Justin Trudeau: An alternative to the Tories’ broken EI plan

Canadians need a plan for jobs and growth. After nearly a decade of Conservative government, unemployment is still stubbornly high and economic growth is sluggish. In the past 12 months, only 15,000 full-time jobs have been created in Canada. That’s why Liberals are focused on a jobs and growth agenda.

Since I became leader of the Liberal Party last spring, we have been talking about solutions to grow our economy and give Canadians a real and fair chance to succeed — infrastructure investment, access to post-secondary education, strengthening our trade relationships and innovation.

As Parliament returned from the summer, the Conservatives could have offered a real plan for jobs and growth. They did not.

Instead, they put forward an employment insurance plan that gives a greater incentive for employers to fire workers than to hire new ones. Experts have shown that their plan can give businesses a benefit of over $2,000 a year when they fire a worker, but only $200 when they hire one.

To understand this point, take the finance minister’s own example of a firm with 14 employees and payroll of $560,000. Under the federal government’s proposal, this business would be eligible for a refund of about $2,200. But, if one new worker was hired, the full Conservatives’ EI credit would be lost. Even worse, take another company slightly over the arbitrary threshold — it would be incentivized to actually lay off a worker in order to receive that $2,200 benefit.

Canadian economists have said that the Conservatives’ ill-considered proposal may be “a disincentive to growth,” “likely to have little effect on employment or wages,” and even “an incentive to fire workers and cut salaries.”

It is not too late for the Conservatives to fix their mistake.

We have offered a counter proposal — a real plan to create jobs and growth. We have asked the prime minister to instead offer a full employment insurance premium exemption for every new job that a business creates. This means businesses would receive a benefit that can reach nearly $1,300 for every new job that they create.

With the money earmarked for the Conservatives’ proposal, our plan could reward and encourage the creation of more than 175,000 new jobs starting this January.

Programs like this have worked before; the federal budgets in 1997 and 1998 each had time-limited EI hiring incentives that provided companies with an EI premium exemption when salary levels exceeded the previous year’s payroll. So, when businesses were growing and hiring, they received a significant tax break.

This approach was also flexible. For example, if it was too much of an administrative burden for a company to keep track of precisely when it reached the previous year’s total payroll, the government simply sent a refund when that business filed its taxes. We know this is a better approach to create jobs and growth because it worked. In the years these programs were active, Canada saw massive employment growth, especially for small businesses.

Prime Minister Stephen Harper has a choice: ignore the experts and the evidence, and stick with a plan that rewards businesses for staying small and getting smaller, or choose a better plan that helps to create more jobs and encourages businesses to grow.

The choice is clear.

Liberals will continue to put forward positive solutions that will help our economy grow and give all Canadians a real and fair chance at success.

Original Article
Source: thestar.com/
Author: Justin Trudeau