Human Resources Committee on Nov. 28th, 2013

[The Chair, Conservative, Phil McColeman]

I call the meeting to order.

Good afternoon everyone. Welcome to meeting number seven of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Today we are studying the supplementary estimates (B) 2013–14 as they pertain to Employment and Social Development Canada.

For the first hour today, we have with us the Honourable Jason Kenney, Minister of Employment and Social Development. Along with Minister Kenney are Ian Shugart, deputy minister; Karen Jackson, senior associate deputy minister of Employment and Social Development and chief operating officer for Service Canada; and Mr. Alain Séguin, chief financial officer. Furthermore, from the Canada Mortgage and Housing Corporation, we have Steven Mennill, vice-president of policy, research and planning.

On behalf of the committee, we'd like to thank you, Minister Kenney, for taking the time to be with us today. I know you have some opening remarks prepared, so I'll turn the floor over to you for your presentation.

[Jason Kenney, Conservative, Minister of Employment and Social Development]

Well, thank you very much, Mr. Chair. Congratulations on your election. I know you've served on this committee for many years, and I'm glad to see that it's in such good hands.

Thank you, colleagues, for the opportunity to appear before you for the first time as Minister of Employment and Social Development Canada and Minister for Multiculturalism—obviously in the former capacity.

First of all, I'll be giving you an overview of the supplementary estimates (B), the ostensible agenda item here, and then make some general remarks about the emphasis I'm placing on ensuring that we connect Canadians with the jobs of the future.

I hope that committee members will be a little patient with me today. This department is a new mandate for me, a huge and complex mandate.

Our department's budget is about $115 billion. It is the biggest budget of all federal departments. Our budget represents about 40% of federal government spending. We employ 23,000 people. Our department's activities affect more Canadians than any other department.

We touch over 30 million clients in the various programs administered through ESDC, and so I'm on a very steep learning curve. I hope you'll be somewhat patient with me today. I will probably be more dependent on good and formative answers from my extremely competent officials than I was after five years at Immigration.

With that in mind, let me say that I'm pleased to appear before you on supplementary estimates (B). Altogether, we're requesting $64 million in these supplementary estimates, and I'll break down each of the major line items.

First of all, we're requesting $14.8 million to support the enabling accessibility fund, which is about construction and renovations to improve physical accessibility for persons with disabilities. The funding in these supplementary estimates would provide $1.16 million to administer the program and $13.65 million to fund small and mid-sized projects.

We have a request for $13.3 million under the homelessness partnering strategy.

The Homelessness Partnering Strategy helps gets homeless people off the streets and into homes. The funds requested are being reprofiled from Homelessness Partnership Strategy allocations in 2012-2013 that were unspent.

Actual spending in that year was less than anticipated, for a number of reasons. First, the funds are distributed according to priorities set by local communities, and the partnership approach requires consultation to establish priorities in line with the partners. And that takes time. Second, some capital projects were delayed as a result of these consultations and by zoning and environmental assessment processes. Third, the short-term impacts of the transition to a more streamlined delivery model resulted in project delays for some of the communities.

Next, Mr. Chairman, I'm requesting $11.9 million to support the first nations job fund, a significant commitment flowing from this year's economic action plan, to support the job training needs of on-reserve first nations income assistance recipients who are 18 to 24 years of age and living in communities that participate in the program. These expenditures will help to provide personal support for aboriginal youth as they secure the job and skills training that will help them get available jobs.

Next, our department is requesting $10 million to fund new internships for recent post-secondary graduates through the Career Focus program. Budget 2013 announced $70 million over three years to support more than 5,000 paid internships for recent post-secondary graduates. In year one, the department is seeking $10 million, with $30 million being spent in years two and three. This funding will be used to provide wage subsidies to employers to give post-secondary graduates career-related work experiences to facilitate the transition to the labour market.

Next, Mr. Chairman, we are requesting $8 million to increase aboriginal participation in the Canadian labour market through the skills and partnership fund, which is a demand-driven program that leverages partnerships from the private sector, provincial and territorial governments, learning institutions, and aboriginal organizations. Given the high volume of project proposals that we had to look at in the last fiscal year, $20.6 million went unspent, so we're now seeking to reprofile $8 million of that to the current fiscal year and $12.6 million to the next fiscal year.

In budget 2012, Mr. Chairman, the government introduced the voluntary deferral of old age security pensions. This allows seniors the flexibility to defer receipt of the OAS basic pension up to the age of 70, in exchange for an actuarially adjusted pension. ESDC is requesting $3.1 million in the supplementary estimates to implement the program and, as well, $500,000 to create a Canadian employer disability forum, which is one of the recommendations that came out of the panel on labour market opportunities for persons with disabilities. I think the committee studied that issue and is familiar with the report.

The ministry has found $1.3 million in offsets through the Canada student loan program and by implementing measures to reduce travel costs. That's noted in the estimates.

We are including a number of statutory appropriations in the supplementary estimates, such as the $3 million announced in the budget for the Canadian National Institute for the Blind to help improve their library services.

The supplementary estimates also include a $600,000 cost adjustment related to employee benefits plans, the majority of which is the result of a deferral of the OAS pension.

Also, $2,000 is consequent to the creation of the Office of the Minister of State for Social Development.

Finally, we will receive half a million dollars in transfers from Aboriginal Affairs and Northern Development to deliver youth programming with the Kativik Regional Government.

The funds requested above through the supplementary estimates (B) will provide ESDC with the tools it needs in the coming year.

Chairman, do I have any time left in my normal set-aside?

[The Chair, Conservative, Phil McColeman]

You do.

[Jason Kenney, Conservative, Calgary Southeast, AB]

How much?

[The Chair, Conservative, Phil McColeman]

You have two minutes.

[Jason Kenney, Conservative, Calgary Southeast, AB]

In that case, I would like to focus on an issue that troubles me greatly. A large number of Canadians have no jobs, yet there is a growing number of job vacancies. That is a paradox that has to be resolved.

It's a really complex problem. As we all know, the aggregate labour market information we see from StatsCan suggests that there is not a grave or identifiable labour or skill shortage, and yet every single employer whom I meet and many unions tell me, particularly in the construction trades, for example, that they are currently experiencing very significant labour and skill shortages.

This is an issue I've taken up with my provincial counterparts. I hope in my capacity to lead something of an informed national conversation on how we can do a better job, not just the federal government but also the provinces, educators, employers and unions, all of us together, in ensuring that Canadians have the skills necessary for the labour market and the economy of the future. It is unacceptable that we should see 13% youth unemployment, 14% unemployment amongst recent immigrants, and ridiculous levels of unemployment among aboriginal Canadians in the labour force precisely when we see employers complaining persistently about labour and skill shortages.

I don't have time, obviously, to go into my detailed thoughts about some of the remedies, but I want to invite members of the committee to propose what they think are solutions: how we can increase labour force participation, mobility, interprovincial labour mobility, mutual recognition of credentials for professions and trades, accelerated foreign credential recognition for foreign-trained professionals; how we can perhaps have a stronger partnership with the provinces in the large transfers we give them through the Canada social transfer for post-secondary education to ensure that those dollars are getting maximum bang for the taxpayer's buck in preparing people for jobs; how we can ensure that ideas like the Canada job grant actually prepare people for real jobs and not fictitious ones, real ones in the labour market through an employer-led program; how we can increase private sector investment in skills development and job training.

I think we need to be imaginative. I think we need to look beyond Canada to some other countries that perhaps have stronger models of education and skills development for the labour market.

I just wanted to touch on that as a key priority for me, Chairman. I look forward to all of your questions. Merci beaucoup.

[The Chair, Conservative, Phil McColeman]

Thank you very much, Minister.

Having checked with our Standing Orders and our routine orders, the first rounds, when we have two panels, are five minutes each. That was what we had decided when we started. I just wanted to make sure that both sides of the table were aware that all rounds will be five minutes.

We will start off with Ms. Sims for five minutes.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

I want to first of all say thank you to the minister for making time available to come and meet with us today.

As time is limited, Minister, I am going to get right to the chase, so to speak. One of the defences against the abundance of criticism that has come toward the proposed Canada job grant is that the LMA system is not working. You kind of alluded to that right now as well. But in a leaked internal document from HRSDC, now ESDC, which collated all of the provincial data, it was shown that 86% of those involved in LMA training had a job within two years. Those numbers are from departmental data.

With an 86% success rate, I'm just wondering what kind of data you are using to say that it's not working.

We're very short for time, so please keep your answer brief.

[Jason Kenney, Conservative, Calgary Southeast, AB]

Mr. Chairman, first of all, those evaluations are interesting but not comprehensive. They don't test, for example, a separate group that didn't go through the training to see what percentage of them ended up in the labour market.

We do know that on a macro level we are not getting the job done, as governments. We are spending billions, more than virtually any other developed country, on skills development and job training, and yet we have unacceptably high levels of unemployment in various areas of our population, as I've identified, and a growing number of employers who are reporting skill and labour shortages.

The idea here is I think basically common sense: it's employers, not government programs, that create jobs. If employers identify people with the aptitude to work specific incremental training programs from which they can benefit with a guaranteed job at the end of it, we are certain that will produce better results.

Finally, let me say that I have not categorized the LMA project as a failure. I've said that I think there are some good projects that we're funding through the provinces and some that have less impressive results. I think it's a mixed bag.

[Jinny Sims, NDP, Newton—North Delta, BC]

Minister, the provinces seem to think that the LMA system works, and there seems to be a lot of unanimity amongst our provinces. I would say that's very rare.

Have you considered allocating new money to the Canada job grant, letting the other program go, or piloting a smaller version with new money first to see if this new approach is going to work?

[Jason Kenney, Conservative, Calgary Southeast, AB]

It's a reasonable question. In part, I would say yes, because in fact the proposal for the job grant would have it implemented through increments, starting with only a 15% allocation of the current LMA transfer to the provinces, and then ramping up to 60% eventually, which means the provinces would, after full implementation, maintain control over $200 million to spend on what they consider priority programs.

In the first year, they would have 85% of their current funding to spend on their priority programs. If you want to call that a pilot approach, I would say it's a very gradual approach and that we can monitor results as we go.

Let me say that I have expressed to the provinces an attitude of flexibility. I met with them three weeks ago, will be meeting with provincial colleagues again in 10 days, and look forward to their kind of counter-proposals. I want to say simply that if they have ideas about how we can do this better, we're all ears.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you.

Minister, my next question has to do with the housing funding. You mentioned that as well. This was the money that was not spent on the homelessness partnering strategy, $16 million of it. What kinds of systems have you put in place going forward to prevent the same kinds of delays, so that funding allocated to help the most vulnerable Canadians can get out of the door in a timely manner?

[Jason Kenney, Conservative, Calgary Southeast, AB]

I don't think we need systems in place now, because we had to do the consultations, and that does take time. You would criticize us if we didn't do the consultations or if we did them in a rush. We have that information back from the local community partners, we've reprofiled the money into the next two fiscal years, and we're ready to roll.

Would anyone like to add to that?

Ian?

[Ian Shugart, Deputy Minister, Department of Human Resources and Skills Development]

I would only add, Minister and Chair, that some of the changes involved the community entity model and shifting the program development through them. That did result in some of the early delays as the communities shifted to that model. That is now done. That behind us, we anticipate that there will be a much more rapid flow.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

[The Chair, Conservative, Phil McColeman]

Thank you.

We'll move on to Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you, Mr. Chair.

Minister, I want to thank you and your officials for being here today and taking the time out of your busy schedule.

Being an Atlantic Canadian, I'll say that our government has made some changes connecting Canadians with available jobs in the last couple of years, and we have heard some opposition protests towards this, as well as some different voices coming from the provinces. I wonder if you could talk a bit about employment insurance, the changes we've made, and the results you've seen so far.

[Jason Kenney, Conservative, Calgary Southeast, AB]

There have been a number of changes, as you know, Mr. Chairman, but the one that's received the most attention is connecting Canadians with available jobs. It was essentially a clarification of the longstanding rules implicit in the employment insurance system, that applicants for EI are required to actively seek and accept available work at their skill level in their local area. We have given a little more definition to what acceptable work and the local area are defined as—always to be applied with a flexibility by our officials.

Basically, Mr. Chairman, the reason we implemented these clarified guidelines is that we saw a really strange paradox of a growing number of employers, even in regions of very high unemployment with large numbers of habitual EI recipients, filing labour market opinions to bring in workers from abroad. Frankly, it made no sense at all to me that someone from Thailand, the Philippines, or Russia would be willing to get on a plane and fly across the world to go to a community to do a job where people who have done precisely that job are down the street, or in the next village, collecting employment insurance.

EI is supposed to be there, and it will be there, for folks who lose work through no fault of their own, and for whom no relevant work is available in their local area. Now there's been a lot of fearmongering about these changes. I can understand there's a lot of understandable anxiety. Whenever there's change, people are going to be anxious, especially when it relates to their income security. I get that 100%. We could have done a better job, perhaps, of communicating those changes, especially in areas where people are very dependent on EI.

Having said that, I really do think some of this was just political fearmongering. I mentioned in question period that one member of Parliament was running around northern New Brunswick saying that this was the end of EI, the end of seasonal benefits, that these communities will be destroyed, that families would go into poverty—complete unadulterated balderdash, invented from whole cloth, and nothing to do with the rules. I followed those speeches and rallies and media stories, and it's interesting that none of them mentioned that the specific changes made were actually quite modest clarifications of the longstanding rules. Now we have the first seven months of data indicating that there has been virtually no negative impact on EI applicants as a result of connecting Canadians with available jobs.

To give you one example in the province of Quebec, for the first seven months of this year versus the first seven months of 2012, there were 6,000 more people whose EI applications were not accepted. We looked a little more deeply into the data and found that only 160 of those people, as best we could tell, had their claims refused because they did not comply with the new requirements under connecting Canadians with available jobs, and that about 5,000 of those refused applicants were refused because we discovered they were living outside the country.

That's not to say everyone who is refused is clearly way outside the rules, but it is to say that on debates like this, as elected political officials, we should not recklessly frighten people about their income security.

Finally, I would like to say that we don't have comprehensive data to draw meaningful conclusions from this, but there's anecdotal evidence building from employers that we achieved the objective. I’ve heard from some fish processing plants in the east coast.

I have also heard about the Regroupement des employeurs du secteur bioalimentaire, a Quebec organization, and from the Saint-Bruno ski resort, where the normal number of out-of-season workers has increased because of the changes we have made.

We just want to encourage unemployed Canadians to be a little more active and to look for a job in their region. As of now, we are meeting our objectives.

[The Chair, Conservative, Phil McColeman]

You have five seconds.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Can you very quickly clarify, Minister, that none of those changes affected the requirements to qualify for the program. Is that accurate?

[Jason Kenney, Conservative, Calgary Southeast, AB]

No, they did not.

[The Chair, Conservative, Phil McColeman]

Thank you for the shortened answer, Minister.

Mr. Cuzner, go ahead.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Thank you very much, Mr. Chair.

I want to thank the minister and the officials for being here today.

Minister, on the EI stuff, I'm not going there today. But it's incumbent, when politicians get engaged, that they tell the truth to the people. When we see a letter stating that EI recipients are receiving payment in 21 days in 80% of the cases, and it's signed by the minister and the minister does not know that notice of non-payment is also part of that measurement, then that gets people upset.

But here's where I'm going. I'm starting this on a good footing, Minister. I know you work hard. I know you're a capable guy. Being smart, capable, and committed, then knowing your files is a step up. I think you can be a fixer. I appreciate at face value your offer to work with the committee and those around, and I thank you for that.

Just with regard to the rationale for the jobs grant, I know the Prime Minister said “[It's] the biggest challenge our country faces”, and I know you're on record saying, “Those who say there is no skill shortages are facing a mismatch with reality”.

Square the circle with the Don Drummond comments and the study from the TD.

[Jason Kenney, Conservative, Calgary Southeast, AB]

I wish I could.

Mr. Cuzner, thank you for asking that question. That is perhaps the most important question this committee could answer. I've been actually quite nuanced. We politicians don't do nuance very well—let's admit it. At least I don't. But I've made an exception in this case to actually be nuanced and say that there's something going on here that I don't fully understand, because you're absolutely right: the Don Drummond and the TD reports and the Institute for Research on Public Policy—I could give you a long list—say that based on the aggregate StatsCan labour market information, there is not evidence of acute labour shortages now or in the forceable future. And yet, Mr. Cuzner, every single employer I meet—from the fish processing plant operators in your area to the people in the service industry and the computer gaming industry in Montreal and the IT industry in Toronto, to the agricultural operators in the west and those in the major construction industry—says their number one challenge is skills shortage. Cumulatively, I don't believe those organizations are lying. I don't believe they're making it up—

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I don't either. Would you agree, though, that it's more in certain areas of the country in certain sectors—