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  • Mobility pricing must be fair and equitable for all April 12, 2018
    As Metro Vancouver’s population has grown, so have its traffic congestion problems. Whether it’s a long wait to cross a bridge or get on a bus, everyone can relate to the additional time and stress caused by a transportation system under strain. Mobility pricing is seen as a solution to Metro Vancouver’s transportation challenges with […]
    Canadian Centre for Policy Alternatives
  • Budget 2018: The Most Disappointing Budget Ever March 14, 2018
    Premier Pallister’s Trump-esque statement that budget 2018 was going to be the “best budget ever” has fallen a bit flat. Instead of a bold plan to deal with climate change, poverty and our crumbling infrastructure, we are presented with two alarmist scenarios to justify further tax cuts and a lack of decisive action: the recent […]
    Canadian Centre for Policy Alternatives
  • 2018 Federal Budget Analysis February 14, 2018
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis Some baby steps for dad and big steps forward for women, by Kate McInturff (CCPA) An ambition constrained budget, by David Macdonald (CCPA) Five things […]
    Canadian Centre for Policy Alternatives
  • CED in Manitoba - The Video January 29, 2018
    Community Economic Development in Manitoba - nudging capitalism out of the way?
    Canadian Centre for Policy Alternatives
  • With regional management BC’s iconic forest industry can benefit British Columbians rather than multinational corporations January 17, 2018
    Forests are one of the iconic symbols of British Columbia, and successive governments and companies operating here have largely focussed on the cheap, commodity lumber business that benefits industry. Former provincial forestry minister Bob Williams, who has been involved with the industry for five decades, proposes regional management of this valuable natural resource to benefit […]
    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

Parting Shots at Budget 2008

Transcripts are now available of my appearances before the House and Senate Finance Committees regarding Bill C-50 (Budget Implementation). I critiqued the Budget’s general direction and its particular changes to (Un)Employment Insurance. The following remarks to the House committee duplicate what I said to the Senate committee, although MPs asked different questions than Senators.

Mr. Erin Weir (Economist, United Steelworkers):

Thank you very much. I really appreciate the opportunity to appear before this committee.

I’d like to talk a little bit about the general direction of the budget being implemented by Bill C-50 and then make some more specific points about the changes to employment insurance proposed in the bill.

Budget 2008 was formulated in the midst of some very serious national challenges. The manufacturing sector is in crisis. We’ve lost about 378,000 jobs since November 2002. That’s about one in six of all the manufacturing jobs that existed in Canada in November 2002. The recently released census confirmed that employment earnings have been essentially flat over the past quarter century, and that the gap between the rich and the rest of us is growing ever wider. Canada’s greenhouse gas emissions continue to increase, our public infrastructure is crumbling, and the list goes on.

Given these pressing needs for government action, I found it quite surprising that the government chose to unveil a budget with the least new public spending of any federal budget in more than a decade.

This severe lack of public funds for important purposes is a direct result of very deep tax cuts that will disproportionately benefit wealthy individuals and profitable corporations. When the tax cuts implemented by this government are fully in effect by 2012-13, the cost will be $14.8 billion of lost corporate income tax revenue, $14.2 billion of lost GST revenue, and $11.2 billion of lost personal income tax revenue. These numbers come to a grand total of $40.2 billion.

Interestingly, this exceeds the $40.1 billion the federal government expects to spend on the Canada health transfer and the Canada social transfer combined, in 2012-13. In other words, if the government had not implemented these destructive tax cuts, it could have afforded to double federal transfers in support of health care, education, and welfare.

My principal objection to Bill C-50 is that it implements a budget that does not address these pressing national challenges and that deprives future governments of the fiscal capacity to do so.

Moving on to employment insurance, Bill C-50 proposes to put that program into a separate fund. Over the past 15 years, when the Canadian economy was growing, unemployment was falling, and employment insurance premiums consistently exceeded employment insurance benefits, the federal government was quite happy to treat employment insurance as part of general revenues. Now we’re in a situation where the Canadian economy is slowing down, unemployment is trending upward, and there’s the possibility of employment insurance premiums falling short of employment insurance benefits, so now the federal government is saying that employment insurance needs to be in a separate fund, apart from its general revenues.

Philosophically we agree that employment insurance should be administered through a separate fund. Our concern, though, is that the government is proposing to put only $2 billion into that fund. That falls far short of the $54 billion accumulated surplus of premiums over benefits in the employment insurance fund. It also falls far short of the $10 billion to $15 billion needed to maintain employment insurance benefits without increasing premiums during a recession, according to the former chief actuary of the employment insurance fund.

If a recession occurs, the regime proposed by Bill C-50 could require either increases in employment insurance premiums or reductions in employment insurance benefits, which would be the worst possible response to a recession. I think it’s very important to maintain employment insurance as an automatic stabilizer for the Canadian economy by providing adequate funds to maintain benefits during a recession without an increase in premiums.

A related concern is that Bill C-50 rules out improvements to employment insurance benefits. It’s well known that the proportion of unemployed workers eligible for employment insurance benefits has declined dramatically. The $54 billion surplus is more than enough money to expand those benefits to cover almost all unemployed workers, but Bill C-50 takes this surplus off the table.

In addition to that, Bill C-50 proposes a new rule for the administration of employment insurance that would require new surpluses in the separate fund be used to finance premium cuts as opposed to improve benefits.

To summarize, the concern I have with the changes Bill C-50 makes to employment insurance is that this new fund will not provide adequate employment insurance benefits to Canadian workers who become unemployed.

Thanks very much for your time.

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