This bill was last introduced in the 40th Parliament, 3rd Session, which ended in March 2011.
This bill was previously introduced in the 40th Parliament, 2nd Session.
Johanne Deschamps Bloc
Introduced as a private member’s bill. (These don’t often become law.)
Report stage (House), as of Dec. 2, 2009
(This bill did not become law.)
This is from the published bill.
This enactment amends the Income Tax Act to give every new graduate who settles in a designated region a tax credit equal to the lesser of
(a) 40% of the individual's salary or wages,
(b) $3,000, and
(c) the amount by which $8,000 exceeds all amounts paid for a preceding taxation year.
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.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.
The House proceeded to the consideration of Bill C-288, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), as reported (with amendment) from the committee.
The Acting Speaker Barry Devolin
There being no motions at report stage, the House will now proceed without debate to the putting of the question on the motion to concur in the bill at report stage.
Some hon. members
Agreed.
On division.
The Acting Speaker Barry Devolin
I declare the motion carried.
(Motion agreed to)
When shall the bill be read the third time? By leave, now?
Some hon. members
Agreed.
Johanne Deschamps Bloc Laurentides—Labelle, QC
moved that the bill be read a third time and passed.
Mr. Speaker, again we are gathered to debate Bill C-288, to give every new graduate who settles in a designated region a tax credit. This bodes well, because it means the bill has passed committee stage.
In 2007, my colleague the hon. member for Chicoutimi—Le Fjord introduced a similar bill, namely Bill C-207. It received support from a majority of the members in the House at all stages and even got as far as the Senate. I promise my colleague, young people and the regions of Quebec to have the same determination to get this bill passed.
To put this into context, the purpose of Bill C-288 is to give a tax credit to every new graduate who settles in a designated region. Since being introduced in the House, this bill has come a long way and has received a great deal of support.
Bill C-288 is supported by a variety of groups and generations throughout Quebec: the Fédération étudiante collégiale du Québec, or FECQ, and the Fédération étudiante universitaire du Québec, or FEUQ, which represent 40,000 and 125,000 students respectively in Quebec; the FADOQ network, which has 255,000 members, and the Fédération québécoise des municipalités, which represents 972 municipalities. They have all given their full support to the bill. What is more, the bill is supported by a number of RCMs, chambers of commerce and youth employment centres.
In addition to this sizeable support, last November the hon. member for Chicoutimi—Le Fjord and I delivered 3,000 postcards in support of Bill C-288 to the office of the hon. member for Roberval—Lac-Saint-Jean. Contrary to what some people have suggested, these postcards were indeed signed by people who are affected by the bill.
Before going any further, I would like to thank two colleagues: the hon. member for Honoré-Mercier and the hon. member for Churchill who have been behind Bill C-288 from the beginning.
I would also like to thank the representatives of the Fédération étudiante universitaire du Québec who came to show their strong support for Bill C-288 by testifying before the Standing Committee on Finance. I greatly value their support because, in a way, this bill is designed for the thousands of students and graduates who will move out of large urban centres to go live and work in the regions.
The main purpose of this bill is to attract young graduates to the regions in order to help solve two main problems: the exodus of young people and the serious shortage of skilled labour. It is important to encourage young graduates to settle in the regions, where they will start their professional careers, and to recruit skilled labour for the benefit of the regions.
The exodus of young people is becoming increasingly problematic in terms of the economic vitality of areas that are far from large centres. These areas need young graduates in order to develop and to enhance their ability to innovate. Obviously, giving recent graduates who settle in regions a tax credit of $3,000 per year—up to a three-year maximum of $8,000—would help revive local economies and meet labour needs.
The exodus of young people has a negative impact, both socially and economically, on any region. It speeds up population aging and reduces the average education level of the people left behind, which undermines the region's ability to innovate. The more remote regions are losing the most residents. In many cases, they depend on one type of industry; these are called single-industry regions.
Gone are the days when resource regions could prosper based solely on extracting natural resources for primary processing elsewhere. In order to grow, the regions will have to look to technology and develop their processing industry more.
Quebec was hard hit by the forestry crisis. Since 2005, Quebec has lost 26,000 jobs in the forestry industry alone, that is, the industry and related services, such as transportation and logging equipment. This represents 50% of Canada's total loss.
Since the Conservatives came to power, about a third of all forestry jobs have disappeared. Some regions have been decimated. Since the summer of 2004, my region, the Upper Laurentians, which has been hardest hit by the crisis, has lost 58% of all forestry jobs in Quebec.
Of the 17 forestry companies in my riding, 14 have been forced to close their doors. Heavy machinery operators, engineers, technicians and truckers have borne the brunt of these job losses. Those with higher levels of education, special skills and expertise, such as engineers, have been forced to leave our beautiful region to find work in their fields.
The Government of Quebec realized that to promote regional economic diversification, it would have to develop new business opportunities in other fields.
This is a major hindrance to the development of secondary industry and high-tech. In all of the studies that have been done, many companies have said they would only be able to stay in their region if they did not grow very much. So long as businesses stay small, they can take care of professional and technical work themselves. If they grow, they have to hire skilled workers. Difficulty finding such workers in the regions might force companies to relocate to urban centres, where they are more likely to find qualified workers.
Bill C-288 proposes a beneficial tax measure for all young eligible graduates in Quebec and Canada. Quebec is not the only province experiencing a youth exodus. Across Canada, economic activity has gradually moved from more rural regions to larger centres. Some provinces—Quebec, Saskatchewan, Nova Scotia, New Brunswick and Manitoba—have introduced a graduate tax credit. The Quebec government introduced its credit in 2003, then amended it, so that it now resembles the tax credit proposed in Bill C-288, which I am talking about today.
The Conservatives tried to derail the debate on this bill by grossly inflating the cost of the program. In his November 24 report, the Parliamentary Budget Officer assessed the proposal according to a number of different scenarios. I would like to clarify some of the data so that members can focus on the essence of the bill.
First, the regions designated in this bill will be determined by the Minister of Finance, after consulting with the provinces involved. Second, the regions will not be designated based on the number of people who would be affected; they will be based on the needs identified in these regions far from Canada's major cities. I should point out that the bill excludes metropolitan regions with more than 200,000 residents. Third, the bill must focus on resource regions and regions with low rates of urbanization that are struggling with long-term unemployment rates, an indicator of poor employment prospects.
Finally, we used economic and health regions as geographic criteria. We then used the long-term unemployment rate to determine the regions where job prospects are more difficult—4.7% and up in 2006. From these regions, we considered only the regions that had over 12% of their population living in rural areas.
In total, we identified 34 health regions that met these criteria, representing 8.24% of the Canadian population. According to the estimates of the Parliamentary Budget Officer, such a measure would cost around $230 million per year, rather than the $600 million claimed by the Conservatives.
Of course, other regions could be added during the discussions between the federal government and the provincial governments, but these regions will have to meet the requirements of the bill, and have a high long-term unemployment rate, combined with a low rate of urbanization or a low population density.
Adding a few regions that meet the above criteria would not substantially increase the cost of the bill.
We still want the support of Liberal and NDP members for this Bloc Québécois initiative. We hope that Conservative members will put aside their partisan ideology and act in the interests of young graduates and the regions.
I believe that many young people who are about to complete their post-secondary education or professional training are waiting for this bill to pass. A number of my colleagues have probably had exploratory visits from young graduates. These young people are in contact with community stakeholders, the decision-makers, and are in a position to determine the regions' needs and to tell us what kind of labour force is needed in our regions to develop secondary and tertiary processing.
The bill creates many expectations. It provides an incentive for attracting youth back to the regions. However, young people who are interested in returning are also interested in the quality of life they may find there. A young person who moves to the region may start a family. Families add vitality to a region.
As I stated earlier, this time I hope that the Conservative members, especially those from Quebec—in particular the members for Pontiac, Roberval—Lac-Saint-Jean and Jonquière—Alma—as well as the independent member from Portneuf—Jacques-Cartier will understand that they must put their regions' interests ahead of their party's interests in order to support all regions of Quebec and their young people.
Mike Wallace Conservative Burlington, ON
Mr. Speaker, I am on the finance committee that reviewed the bill that is before us and I take some exception to the characterization that this is partisan. I really want to encourage our colleagues from the other parties to really look at this.
My question for the sponsor of the bill is, how does she consider the bill fair? Does she not believe in fairness in the tax system, where we compare students who happen to be from an area that has over 200,000 people to those students who are from areas that do not have 200,000 people? How is the Canadian tax system fair when we give a tax bonus to students beginning their careers just because they are from a larger urban centre than those who are not?
Johanne Deschamps Bloc Laurentides—Labelle, QC
Mr. Speaker, I see we are facing extremely different points of view. I do not understand. We are not talking about unfairness. Bill C-288 is designed specifically to encourage young people—who usually have to go to urban centres for training or study purposes—to return to the regions if they wish.
The regions of Quebec are at a crossroads. Indeed, several regions have been hit hard by the forestry crisis. I said in my speech that several regions still depend on a single industry, and I used my region as an example, because that is the case there. If we want to develop secondary and tertiary processing, we need to have a skilled labour force. In order to have a skilled labour force, young people must return to the regions. But young people who go to urban centres develop a network of friends and might be tempted to stay in those urban centres instead of returning home, knowing they will not find work there.
This is an incentive. This does not affect other options, other credits that young people can benefit from. This is an additional measure, nothing more, but one that will encourage young people to return to the regions.
Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON
Mr. Speaker, I would like to thank my colleague for her speech and for having introduced this bill, which is now in its third reading.
In my riding of Algoma—Manitoulin—Kapuskasing, there are many rural communities. The fact that many of the youth decide to move to larger cities poses a huge problem. By studying this bill closely and supporting it, we can ensure that our communities will survive and we can offer more opportunities to youth.
This bill is not about equality, as the Conservative member said. It aims to fix a problem that rural areas are facing.
I would like to ask my colleague to speak more about the youth who need to stay in or come back to their communities.
Johanne Deschamps Bloc Laurentides—Labelle, QC
Mr. Speaker, I thank my NDP colleague. I told her that I was very pleased to hear where she lives. I have family members, the Deschamps, living in Kapuskasing. I should not be saying my name, but I wanted to say hello to them.
I imagine that the economic development of her region is important to my colleague. In fact, we are not reinventing the wheel. A number of provinces have this type of incentive or tax credit, and many young people take advantage of it.
It is quite normal for a worker who pays provincial and federal taxes to benefit from such a credit. It is not unusual to return a portion of the taxes they pay to taxpayers.
Ted Menzies ConservativeParliamentary Secretary to the Minister of Finance
Mr. Speaker, let me start by acknowledging my friend and colleague across the way, the member for Laurentides—Labelle. I have the greatest respect for this individual, and I am sure her original intent was very appropriate. We are all concerned about education and getting our young people to work.
Unfortunately, this bill misses the mark drastically. I stand once again to plead with this House to recognize the many problems and tremendous cost of this proposal and suggest that we must defeat it.
Let us be clear. This proposal is very bad policy. It would grant preferential and unfair tax treatment by way of a special tax credit to a chosen few graduates. These graduates would need to reside in an ill-defined and allegedly economically depressed designated region and take up vague, qualifying employment for a limited period.
Let me put in a very quick example. Just this afternoon we have done a little research on this and we find that within the parameters, even with this vague amendment, Fort McMurray qualifies as an economically depressed region.
I am sure the member for Fort McMurray—Athabasca would stand and vociferously argue that, simply because Fort McMurray's population is 65,000 people. I am sure members know the wage structure in that community. Truck drivers bring home over $100,000 a year. Somehow this is not making sense. That is why we need to defeat this bill at this stage.
For the record, our Conservative members at finance committee fought to have a thorough study of this flawed proposal. We suggested we should wait and hear from the witnesses at committee to help identify the countless deficiencies in this. Unfortunately the opposition did not agree.
As a result, with only two short hearings and some minor tinkering, a Bloc-NDP-Liberal coalition, and where have we heard that before, of committee members adopted this approximately $0.5-billion proposal. However, in that brief hearing we did get the opportunity to have the Parliamentary Budget Officer appear before the committee.
Conservative members of the committee had requested in advance that the Parliamentary Budget Officer cost this proposal. That is one of his mandates. We were happy to see him step forward and do that.
In his report, the Parliamentary Budget Officer confirmed what we as the government have been saying along, that this is a costly proposal. Let me quote directly from the Parliamentary Budget Officer's report:
Overall, assuming no behavioural change on the part of graduates and based on the foregoing assumptions, these ranges suggest that at full phase-in the program could have a cost estimate of between over one hundred million to approximately six hundred million per annum.
Let me repeat, $600 million per year. Over the course of 10 years alone, that would be a cost of about $6 billion. All that and “assuming no behavioural change on the part of graduates”.
That is a $6-billion proposal that could very likely be even more expensive than what we are actually debating here today. The alleged merits of the proposal aside, which are certainly in doubt, I ask through you, Mr. Speaker, how the Bloc member and her party might be thinking that we would pay this $6 billion. What programs would they eliminate? Would they cut transfers to provinces? What taxes would they raise? Or would they pay for it at all?
Unfortunately we have no answers to these questions because we did not have time to pursue it properly at committee.
I will share with my colleagues in the House who had questions as well and who suggested the finance committee ask more questions of the Parliamentary Budget Officer. Let us read from the report released this past November:
Given the sensitivity of the tax credit's estimated cost to the size and number of the designated regions, Committee members may wish to further refine this proposal to set policy boundaries around key cost drivers.
Unfortunately, as I indicated earlier, that did not happen. If the Bloc-NDP-Liberal coalition on the finance committee had looked a little more closely at this flawed proposal, it would have understood why it raised so many concerns.
First, this proposal would basically provide preferential and unfair tax treatment to literally any recent post-secondary graduate working in a designated region. This would happen regardless of whether there were a surplus or a shortage of workers with that skill.
The proposal makes weak assurances that a graduate's work should somewhat relate to their training, but does not specify on what basis this would be determined. For example, any graduate could claim that his or her employment made use of the general problem-solving skills acquired at school.
Second, the list of designated regions expressly referenced in this proposal has not been updated or revised in close to three decades. Even with the minor tinkering I had mentioned, that would mean the entire province of Saskatchewan would be one of these designated regions, excluding Regina and Saskatoon of course. It would be classified as an economically depressed and designated region. I know one member of our committee, the member for Saskatoon—Rosetown—Biggar, would be quite offended by that. In fact I believe she was. This would be comical if it were not carrying a $6 billion cost.
I am at a loss as to how anyone would imply that Saskatchewan is currently a depressed region. In February 2010 Saskatchewan had an unemployment rate of 4.3%, nearly half the current national average of 8.2%. What is more, according to CIBC World Markets, Saskatchewan will lead other Canadian provinces in economic growth this year, well ahead of Canada's overall projected growth.
CIBC economist Warren Lovely said:
Oil, potash, agriculture and uranium sectors are again in demand, with ongoing development paving the way for production increases. Expect Saskatchewan to lead all provinces in 2010...
Yet this Bloc proposal would characterize Saskatchewan as largely having limited employment opportunities. It would give those workers in booming Saskatchewan a preferential tax treatment. How is that fair? Why would we provide preferential tax treatment for select new graduates but nothing for others?
For example, a new graduate working in Saskatchewan in a designated region and earning around $33,700 would not pay a penny of federal tax for three years. Alternatively, a new graduate working outside these ill-defined designated regions, everywhere from Winnipeg, Halifax, Windsor, Toronto, Montreal, Calgary and more, would pay nearly $3,000 per year in federal income tax. Again this is a deeply flawed and poorly thought out proposal.
Third, there is no guarantee that new graduates attracted to a designated region would remain there once their eligibility for the credit expired. It would encourage young workers to make employment decisions based on temporary, preferential and unfair tax treatment, rather than seek their best opportunities for employment, in other words, where their skills best meet the demand.
On the other hand, a large number of new graduates who are currently choosing to freely work in designated regions without this special tax credit would be provided preferential tax treatment for little or no compelling reason.
Clearly the problems with this proposal are critical. The cost is astronomical, as high as $6 billion in the first 10 years alone, and as the Parliamentary Budget Officer noted, that is assuming no behavioural change on the part of graduates.
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Mr. Speaker, I rise in the House today to debate Bill C-288, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions).
As the vice-chair of the Standing Committee on Finance for several years now, I want to point out that our committee has studied this bill many times. The committee has been through numerous consultations and amendments other than those mentioned by the parliamentary secretary, and I believe we have achieved a state of near-perfection.
Though this bill is somewhat imperfect, that is the case with most private members' bills in this place. It is no fault of anyone's, but with the private members' bills that are brought forward, there will be some imperfections because of the limited resources we have as individual members of Parliament. We are not the government. We do not have the bureaucracy behind us, so some of the bills are limited in terms of detail. We have to try to work those details out. That is the reason we send these bills to committee.
However I feel the bill does address a crucial area of the Canadian economy that the Conservative government has chosen to ignore.
The parliamentary secretary spoke about what happened in committee. The government could have taken steps to propose better legislation. It could have tabled legislation using all the resources of the government to address this issue. It could have tabled a more complete bill, a bill that would have considered the needs of regions, that would have tied regional development, along with job creation, innovation, which we have been talking about, and green technologies, to consider the needs of students and their employment futures.
Instead the government decided to shut down Parliament and go on vacation for a couple of months and came back with nothing more than a vision to change the national anthem.
Given the failure of the Conservatives to work for all Canadians, I think at this point Bill C-288 is the best option we have on the table.
To ensure a prosperous national economy, wealth must come not only from big cities. We need a broad range of skills and professions in all regions of our great country. As the member for a Montreal Island riding, I am acutely aware of the challenges facing people who live in the regions. I want to talk about the labour shortage, the high cost of transportation, the lack of public transit and other huge challenges for those who live in the regions.
Those are just some of the reasons I support this bill.
The failure of the government to propose long-term solutions to strengthen the economies of our smaller regions has led to entire communities being left behind. The costs associated with regional economic failure are too great to completely catalogue in the short time permitted for me today.
Of course these include the stagnation of economic development and growth in smaller communities, the breakup of communities as the most capable of the young people migrate elsewhere, the departure of industries as the local talent pool dries up, and increased burdens on the EI system as unemployment in the region increases.
These students sometimes not only move away from the regions into the cities but they also move away from the cities to other places and to other countries.
Bill C-288 introduces a tax credit for young graduates who settle in one of the geographic regions listed in the Regional Development Incentives Act to take up work in their field.
The tax credit can be anywhere from $200 to $750, which is a substantial amount to students who have recently completed their studies and earned their degrees and are ready to work. I do not think this measure will bankrupt the government. That kind of money will not hinder economic growth. In fact, these graduates can work in the regions and create still more jobs.
Even if they want to return to their hometowns, many new graduates cannot because they have student loans and simply cannot work for the typically lower salaries offered in the regions.
This bill would encourage many Canadians to return to their home regions after completing their studies. It would enable new graduates to benefit from a tax credit equal to 40% of their salary, up to $8,000. That is one of the things we asked for when the bill was referred to the committee.
The Bloc proposed an $8,000 tax credit. I proposed that that amount be spread over three years, in order to prevent students from returning for just one year to take advantage of the tax credit and then moving somewhere else.
The committee decided to introduce an initial amendment to spread the $8,000 over three years: for example, $3,000 the first year, $3,000 the second year and $2,000 the third year. That way, young people will stay for 12, 24 or 36 months or longer after they get their first job.
This would provide young graduates who want to ply their trades back home an adequate financial reason to do so, and at minimal cost. The provincial government in Quebec has already instituted a measure similar to the one proposed in Bill C-288 and it has been quite successful so far.
While the bill has much potential, we also talked about costs. We have had all kinds of costs and that is why the Liberals introduced an amendment that would be applicable to communities of 200,000 and less. We had a cost of $600 million and I think the Bloc came up with $160 million. We are comfortable with $160 million, so we in the Liberal Party are ready to support that.
Liberal members of the Standing Committee on Finance proposed an amendment that was approved by the member who had originally introduced the bill. That amendment ensures that the bill targets rural regions in particular, by excluding students who move to cities with a population of more than 200,000. Thus, the bill will achieve its goal, while ensuring that the cost of implementing it will be relatively low.
This amendment would ensure that the tax credit is extended only to those students who choose to settle in truly small communities, not as the member opposite, the parliamentary secretary, just suggested. Thus it helps the bill better achieve its stated goal while minimizing the costs associated with implementing the bill.
In committee we try to improve some of these bills, but the Conservatives did not help or make any suggestions when in fact we did try to work out regions or areas where this bill would be applicable. Hopefully, places like Fort McMurray would not be one of those areas, but if there was all of a sudden—
