Finance Committee on Nov. 25th, 2009

[John McKay, Liberal, Scarborough—Guildwood, ON]

Well, when we were listening to the member from Chicoutimi, the supporting folks were a little confused as to what it was they actually meant. So there may or may not have to be amendments to be consistent with your working assumption.

The second question has to do with the hard data, and the only hard data you have in the area has to do with the Quebec experience which was roughly a take-up of 7% of the graduates. The working assumption of the bill is that if there is this tax credit, then there will be a flow of people back to the regions. In your analysis of the Quebec data, is that a provable assumption?

[Kevin Page]

It is based on actual experience. But maybe I'll get Jason to answer, as he has had conversations with the folks in the Government of Quebec as well as the professor from the University of Ottawa on any incentive effects of people moving to take advantage of a credit.

[Jason Jacques]

We didn't specifically look at the inducement issues, so the question of incrementality, how many people would receive the benefit who were currently living there versus how many people you would convince who otherwise wouldn't have moved back, wasn't directly addressed. In speaking with the Province of Quebec and the Ministry of Finance, they indicated that they planned an evaluation in the near future to specifically assess that issue and the effectiveness.

There are several working paper and peer-reviewed academic papers that specifically look at that issue of inducement with respect to graduate migration and location decisions. They would seem to indicate that for the amount of money currently on the table, there could be inducement effects. Actually, the Canadian expert in this area is at the University of Ottawa, Dr. Ross Finnie. He was quite generous with his time on this issue.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Laforest, please.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Mr. Page, Mr. Khan and Mr. Jacques, thank you for the work you have done, this is an interesting analysis.

It says in your report that this bill takes its inspiration from the Quebec legislation dealing with regional development and encouraging young people to return to the regions. You say that it is available in 11 designated regions in Quebec. A little earlier, we heard from Ms. Deschamps, who is proposing this bill. I asked her whether this bill more closely reflects the model which yields an estimate of $180 million, like the bill Mr. Bouchard—who is actually here today—sponsored, or whether it was more in line with the $600 million estimate, as presented by the Conservatives.

You say that there are 11 designated regions in Quebec, even within these designations, the region as a whole is not included. I gave the example of my own region. There are 50 different municipalities there, but not all municipalities are eligible under the legislation, based on what is in place in Quebec. In the presentation made by Ms. Deschamps, those same criteria were reflected. It is the same municipalities that need to see young people come back to the regions, because they have a high unemployment rate.

In doing your assessment of the other regions of Canada, did you apply the Quebec model? Can you, as is the case in Quebec, measure differences within a single region? Are you able to do that for the other regions of Canada?

[Kevin Page]

Unfortunately, Mr. Laforest, it really isn't possible to do the same type of analysis.

What we did in our reasonableness test at PBO, using Statistics Canada data, using what we call health regions--there are 90 health regions defined by provinces across the country--was something similar. We basically looked at the long-term unemployment rates in each of these regions. We did an analysis compared to an average long-term unemployment rate. One of the scenarios, when we looked at health regions that have long-term unemployment rates at 2% or higher above the national average, resulted in numbers very similar to those in the province of Quebec overall, in terms of $145 million per year as opposed to $180 million per year.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

That was my second question. If we decided that the rule would be to restrict this to regions or sub-regions with an unemployment rate that is 2% or 2.5% higher than elsewhere, that would limit both the cost and the number of participants. Furthermore, it would act as a real incentive for the regions that are in difficulty.

[Kevin Page]

That's possible. I think the decision to be made will be whether we want to consider health regions or economic regions based on the census.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I see. Thank you.

[The Chair, Conservative, James Rajotte]

Mr. Bouchard, please.

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

Thank you, Mr. Chairman.

I would like to thank you for being with us this afternoon.

I understand, from reading your document, that Bill C-288 is similar to the program put in place by the Quebec government. We know that the government of Quebec's budget estimate for 2009 is $45 million. The population of Quebec represents 23% of Canada's overall population. If we do a mathematical projection, we arrive at about $195 million for Canada.

Do you think that $195 million figure is more realistic than the $600 million figure put forward by the Conservative Party?

[Kevin Page]

Mr. Bouchard, as I indicated in my introductory remarks, the size of the regions and the number of residents are the main factors that will determine the cost of this proposal. That explains the significant gap between the two existing cost estimates. In order to arrive at a more precise estimate, the regions have to be defined. It would be possible to create a type of region similar to the one used by the government of Quebec and to come up with an estimate of about $180 million a year.

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

In your statement, you asked how many regions should be designated. You also are wondering whether the designated regions are intended to cover an eighth of the population, as in the $180 million estimate. When you established that assumption, which you then deconstructed, was your analysis primarily mathematical? For example, would we be able to see which specific areas would be included in a specific province? If we take one eighth of the population, are we talking about specific areas in a province? Does your study go into that much detail?

[Kevin Page]

Yes, we did do that analysis. It is possible to use the health regions and identify exactly the level of the regions using numbers such as long-term unemployment, and then compare that to the average. So, it is possible to identify specific regions that way.

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

Is the one-eighth that you referred to similar to the regions covered under the Quebec program?

[Kevin Page]

The criteria are different in Quebec. They use what are called resource regions, whereas we are using what we call health regions. We specifically looked at labour market criteria and compared unemployment rates.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Page.

Thank you, Mr. Bouchard.

Mr. Wallace, please.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

Thank you for the work that your office has done. I was one of the ones pushing for this work to be done, and I really appreciate it. You got it done in a relatively quick period of time, and I thank you for that.

I have some questions, and then I want to ask you about a further study that you have indicated here.

First of all, the regions you used are based on the wording in the actual bill. Is that not correct? The bill says,

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

You just used the wording that's already in that legal document. Is that correct?

[Kevin Page]

Correct, sir. As we've indicated, effectively that definition under the regulations no longer really exists, but we did use those regions. We deconstructed the finance estimates. We've calculated them, and they're in the annex.

[Mike Wallace, Conservative, Burlington, ON]

But that's what you used, right?

[Kevin Page]

Correct.

[Mike Wallace, Conservative, Burlington, ON]

If the committee saw fit for you to do further work on regionalizing or taking urban sections out, or deciding that the unemployment overlay should be there too--Fort McMurray is a rural area, and it may not have that high an unemployment rate--you could do that work if we gave you time to do that. Is that correct?

[Kevin Page]

Yes, and thanks to you, sir, because we developed the work in terms of developing a cost methodology as a relation with Statistics Canada, we could do it quite quickly now.

[Mike Wallace, Conservative, Burlington, ON]

Okay, I appreciate that.

Now, I have another question for you. There was some confusion in my mind. I want to be frank. I know the mover of the motion is still here. I believe in the mobility of labour and that we use the levers of government to get individuals to move to where the jobs are. An effective tax system, or whatever, I don't disagree with. I think it's a bigger strategy than this piece of legislation, but I do believe in that. My in-laws came over from Italy for opportunity. My father moved nine hours away from his family for opportunity. I've moved for opportunity, and I believe in mobility of labour and that we should be supporting this.

So on the issue of whether an individual qualifies for, in this case, the credit, as you call it, there was confusion on whether they had to be educated in the field they got the job in. So let's say, to use a wild example, I got my engineering degree from Ottawa, or from the Université de Montréal, wherever. I go back, though, to my region and I get a job in a field other than engineering, maybe plant management. Who knows what it is, right? Does that count in your numbers as somebody who would qualify for that tax credit or not?

[Kevin Page]

We made no accounting for that, sir, whether they got a job in a different field from what they had studied in, or in fact whether they were educated in a different part of the country.