to discriminate against new graduates in major centres, as some Conservative members are implying, but simply to put in place a proven measure to help regions with declining populations.

Last week, in the newspaper Progrès-dimanche, MigrAction, an organization in Saguenay—Lac-Saint-Jean that encourages young people to settle in the region, said that the Government of Quebec's program is an excellent way to encourage people to come back to the region and that young professionals really seem to appreciate it.

We propose to use the Regional Development Incentives Act to determine the designated regions. In the part entitled “Designation of Regions”, this act sets specific rules for designating regions. First, the federal government and the province have to agree on the designated regions; a region must have an area of not less than 12,500 square kilometres; and the region must be in economic difficulty.

There are communities in every province that meet these criteria.

We must take action to prevent hundreds of cities and towns from disappearing in future because no one is settling there. This is the danger facing many communities in Quebec and Canada.

I am counting on the Conservative and Liberal members from Quebec to make their Canadian colleagues aware of the how effective the Quebec legislation has been and what a positive impact it has had.

To allay some Conservative members' fears that such a measure will cause a loss of productivity, I want to point out that the Government of Quebec set up the Gagné commission to study tax measures targeting the regions. The commission found that productivity increased much more slowly in resource regions than in urban and central areas. Productivity rose by 2.5% from 1998 to 2005 in Quebec as a whole, by 3.5% in metropolitan areas, but by only 0.2% in resource regions or remote areas.

The Gagné commission found that growth in the highest value added businesses, in other words leading edge, secondary and tertiary processing businesses, was behind the increased productivity. It also noted that the difficulty attracting skilled labourers to remote areas prevented leading edge and processing businesses from opening in those regions. The purpose of this measure is to avoid that type of situation and to resolve the problems of low productivity in the more remote regions or regions that are far from major centres.

As far as the cost of such a program is concerned, based on the new criteria established by the Government of Quebec in 2006, this Quebec program cost $30 million in the first year. In 2007, the estimated cost of the program was $45 million and, in 2008, the cost is estimated at $60 million. The cost should then level off at around $60 million for subsequent years.

When economists were asked to estimate the cost of such program for all of Canada, they estimated it would be $90 million the first year, $135 million the second year, $180 million the third year and roughly $180 million in subsequent years.

I am calling on all hon. members of this House of Commons and the hon. members from Quebec—specifically the two Conservative members from Roberval—Lac-Saint-Jean and Jonquière—Alma in my region—who are well aware of the effectiveness of such a program, to help our regions support their young people. We have to put a stop to this population hemorrhage and start allowing the processing industry to develop by giving our entrepreneurs the chance to get the skilled workers they need.

I will close with a summary: if the majority of hon. members voted in favour of Bill C-207, it would provide tax creditof up to $8,000 over a certain number of years that a young person could use to pay off student loans or as a down payment for a home. These are measures that would encourage our young people to move back to the regions where there is a dwindling population, an economic downturn and economic difficulties.

The House proceeded to the consideration of Bill C-207, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), as reported (with amendment) from the committee.

Finance

[Rob Merrifield, Conservative, Yellowhead, AB]

Mr. Speaker, I have the honour to present, in both official languages, the fourth report of the Standing Committee on Finance, related to Bill C-207, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions).