Not in service (II)

By Aaron Wherry - Thursday, November 10, 2011 at 5:17 PM - 0 Comments

In response to this post, the office of Human Resources Minister Diane Finley sends along the following.

As announced in August, Service Canada will improve the way in which EI claims are processed by introducing further automation to an increasingly outdated and paper-based system. This will happen over the next three years. With continuous improvements to the way that we do business – such as increased automation, improved online services, and a nationally-managed approach to the distribution of workloads – Service Canada is positioned to manage service demands in a more cost-effective way. Modernizing our services will mean changes to the way we currently do business but ultimately will allow for better services for Canadians.

Canadians expect their hard-earned tax dollars to be used as effectively and efficiently as possible. The government of Canada is working hard, on behalf of Canadians, towards eliminating the deficit, returning to balanced budgets and improving the services we deliver. Over the course of the year, and dependent on labour market conditions and other factors, there may be fluctuations in the volume of Employment Insurance (EI) applications which could affect the speed of pay from one week to the next. We continue to carefully monitor the number of claims to make sure that we provide the best possible service to Canadians who are in need of benefits.

‘The trouble with the populist narrative’

By Aaron Wherry - Wednesday, November 9, 2011 at 1:28 PM - 0 Comments

Bob Rae appeals to economics.

A premium is a tax, and payroll taxes discourage hiring. Make no mistake, payments to people who have no work is essential, and a hallmark of a decent society and an effective automatic stabilizer for the economy. But how we pay for them should be the subject of a serious debate. The Liberal Party is calling today for a freeze on employment insurance premiums, and a review of the tax into the future. The payroll tax increases planned by the Conservatives will put a new tax burden of 1.2 billion on businesses and workers just as the economy is slowing down. It is a very bad idea, and the Conservatives should change course.

We need to go further and address the income tax code itself. Like their other favourite statute, the Criminal Code, the Conservatives cannot resist tinkering with endless boutique tax credits and changes that respond to the flavour of the month politics that is now the hallmark of the political right. These credits are rarely refundable, which means that those who really need help don’t get it. Out of the roughly 25 million tax filers in Canada, eight million do not have enough income to pay taxes. Those are the people who need these tax credits the most and they are the ones who don’t even get to apply.

An answer, of sorts

By Aaron Wherry - Tuesday, November 8, 2011 at 12:37 PM - 0 Comments

The Liberals have persisted these last several weeks in asking the government side to cancel an increase in EI premiums scheduled for next year. The government side has persisted in ignoring these questions.

Today though, the Finance Minister will apparently announce that the planned increase will be halved.

Idea alert

By Aaron Wherry - Wednesday, October 12, 2011 at 9:44 AM - 11 Comments

Scott Clark and Peter DeVries take on EI premiums.

Simply put, the EI premium rate is a bad tax – probably the worst tax that the government has available to raise revenues. It inhibits employment and economic growth; it is unfair in its impact on low-income workers; it is extremely complex to calculate and administer…

The best option would be to get rid of the EI premium rate altogether and replace it with an alternative source of revenue. One way this could be done is by replacing the lost revenues, about $20 billion, by increasing the GST and corporate income tax rates.  This would address the problem of the working poor by spreading the burden over much larger tax bases.  In addition, the GST low-income tax credit could be increased, sheltering these individuals altogether.

Policy alert

By Aaron Wherry - Tuesday, April 5, 2011 at 2:12 PM - 7 Comments

Jack Layton promises new family care initiatives.

Under the program, families hoping to build a self-contained, add-on unit for an elderly relative would be entitled to a forgivable loan that would cover half the cost of renovations up to a maximum of $35,000. Mr. Layton also promised to extend EI benefits for people looking after a dying relative to six months — up from six weeks — and to introduce a new, up-to-$1,500-a-year caregiver benefit to help struggling low and middle class families who are looking after a sick or injured loved one. He further vowed to close the loophole that prevents Canadians who have accessed maternity, adoption, sick or other leave from accessing regular EI benefits should they lose their jobs when they return.

Policy alert

By Aaron Wherry - Wednesday, March 30, 2011 at 4:34 PM - 11 Comments

Stephen Harper continues to review measures set out in last week’s budget: yesterday an EI credit for small businesses, today an extension of the capital cost allowance.

If re-elected, the Tories would offer a two-year extension of the capital cost allowance, which is currently set to expire at the end of the year.
The program allows businesses to accelerate the timing of their capital cost deductions by 50%, deferring taxation and improving financial return on investments in new equipment and machinery.

'Dear Minister Flaherty'

By Aaron Wherry - Tuesday, February 16, 2010 at 3:06 PM - 22 Comments

The NDP files its suggestions with the Finance Minister, including pension reform, EI reform, municipal funding, an extension to the home renovation tax credit and a repeal of planned corporate tax cuts.

In addition to job creation measures, the Government must address the looming structural deficit, as identified by Parliamentary Budget Officer Kevin Page. The deficit was caused, in part, by previous reckless reductions in corporate income tax rates. Like most Canadians, New Democrats recognize that in the long term, we cannot spend more than we collect. Yet your government has not only attempted to deny the existence of the structural deficit, it has aggravated the imbalance by reducing revenues despite the absence of any evidence that those tax savings have led to investments in jobs for Canadians. Your unbalanced corporate tax policy is exacerbating our overreliance on oil extraction, and contributing to a high dollar, which in turn hampers job creation and exports in the value-added sectors of manufacturing, forestry, aerospace and others. We propose that you announce the government will not proceed with additional cuts to the corporate tax rate in 2011 and 2012.

The Commons: A difference of realities

By Aaron Wherry - Wednesday, October 7, 2009 at 6:24 PM - 46 Comments

The Scene. Michael Ignatieff stood and, perhaps feeling a bit parched, took a sip of water. Putting down his glass, he proceeded with his supposition.

The Prime Minister, the Liberal leader said, was planning to increase employment insurance premiums. This, he said, will deter employers from hiring. And this, he explained, would add to the tax burden. Across the way, Conservative MP Dean Del Mastro was loudly displeased.

“Will the Prime Minister admit,” Mr. Ignatieff finished, “that he is raising taxes and that tax increases will kill jobs?”

Shaking his head and shrugging, the Prime Minister stood with his version of events.

“Mr. Speaker, on the contrary,” he said, “this government has frozen premiums for employment insurance for this year and next. In the long term, these rates are determined by an independent commission.”

Mr. Ignatieff listened to this response, then stood with a conclusion.

“Mr. Speaker,” he explained, “this means that ‘Yes, we’ll raise taxes.’” Continue…

It's not about him, but now that you mention it…

By Aaron Wherry - Monday, September 28, 2009 at 1:26 PM - 9 Comments

I try again to explain Jack Layton.

This seemed a terrible day for the leader of the NDP. But if you were thinking Jack Layton had just turned himself inside out, that the unrelenting opponent of this government had just debased himself for the purposes of political expediency, you would be wrong. At least so says the NDP.

“Canadians are fair-minded and want their politicians to use common sense,” Brad Lavigne, the party’s national director, said over coffee a few hours after the vote. “And what you’ve seen is probably Jack Layton’s best week of his leadership.”

Really? “Absolutely,” Lavigne confirmed. “I’d say it’s one of his best weeks by far. In terms of seizing the opportunity, sticking to the principles, recognizing that it actually takes strength to get things for the people that sent us here. I think what Jack Layton has done this week is give a voice to the millions of Canadians who want to see this Parliament work and don’t want to go to an election.”

It's not me, it's you

By Aaron Wherry - Monday, September 28, 2009 at 10:27 AM - 22 Comments

Jack Layton tries again to explain himself.

In the end, as we debated whether we would support the $1 billion for the unemployed or give Harper the election only he and Ignatieff seem to crave, I kept coming back to the faces of the many people I’ve met who asked me to help them. For them, the financial support will make a big difference.

I feel anguish right now, but it has nothing to do with the criticism that has been levelled at us. No, it is that we haven’t been able to help more hard-working Canadians who are in need. It’s going to be a hard, hard winter for far too many of them.

'The choice before New Democrats is simple'

By Aaron Wherry - Monday, September 21, 2009 at 11:07 AM - 38 Comments

Jack Layton explains himself.

This new reform falls far short in many ways. It doesn’t cut waiting periods, increase benefits or create uniform access across the country. We are under no illusions that this bill fixes the major problems in the EI system. We will continue to work for further changes to EI. In fact, we have a dozen proposed laws before the House that would improve other elements of the existing system.

But my party cannot, in good conscience, vote down legislation that is a step in the right direction.

Mind trap of the day

By Aaron Wherry - Thursday, September 17, 2009 at 4:33 PM - 38 Comments

From Question Period this afternoon.

Hon. John McCallum (Markham—Unionville, Lib.): Mr. Speaker, I have a question for the finance minister. Does the increase in employment insurance premiums beginning in 2011 constitute a tax increase, yes or no?

Mr. Ted Menzies (Parliamentary Secretary to the Minister of Finance, CPC): Mr. Speaker, the simple answer to that is no. Let me remind Canadians what happened to the notional surplus that was in the EI fund years ago. It is gone. Those people who paid into it never got it back. We provided an arm’s-length board to manage that, so that can never happen again.

Joe Comartin's straight-talk express

By Aaron Wherry - Thursday, September 17, 2009 at 10:48 AM - 11 Comments

The NDP MP does not sound particularly enthused about the government’s EI legislation.

Windsor-Tecumseh MP Joe Comartin says an Employment Insurance bill tabled by the Conservative government Wednesday doesn’t live up to the way it was characterized by the human resources minister. ”I guess my initial reaction is what’s not in it,” said Comartin of the bill, which was tabled in the House of Commons at around 3:30 p.m. after parliament was disrupted by an anti-seal hunt protest. ”We just don’t see how they claim it will cost $900 million and benefit 190,000 people.”

The NDP speaks! With enthusiasm that sounds only a little forced!

By Paul Wells - Wednesday, September 16, 2009 at 4:24 PM - 53 Comments

So I ran into a surprising number of NDP types during my stroll up the Hill this afternoon, all eager to explain why this decision to support the government is not a 180-degree turnabout. Or in the words of one nameless but affable senior NDPer, “It’s not a 180.”

Having mocked Canada’s Natural Non-Governing Party in a couple of posts below for what, from where I’m standing, sure looks like a 180, it behooves me to print the NDP’s rationale in something approaching good faith. Off we go then:

• It’s not that the Liberals voted confidence in the government 79 times that upset the NDP so, it’s that they gave the government such unflagging support “and got nothing in return.”

• The NDP, on the other hand, “got $1 billion.” That’s the value (anticipated, at least) of the government’s latest proposed changes to EI payments. That $1 billion “isn’t enough, but it’s a pretty good start.”

• So, as Jack Layton put it in his scrum, the choice was between $1 billion for unemployed Canadians, or spending a third of a billion on an election. Layton asserts that he made the wise decision.

• Surely there’s a punchy talking point I haven’t quoted yet? Right you are. “A working group was the best the Liberals got out of the government for all those Yea votes,” one shadowy but determinedly chipper New Democrat told me. “So, Michael Ignatieff got lunch with Pierre Poilievre. We got a billion bucks.” Punchy!

There you go. Now. Having relayed this line of argument with an admirably straight face, perhaps I can be forgiven for adding this. The latest round of changes to EI, which have won the support of the NDP, aren’t the only incremental spending on employment insurance this year. Here’s a bunch of other changes, already passed, which add to $6.2 billion in value. One would be tempted to argue that is 6.2 times as good a start as a $1 billion change. But the NDP was against those earlier changes. That’s not a 180?

Evolution

By Paul Wells - Monday, August 31, 2009 at 6:01 PM - 54 Comments

“That’s why we have to reform EI. Improving eligibility will bring help to workers who have paid in but don’t currently qualify. It is also the most effective, rapid and targeted form of stimulus the government can offer our economy right now…

“One-hundred-and-fifty-thousand more unemployed Canadians on EI mean 150,000 more Canadian families spending on food, rent and transportation. It means money flowing into communities that have been hit the hardest by this recession. That’s the kind of immediate, targeted and effective stimulus we need right now…

“Red tape has paralyzed federal infrastructure spending, and billions of dollars are being held back by the federal government from municipalities that are desperate to get shovels in the ground and to start creating jobs. We can help those communities directly, right now, by improving access to EI.”

— Michael Ignatieff, National Post, May 23

“EI reform is not an issue universally popular with caucus members. Some MPs argue that their constituents would rather hear about job creation than insurance for lost jobs.

“’EI is an important issue but it’s not the only issue,’ House Leader Ralph Goodale said, repeating the refrain for emphasis. ‘EI is one of the issues. It is not the only issue.’”

— Globe and Mail, today

Leaky facets

By Paul Wells - Friday, August 7, 2009 at 9:38 AM - 37 Comments

My outrage at the “senior government official” who’s been leaking public-service costings that seem designed to embarrass the Liberals at the Special Blue-Chip EI-EI-O Panel is consummate. If it’s the senior government official I think it is, and honestly I have no way to know, but if it is, then it’s the same guy who told me nothing good can come of this committee if the parties negotiate in public. So, you know, boo.

But my outrage is a bit confused this morning, because since I read about the senior-government-official leak last night, I’ve discovered this story in this morning’s Le Devoir (mostly behind a subscriber wall, sorry) which suggests somebody’s been leaking public-service costings that seem designed to help the Liberals. I’m thinking probably not a senior government official.

“According to information obtained by Le Devoir, a federal official was dispatched to put a number on the suggested reformes, and what he said pleased the Liberal members immensely,” Hélène Buzzetti’s story says. “On average, he confirmed to them, the extra unemployed who would now qualify because of the lower admissibility threshold would get $6,900. The bill for Ottawa, already in the red, would therefore not be insurmountable.” Hélène’s story puts the total new cost at $1.1 billion to $1.5 billion per year.

Suddenly quotes like this one from Liberal MP Mike Savage, quoted by the Globe via Aaron, have a shiny new coating of irony:

“But in order for that to happen, there has to be good faith on both sides,” he said, adding that the document the Tories released had a note on it that said “Employment Insurance Working Group not for distribution.” “Then, they ran out and distributed it. I think that speaks for itself,” he said.

Readier than thou

By Aaron Wherry - Thursday, July 23, 2009 at 9:42 PM - 7 Comments

More from Michael Ignatieff’s incredibly anticipated appearance in public this afternoon.

Bipartisan negotiations on employment insurance reform got off to a rocky start Thursday, with the Liberal leader slamming what he called the Conservative government’s indifference to the plight of Canada’s jobless. Michael Ignatieff issued the criticism just as three Liberals and three Conservatives – members of an EI reform panel struck last month in an 11th-hour deal to avert a summer election – were sitting down for their first meeting.

“We note that the government has taken five weeks to get its act together on this. We were ready to go at the end of June with this committee,” Ignatieff said. ”It’s a sign I’m not sure that they give any real importance to employment insurance reform but we certainly do.”

Plus comment on Nortel and Abdelrazik.

The EI conundrum

By Andrew Potter - Friday, June 19, 2009 at 12:06 PM - 13 Comments

Chantal Hebert has a dy-no-mite column today explaining why Harper was so happy to punt the question of EI reform to the blue-ribbon panel. I thought the intervention by the western premiers was interesting, and halfway welcome. On the one hand, I agree entirely with Gordon Campbell’s assessment: we already have an equalization program, and EI should not be used to prop up economically stagnant parts of the country. But then he turned around and proposed a dual national standard for EI qualification: One for urban areas, another for rural areas that are dependent on declining resource industries.

Well hang on. What’s the difference between using EI to support, say, the maritimes and not Ontario, and using it to prop up forestry but not finance? Even when they don’t overlap (the regions tend to be poor because they have sagging rural economies) the error is the same in both cases: an insurance program is being used for a perverse form of economic engineering that gives people an incentive to stay in dying industries.

At the core of this is a category mistake: EI is supposed to insure individuals, but the federal government, and now, Gordon Campbell, want to use it to support collectives, in the form of either regions or industrial sectors. But how does it help an individual who loses his or her job what sector they happen to be in?  Having a lower qualifying period for people who choose to work in crappy industries would be like the government charging a health-care deductible for people who exercise and don’t smoke, but waiving it for dopefiends and boozehounds.

Meanwhile, the other issue on the table is even thornier: How to insure the self-employed. On this case, Harper was being entirely genuous — this is not the sort of thing you can just hammer out in a few meetings, or even during an extended summer sitting of parliament. There’s a reason why the system doesn’t already insure the self-employed, and it isn’t simply because of a lack of money or political will. Stephen Gordon has a good post listing the various objections to the proposal, including the obvious problem of moral hazard to the more academic (but no less important) problem of how to distinguish labour income from capital income.

Like prof Gordon, I don’t think there is a non-lousy way of using EI to insure the self-employed. A better idea, in my opinion, which would have the advantage of being a decent social policy regardless, would be to implement a proper guaranteed basic income (or “negative income tax”, or whatever you want to call it). It would provide all the benefits of public insurance, without the hassles of having to root out moral hazard.

EI-EI-uh-oh?

By Andrew Potter - Saturday, May 23, 2009 at 8:42 PM - 52 Comments

In today’s FP, Michael Ignatieff (or, more likely, a committee of flacks writing under his name) makes the case for a nine-week qualification period for EI. 

Over at the best economics blog in the country, Stephen Gordon thinks it’s a crazy idea:

The Harper government has provided a broad range of targets for intelligent criticism for their policy choices over the past years. But the Liberals, the NDP and the Bloc Québécois have instead chosen to focus their attention on advocating one of the few remaining dumb ideas that the Conservatives haven’t already jumped on.

The Commons: 'The government is trying to patch EI with duct tape'

By Aaron Wherry - Tuesday, March 24, 2009 at 6:05 PM - 31 Comments

The Scene. Michael Ignatieff put his right thumb and index finger together and tried to explain the situation to the Prime Minister.

“Mr. Speaker, there were 24,000 new claimants for employment insurance this January,” he said. “That is bad enough. But thousands more Canadians are losing their jobs and are not able to claim EI, even though they paid into the system.”

He closed his fist as he approached the question.

“The government is trying to patch EI with duct tape while evading the real issue, which is eligibility,” Ignatieff continued. “Will the government adjust the eligibility requirements so that all Canadians, wherever they live, can claim EI when they need it?”

The Prime Minister rose to respond. Or at least speak next.

“Mr. Speaker, the leader of the Liberal party should know that eligibility for EI is determined by the region in which one lives, according to a formula. As, obviously, employment conditions become more difficult, eligibility becomes easier,” he explained. “This is the government that has put additional moneys into EI. This is the government that has made sure people who need EI during this recession will be able to access it for a longer time to get more training. We have brought in new additional EI training. Also, we have made sure that EI cheques can get out faster.”

The Liberal leader did not appear obviously impressed with this. “Mr. Speaker,” he said, “I take that as a ‘no,’ so let me rephrase the question.” Continue…

Questions About Harper's Mat-Leave Proposal

By Andrew Potter - Monday, September 15, 2008 at 2:39 PM - 26 Comments

***UPDATE: PMO says once you’re in, you’re in. No opting out.

NOTE: This post has been revised, I missed a line in the announcement about post-claim payments

****

Big Tory announcement of the day is the proposal to extend the EI-funded maternity/parental benefits to the self employed, to avoid forcing the self-employed to “choose between starting a family and starting a business”. Setting aside the fact that no one is being forced to choose here, I’m trying to figure this one ou

On the one hand, I like the idea of incentives for people to have kids, and giving new parents a chunk of tax money to take six to twelve months to take care of their newborns seems like a good incentive. At the same time, funding maternity leave out of the EI plan never made any sense.

So, to the Tory plan. My first reaction was, “great idea”. But the more I look at it the weirder it looks. Here are the details:

1. Voluntary opt-in.

2. Same benefits as regular EI participants.

3. opt-in must be done at least six months prior to making a claim.

4. Premium rates will be set to make the system self-financing.

5. There will be a specified amount of post-claim payments, TBD.

6. Details to be set by a review by the newly created Canada Employment Insurance Financing Board.

That is basically the extent of what the Tories are telling us.

But here’s the thing. Insurance is supposed to protect you against unforeseen and accidental misfortunes, and – Bristol Palin aside — not that many people get pregnant accident. In fact, unlike insurance for things like fire and theft, where you are trying to avoid that outcome, the point of this policy is to actually encourage people to get pregnant.

That is just to say that this seems ripe for a massive case of adverse selection, where the only people who opt-in are those who are trying to get pregnant. A lot depends here on how they figure out the post-claim payments system, I think. But I turned it over to a friend who knows a lot more about public insurance and parenting than I do. Here’s his take:

Seems kinda crazy….

Continue…