Good morning everyone. Welcome to the 33rd
meeting of the Standing Committee on Aboriginal Affairs and Northern Development.
This morning we welcome representatives from two departments of government, the first from the Department of Human Resources and Skills Development, the second from the Department of Finance.
This is our second meeting on consideration of the barriers and opportunities or solutions we can identify in advancing the economic development of Canada's north. I say that, members, because as we go through the course of our questioning and hearing from witnesses during this study, I think we need to be mindful of the mandate we have at hand and keep our questioning on the orders of the day. Obviously there are times, particularly depending on the witnesses, when any number of questions may arise. I simply remind members that we need to focus on these important questions, identifying where those gaps may exist, for the purpose of eventually formulating what all committee members believe to be important recommendations that we can recommend to the House and to the government in advancing economic development in Canada's north.
Without taking that any further, I would like to introduce Mr. Thompson, the associate assistant deputy minister of the skills and employment branch of HRSDC; and also Mr. Chris Forbes, the directeur général, Direction des relations fédérales-provinciales et de la politique sociale du ministère des Finances. I know that you probably both know we typically allot ten minutes for each presentation. I see that you have circulated your remarks in advance. We appreciate that.
We'll go through each presentation, followed by questions from members. I'm sure you also know that when we get to questions, the first round will be seven minutes—that is for the member's question and for your response. We guide our responses as succinctly as we can.
Monsieur Lévesque, avez-vous une question?
Yes, of course. I apologize.
The northern population growth rate is nearly double the Canadian average, with a large aboriginal and youth population, especially in Nunavut and the Northwest Territories, where two-fifths of the population is under the age of 25.
Labour market performance in the territories has been strong overall. However, labour market outcomes for aboriginal Canadians in the north continues to lag. In fact, the unemployment rates of aboriginal Canadians in the territories are more than double those of other northerners. Lower education and literacy skills, remote locations, severe housing shortages, and significant health concerns as well as distance to employment are all factors that contribute to the higher incidence of unemployment.
As the economy rebounds, there will be increased pressure for skilled workers in the north.
HRSDC has designed a number of programs to ensure that northerners participate in and benefit from economic activity in the territories.
The Government of Canada recognizes that provinces and territories are best placed to design and deliver labour market training to meet their particular regional needs.
HRSDC provides support to territorial governments through a number of agreements, including labour market development agreements, or LMDAs, labour market agreements, and more recently, the skills training and transition fund, or the STTF, which was introduced through Canada's economic action plan.
HRSDC will provide $11.3 million to the territories through labour market development agreements in 2009-10. This includes additional funding of $1.6 million, which was announced in the economic action plan. These benefits were received by individuals who lost their jobs and are eligible to receive employment insurance benefits.
HRSDC also recently signed labour market agreements with all three territories, which are designed to promote greater labour market participation by providing access to employment programs for non-EI-eligible workers. In 2009-10, these agreements totalled $3.24 million.
Under the economic action plan, HRSDC will also provide the territories with $4.53 million in support through the new skills training and transition fund in 2009-10. This fund, which is managed through the labour market agreements, helps individuals regardless of their eligibility for EI in sectors, occupations, and communities that are affected by the economic downturn.
Along with this suite of labour market agreements, HRSDC has several national labour market programs that target aboriginal people. The programs are designed to improve the skills and workplace readiness of aboriginals to enable them to fully participate in the economic development of the north.
The aboriginal human resources development strategy, or AHRDS, is the largest of our labour market programs delivered by HRSDC in the territories, where we have 13 agreements worth approximately $25 million in 2009-10.
AHRDS is designed to expand the employment opportunities of aboriginal people across Canada through a number of programs and services, including skills development, job creation partnerships, and employment assistance services. Through AHRDS, the program has employed 135,000 aboriginal clients since 1999 and has resulted in over 42,000 aboriginal Canadians returning to school.
Building on the successes of the AHRDS and the need to adjust the program to the new economy, HRSDC is modernizing the AHRDS program to respond to the current economic environment and to the realities with the new successor program, which is known as the aboriginal skills and employment training strategy. This renewed program will come into effect in 2010-11. This new program will focus on three strategic priorities, which include demand-driven skills development, partnerships with stakeholders, and accountability for improved results.
As part of the economic action plan, HRSDC also recently launched a new $25 million aboriginal skills and training strategic investment fund to support short-term, focused initiatives that are designed to help aboriginal Canadians receive the specific training they require to benefit from immediate employment opportunities. As of November 2009, this fund will support 71 projects across Canada.
Furthermore, budget 2009 provided $100 million over three years in funding for the aboriginal skills and employment partnership, or ASEP, program, which fosters partnerships between provincial and territorial governments, aboriginal organizations, and the private sector to create training and employment opportunities. The new funds will support up to 20 new partnerships, which will ensure a highly skilled aboriginal workforce and help to secure long-term, sustainable jobs.
HRSDC's efforts in the north through programs like ASEP and AHRDS have resulted in investments in skills upgrading and have led to aboriginal labour market successes. For example, with the help of an ASEP program, currently 25% to 40% of employees in mining industries in Baker Lake and Mary River are Inuit.
HRSDC also delivers national programs that target the territories’ largest cohort, youth. Through the Youth Employment Strategy, the department has invested approximately $1.85 million in 12 youth projects in the territories, this year alone.
The youth employment strategy includes initiatives such as the skills link program, which successfully assists youth, particularly those facing barriers to employment, in gaining the skills, the work experience, or the abilities that they need to make a successful transition to the workplace.
HRSDC also works directly with employers through sector councils, which provide employers with tools and strategies to attract and retain northerners in the workplace.
Sector councils are platforms for stakeholders to share ideas, concerns, and perspectives about human resources and skills issues and to find solutions that benefit their sector. Two sector councils have a particular focus on activities in the north. The mining industry attraction, recruitment, and retention strategy, operated by the Mining Industry Human Resources Council, is developing a tool kit for employers to facilitate the attraction, recruitment, and retention of aboriginal people. In addition, the Aboriginal Human Resource Council runs the mastering aboriginal inclusion workshop program, which encourages organizations to incorporate aboriginal people into their workforce and shares best practices on how this can be done.
In September 2008 the Government of Canada announced $1.94 billion for housing and homeless investments for low-income Canadians over five years, through to March 2014.
As part of that announcement, the Homelessness Partnering Strategy was extended for two years from April 1, 2009 to March 31, 2011, thereby confirming an annual commitment of $134.8 million to reduce and prevent homelessness in Canada.
In addition, the government committed to consulting with its provincial and territorial partners, as well as community and aboriginal groups, including those in the north, that work to combat homelessness. Consultations will focus on improvements to federal investments in homelessness between 2011 and 2014, the last three years of the five-year period.
The objective of the five-year funding extension is to continue to assist communities, including those in the north, in providing community-specific, coordinated response to those at risk of homelessness.
Last, I want to speak to the relationship with CanNor, the Canadian Northern Economic Development Agency. HRSDC, as I have indicated, makes important investments in labour market programming in the territories. However, the department continues to ensure that a broad labour market framework relates to other key policy areas, such as economic development, education, and social assistance. To this end, HRSDC is collaborating with other federal departments to ensure that we move forward together to maximize northern participation and benefit from the Canadian economy. The creation of the new agency provides an excellent focal point for federal dialogue and collaboration on these priorities. Given the clear link between the department's social and labour market programs and CanNor's mandate to enhance economic development in the north, we are collaborating in innovative ways and working together.
We are currently negotiating a memorandum of understanding that would see employees of the department co-locate in the CanNor office in Iqaluit. The goal of this co-location is to ensure the effective coordination of economic development efforts and social and labour market programs. These efforts will ensure that programs and initiatives are streamlined in a manner that eliminates duplication and improves labour market efficiencies.
In conclusion, Mr. Chair and honourable members of the committee, I want to thank you again for inviting me to outline the role that HRSDC is playing in labour market development in the north.
It will be my pleasure to respond to any questions that members may have.
Thank you, Mr. Chair.
I would like to thank the members of the committee for this invitation to appear before you today as a witness on the subject of northern economic development.
I would like to begin by introducing my colleagues. Sean Keenan is the Senior Chief of the Tax Policy Branch at the Department of Finance, and Elisha Ram is the Director of Economic Development, also at the Department of Finance.
Let me begin by talking about the two areas where Finance has direct responsibilities bearing on northern economic development. It would, first, be providing transfers to territorial governments, and also the design of federal tax policies. I'll start with the transfers.
Territorial governments are recipients of the three major legislative transfers administered by the departments. In total, these transfers add up to about $2.9 billion in 2009-10. This is in addition to other federal support delivered by departments such as HSRDC. So there are three transfers.
First, we have the Canada health transfer, which provides the annual funding for health care and support of the principles of the Canada Health Act.
Second, we have the Canada social transfer, which is an annual federal block transfer. That transfer is in support of post-secondary education, social assistance and social services, and programs for children.
Third, and perhaps most importantly from a territorial perspective, would be the territorial formula financing. The territorial formula financing is the largest single federal expenditure to each of the three territorial governments. In 2009-10, the TFF, as we call it, amounted to $612 million for the Yukon, $864 million for the Northwest Territories, and just over $1 billion to Nunavut. So the total is about $2.5 billion for 2009-10, and this is the primary revenue source for territorial governments.
The territorial formula financing grant is an unconditional grant from the Government of Canada that takes into account the unique circumstances in the north and the high cost of delivering programs and services. Territorial formula financing enables territorial governments to provide a range of public programs and services that are comparable to those offered by provincial governments at a comparable level of taxation.
Finally, I would mention on the transfer side that Finance Canada is also responsible for the resource revenue-sharing portion of negotiations around the devolution of natural resources to the territories.
With that on transfers, I'll turn to the department's role in designing federal tax policy.
The fundamental role of the tax system is to raise revenues necessary to fund government spending priorities in a manner that balances economic efficiency, fairness, and simplicity. In some circumstances, the tax system can also be used directly to achieve public policy objectives.
With respect to the north, the Income Tax Act contains the northern residents deduction, which is intended to assist in drawing skilled labour to northern and isolated communities by providing recognition for the additional costs faced by residents of these areas. There are, in fact, two income tax deductions available to residents of the north who live in the prescribed northern zone or the intermediate zone for at least six months: a residency reduction, which provides $8.25 per day per person in the northern zone; and a deduction for employer-paid travel expenses for any number of trips made to obtain medical services, and up to two trips per household member per year for other reasons. The residency component of the northern residents deduction was increased by 10% in 2008.
It's worth noting, too, that the Department of Finance is also responsible for the development of tax policy related to aboriginal issues more generally, for negotiating and administering tax administration agreements with aboriginal governments, and for developing negotiation mandates and for negotiating the tax elements included in comprehensive land claim and self-government agreements—and I have colleagues here who can speak to that if necessary.
My final point would be that the Department of Finance, as you know, is also responsible for providing advice to the minister in the context of the federal budget, budget 2009, tabled last January—the economic action plan. It included a wide range of measures that will benefit the north. Mr. Thompson talked about some of the skills and training initiatives. There are also infrastructure projects, northern economic development such as CanNor, and housing projects for the north. Altogether, those investments from budget 2009 are worth about $770 million.
Thank you very much. I'd be pleased to answer any questions from the committee.
Thank you, Mr. Chair, and thank you to the witnesses.
I'm going to take my seven minutes probably to speak mostly with you, Mr. Thompson. I appreciate your words today, and I'm going to try to go a little bit more into the specifics because I feel, respectfully, that you understated the important role that you do play in northern regions. It's just an amazing job, not just coordinating with other departments like INAC and, in my case, coming from the great Kenora riding, FedNor. HRSDC has to always have its finger on the pulse of what's happening with respect to the activities of other departments, but growth and diversification within the economies in those regions.... In the great Kenora riding we have 25 isolated communities, and we've come to understand, particularly quite recently, that priorities moving forward with respect to first nations communities deal with making sure they have the skills capacity to complete significant projects going on in their communities. So now through SLAAMB, which you may very well be aware of, out of Sioux Lookout, there is a great opportunity to account and reconcile for decades of carpentry work done by first nations in their own communities and actually get important tickets for that. I applaud HRSDC's role in that.
Furthermore, there was a recent announcement through the community adjustment fund in Pikangikum, where we're setting up classrooms and training people, with partnerships in a regional college, in an effort to ensure they have the best chance at full participation in an extraordinary forestry initiative that is indeed, beyond harvesting and diversification, into value-added deals with forestry management, tourism, and wardenship of historical lands, not just for the nations, but that contain a lot of important information as to the history of that forest in northwestern Ontario.
So with that as a preamble, and recognizing the important social and labour market investments that you make, and by way of example in the great Kenora riding, we're focusing, as the chair pointed out earlier, on economic development in the north. And I always qualify that. My riding is also on the shores of Hudsons Bay, very much north but within another jurisdiction.
I would like it if you could describe in a little bit more detail how you have been and will continue to be that focal point for coordinating and responding to the role of other departments. I know, like in my riding and the territories, you are interested in the skills development not just for first nations people but for another catchment or constituent as well. How will you continue to play an important coordinating role with other departments in some of these initiatives? And take the time as well to refer, if you would like, to specific first nations skills and employment partnership programs that you have in mind.