Mr. Speaker, it is a privilege to engage in debate today with my hon. colleagues on Bill C-207, sponsored by the hon. member for Chicoutimi—Le Fjord.
The bill proposes to provide a non-refundable tax credit to new graduates who engage in “qualifying employment” within two years of graduation. I will get into what that means in a minute. The credit would be the lesser of 40% of earnings in the first 52 weeks of qualifying employment or $8,000 and could be used over two years.
For the purposes of the credit, qualifying employment would involve duties related to the skills the new graduate attained during his or her education or training, and this work would have to be carried out in a “designated region”, which refers to any of the regions listed in the Regional Development Incentives Act. The proposed definition of designated region is one of the things that I will be talking about in a minute.
I think that all of us in the House want to make sure that all regions of the country flourish and have the workers and the skills they need and we also want to encourage young people to look at not just the big centres, the hot centres, but at the advantages of being in another part of the country. I commend my colleague for addressing this issue.
However, although the proposal before us sounds good in theory, there are a number of inconvenient and rather cold practical facts that I think the House needs to consider when looking at this measure.
The first concern is that there appears to be no clear rationale or specific necessity behind the proposed tax credit. There is a kind of feeling that it would be nice to help young people settle wherever they want even if it is not in a hot centre, but there are no demonstrated facts.
The hon. member has not shown that there is a particular shortage of skilled workers in these designated areas. There are no facts to show that employers in the regions are unable to find the skilled workers they need. There is no evidence to show that even if employers are offering good compensation and working conditions skilled workers are unwilling to come.
If there is a real need for skilled workers, then why a measure that only targets new graduates? All skilled workers wanting to relocate into such a region should be considered.
Why propose a tax credit available to recent graduates if there is no demand for their newly acquired skills in a particular region?
Above all, we need to remember that we are the Government of Canada, so a government putting forward a measure to entice recent graduates to work in certain regions rather than others can hardly be called a good national policy.
These are just some of the gaps in the proposed credit brought forward in this bill. There does not appear to be any concrete reason to provide additional incentives, just some suggestion that maybe people could settle and raise families in certain regions, but they could do that anyway.
I think we have to question the effectiveness of the time-limited credit that would provide tax relief for the first 52 weeks of a new graduate's qualifying employment but then would stop. I fail to see how a 52 week tax credit would really be able to attract and retain skilled workers. I fail to see how we would have people settling and raising families, as the member has talked about, for just a 52 week tax credit. It is more likely that a tax credit might bring people into a particular region for a short term, but they then would move on to greener pastures.
If it is true that a tax credit is helpful, then the very generous tax incentives would be needed for skilled workers to choose work in these regions. If that is the case, if there are generous tax credits needed, then would they stay when those credits are no longer available? Is it good policy? Is it a good use of public funds to pay large subsidies that will clearly produce no lasting benefits? I think we would have to conclude that the answer is no.
One also has to question the appropriateness and fairness of using the tax system to provide benefits to graduates choosing to work in certain regions but also to exclude graduates who choose to work in other regions. A new graduate working in one of these designated regions would be able to earn up to about $56,000 in their first year of employment without paying any federal tax at all, but the same graduate doing the same work a mere kilometre outside the boundary of one these regions would pay an extra $8,000 in federal income tax on the same earnings, and the co-worker of this new recruit would also pay $8,000 in federal tax.
This can hardly be considerable equitable from anyone's standpoint. I think members of this House would certainly expect to hear complaints from those who do not qualify for the credit. This, of course, would result in pressure to greatly expand the existing list of special designated regions and extend it to all workers who are not recent graduates.
One of the other problems is that the bill does not identify specific occupations or skills that are supposed to be in short supply in any of the designated regions. The bill uses some broad language about eligible work being that for which the duties relate to the graduate's training or education, but that would be extremely difficult to enforce.
In practice, those with training and skills in low demand would receive the same tax credit as those with training and skills that are strongly needed. This goes against the supposed purpose of ensuring that designated regions have better access to needed skills. New graduates could come into these regions with unneeded skills or with low demand for their skills and get the very same $8,000 tax credit as those that the regions actually really need, so the bill would not help to encourage specific graduates to stay and relocate where they are needed most.
Another issue to be considered is that the proposed credit may cause undue strain on other regions of the country that are also trying to attract Canada's recent graduates. There would be an $8,000 disparity in the tax burden between new graduates who worked in these designated regions and those who did not. This could mean that regions not fortunate enough to be included in the list of designated regions could experience greater difficulty attracting new talent, especially if they are located near designated regions.
How could it possibly be the role of the Government of Canada to provide incentives to recent recruits to locate in certain regions of the country to the detriment of other regions?
The definition of a designated region leads me to another point, an important point, because the list of these special regions is found in a supplementary section to the Regional Development Incentives Act, which I already have mentioned.
This act has quite an interesting list of regions. For example, the list in this act includes whole provinces and territories: Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Yukon, and the Northwest Territories.
All of those are designated regions under the act, so every single graduate working in any part of these provinces would be eligible for an $8,000 credit against federal income tax.
Every part of the country that needs equal opportunity to attract workers based on current economic conditions and labour market needs would lose out because of the arrangement being suggested in this bill.
For example, the entire province of Saskatchewan is a designated region under the act, where, says the act, “existing opportunities for productive employment in the region are exceptionally inadequate”. But the fact is that unemployment in Saskatchewan is currently at 3.9%, well below the national unemployment average, which is just over 6%.
Another example is Manitoba. It is included in the list, but its unemployment rate is 4.2%, again well below the national average.
The proposed credit would provide inequity among the regions. It would involve significant costs. It would also be a disincentive for areas that need particular skills in being able to attract them.
Because this measure is not shown to be necessary, is poorly targeted and is manifestly unfair, I am unable to support this private member's bill. I trust that my colleagues will carefully consider the points I have raised today and also vote against the bill.