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Archived - Action to Help Canadians and Stimulate Spending

Canada's Economic Action Plan includes $13.5 billion over three years to support workers affected by the global economic slowdown, create opportunities for Canadian workers through skills development, strengthen partnerships with Aboriginal Canadians, and stimulate the economy by providing personal tax relief to Canadians.

Highlights

• Unemployed workers will receive enhanced benefits on April 1 or sooner—an extra five weeks of Employment Insurance, work-sharing and wage earner protection.
• Additional funding for training for unemployed Canadians will be available to provinces and territories by April 2009.
• Enhanced support for older workers in vulnerable communities will be available to participating provinces by April.
• Most Canadians will begin to see benefits from personal income tax reductions, for measures effective January 1, 2009, on their pay stubs as of April 1.
• Measures to provide more opportunities for youth employment are anticipated to be in place by June.
• Five Aboriginal training and employment projects are expected to be approved in May and commence in the summer.

Canada Skills and Transition Strategy

The Canada Skills and Transition Strategy provides $8.3 billion to both help Canadians hardest hit by the downturn weather today's economic storm and provide them with the necessary training to prosper in tomorrow's economy. It consists of a three-pronged strategy to strengthen benefits, enhance the availability of training and maintain low Employment Insurance (EI) premium rates. Considerable progress has been made in implementing the strategy.

The EI program exists to provide financial support to Canadians who have lost their jobs. Steps have been taken to improve service delivery and to ensure the efficient and timely processing of new EI claims in order to provide those workers who have been laid off access to EI as quickly as possible.

In addition, the Government has moved quickly to ensure that the additional support provided through the Economic Action Plan will be available to workers. With the Royal Assent of the Budget Implementation Act, 2009, the following enhanced benefits will be available to eligible workers:

• Extra Five Weeks of Regular EI Benefits: Regular benefit entitlements will be extended by five weeks and the maximum benefit duration will rise from 45 to 50 weeks, providing reassurance to unemployed workers that they will have financial support for a longer period. Service Canada will start providing this benefit to all claims that were active two weeks before the date of Royal Assent.
• Wage Earner Protection: The Economic Action Plan extends the benefits of the Wage Earner Protection Program to cover severance and termination pay, as well as wages and vacation pay owed to eligible workers following the bankruptcy of their employer. These extended benefits will be available to all eligible employees whose employer became bankrupt after January 26, 2009.

With the approval of the necessary regulatory and program changes, the following benefit enhancements will be available to eligible workers.

• Work-Sharing: Work-sharing is a current element of the EI program, designed to avoid layoffs by offering benefits to qualifying workers willing to work a reduced work week temporarily until their employer is able to bring people back on full time. Changes to extend, over the next two years, these arrangements by 14 weeks, to a maximum of 52 weeks, have been approved by the EI Commission and new agreements became eligible for the extended duration as of February 1, 2009.

• Long-Tenured Workers: Individuals who have spent years working in one industry or for one employer may now face the prospect of unemployment and the need to retrain for a new job, possibly in an entirely different industry. Regulatory changes to the EI program will provide the authority to extend EI income benefits for long-tenured workers participating in longer-term training with additional time and financial support. Consultations with provinces and territories have begun. Upon completion of these consultations, approvals will be sought, with the goal of providing these extended benefits by late May 2009.

Enhancing the Availability of Training

Current benefits under Labour Market Development Agreements (for EI-eligible Canadians) and Labour Market Agreements (for those not eligible for EI) provide considerable support to workers through employment benefits, training, job-search and self-employment assistance. Canada's Economic Action Plan strengthens these programs. Under the Budget Implementation Act, 2009, funding is available as of April 1, 2009 and will flow to those provinces that have signed amended or new agreements to ensure appropriate accountability and reporting.

• EI Training Programs: The Economic Action Plan provides targeted two-year funding of $1 billion to expand the availability of training delivered through the EI program by provinces and territories. This funding will be allocated based on the share of unemployed persons in a province or territory and will flow through the amended existing Labour Market Development Agreements beginning April 1, 2009.
• Strategic Training and Transition Fund: The Economic Action Plan provides $500 million for this targeted two-year initiative to support the labour market needs of individuals, whether or not they qualify for EI, and to help ensure that all Canadians will be able to access the training and other assistance they need. The funding will be allocated based on the share of unemployed persons in a province or territory and will flow through the amended Labour Market Agreements by April 15, 2009.
• Older Workers: The Economic Action Plan provides an additional $60 million over three years to the Targeted Initiative for Older Workers (TIOW), a federal-provincial-territorial employment program to better support older workers and their families in vulnerable communities through a range of employment activities. The scope of the TIOW will be expanded to include vulnerable cities with populations of less than 250,000. Amending agreements will be signed with all participating provinces and territories and new agreements will be negotiated with any new province or territory that elects to begin to participate in the initiative by April 2009.

Progress has also been made on the other initiatives in the Economic Action Plan designed to enhance training opportunities.

• Youth Employment: The Economic Action Plan provides two-year targeted funding to enable more employers in the not-for-profit sector to hire summer students and to enhance the federal public service student employment program. These funds will flow through the Canada Summer Jobs Program and the Federal Student Work Experience Program. The funding will be available to hire summer students by May 2009. The Economic Action Plan also provides a one-time grant of $15 million to the YMCA and YWCA to place youth in internships in not-for-profit and community services organizations, with a focus on environmental projects. It is anticipated that internships will begin in June.
• Apprentices: The Economic Action Plan provides $40 million a year to launch the Apprenticeship Completion Grant, which will provide a taxable grant of $2,000 to apprentices who complete their certification in any of the Red Seal skilled trades. Implementation is expected to be completed by July 1, 2009, with payment retroactive for apprentices who received their certification on or after January 1, 2009.
• Aboriginal Canadians: The Economic Action Plan provides $100 million over three years to support the Aboriginal Skills and Employment Partnership (ASEP) initiative. Five ready-to-go ASEP projects have been identified, with approvals scheduled for May and projects expected to commence in the summer. A call for additional projects is being prepared and will be launched in April. New projects will be assessed and approved by August with projects to start by October. The Aboriginal Skills and Training Strategic Investment Fund of $75 million, which will strengthen opportunities for partnership and targeted training for Aboriginal Canadians, is scheduled to be launched in late March, the call for business plans to be issued in April, with projects to begin by August 2009.

Keeping EI Rates Frozen

The Government committed in the Economic Action Plan to freeze EI premium rates for 2010 at $1.73, the same rate as 2009. This will take effect once the Budget Implementation Act, 2009 has received Royal Assent.

Further Developing a Highly Skilled Workforce

The Economic Action Plan provides $87.5 million over three years to temporarily increase the number of Canada Graduate Scholarships (CGS) awarded by the granting councils. This measure is to be delivered through the existing CGS program. Authority to access the supplementary funding is anticipated to be secured in early April, and the granting councils plan to award the additional scholarships from existing applicant pools.

Canada's Economic Action Plan also sets aside funding of $3.5 million over two years to accelerate the implementation of the Industrial Research and Development Internships program launched in Budget 2007. This funding will support 600 additional internships over the time period, bringing the total number of internships available each year to 1,000. Authority to access this additional funding is anticipated to be secured in April 2009.

Tax Relief for Canadians

Canada's Economic Action Plan proposed, effective January 1, 2009, to:

• Increase the basic personal amount and the top of the two lowest personal income tax brackets by 7.5 per cent above their 2008 levels, so that Canadians can earn more income before paying federal income taxes or before being subject to higher tax rates.
• Effectively double the tax relief provided by the Working Income Tax Benefit (WITB) to encourage low-income Canadians to find and retain a job.
• Increase the Age Credit amount by $1,000, providing up to an additional $150 of annual tax savings for low- and middle-income seniors.

In addition, effective July 1, 2009, the Economic Action Plan proposed to raise the level at which the National Child Benefit supplement (NCBs) for low-income families and the base benefit of the Canada Child Tax Benefit (CCTB) are phased out, providing a benefit of up to $436 for a family with two children.

Steps have been taken to ensure that the benefits of these tax reduction measures flow to Canadians as set out in the Action Plan:

• Canadians will pay less taxes, and they will see it on their pay stubs. The Canada Revenue Agency has committed to adjust the 2009 Payroll Deductions Tables to take effect April 1, 2009, at which time taxpayers subject to withholding (e.g., most employees) will begin to benefit from the higher basic personal amount and tax bracket thresholds. Taxpayers paying by instalment, including many seniors, can immediately adjust their payments to reflect the changes for the 2009 taxation year.
• A general Notice of Ways and Means Motion was tabled in Parliament with the Budget on January 27, 2009, followed by the tabling of a detailed Notice of Ways and Means Motion for select measures on February 4, 2009. In accordance with these motions, the Canada Revenue Agency is administering the basic personal amount, tax bracket threshold and Age Credit changes for the 2009 taxation year pending passage of implementing legislation. (Royal Assent of implementing legislation, however, is required before the proposed higher payments under the CCTB/NCBs and WITB can be made. The Economic Action Plan proposed that the increases in the CCTB/NCBs take effect July 1, 2009.)
• The Budget Implementation Act, 2009 includes the proposals to increase the basic personal amount and the top of the two lowest personal income tax brackets, enhance the CCTB/NCBs, and increase the Age Credit.
• In recognition of the important role played by provinces and territories in providing basic income support, the Government committed in the Economic Action Plan to consult with provinces and territories before implementing the final design of the enhanced WITB for the 2009 taxation year. Consultations among federal, provincial and territorial officials on the enhancement of the WITB were initiated in February 2009. Legislation implementing the enhanced WITB will be tabled in Parliament later this year, following the conclusion of discussions with provinces. Low-income working Canadians will receive tax relief from the enhanced WITB when they file their 2009 tax return. Legislation must receive Royal Assent before enhanced WITB benefits are paid.

The next report will provide further updates on the status of implementing legislation and provincial and territorial consultations on the enhancement of the WITB.

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