Canadian Finance Minister Jim Flaherty is offering grants for job training and extending investment tax breaks to help companies in the world’s 11th largest economy find skilled workers and boost manufacturing.
The grants of C$15,000 ($14,600) will consist of contributions by the federal government that would be matched by employers and provincial governments at a cost of C$500 million a year, Flaherty said. Canada is also increasing funding for manufacturers by extending a tax credit for investments in factory equipment at a cost C$1.4 billion.
“There are too many jobs that go unfilled in Canada because employers can’t find workers with the right skills,” Flaherty said in his budget speech today in Ottawa. “Unless we act now, this problem will be compounded as the recovery continues.”
The longest-serving finance minister in the Group of Seven nations highlighted the job grant in a budget focused on boosting growth amid weak demand from export markets in the U.S. and Europe and consumers carrying record debt levels. Flaherty is relying on companies that are holding record amounts of cash to drive growth with investments and exports as he seeks to eliminate Canada’s deficit by 2015.
“Flaherty has a tricky balancing act right now to balance the books while at the same time making some investment to stimulate business growth,” Dan Kelly, president of the Canadian Federation of Independent Business, said in an interview. “We have to start doing a better job in preparing Canadians, and we think that engaging employers is the best way to make that happen.”
Ontario, Canada’s most-populous province and main manufacturing region, was the focus of most of the funding. Flaherty announced C$920 million over five years for a regional development agency. The budget also allocated C$1 billion for aerospace and military manufacturers and C$92 million to help forestry companies find new markets.
The job grants depend on negotiations with the provinces to change labor-market agreements that begin expiring next year. Flaherty said today those agreements haven’t eased shortages of skilled trades workers such as electricians, carpenters and engineers. The reworked terms will offer “short-duration training” at community colleges or union training centers, he said.
The skills shortage may be overblown as wages have not risen high enough to reflect a true shortage in some areas, Derek Burleton, an economist at Toronto-Dominion Bank, said in an interview, adding the investment measures may have more impact.
“Canadian businesses need to step up and become more innovative and productive,” Burleton said. “In our medium-term growth forecasts, we are counting on business investment to ramp up from the recent pace, which has been disappointing.”
The business spending incentives come amid signs that executives are reluctant to expand. Investment spending will increase this 1.7 percent this year, the slowest pace since the 2009 recession, a Feb. 27 survey from Statistics Canada projected.
Non-financial companies held a record C$600 billion of currency and deposits in the fourth quarter, up from C$434 billion in mid-2009 as the last recession ended, according to Statistics Canada.
Calgary-based Suncor Energy Inc. (SU), the country’s largest energy firm, led all companies with C$4.39 billion in cash and marketable securities according to Bloomberg calculations. Twenty-three companies had cash and marketable securities worth more than C$1 billion.
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com