Thank you, Mr. Chair.
Good morning. It is a pleasure to be here today to discuss the work that is currently under way with respect to the Canada apprentice loan program.
In the 2013 Speech from the Throne, the Government of Canada committed to ensure that Canadians are aware of the opportunities offered by skilled trades and to assist apprentices with the cost of their training.
As part of this commitment, economic action plan 2014 proposed the creation of the Canada apprentice loan program as an expansion of the Canada student loan program to provide apprentices registered in Red Seal trades with interest-free loans of up to $4,000 per period of their technical training. These loans will be interest free until the apprentices complete or terminate their apprenticeship training, at which point interest will start accruing and the loans will go into repayment.
The apprentice loans act, established as the legal framework for the Canada apprentice loan program, basically authorizes the making of regulations for the administration of the act. It provides the Minister of Employment and Social Development the authority to enter into loan agreements with apprentices, and provides for the establishment of a contract with a third party service provider for the administration of the Canada apprentice loan program.
The new act also provides for the making of regulations pertaining to certain benefits that are currently available to Canada student loan borrowers. In addition to these loans being interest free, the benefits include assistance for borrowers who face financial difficulty during repayment, and also the loans would be forgiven if the borrower becomes severely permanently disabled or in the case of the borrower's death.
In addition to the introduction of the apprentice loans act, consequential amendments have also been proposed to the Bankruptcy and Insolvency Act and to the Department of Employment and Social Development Act. The amendment to the Bankruptcy and Insolvency Act will ensure that apprentice loan borrowers are treated the same way as other student loan borrowers. The amendment to the Department of Employment and Social Development Act will allow for electronic administration of the apprentice loans.
The new Canada apprentice loan program will complement other Government of Canada initiatives, such as the apprenticeship incentive grant program and the apprenticeship completion grant program that were introduced in 2007 to encourage apprentices in Red Seal trades to complete their training.
As some of you may know, the Red Seal program is an interprovincial standard of excellence for the skilled trades, which aims to encourage harmonization of apprenticeship training and certification programs, foster mobility across Canada, and more rapidly connect skilled trades workers with available jobs in high demand regions. Today, Red Seal trades account for approximately 80% of all registered apprentices in Canada.
Despite existing measures to support apprentices in Red Seal trades, completion rates have been rather low, with only about half of apprentices completing their training. This represents a potential loss to the economy as well as to the individual, as apprentices who obtain certification have greater job stability and earn, on average, 25% more per hour.
A key factor that has been reported as contributing to low apprenticeship completion is the financial cost of attending periods of blocked technical training. During these blocks, which last between four and twelve weeks, apprentices face significant costs, including forgone wages, educational fees, tools, equipment, and sometimes relocation and living expenses if they have to move elsewhere to attend the training. For some apprentices, particularly those with families, these costs can be quite onerous.
Furthermore, unlike other post-secondary students, apprentices are not eligible for student loans because their training doesn't fall within existing program parameters of the student loan programs.
Over the last few months, officials with the Canada student loans program have held discussions with national apprenticeship stakeholders and provincial and territorial apprenticeship authorities to discuss program design and delivery issues. These discussions will serve as the basis for new regulations, and once those regulations are approved, the Canada apprentice loans will be available to apprentices in January 2015.
Thank you.