Bill C-288 (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 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.

Income Tax Act

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

moved for leave to introduce Bill C-387, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents).

Mr. Speaker, this is a bill that, interestingly enough, first surfaced in this chamber from the current Minister of Citizenship, Immigration and Multiculturalism. It has been reincarnated on a number of occasions by myself and the member for Essex. It would redress a gross injustice to people who receive social security benefits while living in this country.

The former Liberal government made a major change, which I believe was a grossly improper one. This would rectify it so that the social security payments received in Canada would be treated the same as the Canada pension plan benefits that are received in the United States and taxed there by that government.

Right now, we are substantially overtaxing these benefits received by Canadians living in Canada but receiving social security benefits from the United States.

I would also thank my seconder, the member for Burnaby—Douglas.

(Motions deemed adopted, bill read the first time and printed)

The House resumed from March 30 consideration of the motion that Bill C-288, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), be read the second time and referred to a committee.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, I appreciate the opportunity to engage in debate on Bill C-288, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), a proposal to grant preferential tax treatment to a chosen few graduates in designated regions who take up qualifying employment for a limited period, after graduation.

I would like to remind the House that this proposal is nearly identical to one considered in the last Parliament, known as Bill C-207, a proposal, I further note, that was soundly rejected by the majority of all party finance committee after it conducted a detailed examination only last year.

Why did the committee reject this proposal? It was more than likely due to the numerous problems associated with this legislation, problems I will briefly outline.

First, it would basically provide preferential tax treatment to recent select post-secondary graduates working in a designated region, regardless of whether there would be a surplus or a shortage workers with their particular skills.

Second, what this proposal would classify as economically depressed designated regions is informed by another piece of legislation that has not been updated in nearly three decades. This would lead to both Saskatchewan and Manitoba, which have among the lowest unemployment rates in Canada, to be comically classified as “depressed regional economies”.

Is Manitoba, with an economy that has remained so strong that it is launching television ads aimed at attracting workers from other parts of Canada, a depressed region?

Is Saskatchewan, with the lowest unemployment rate in the country and labour shortages, a depressed region?

Listen to what the Canada West Foundation had to say about Saskatchewan's economy:

Not only did Saskatchewan lead Canada in economic growth last year, it is also in solid contention for doing the same this year. In fact, many analysts expect the economy of every other province but Saskatchewan to shrink this year....In 2008, Saskatchewan created more jobs than ever in its history. Things were so hot that some industries faced labour shortages, to the point that Premier Brad Wall visited job fairs outside the province to try to attract new workers.

Is Saskatchewan a depressed region? Clearly, the answer to that question would be an emphatic “no”.

Moreover, a proposal based on the assumption that both provinces are economically depressed and in need of special assistance would not only be ineffective, it would be preposterous.

Third, there is no guarantee that new graduates attracted to a designated region would remain there once their eligibility for the credit expired.

Fourth, Bill C-288 would be tremendously expensive, representing $600 million annually in lost tax revenue. Is $600 million for a proposal that would likely not result in any meaningful economic activity and likely not create a single job efficient? Again, clearly, the answer is an emphatic “no”.

Fifth, this proposal would be exceedingly unfair in that it would grant preferential tax treatment to a select few and nothing for others. For example, a new graduate working in Saskatchewan, one of the outdated depressed designated regions, and earning around $33,400 would not pay a penny of federal income tax for three years. Whereas some in Ontario, not included in the nearly three decades old list of designated regions, would pay almost $2,700 per year in federal income tax.

Without a doubt, this proposal is fatally flawed and one that the House should reject. Not only is it costly and ineffective, it would do nothing to ensure Canada generates the highly-skilled workers we need to succeed in the global knowledge-based economy and meet the needs of employers across Canada.

A skilled, educated and adaptable workforce will greatly influence Canada's ability to compete in a global marketplace and ensure we remain a prosperous country. That is why our Conservative government has remained focused on helping provide the highest quality education and skills training.

One of our Conservative government's ongoing commitments has been to strengthen post-secondary education to enable more Canadians to pursue studies and better link the skills and expertise of students to real world needs.

We have not merely been talking about that. We have taken real action through significant new investments to make that happen. These include: an additional $800 million per year to the provinces and territories through the Canada social transfer to strengthen post-secondary education; support that will reach $430 million annually for a new consolidated Canada student grant program designed to increase post-secondary participation and, ultimately, graduation; $205 million in new annual funding to granting councils to support research and development at Canadian universities, creating new training opportunities for graduate students; close to $200 million per year in new tax measures to help students and families with the costs of college or university, including the textbook tax credit, a full exemption for scholarship and bursary income and making the registered education savings plan more flexible and generous; and, measures to directly support academic excellence by supporting the following: the creation of an additional 1,000 Canada graduate scholarships awards for outstanding Canadian masters and doctoral students; the establishment of 500 new prestigious scholarships to attract the top Canadian and international doctoral students to Canadian institutions; and, the creation of new practical research and development internships for graduate students at Canadian companies to provide students with hands-on experience and understanding of the research challenges of the private sector.

Our Conservative government has also taken action in support of skilled trades. These include: a new apprenticeship job creation tax credit, which provides eligible employers a tax credit equal to 10% of the wages paid to qualifying apprentices in the first two years of their contract, up to $2,000 per apprentice per year; a new apprenticeship incentive grant that will provide $1,000 per year to apprentices in the first two years of an apprenticeship program in one of the nationally recognized red seal trades; and, a new tools tax deduction of up to $500 to tradespeople for the cost of tools in excess of $1,044 that they must acquire as a condition of their employment.

Also in budget 2009, we provided even further opportunities for short and long term skills upgrading. This included a targeted program for apprentices and new summer youth employment initiatives, such as $15 million to the YMCA and YWCA to place young people in internships in not for profit and community services organizations. As YMCA Canada noted, the latter initiative will “assist young people to gain valuable employment skills and mentor civic engagement”.

We have also recognized that a fair and competitive tax system is fundamental to ensuring ongoing economic prosperity, providing incentives for youth to obtain further skills and knowledge and fueling entrepreneurship and investment. That is why we have slashed taxes nearly $220 billion since forming government in 2006.

Unmistakably, our Conservative government has a comprehensive and long term plan to address current economic challenges while laying the groundwork for future prosperity. We cannot be sidetracked and we cannot afford to be derailed by expensive and ineffective proposals such as Bill C-288, a proposal that would do nothing to further regionalize economic development or lead to job creation.

Bill C-288 is a poorly targeted and unfair tax measure that is constructed on an outdated piece of legislation that has not been updated or revised in nearly three decades. That would absurdly classify Saskatchewan and Manitoba as depressed economic regions despite overwhelming evidence to the contrary.

I am unable to support this proposal and would encourage the House to similarly reject it, as the all party finance committee did after examining it in-depth last year.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Mr. Speaker, I appreciate the opportunity to speak to the proposal before us today, which a very good proposal. At a minimum, it gives us the opportunity to speak about some of the challenges that those of us who represent smaller areas and rural communities in Canada have and what we as a national government might do to enhance the possibility of having some of our young people return to work in the areas from which they come. We have put a lot of resources, energy and time into developing our young people and we would like them to return home and participate with the new skills, training, education and intelligence they have gathered over their years of education, if they choose, with some incentive.

This bill is timely given the recession we are in and the difficult economic challenges that are being faced all over the country in large and small areas. Attention is being paid to some of the larger centres with big populations. Areas like Toronto, Vancouver and Montreal are being decimated by downsizing in the auto industry. There are also small, vital, viable, wonderfully exciting communities across this country that are being hit hard as well.

They should, in partnership with senior levels of government, be able to attract some of those young people who they fostered in the first place back to work with them to develop new economies and take advantage of some of the new opportunities out there that they know about. Many of the young people study these. Many of them travel. Many of them, in their university settings, rub shoulders with folks from other parts of the country and get involved, interested and terribly excited about some of the new possibilities that might be there for all kinds of communities and areas in this country.

We need them to come back home and share their knowledge with their community leadership and work with businesses, social and economic development professionals or folks who exist in those communities. They would begin to not only imagine but actually work on putting in place those new work, business and social development opportunities that will actually put those communities on a proper footing.

The member who spoke previously defended the position of the government and its lack of action where regional economic development is concerned, particularly where smaller communities are taken into consideration. If we were to listen to her, we would yet again come to the understanding that the government really does not know or have any interest in knowing what is going on in big parts of Quebec where there are many challenged regional and rural areas that need not only money and resources to come from various and sundry places but personnel. They need young people. They need that intelligence that they bring to be part of that package as well.

I know that in my own area of northern Ontario and Algoma, surrounding Sault Ste. Marie, we have all kinds of challenges where the economy is concerned. We are taking some of those really wonderful little communities with unique and interesting characteristics and turning them around in these very difficult economic times. We will take advantage of the new economy that we know will come at us if we do the right thing.

Before the fall of the financial institutions around the world, the economy did not serve smaller, rural and regional areas in the same exciting way that it did for some of the bigger centres.

We think that a shift in priority, a shift in the way that we look at economy, a move back from the focus on global and world economy and a move back from the kind of interaction and trade that we hung our economic development and trade hat on for so long would play into the opportunities and the possibilities for some of our smaller communities.

We need to begin once again to focus on domestic economies and on local economies, on the ability of local producers, manufacturers and workers to share with each other, to barter with each other and to work for and with each other to create work to generate the wealth and the money that is needed to keep a local economy going and, by doing that, then to participate from a position of strength and more positively and actively into the larger economy, which is often regional, then provincial and national.

Given the serious challenges facing young people when they come out of university these days, particularly with the loans they have accrued over those years of trying to get an education, it is often not realistic for them to go back to a smaller area where there is very limited opportunity for a job that they are trained in and a job that will pay them the kind of income they need to pay down their loans in a realistic timeframe so they can get on with their lives, consider entering into a relationship and having children. They will often choose to go some place else because of financial considerations and the burden of debt on their shoulders and on their families' shoulders, frankly. Because of that, they often move on to some place else and everybody is a loser.

I think most young people would be excited to go back home and actually create for themselves a wonderful lifestyle in a place where they were known and where they could bring new energy to their community.

In a country like Canada, with such a vast area of rural and remote lands, for us to develop those smaller communities and ensure they are viable and vital helps all of us. It makes our country a better place. Given the resource base of so much of what we do, where our relationship with other countries and trading fairly with other jurisdictions is concerned, it is the way that we harvest and take advantage of those resources in a sustainable fashion, which I believe young people understand much more readily and clearly than we often do. At the moment, our only practical experience and background is in the way that we have always done it. Young people may have new ways of doing things from what they have learned in their education. They may know how we can create an economy not only for today but an economy for tomorrow for our children and our children's children. We also need to do all that we can to protect the very at risk and vulnerable environment that right now that all of us really need to be paying attention to.

The member who spoke previously said that this was a very expensive attempt to attract young people to do some local and regional economic development. I suggest that we make political choices here every day that talk about how we spend the money that we collect from taxpayers.

For example, the government has chosen over the last two and a half years to give back to big corporations, oil companies, banks and wealthy Canadians, some $250 billion in tax relief. That is a lot of money. If we take one small percentage of that and use it in a way that helps young people to return to their communities and stimulate local economies, I think our country is better off in the long run and it is a more intelligent investment in our young people. It says to them that we appreciate and put value on who they are and the education they have received, that we want them to come back and that we are willing to be there with them and help them financially.

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

Mr. Speaker, I want to thank my colleague from Sault Ste. Marie for his excellent speech. I hope that the member for Saskatoon—Rosetown—Biggar listened to some of what he had to say.

Unfortunately, she left before the member for Sault Ste. Marie finished speaking, but if she had listened to his whole speech, I believe she would have seriously reconsidered her own position.

I would also have liked it if the Conservative members had listened more carefully to the speech by the member for Sault Ste. Marie and had distanced themselves from their Conservative ideology. I believe that if they had been more attentive, we would have more support for this bill, at least I hope so.

I would like to thank my colleague from Laurentides—Labelle for agreeing to introduce the bill, which gives a tax credit to new graduates working in regions with demographic and economic problems.

I have to say that my colleague from Laurentides—Labelle and I have visited a number of regions of Quebec in the past two months. Everywhere we went—Chicoutimi, Forestville, Matane, Trois-Pistoles, Baie-Comeau, Rimouski, Rouyn-Noranda, Val d'Or, Mont-Laurier, Maniwaki and La Tuque—we heard the same message: this sort of measure is needed to help young people and the regions.

I will come back to the speech given by my Conservative colleague from Saskatoon—Rosetown—Biggar. She raised a number of points. First, I have to say that if the member had consulted her people in Saskatoon, she would have realized that the Government of Saskatchewan has just introduced an identical program to help graduates who settle in economically depressed regions with declining populations.

The member also said that the Regional Development Incentives Act needed to be updated because it was out of date. I agree that this act should be updated, but it is not the role of this bill to do that. It is up to the government.

She also said that this program would cost $100 million a year and that it was far too expensive. Hon. members will recall Bill C-207. The Conservatives who spoke to that bill said it was far too expensive. They were talking about $600 million at the time. I see they have finally got their estimates down to more reasonable figures.

To give my colleagues of the House some context, I will give a brief outline of the bill. The tax credit is intended for students who, in the 24 months following the successful completion of their studies, accept employment in their area of specialization in a region that is facing economic and demographic difficulties. The bill would give an income tax credit of up to $8,000 to recent graduates for a minimum of three years.

In the 2006 election, I promised to introduce legislation to help young people who want to settle in the regions. I am talking about Bill C-207, which I introduced in April 2006. It was supported by a majority of members of the House at all readings and even made it to the Senate. Unfortunately, when an election was called in the fall of 2008, the bill was stopped in its tracks.

I am therefore very pleased to see that the bill is being debated again here today in this House. I am also happy because it gives me the opportunity to clarify a few things. By voting against the former Bill C-207, the Conservatives denied young people access to a tax credit they could have used as of this year's tax return. I was especially disappointed by the Conservative members from Quebec, particularly the two ministers from my region who, incidentally, are very familiar with this measure, since the Quebec government has had a similar measure in place since 2003.

Once again, these members have proven that those who are members of governing parties in Canada tend to close their eyes and forget about standing up for the people they represent. This time, I hope that Conservative members from Quebec, especially the members for Roberval—Lac-Saint-Jean and Jonquière—Alma, will pass along a message within their caucus explaining the benefits of such a measure.

It is a surprise to no one in this House when I say that the regions of Quebec, as well as several regions in other Canadian provinces, are in the midst of an economic crisis that began long before the current crisis struck. I am speaking of northern Ontario and northern British Columbia and of several large regions in decline in New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island. These regions have had economic woes for many years. It goes without saying that implementing a tax credit to encourage young people to live in the area, or to remain there, would be very beneficial.

Our regions are experiencing a real crisis that the Conservative government is completely ignoring. I hope that, this time, my colleagues opposite will show a little more humility as they listen to the cries for help from the regions and the young people living there.

Quebec is not the only province to adopt such a program. Following the speech by the member from Saskatoon—Rosetown—Biggar, I stated that the provincial government of Saskatchewan instituted a similar program a few years back.

Many regions are in a period of economic distress, which of course only increases the trend of youth out-migration. Indeed, the further we go from the main centres, the more the population is declining. Quebec, like Saskatchewan, has taken measures to stem the tide. The exodus of youth and the depopulation of the regions are not new phenomena. However, for decades, they were offset by high birth rates. With the drastic decline in the birth rate, the challenge today is to keep these young people in the region and to attract others to come and settle there. Time is of the essence because the trend has continued since the 1990s and the situation is worsening in several areas.

At present, the population is declining in 6 of the 17 administrative regions in Quebec, namely Abitibi-Témiscamingue, the Lower St. Lawrence, the North Shore, Gaspé and the Magdalen Islands and part of Mauricie and Saguenay—Lac-Saint-Jean. In fact, in my region, Saguenay—Lac-Saint-Jean, young graduates about to marry or start a family leave every day. A region that loses its young people is condemned to certain death, in the medium or the long term. To make matters worse, the departure of one young person often sets off a chain reaction and many more people leave their regions.

Young people who leave their regions to go study in Quebec City or Montreal end up making connections and friends and developing a network there. As such, it is more than likely that, once they have completed their studies, they will want to settle in their new community rather than return to their home region. That is what happened in my own family. There are five children in my family. My three sisters, my brother and I have 11 children all told, all of them born in the Saguenay—Lac-Saint-Jean region. Now, only three of them remain in my region, while eight have gone to live elsewhere.

In closing, I would like the members to bear in mind that this bill has two goals: stem the outgoing tide of young people and bring skilled workers back home. This tax credit would go a long way toward developing the regions.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, my Bloc Québécois colleague's passion for his family, his region and all of Quebec is remarkable. It is wonderful.

With respect to Bill C-288, I was quite intrigued to hear the speech of the Conservative Party member from Saskatchewan, whose region I recently visited upon invitation. We held forums on community economic development. It was quite ironic because the member from Saskatchewan narrowly beat out a great person I know, Nettie Wiebe, who will win it next time.

[Ed Fast, Conservative, Abbotsford, BC]

Wishful thinking.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I think that a couple of hundred of votes should do it.

In Saskatoon people talked about the need for this very effort, that regional economic development hinged upon their ability to retain and attract graduates and young people. Young people have been leaving. Those human resources are critical to the development of Saskatoon and Saskatchewan in general and yet their representative today was speaking against such an effort.

This also speaks to a fundamental philosophy that seems wrong with the government and needs to be altered with respect to resources in general. We are talking about natural resources as well as the human resources in our young people who go through the training programs. The bill attempts to address the disastrous loss of human capital we have seen in many parts of rural Canada.

I come from northwestern British Columbia. While we have exported minerals, forestry products and fish, we have also exported a great deal of our young talent. We on the New Democrat side support the bill. We believe this could help alleviate some of the strains within our community. This is important in a national context as well simply because failing to attract this young raw talent back to our regions, will inhibit the ability of the country to bounce back from this recession. That is getting more doubtful today as the Prime Minister puts on his rosy glasses. The IMF and the Parliamentary Budget Officer are forced to correct him time and again.

The recession seems to be deepening and the only way out is to have a national vision. The only way out is to have a strategy and a plan. We must encourage the redevelopment of our rural communities. We have been losing people and talent. It affects things in a cyclical way. The more difficult it is to attract young professionals to a community, the more difficult it is to attract anyone to that community, and the more difficult it is to have the services to give Canadians the quality of life they have come to expect.

We hope that the bill can address the professional shortages in particular. We are talking about the doctors, the nurses and engineers who can help stimulate an economy. When the tipping point has already been crossed it is very difficult to attract other nurses, doctors, engineers and architects into the community when there is a shortage. A doctor may not come if that doctor is going to be the only doctor on call. If two or three doctors are already there, it is much easier for a small town to attract another doctor or nurse. Architects, artists and all the other professionals do not come if the pool is too small. We have seen the trend over the past 20 years. Some of it is partly due to demographic trends. However, it is also because of a lack of vision on the part of the federal and provincial governments. It affects the urban and rural landscapes of this country.

Today I was pleased to welcome a group from my community of Thornhill. Members of the junior secondary band were here on a triumphant tour. The band had just won a bunch of gold medals at a national competition. These young people are in Ottawa for the first time. They are celebrating in our capital. They have such bright young faces and so much talent to exhibit over their lives. However, after they graduate from college, in the trades, or university, what will our ability be in northwestern British Columbia, or any part of rural Canada, to attract that talent back? How can we make it more welcome for them? Bill C-288 seems to help address that, to at least take some steps toward helping those who are interested in living in rural parts of Canada.

The history of this country has been driven by an idea that we would expand into some of the more remote and rural regions in order to access the incredible wealth in resources. Much of that was done in an ad hoc way, but there was always an understanding that the resources were common property, that the resources were of a collective good that Canadians were endowed with.

Time and time again we have seen natural resource policies from the government which shut down communities. We have certainly seen it across British Columbia in the forestry sector. It is absolutely devastating. Fifty-four mills have closed and 28,000 people have lost their jobs in a five year period.

Then when someone brings forward a bill to counteract that and make it more attractive for graduates to get back into those communities to start up their own businesses and have a professional career, we hear Conservative members say that we do not need that either. They will strip down our basic industries, and then when we suggest ideas that could attract professionals back to those communities, the Conservatives say that they are too busy for that. They are occupying their time with free trade deals with Colombia to which they are not applying any kind of intelligence whatsoever. If there were a better form of investment than this, I would ask the government to make that claim and stand on it.

The government has claimed that attracting our young people to rural parts of the country is just too expensive to do. Yet the Conservatives can find $1.3 billion every year to dump into the tar sands, into companies that make hundreds of millions of dollars especially in times when oil was $140 a barrel. They did not know what to do with the money, and the problem was it was overheated and the government was absolutely complacent with the previous regime and it continued to overheat.

That was considered a good choice and is still considered a good choice by the government. We see that as fundamentally flawed. The government should use that $1.4 billion to help graduates move into rural parts of Canada. It should stop these tax handouts to companies that do not need them, and put that money in places where it would actually make sense to help alleviate the strains that are happening within rural Canada.

The second point to this speaks to another vision that seems to be absent, which is what a restoration of the economy would look like. South of border we see quite an inspirational movement toward a green economy, toward making the recovery and the investments that are happening on behalf of the taxpayers lead to a betterment of and a creation of a sustainable economy.

The government says it is agnostic and it will just step back and let the invisible hand do its nefarious work. Yet time and again young professionals and new companies say that the investment environment here in Canada for green and new sustainable technologies pales in comparison to that in the United States, Europe and Australia.

The money will flow to the places that actually create the environment to attract the young professionals that we are talking about in this bill. The government cannot simply wash its hands of this and say that it is going to dump a bunch of money into the oil sands but do nothing on wind energy, which is running out in two months' time. Wind companies have been petitioning the government for months now, asking what it is doing to catch the shortfall.

Canadians are interested. Companies are being set up. People have made the investments. They are ready to create those jobs, and now the government is saying that the subsidy, which is one-quarter of the one in the U.S., already tipped out of scale, is just going to die out completely.

To young folks who are coming out of the colleges, universities and the trades right now, it is perplexing to encounter a government with a policy and a budget that was perfectly designed for 1950. It would have been an excellent set of numbers and initiatives from a government two generations ago, but not for a government looking to the future, to a new economy for the graduates of today.

We get these mixed signals all the time. And we wonder why young people do not get more involved, why the voting rates are so low, and why they do not stand for office as frequently as they should. I have talked to those young people. I know that even my Conservative colleagues sneak into a school from time to time, or encounter a young person, by accident, perhaps. The Conservatives need to ask the young people what they need. The things needed in rural Canada are initiatives that allow young people to feel some sense of hope of returning to their communities and reinvesting in those communities, creating the kind of economy and communities that we want to see for the future.

The Conservatives have to get out of the dark ages. Those guys have to turn around and support initiatives that are proactive and progressive. They should at long last leave the ideology behind and support the bill. Let us get on with attracting young people back to rural Canada.

[The Deputy Speaker, Andrew Scheer]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker, Andrew Scheer]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Deputy Speaker, Andrew Scheer]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker, Andrew Scheer]

All those opposed will please say nay.