Last month, Finance Minister Joe Oliver announced the Conservatives job creation plan -- to cut Employment Insurance contributions to small businesses. Tom Walkom writes that the "plan" represented yet another attack on the Employment Insurance regime in Canada:
Under Oliver’s plan, small-business owners will see their employment insurance premiums cut by about 15 per cent over the next two years.
Lower payroll taxes, the finance minister said then, would encourage these small businesses to hire more workers.
Oliver’s claims were supported by the Canadian Federation of Independent Business, a lobbying group, which said the measure would create about 25,000 person-years of employment over an unspecified period.
This week the Parliamentary Budget Office released a cost-benefit analysis of Oliver's plan:
In a report released Thursday, it says that the two-year, $550-million tax break will produce only 800 net new jobs.
That works out to $687,500 per job.
There was another way to use Employment Insurance to create jobs:
Instead of lowering EI premiums overall (which, according to the parliamentary budget office, would have created 10,000 net new jobs), the government made a bow to its key small-business constituency.
But, as always the stated aim of the policy was not its real aim. Oliver was buying the votes of small business, not creating jobs. Nothing illustrates the corporate juggernaut better than what has happened to Employment Insurance in the last 25 years:
During the 1990s, Jean Chrétien’s Liberals used the employment insurance surplus to pay down the deficit and offer tax breaks to corporations.
When he took power, Prime Minister Stephen Harper did much the same. In 2008, the EI fund’s $57.2 billion surplus was quietly absorbed into general government revenue. Even now, the Conservatives are reluctant to relinquish their hold on the EI windfall.
The parliamentary budget office estimates that over the next three years, Ottawa will collect $6.4 billion more in EI premiums than it will spend on the unemployed.
That's because only 38% of Canadians are now eligible for Employment Insurance.
And they call that brilliance.