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February 10, 2014

Canada Apprentice Loan unveiled in 2014 federal budget

DCN staff writer

OTTAWA

The creation of the Canada Apprentice Loan reinforces the importance of the apprenticeship training system to industries like construction for future labour market needs, says the head of the Canadian Construction Association (CCA).

Introduced in Economic Action Plan 2014, the Canada Apprentice Loan will offer interest-free loans to help registered apprentices in Red Seal trades with the cost of their training. Apprentices registered in their first Red Seal trade apprenticeship will be able to apply for loans of up to $4,000 per period of technical training.

CCA president Michael Atkinson said this is the first loan program he is aware of for apprentices; there have been grants for apprentices and tax incentives for employers.

“Apprentices are generally older than university students, for example, and when they go back to the classroom to take their technical training, they are giving up their livelihood in terms of their salaries,” he said. “It is true that they can draw Employment Insurance (EI), however, often these individuals have families, other commitments and are incurring some financial hardship in returning to the classroom. I think these measures will go a long way in defraying some of those costs.”

At least 26,000 apprentices per year are expected to apply for over $100 million in loans, reports the government. The Canada Apprentice Loan is funded from an expansion to the Canada Student Loans program.

The estimated net cost of these loans to the federal government would be $25.2 million over two years and $15.2 million per year on an ongoing basis.

Atkinson noted that these loans are only available to apprentices in Red Seal trades.

“My one criticism is it is limited to Red Seal trades only. More and more trades are becoming Red Seal, but obviously not all apprentices are entitled to this measure, and there are a lot of apprenticeable trades in the provinces,” he said.

Further details are expected to be announced by the Minister of Employment and Social Development in the coming months.

The budget also proposed to introduce the Flexibility and Innovation in Apprenticeship Technical Training (FIATT) pilot project. It aims to expand innovative approaches to the delivery of apprenticeship technical training aimed at reducing non-financial barriers to completing training and obtaining certification.

Examples of the pilot could include using in-class simulators, e-learning modules, remote learning sites and video conference in place of, or in addition to traditional in class learning.

“Trying to find ways and means to deliver the apprenticeship classroom training portion of the program can only be more beneficial to everyone concerned to ensure that the timing of block releases, for example, isn’t an impediment to apprentices completing their apprenticeship program,” said Atkinson.

“Trying to find more flexibility to deliver the technical training aspects we believe is a step in the right direction.”

It is anticipated that the FIATT pilot project could support up to 12 multi-year projects across the country through a reallocation of $13 million over four years starting in 2014–15.

The government said it will take steps to ensure that apprentices are aware of all the existing financial supports currently available to them through the EI program while they are on technical training.

“There is also something called Supplemental Unemployment Benefits...that a lot of people aren’t aware of. This is where an employer can supplement funds that are paid to an EI recipient without the individual losing their EI eligibility status,” explained Atkinson.

“I think the government feels that a lot of employers aren’t aware of these supplemental plans and they aren’t taking advantage.”

Currently the basic EI benefit rate is set at 55 per cent of the employee’s weekly insurable earnings up to a maximum of $485 per week.

Employers can choose to top up an apprentice’s EI benefits up to 95 per cent of their normal wage through the use of a Supplemental Unemployment Benefit Plan.

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