Mid-Year Update

So, last week, the federal government delivered its Spring Economic Update, a kind of mini-budget for people who can’t wait until November for their fix. I am sure you are wondering what, if anything, changed for post-secondary education. I’ll break it into five topics.

First, there’s nothing in there on research apart from yet another round of tweaks to the Scientific Research & Experimental Development Tax Credit. No surprise there.

Second, there is nothing in there rectifying or even hinting about rectifying the gross error the government has made with respect to international students. Which, of course, the government does not think is a mistake, it thinks it is a success, because after all they did it and got re-elected and that’s what matters, right? Colleges like the Manitoba Institute of Trades and Technology can go under and that’s just fine with the governing Liberals because they have their majority and that’s all that counts. Again, no surprise.

Third, the nerdier among you may be wondering what is taking so long for the government to release its AI strategy. The Update leaves us no wiser about that, but it did provide us with some hints about what will be in the Strategy including the intriguing phrase “Canada must become an AI skills nation, where AI creates good jobs for Canadians, by giving access to AI training and education for all Canadians…”.  I have been critical of this governments’ understanding of the importance of skills in the innovation process, but I welcome the possibility that I might be proved wrong on this. We’ll see soon, I guess.

Fourth, the Government confirmed its commitment to not make any decisions about student aid – as reported back here, it’s another one-year extension of the current grants and loans system. There is literally no good reason to keep giving one-year extensions to this policy other than that it lets the government count each one-year extension as “new” spending for the purposes of wandering onto campuses and making announcements every 12 months. One of the most cynical comms-as-politics measures this government has undertaken, and that’s a pretty high bar. 

Fifth and finally – and this is the big one – the government has finally put some meat on the bones of its manifesto commitments on apprenticeships. It is a bit different than what was promised a year ago, and some of it remains deeply useless, but there are some improvements over what was proposed in 2025. 

If you want to refresh your memory about the original Liberal commitment, my analysis of their PSE-related commitments, including their big promises on apprenticeships, is here. TL;DR, they promised two things. The first was a large but proven-ineffective set of grants for apprentices, and the second was an increase in funding for apprenticeship spots, split 55-45 between union-run training facilities and community colleges. (Why dedicated pots? Because have a union-dedicated pot is a proven way of bidding for private-sector union support, as the Ford government has shown us repeatedly over the last seven years or so, and the Conservatives were offering a larger bribe, so…)

My analysis at the time was that none of this amounted to a serious attempt to get at the problem of increasing apprenticeship numbers. I pointed out first that apprenticeships need to get hired by someone before they can train: the fundamental constraint on apprenticeship numbers is thus employers, not training spots (though those obviously matter as well). I also suggested among other things that if you wanted to increase the flow from apprenticeships into journeypersons, it wouldn’t hurt to reduce the amount of time it takes to achieve Red Seal status: from the current four years, in most trades, closer to the European standard of two or three.

So now the Liberals have had a year to think through this stuff: did their announcement last week get it right? Well, yes and no.

No, because instead of getting rid of the useless apprenticeship subsidy, they actually decided to increase it, from up to $8,000 per apprentice to $16,000 (and yes, that’s on top of the EI they receive during their brief study periods, and on top of their $20-30K salary they receive the rest of the year), PLUS they are restoring and increasing the completion bonus (formerly $2,000, now $5,000). As previous studies have shown (see link above), this is pretty much all going to be windfall gains to the apprentice: it won’t increase completion much, meaning we’re just paying people to do what they were going to do anyway. And our Very Serious Government and Very Serious Prime Minister have just decided to double the size of that windfall gain.

But also, yes, because the government seems to have decided to broaden the proposal to tackle those issues of apprenticeship hiring and overly-lengthy apprenticeship periods. On the latter, the Update proposes “to provide up to $331 million over five years, starting in 2026-27, and $18 million ongoing to boost and modernise apprenticeship training for a faster journey to the Red Seal”.  It’s not really clear to me why this would take so much money – and it’s also not clear how the feds can create a faster journey to Red Seal when apprenticeship period rules are made at the provincial level, but I applaud the direction of this commitment at least.

On the other issue, hiring, well…they have the right idea, but dear Lord they seem to have taken the most expensive possible route to do it. Their strategy has two prongs. The first is on pre-apprenticeship, which aims to “providing youth aged 15-30 with paid, entry-level, trades-related work experience that leads into apprenticeship.”. This is smart, because again, if employers are hiring apprentices, they are going to want see a certain base level of skills before doing so. Pre-apprenticeship employment programs are a way to do that.

The other prong is almost certainly not what it seems. It is called the Build Canada Apprenticeship Service, which is supposed to provide employers with “wage subsidies of up to $10,000 for their first-year salary, matching apprentices to job opportunities, and offering hands on navigation and support”.  Which sounds like an even bigger windfall gain to employers than the wage subsidies are to students. Employers in Canada offer over 100,000 new apprenticeships each year. If every single one of those gets a $10,000 wage subsidy, then that would cost over a billion dollars a year before you even add a single new space. If literally true, it would be economic illiteracy on a grand scale. Whether it would work or not to increase apprenticeship numbers, I can’t say. I suspect a more efficient way of doing this would be to vary the subsidy according to economic conditions, letting it fall when unemployment is low and rise when it is high, but that’s just a guess on my part.

BUT looking at the costing for all this, I suspect that a flat-$10K is actually not what the government is proposing. There is unfortunately no break down of costs across the various measures listed above, but the total cost is supposed to be about $1.3 billion a year at phase-in. Given how costly the student payments are, there simply isn’t enough room for both those costs and a universal $10K-per-job subsidy. Which means either these numbers are wrong, or there are going to be conditions on accessing the wage subsidy that the government has chosen not to reveal yet. My guess would be the latter.

So, there you go. It’s a better package than the one in the manifesto in the sense that it is at least trying to come up with a holistic approach to improving and accelerating apprenticeships. But it still appears to suffer from poor targeting – possibly even worse than what was in the manifesto. I thought we were supposed to be in a new era of lean government, a government that could make hard choices, but this announcement doesn’t provide a whole lot of evidence for that.