Wednesday October 22, 2014

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Quebec: We want out of this new federal skills program


Quebec Labour Minister Agnes Maltais speaks during a news conference in Ottawa Wednesday February 27, 2013. The Quebec government has formally requested to be excluded from the new federal skills-training program.The province's pro-independence government is particularly livid about the budget, and has held two news conferences 18 hours apart in order to blast it. THE CANADIAN PRESS/Fred Chartrand

QUEBEC CITY, Que. - The Quebec government has formally requested to be excluded from the new federal skills-training program that has attracted a range of reactions in provincial capitals.

The angriest response by far came from the pro-independence Parti Quebecois government, which, on Friday, held its second news conference in 18 hours to blast the federal budget.

The skills program is one of several controversial budget measures that will test the Harper Conservatives' ability to manage relations with the newly elected Parti Quebecois.

Other points of contention include the elimination of a decades-old tax credit for investing in a union-run venture capital fund, a change that will be felt almost exclusively in Quebec.

As for the training program, the Quebec government says it's willing to open its books to show that the current provincial program works — while, at the same time, slamming the door shut on any joint federal-provincial initiative.

"We're asking for Quebec to be excused from this federal program," Labour Minister Agnes Maltais said Friday. "We refuse to go 15 years backward."

Labour training was devolved to the provinces in the wake of the 1995 Quebec referendum, in keeping with a long-standing demand in that province for more autonomy in the area.

The new program would see more control handed to the private sector. Employers would kick in up to $5,000 to train a worker, while the federal and provincial governments would be expected to match the sum for a total grant of $15,000 per employee.

Ontario also calls the plan a shell game that might hurt the workers who need it most. It says it's better-placed than Ottawa to respond to labour market needs in the province.

British Columbia says it's concerned about being asked to foot the bill for a new federal program. Nova Scotia and Newfoundland have asked for more information before jumping on board.

But the reaction was more positive in Saskatchewan, where Premier Brad Wall greeted the budget favourably. The revamped training plan was on the province's wish-list. The growing energy producer faces a labour shortage, with predictions it will need at least 60,000 workers by 2020 to maintain growth.

The federal government expects 130,000 Canadians to participate in the training program each year, once it's fully up and running.

Finance Minister Jim Flaherty, who was selling his budget in Vancouver on Friday, didn't respond directly to Quebec's concerns but stressed Ottawa is open to negotiations with the provinces about just how the skills-training program will work.

Prime Minister Stephen Harper's office reacted cautiously to talk of a boycott in Quebec. There was no comment on possible conditions for opting out.

"The current (labour) agreement expires next year and we hope to have a deal with the province by then," Harper spokesman Carl Vallee said in a statement.

"What we want are jobs, not fights."

Meanwhile, in Quebec City, politicians detected a few sucker-punches in Thursday's budget.

Perhaps even more than the labour-training change, the provincial government was furious about the end of the tax credit for union venture-capital funds. The change will mostly hit Quebec, where the investment vehicle is popular.

The federal budget said the tax credit has been criticized by academics, international organizations like the OECD, and venture-capital industry stakeholders as an ineffective means of stimulating the venture-capital sector.

The system has not been without controversy. Recent media reports have said the biggest such fund is being probed by investigators at the province's corruption inquiry, on suspicion of criminal activity. While disputing accusations of wrongdoing, a fund spokesman confirmed investigators had been met.

This week's move has, in any case, struck a sensitive chord in Quebec.

Some even view it as an assault on the province's values — notably on the so-called "Quebec model," the form of economic interventionism venerated by some as the key that opened up boardrooms to francophones starting in the 1960s.

Consider the deep personal ties between those investment funds and every major political party in the province.

The PQ premier's husband, Claude Blanchet, once ran Quebec's biggest union venture-capital fund, which now risks losing investors.

The man who replaced him in 1997 is now the official Opposition's finance critic, Liberal Raymond Bachand.

And the leader of the other opposition party, the Coalition's Francois Legault, even built his own personal fortune with Air Transat — which was started off with the help of a $4-million grant from that same fund, the Quebec Labour Federation's Solidarity Fund.

The QFL fund has nearly $9 billion in assets and almost 600,000 investors.

The changes announced Thursday will remove $355 million in tax advantages for investors in such funds, by cancelling a 15 per cent federal refund created in the 1980s.

Eighty-eight per cent of the impact of that move will be felt in Quebec.

The Quebec government drew comparisons between the disappearance of that credit and the new economic development fund for Ontario worth nearly $1 billion.

"While Ontario is getting $900 million for its manufacturing industry," said Intergovernmental Affairs Minister Alexandre Cloutier, "Quebec is getting peanuts from Ottawa."

It has called the federal budget an act of economic sabotage against Quebec and an attack on the province, which gave the federal Conservatives few seats in the last election.

The federal finance minister said he believes an flexible arrangement is possible.

"I think there's an opportunity to negotiate and figure it out," Flaherty said after a speech to a local board of trade.

"Situations aren't identical across the country. We've worked well with the provinces on this issue since 2007 — we just think we can do better."

The opposition parties in Quebec are also upset about the budget, but they're trying to pin their disappointment on the provincial government. They say the PQ is more determined to pick fights with Ottawa than work with it and, as a result, has no leverage whatsoever.

The PQ scoffs at that notion.

Cloutier says other provinces don't have sovereigntist governments, and the program was imposed on them anyway, and he also notes that the last Quebec government had plenty of policies forced on it by the Harper Tories.

Quebec's main business lobby, the Conseil du patronat, was more favourable toward the budget. However, it urged caution in revamping the skills-training system.

—With files from Maria Babbage in Toronto, Alexander Panetta in Montreal and James Keller in Vancouver


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