Conservatives agree to freeze EI premiums

Today, Finance Minister Jim Flaherty is announcing a three year freeze on increases in Employment Insurance premiums for both employers and employees. These premiums have been increasing yearly and I and the Liberal Party have been calling for just what Minister Flaherty is announcing today. Therefore I must commend the Minister for what he is doing.

(But lest you get too excited,  I want to say that under Prime Minister Harper, the Canadian economy’s growth record has been the worst since R.B. Bennett)

Here is an exchange from Finance Committee in November 1, 2011, over two years ago where I made just this point about EI premiums:

7:40 p.m.

Liberal

Ted Hsu Kingston and the Islands, ON

Thank you very much, Mr. Chair.

I want to ask about corporate taxes as well. I heard the remark from Mr. Adler about increasing corporate taxes, and Mr. Myers spoke about the connection between taxes and employment and investment.

The Conservatives raised the EI tax rate, I believe, by something like 2.9% in 2011, and we’re expecting something like a 5.6% increase in the EI rate in 2012. Do you think that will have an effect on employment and investment?

7:40 p.m.

President and Chief Executive Officer, National Office, Canadian Manufacturers and Exporters

Dr. Jayson Myers

Any increase in cost is going to have an impact on the amount of money that companies have to invest, so, frankly, yes, it does.

One of our recommendations, though, is to take a look at the EI system. I think you could make a very strong argument that a tax credit could be introduced for companies that are undertaking workforce skills development to provide companies that are investing in their employees with a credit against the increases in employment insurance. That’s what I think would be a very effective mechanism.

Right now, you have to lose your job before you get retraining. It would be nice to be able to support investment as it was being undertaken at the workplace itself.

So, yes, we are concerned about those increases as well.

7:40 p.m.

Liberal

Ted Hsu Kingston and the Islands, ON

Looking at the markets today and what’s happening with Greece, it looks like the government might fall later this week. The bailout package is potentially in trouble.

Do your members need that increase in the EI rate in 2012, or do you think it would be safer to delay that?

7:40 p.m.

President and Chief Executive Officer, National Office, Canadian Manufacturers and Exporters

Dr. Jayson Myers

I don’t think that increase in EI rates is going to have an overall impact on the rate of employment. I think what we need above all is stability and certainty in the tax system, and in the economy, period. Right now there’s a tremendous amount of uncertainty as a result of what’s happening in Europe, and of course the impact on China and North America.

In fact, if you look at concern about the economy, I think the perception and uncertainty is running ahead of actual business. Orders are pretty good, and a lot of sectors are expanding right now. That is what’s going to generate employment growth here.

Again, anything today that is adding to the uncertainty around investment I think is certainly not a good thing, at a time, in my mind, when we need to be laser focused on what it takes for companies to make these investments and to grow. That’s what is going to be important. No company is going to increase employment if they don’t have customers, financing, and if they are not making the right investments in new products or skills development or new technologies. I think that’s the first consideration here.

7:45 p.m.

Conservative

The Chair James Rajotte

You have one minute.

7:45 p.m.

Liberal

Ted Hsu Kingston and the Islands, ON

Let me use my minute to be clear that your members prefer that the Conservatives not increase that tax.

7:45 p.m.

President and Chief Executive Officer, National Office, Canadian Manufacturers and Exporters

7:45 p.m.

Liberal

Ted Hsu Kingston and the Islands, ON

Thank you.

7:45 p.m.

Conservative

The Chair James Rajotte

Thank you, Mr. Hsu.

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