Liberal Leader Michael Ignatieff presented three proposals today that would help to create new, high-paying jobs in many sectors of the economy and alleviate the worst level of youth unemployment in a generation.
“We’re in a jobless recovery, but the Conservatives have no plan for creating long-term, high-quality jobs,” said Mr. Ignatieff. “That’s why we’re putting forward concrete proposals that would immediately stimulate job creation if the government were to adopt them in its upcoming budget.”
Liberals are proposing three initiatives that the federal government could implement right away to immediately create jobs and strengthen Canada’s economic future:
1. Support for Manufacturers – Boost job-creating productivity and competitiveness through a cash advance on the Accelerated Capital Cost Allowance (ACCA) to help manufacturers purchase new equipment.
2. Jobs for Young Canadians – Reduce the worst youth unemployment in a generation by introducing a temporary financial incentive to hire young Canadians; and,
3. Encouraging Investment in Start-Up Companies – Create new jobs by introducing additional tax incentives for Canadians who invest in Canadian entrepreneurs and start-up companies in emerging sectors such as clean energy and life sciences.
“In this recession, our manufacturers can only create new jobs if they have better access to the capital they need to invest in new equipment and get ahead of global competition,” said Liberal Finance Critic John McCallum. “A cash advance on the ACCA tax benefit would help manufacturers hurt by the recession become profitable by boosting job-creating productivity.”
“Canada’s youth face double the national unemployment rate,” said Liberal Youth Critic Justin Trudeau. “By giving employers a greater incentive to hire the next generation of workers, we can help our youth obtain the job experience they need and boost our economy.”
“New investment models have helped make Canada a leading destination for mining exploration,” said Liberal Industry Critic Marc Garneau, referring to Flow-Through Shares (see Backgrounder). “By extending these models to emerging sectors of the economy, we can help bridge the gap between research and commercialization, and create cutting-edge jobs of tomorrow in the process.”
320,000 Canadians who have lost their jobs since the recession began in October 2008 are still unemployed, while half a million face the end of their EI benefits before finding a new job. New jobs that have been created since the recession began are more likely to be lower in quality than the jobs they replaced, predominantly through part-time or self-employed work, with fewer hours of work on average.
Backgrounder
Jobless Recovery
Over a year after the recession began in October 2008, more than 300,000 Canadians who have lost their jobs still have not found employment, while the Harper government has no strategy to create new long-term, high-quality jobs.
Many economists believe Canada is experiencing a “jobless recovery.” The new jobs that have been created are more likely to be lower quality than the jobs that have been lost, with reduced hours, more part-time work and more self-employment. More Canadians now face economic insecurity compared to a few short years ago, which threatens Canada’s overall economic growth and fiscal balance.
Canada’s Economic Landscape
The Conference Board of Canada has said that productivity is the single most important determinant of a country’s per capita income over the long term. From the fourth quarter 2007 to the third quarter of 2009, labour productivity in Canada fell 1.2 percent, while the United States grew by 4.9 percent.
Youth have lost more jobs than any group in this recession. Summer unemployment for youth in July (20.9%) and August (19.2%) were the worst since Statistics Canada started collecting data in 1977, totalling 210,000 job losses. The current unemployment rate among young Canadians is 16 percent, double the national average.
Emerging technologies offer the greatest promise for creating the high-quality jobs that will drive Canada’s future economic growth. According to the Canadian Venture Capital Association, companies backed by venture capital averaged annual employment growth of 17.1 percent between 2003 and 2007, but Canada’s venture capital system is currently mired in a 14-year low.
Liberal Jobs Proposals
Jobs are the number one priority of the Liberal Party of Canada. To encourage the federal government to address job creation in the next federal budget, Liberals are putting forward three initiatives that the federal government could implement right away to immediately stimulate job creation today and strengthen Canada’s economic future.
1. Support for Manufacturers
Boost job-creating productivity and competitiveness through a cash advance on the Accelerated Capital Cost Allowance (ACCA) to help manufacturers purchase new equipment.
Liberals propose the federal government implement a cash advance on ACCA to help manufacturers purchase new equipment.
Many manufacturers who want to become more productive and competitive face two challenges: they lack access to capital to make investments in new equipment, or they cannot immediately benefit from the ACCA during the recession as they are not profitable.
Under the current rules of the ACCA, companies can invest in new equipment now and claim the ACCA in future years when they are profitable.
A cash advance will give these manufacturers immediate access to resources to buy new equipment, innovate and become more competitive, while creating jobs in the process.
2. Jobs for Young Canadians
Reduce the worst youth unemployment in a generation by introducing a temporary financial incentive to hire young Canadians.
The current unemployment rate among young Canadians is 16 percent, double the national average. The Liberal Party of Canada believes we must make a priority of creating jobs for Canada’s future workforce.
Liberals propose the federal government implement a temporary financial incentive, granted to companies that hire young Canadians, such as new graduates from college, university or apprenticeships.
For example, in the late 1990’s, the Liberal government introduced a temporary Employment Insurance premium holiday for businesses that hired Canadian youth. Another example could be to further boost the Canada Summer Jobs program. These concepts, or similar mechanisms, should be considered to help Canadian companies hire bright young Canadians to strengthen their business, while giving young Canadians valuable job experience for the future.
3. Encouraging Investment in Start-Up Companies
Create new jobs by introducing additional tax incentives for Canadians who invest in Canadian entrepreneurs and start-up companies in emerging sectors such as clean energy and life sciences.
Venture capital is the heart of private sector investment in new start-up companies in emerging technologies, such as clean energy, telecommunications, and life-sciences.
Venture capital and overall private sector investment in research and development in Canada lags the world. To create jobs today and strengthen our economy for the future, the Liberal Party believes we must invest more in Canada’s entrepreneurs and Canadian ingenuity.
The Liberal Party proposes the federal government introduce a new tax benefit to Canadians who invest in new start-up companies such as extending “Flow-Through Shares” tax incentives to other emerging sectors or introducing an “Innovation and Productivity Tax Credit” (IPTC)
Flow-Through Shares allow start-up companies who have little or no revenue to pass on tax deductions to investors, boosting the incentives to invest in Canadian entrepreneurs.
Flow-Through Shares are currently applied to the mining sector for exploration, and have been credited for making Canada the world’s top destination for exploration investment. Exploration expenditures in Canada rose from approximately $300 million in the late 1990s to an estimated $1.722 billion in 2006.
An IPTC would grant Canadian investors an income tax credit for investments in eligible companies that meet certain criteria.
The Liberal Party would recommend these measures be considered in partnership with the provinces and to complement existing policies that support investment in Canadian entrepreneurs.
Flow-Through Shares or an IPTC could be used to help Canadian entrepreneurs bridge the “valley of death” – the gap between research and commercialization, and create an innovation boom for start-ups in areas such as life-sciences, clean energy and information technology.
Organizations that support the introduction of Flow-Through Shares or an IPTC to boost investment in emerging sectors include:
• Information Technology Association of Canada
• National Angel Capital Organization
• Canadian Advanced Technology Alliance
• Friends of the Canadian Institutes of Health Research
• Conference Board of Canada
• Canadian Federation of Independent Business (CFIB)
• MaRS Discovery District for Medical & Related Sciences
• Ottawa Centre for Research and Innovation (OCRI)
• BC Technology Industries Association (BC TIA)
• Brightspark Capital Partners
• Canadian Task Force on Early Stage Funding
• Foragen Technology Ventures Inc.
• Garage Technology Ventures Canada
• Petroleum Technology Alliance Canada
• Saskatchewan’s Minister’s Advisory Council on
• Information Technology
• Saskatchewan Advanced Technology Association (SATA)
• Springboard West Innovations Inc.
• Sustainable Development Technology Canada (SDTC)
• Trillium Medical Technology Association
