The government is looking for ways to support citizens in lifelong learning-- the Canada Training Benefit is one way of doing this. However, it may not be enough. Read this case study by Rosanna Tamburri on education innovation – all for PPF's Brave New Work project on the future of work.

Issues in Action

This case study illustrates the topics in Harvey Weingarten’s report on Improving the Linkages between Universities and Workplaces

In recent years, governments around the world have been grappling with ways to encourage workers to upgrade their skills and embrace lifelong learning. In 2020, the Canadian government launched the Canada Training Benefit, a key piece in its efforts to spur retraining among working adults. The benefit has two major components: a tax credit for occupational skills training, and an Employment Insurance (EI) benefit that provides workers with paid leave as they seek training.

However, one year after its introduction, policy analysts are calling for changes to the program. “It was somewhat farsighted of the federal government to introduce [the Canada Training Benefit], and it has a ton of potential for supporting learners,” says André Côté, a public affairs consultant and a former senior adviser to the Ontario government. However, Côté and others have urged the government to revise the program, by raising the level of financial support available to individuals and targeting it to low-income earners.

The benefit has two major provisions. The first, the Canada Training Credit, provides workers between the ages of 25 and 64 with a tax credit of $250 a year, up to a lifetime limit of $5,000. The funds accumulate in a training account administered by the Canada Revenue Agency, and can be used to cover up to half the cost of programs offered by colleges, universities and other institutions that provide occupational skills training. After four years, a typical worker will have accrued a $1,000 credit balance, which can be claimed against tuition fees of $2,000 or more.

The Canada Training Benefit has two major provisions:
1. The Canada Training Credit which provides workers between the ages of 25 and 64 with a tax credit of $250 a year, up to a lifetime limit of $5,000
2. Employment Insurance Training Support Benefit, provides workers with up to four weeks of employment insurance benefits 55% of a participant’s weekly insurable while they seek training.

To take advantage of the program, Canadians must pay for the training upfront and claim the credit at tax time to get a refund. The 2020 tax year was the first time the credit was available to Canadians, but it isn’t yet known how many utilized it.

The second provision, the Employment Insurance Training Support Benefit, provides workers with paid leave while they seek training. It provides up to four weeks of employment insurance benefits at 55% of a participant’s weekly insurable earnings. The EI benefit was to have launched in 2020 but stakeholder consultations and the COVID-19 pandemic have delayed its rollout.

When she testified before the House of Commons Human Resources Committee in March, Carla Qualtrough, Minister of Employment, Workforce Development and Disability Inclusion, indicated the EI benefit portion of the program would be revised, but the recent federal budget introduced in April didn’t include any changes to the provision.

Program welcomed as “a good first step”

A Public Policy Forum paper by André Côté, Jake Hirsch-Allen and Gladys Okine-Ahovi recommends three important changes to the program: increasing the tax credit amount from $250 to $1,000 a year, up to a lifetime limit of $20,000; making the benefit levels dependent on income or introducing enhanced supports for low-income earners; and making the benefit available to Canadians upfront, much like the Canada Emergency Response Benefit, which provides financial assistance to those who have lost their jobs as a result of the COVID-19 pandemic.

The Future Skills Council, a government advisory group, called the Canada Training Benefit a “good first step” in encouraging people to pursue skills training, but said “much more is possible.” In a recent report, it recommended that policymakers consider other tools such as increased tax deductions and tuition rebates to reduce the upfront financial barriers and that they target measures to those with lower incomes and in precarious jobs.

The Canada Training Benefit is one of numerous policy initiatives that the federal government has introduced to encourage retraining among Canadians. Jennifer Robson, a professor at Carleton University, says that the incentives generally fall into three broad categories: programs that are targeted directly at individuals; programs directed at employers; and “supply-side” initiatives such as bilateral labour-market transfer agreements that provide funds to provinces to cover provincially administered workforce-development programs.

The training benefit is part of the first approach—putting money directly into people’s hands. It functions much like a voucher, Robson explains, except that the credit has no upfront cash value. The program only covers direct training costs like tuition, and excludes ancillary fees such transportation or childcare expenses, which can be challenging for people, particularly low-income earners, to afford, Robson says.

However, the broader challenge is that retraining initiatives tend to be taken up mainly by higher-income workers who already have training and education, and who are more likely to work for an employer willing to pay for them. “One thing that would be really important is starting with something that is more responsive to the needs of lower-wage workers,” says Robson.
In addition, it can be challenging for people to find appropriate training programs and calculate how much they are eligible to get back at tax time. “If you are a low-income person those calculations matter a lot,” Robson says. One possible solution she proposes is to convert the credit to a true voucher so that the cash is available to workers at the time that they enrol in a program and incur the fees.

Retraining initiatives tend to be taken up mainly by higher-income workers who already have training and education, and who are more likely to work for an employer willing to pay for them. “One thing that would be really important is starting with something that is more responsive to the needs of lower-wage workers,” says Dr. Jennifer Robson.

Another option would be to target the program to lower-income earners by making it income-dependent, Robson adds, noting that those with higher incomes have other retraining options available to them, such the Lifelong Learning Plan, which allows individuals to withdraw funds from a Registered Retirement Savings Plan to obtain training.

On the plus side, the training credit complements microcredential programs increasingly being rolled out by post-secondary institutions, Robson notes. Turning the credit into a voucher that is better targeted to lower-income people and paid directly to institutions “would have a huge incentive effect for institutions to improve the breadth and quality of microcredential options,” she says.

Ontario launches temporary training tax credit

In response to the COVID-19 pandemic, the Ontario government recently introduced a similar training tax credit, although it is temporary. The Ontario Jobs Training Tax Credit, which functions much like the federal tax credit, provides a refundable tax credit worth up to $2,000 to cover up to half the cost of program fees. To claim the credit, individuals must have a positive Canada Training Credit balance for 2021.

When the federal government announced the Canada Training Benefit program in the 2019 budget, it estimated the benefit would cost $1.7 billion over five years. The 2021 budget contained several new initiatives to promote skills training. Among other things, it pledged $960 million over three years for a new Sectoral Workforce Solutions Program, which would support sector associations and employers in designing and delivering training that is relevant to businesses, and $298 million over three years for a new Skills for Success program to help Canadians improve their literacy, numeracy and other transferable skills. Another program would support communities in developing plans to identify high-growth organizations and connect them to training providers.

A recent TD Economics report on the need for retraining strategies for Alberta’s oil and gas workers said Canada’s patchwork of retraining and upskilling policies “leaves much to be desired.” It noted that workers “have to navigate a complex web of programs delivered by a multitude of organizations and institutions with little foresight as to whether or not the skills gained actually align with what is needed.”

The report, which was released before the 2021 budget, recommends adopting a system similar to Singapore’s SkillsFuture program, which provides citizens with an initial training credit of $500, to be periodically topped up by the government. However, the credit is just one part of a larger program that includes advising services and “transformation maps” that identify career pathways, occupations, work tasks and the skills required for each task.

Still, according to Robson, even Singapore has encountered problems getting its program up and running. “No one has found the perfect solution,” she says. “I don’t think any jurisdiction has cracked the code.”

Robson notes that Canada has long lacked a culture of lifelong learning. “You can’t engineer culture change overnight,” she says. However, the Canada Training Benefit “is a start.”


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