Mr. Chairman, I'm pleased to report to the committee that we have signed, as I mentioned, agreements in principle with all thirteen provinces and territories, for them to deliver the Canada job grant through something called the Canada job fund. Through these agreements, we're renaming what was previously known as the labour market agreements as the Canada job fund. This will be a $500-million annual transfer to provinces allocated on a per capita basis. The provinces, in these agreements, are committing to allocate 40%, i.e., $200 million of the $500 million, toward employer-led training initiatives, which is enormous progress.
Mr. Chairman, I should back up a step and remind members that it was actually our government in 2007 that created, de novo, the labour market agreement and a half a billion dollar annual transfer to provinces specifically to address those Canadians who are, as we say, technically more distant from the labour market, folks who haven't been working for a while. We have the labour market development agreement, $2 billion, that comes out of EI funds for folks who are either on EI or who have worked in the past three years, but we realized there was a group of Canadians who perhaps had never qualified because they actually had never worked. Many of them maybe didn't finish high school, have literacy challenges, maybe are on social assistance, etc.
We developed, with provinces, some specific programming with this $500 million of new funding in 2007. However, as a general observation, Mr. Chairman, we were concerned, based on input and data, that we were getting inadequate results for the taxpayer's buck when it comes to training Canadians; that there were too many training programs that were training people for jobs that didn't exist, or training them for the sake of training; that some of these tax dollars were supporting the endless churn of resumé factories and well-intentioned organizations that really weren't linking people up with jobs in the real labour market.
We also observed that according to the OECD, Canadian governments collectively spend more on skills development and job training than governments in any other developed country, but Canadian employers in the private sector spend less, relatively, than virtually any other developed country.
The job grant came from this observation that we weren't getting maximum bang for the taxpayer's buck in terms of jobs created through the training system, and employers were under-investing in the system. The observation was we could address both of those deficiencies by priming the pump to increase the private sector employer investment in training, and then the employers would have an incentive to actually employ the people trained. That was the concept of the job grant.
As you know, we proposed it in the 2013 budget. We had some back and forth with the provinces. When I became responsible for the file last summer, I immediately began contacting provinces. I listened to them, listened to the business community and labour unions, and others, and we came back with several different iterations of the proposal, and finally came to an agreement in principle in March.
I'm very pleased with this. There would not only be $200 million of the $500-million Canada job fund transfer allocated to, generally, employer-led initiatives, which will typically mean consortia of businesses working through service-providing organizations to engage the long-term unemployed with relevant training that leads to actual jobs, but in addition to that, provinces are committing to spend $300 million, once fully implemented, on the Canada job grant. The key flexibility that we offered to get their agreement here was that they could source that $300 million in year four through any source of funds. That could come from any one of the roughly $3 billion we transferred in skills development. We also transferred, by the way, notionally, about $3 billion for post-secondary education, through the Canada social transfer. Oh, and by the way, we transferred tens of billions of dollars in other programs. They could source the $300 million out of any source of funds.
The commitment there is that they will set up a program that employers can apply for. What employers will do is identify individuals for specific training programs. They will make a commitment to hire those individuals at the back end of the training, and the employers will, on average, have to commit to paying for a third of the cost of the training.
We have introduced flexibility for the small and medium-sized businesses that have limited capacity, so they can either put in as little as 15% cash into the job grant, or they can account for half of their contribution through wages paid to trainees while they're undergoing training.
This has been an example of federalism working. I think the provinces have actually gone from being, shall we say, unenthusiastic to quite enthusiastic about the prospect of this new program. We have signed final agreements with five provinces, and I would hope that within a matter of weeks we'll have completed all the others.
