Hon. Scott Brison (Kings—Hants, Lib.)
|| That, in the opinion of the House, the Employment Insurance (EI) plan announced by the government on September 11, 2014, and which will begin on January 1, 2015, will not create jobs and growth but will instead provide a financial incentive for employers to lay off workers; and therefore, the House urges the government to re-direct those resources by providing employers an EI premium exemption on newly-created jobs in 2015 and 2016.
He said: Mr. Speaker, today in my remarks I will speak to the problems concerning the Conservative government's small business job credit and the design flaws in that tax credit. I will also propose a better policy plan that will help create jobs and economic growth for Canadians.
In my remarks, I will examine how errors in the design of the Conservative tax credit will have a real and negative impact on the Canadian economy, namely how these changes will actually discourage the creation of new jobs and potentially slow down already abysmally slow economic growth. I will also propose a way to fix these problems by replacing the Conservatives' flawed tax credit with an EI premium exemption for the creation of new jobs. Finally, I will discuss why it is so important that the government focus on jobs and growth, fix this mistake, and replace the small business job credit.
Canadians deserve a government that has a plan for jobs and growth. The government’s EI rate reduction proposal provides neither.
The problems with the small business job credit indicate that the Minister of Finance was not thinking of jobs or growth when he introduced the proposal earlier this month. The scheme he introduced will lower EI premiums for qualifying firms in 2015-16, from $1.88 for every $100 of insurable income, to $1.60, which is a reduction of about 15%. However, and this is the key, the tax credit is only available to Canadian businesses that pay $15,000 or less in EI premiums in those years.
Because of how the tax credit is designed, it encourages small businesses to potentially slow their growth in order to stay below the $15,000 threshold. With this tax credit, the Conservatives have introduced a perverse incentive for businesses to potentially reduce the hours of their workers, or in some cases even fire workers, in order to get below the $15,000 threshold.
This perverse incentive has caught the attention of economists and public policy experts, who are lining up to slam the Conservatives' poorly designed scheme.
One economist and tax expert the Conservatives often quote is Jack Mintz. In fact, they have included him in their last three budgets. However, Jack Mintz will not endorse their small business job credit; instead, he calls it “a disincentive to growth”.
Mike Moffatt recently wrote about the tax credit in an article for Canadian Business, entitled “The Small Business Job Credit actually makes it weirdly profitable to fire people”. He wrote in the article that “the proposed ‘Small Business Job Credit’ has major structural flaws that, in many cases, give firms an incentive to fire workers and cut salaries”.
He also noted:
|| Although this is sold as a job credit, there is no requirement that companies hire new workers. A firm can have fewer workers and a lower payroll than they had the year before and still receive a tax credit.
Mr. Moffatt went further and said:
|| A larger problem with this proposal is the discontinuity that occurs when a firm reaches $15,000 in EI payments to the government.
|| The way this proposed system is designed is that the maximum benefit a company can receive from firing a worker and going under the $15,000 threshold far exceeds the maximum benefit a small business can receive from hiring an additional worker:
Specifically, Mr. Moffatt wrote:
|| The maximum benefit a firm can receive from firing a worker is $2234.04.
|| The maximum benefit a firm can receive from hiring a worker is $190.52.
He concluded with the following statement:
|| The challenge now is to get the details right, before this incredibly flawed plan becomes reality.
To understand this point, take the Minister of Finance'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.
However, if one new worker was hired, the Conservatives’ full 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.
This is perverse, and that is why Jack Mintz and Mike Moffatt are not alone in their criticism of this plan.
In a piece entitled “Why the new EI tax credit could do more harm than good” in Maclean's magazine, Stephen Gordon, an economist at Laval University, has written:
|| For firms that are just under the $15,000 threshold, hiring a new worker would mean crossing the line and losing the tax credit entirely. For firms that are just over the threshold, the incentives are even more perverse: firms may choose to actually reduce employment in order to be eligible for the tax credit. To be sure, not all small businesses are in this position and many will be able to hire and take advantage of the tax credit. But it’s by no means clear at this point that the positive incentives to hire more workers will outweigh the negative ones.
Earlier this week Barrie McKenna wrote in The Globe and Mail about this tax credit and how it discourages small businesses from growing. He wrote:
|| Unfortunately, our love of the small isn’t doing the larger economy any good. It may even be causing harm by creating a perverse disincentive for small companies to grow.
|| Larger companies, and particularly fast-growing ones, are more competitive, invest more, offer better wages and benefits, and are more likely to become exporters. And when they do that, they become job-creation machines.
|| Put simply: Growing companies, not small ones, drive economic growth.
|| Governments should want more of them. But our policies are sending exactly the opposite signal: Stay small. Don’t grow.
It is clear that the Conservatives are putting Canadian jobs and economic growth at risk with this poorly designed small business job credit. They are prepared to spend $550 million on a scheme that would encourage firms to stay small and actually incentivize businesses to fire workers. There is a better way to use this money. We could reduce EI premiums, promote job creation and support economic growth all at the same time.
That is why the Liberals are calling on the government to replace its poorly designed small business job credit with an EI premium exemption for newly created jobs. For the same cost as the small business job credit, the government could provide employers with an EI holiday on new jobs created in 2015-2016.
Unlike the Conservative scheme, the EI holiday would not reward companies that reduce wages or staffing levels in order to make it under an arbitrary $15,000 threshold. Instead, it would reward all employers with up to $1,300 for every new job they create. This EI holiday would apply to any business regardless of size, but to qualify, employers would have to hire new workers and increase their EI payroll over the previous year. That way, the plan would only reward real job creation. This plan could help create over 175,000 net new jobs.
Rewarding job creators with lower EI premiums is a plan that works, and it has been done before, by a previous Liberal government. In budget 1997, the Liberal government of the day introduced a new hires program, which virtually eliminated EI premiums specifically on new hires by small businesses in 1997-1998. This is what was said in budget 1997:
|| The New Hires Program announced in November 1996 will provide employment insurance premium relief to small firms that create new jobs in 1997 and 1998. By reducing the cost of new workers, this program will encourage small firms to accelerate their job creation plans....
While the new hires program was targeted to small business, it did not create a disincentive against jobs and growth as those businesses grew. Instead, it benefited any business that had premiums of $60,000 or less in 1996 and then grew in 1997-1998.
In budget 1998, the Liberal government built on the new hires program and introduced an EI holiday for all employers, regardless of size, who helped create new jobs for young Canadians.
This is how the new program was outlined in budget 1998:
|| To encourage employers to hire young Canadians, this budget proposes to give employers an employment insurance (EI) premium holiday for additional young Canadians, between the ages of 18 and 24, hired in 1999 and 2000. As with the New Hires Program, ...employers will be allowed to stop paying premiums when they reach the 1998 level of payroll, or they can claim a rebate when filing their tax forms. Unlike New Hires, however, there will be no minimum threshold and all firms will be eligible without limitation on size.
There is an important difference between that plan, which worked, and the current Conservative plan, which not only will not work but will potentially render damage to the Canadian economy.
As Liberals, we know that government must help create the right conditions for jobs and growth. That is why Liberal governments introduced an EI premium holiday to reward job creation. It is why Liberal governments lowered taxes time and time again, both income taxes and EI payroll taxes. It is why Liberal governments introduced significant new investments to infrastructure. It is also important to recognize that Liberal governments turned deficits into surpluses, paid down debt, and left the Conservative government with the best fiscal situation of any incoming government in the history of Canada.
Liberal governments know that a pro-growth agenda requires both infrastructure investments and competitive tax rates. This is a significant area of disagreement between Liberals and Conservative governments. Currently, instead of supporting economic growth, the Conservatives are actually slashing the new Building Canada fund by nearly 90% over the next two years. The Conservatives are doing this at a time when unemployment remains well above pre-recession levels and Canada's economic recovery has stalled, a time when we have 230,000 fewer jobs for young Canadians than before the downturn in 2008.
Our economic growth has fallen behind that of the U.S. and the U.K. In the last 12 months, Canada has created a paltry 15,000 net new full-time jobs across the entire country and young Canadians are struggling with unemployment and under-employment.
Meanwhile, the EI tax rate under the Conservatives is significantly higher today than it was in 2008. Each year since 2011, the Conservatives have raised the EI tax rate during an economic downturn. First they increased it from 1.73% to 1.78%, then to 1.83% and finally, last year, to 1.88%. Raising payroll taxes during a time of stagnant economic growth and poor job numbers does not make sense.
The Conservatives have promised to set the EI tax rate at a seven-year break-even cycle. Now they actually want us to applaud them for freezing the tax rate at 1.88% until 2017, but if the Conservatives had actually kept their promise and allowed the EI tax rate to be set at a break-even rate, the EI rate would have fallen to 1.62% this January.
Earlier this month, the Office of the Superintendent of Financial Institutions released its 2015 actuarial report on the EI premium rate. According to OSFI and the government's own numbers, it is set to take in an additional $3.5 billion in EI taxes next year, above and beyond what is required to pay for the EI program. Even with the small business tax credit, the Conservatives will still collect over $3 billion in excess EI taxes next year.
The Conservatives are hurting the Canadian economy by cutting infrastructure investments and keeping EI taxes artificially high just to pad their books to try to achieve a political surplus on the eve of an election.
Canadians want their government to focus on jobs and growth, but the Conservatives are not listening. Instead, they are trotting out old job creation numbers from 2009 and 2010 and telling Canadian families who are struggling not to worry and to be happy that we are better off than Spain. Canadians deserve better than this. Young Canadians, and their parents and grandparents, deserve better than this.
Liberals understand that the government must create the right conditions for jobs and growth. Government can do this by identifying and removing barriers to growth, barriers including the Conservatives' small business job credit, which perversely punishes businesses for growing.
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.
In fact, last week the NDP finance critic, the member for Skeena—Bulkley Valley, spoke in favour of the principle behind this motion. He was speaking about the flawed small business job credit when he said in the House:
|| How about we offer tax breaks to businesses when they actually create new jobs, rather than this hope, wing and a prayer for long-term prosperity?
We agree with the NDP finance critic and appreciate his party's support for the principle behind our policy, which is, in his own words, that we offer tax breaks to businesses that actually create jobs.
We are here today to discuss ways to move the Canadian economy forward, to reduce impediments to growth, and to create the conditions whereby Canadian businesses of all sizes can move forward and create jobs, opportunities, and growth for the Canadian economy. That is why we are asking the government to replace its flawed small business job credit with an EI holiday for employers who, to again borrow a phrase from the member for Skeena—Bulkley Valley, “actually create new jobs”.
I hope that members from all sides will listen to reason and support this motion, which supports an EI tax credit that rewards job creation instead of punishing it. It was a measure that was successful in the late 1990s under a previous Liberal government in creating jobs and growth for Canadians.
I would hope that we have a robust debate and discussion today on this issue, but that we put our partisan differences aside to agree on a policy that can offer real hope to Canadians and real opportunities for Canadian businesses to create good jobs across this country.
Mr. Gerald Keddy (Parliamentary Secretary to the Minister of National Revenue and for the Atlantic Canada Opportunities Agency, CPC):
Mr. Speaker, before beginning debate, I should let the House know that I intend to split my time with the member for Prince Edward—Hastings.
With this motion, my hon. colleagues are suggesting that somehow the government job credit for small businesses is nothing but an incentive to lay off employees. As I mentioned in my first question to the member for Kings—Hants, it is a little difficult for us to wrap our heads around the logic, and I suspect it is difficult even for the Liberals, that somehow any government, not just this government with a reputation of creating jobs, would take any action to reduce the number of jobs available. It is truly ludicrous.
What we are doing is exactly the opposite. The small business job credit will lower EI premiums for small businesses by 15%. Over the next two years, the premium reduction will save employers $550 million, money they can use to hire more Canadians.
The Canadian Federation of Independent Business estimates the credit will create 25,000 person-years of employment over the next two to three years. The Minister of Finance also confirmed that in 2017, EI premiums will go from the current $1.88 per $100 of earnings down to $1.47 per $100 of earnings. This means that employers will have more money to invest in things like training and increasing wages, and workers will have more money in their wallets at the end of the day.
Our government has a responsibility to create the right conditions for economic growth, and it is clearly one that we do not take lightly.
Since the economic downturn, we have had a steady increase in employment, low interest rates and the kind of economic growth that has made us the envy of other countries. We got here by implementing concrete measures to ensure Canadians have the skills they need for the jobs that are in demand. That is a big part of it. On the other side of the coin is how we are supporting employers to ensure they continue to grow their businesses and create jobs for Canadians. The small business job credit is simply the latest step in a broader plan to support job creation in our country.
Another element of our plan, as members know, is the Canada job grant, an employer-driven approach to help Canadians gain the skills and training they need to fill available jobs. So far we have finalized agreements with all of the provinces and territories, and six of them are already accepting applications from employers with a plan to train people for jobs. Matching employers with employees across this country will continue to create jobs across Canada. What this means is that employers can be sure they will have an employee with the skills that the job requires. It means as well that there is a real job at the end of the training.
We are also partnering with several colleges and training institutions to get more businesses directly involved in ensuring there is a better matchup between skills taught and skills wanted. That is also why we invest so much in apprenticeships. However, support for apprentices will not accomplish much if it is difficult for people to hire them. To change this, the government has provided tax credits for employers who hire eligible apprentices.
Employers can also take advantage of provisions in the EI system for supplemental unemployment benefits or SUB plans. Employers with a registered SUB plan can provide supplemental payments to EI benefits for temporary periods of unemployment due to a temporary stoppage of work, training, illness or injury. So far close to 3,000 employers across Canada have approved SUB plans, and over 887,000 workers are benefiting from these payments. The SUB plan, among other things, solves a major challenge for employers who hire apprentices. It means that employers can pay up to 95% of their apprentice's regular salary, while the apprentice is completing his or her technical training at college.
Our priority is clear. Since the depths of the global recession we have implemented a range of measures to create jobs and prosperity for all Canadians, and we are seeing the results. Canada's economy is performing well in the context of the weakened global economic recovery. We have created over 1.1 million jobs since July 2009, and over 80% of these jobs have been in full-time positions. Nearly 80% are in the private sector and 65% of those are in high-wage industries.
As I said, this job credit for small business is the latest measure in a much broader plan, a plan that includes a commitment to a national EI program that is more reflective of, and responsive to, local labour market conditions and that stimulates job creation. The job credit we announced two weeks ago intends to do just that.
However, it is increasingly clear that the Liberal leader does not have a plan for the economy. He believes that budgets balance themselves, and now he is trying to make us believe that taxing small businesses would somehow create jobs. In fact, it is the opposite. The Liberals' plan for employment insurance would cost Canadians nearly $6 billion. This would lead to a massive increase in payroll taxes, with an increase in EI premiums of nearly 50¢, and would kill thousands of jobs.
If we take a look at just one part of this plan, the 45-day work year, its cost alone would be over $4 billion. Other parts of their plan are equally thoughtless, including $3 million to provide EI for prisoners. They would compensate perpetrators of crime.
It is abundantly clear that we do not need the measure that our Liberal colleagues are proposing today. Therefore, I urge all members not to support the motion. This applies particularly to the members of the NDP, who I am sure do not need to be reminded of their record of being the least democratic party in the House, without a single dissenting vote against the party line since becoming the official opposition.
In closing, I know my colleague from Prince Edward—Hastings has more to add to this speech. What we have here is flawed Liberal logic backed up by flawed NDP logic. Really, the facts speak for themselves. This is a good incentive. It would create jobs across this country. This is legislation we need. We do not need the naysayers.
Mr. Daryl Kramp (Prince Edward—Hastings, CPC):
Mr. Speaker, today I am honoured to add my voice in support of the new small business job credit, which builds on our government's commitment to lowering taxes and leaving more money in the pockets of hard-working Canadian families and job-creating businesses.
Our government has a proven track record of success when it comes to supporting families and communities. Regretfully, the high-tax NDP and Liberals do not believe that we are on the right track. They think that Canadians should pay more taxes. We have an obvious difference of opinion. Respectfully, that is a difference.
In the last federal election, we said that Canadians should pay less tax and that we would end up having more revenue for the government. That is exactly what has happened. In fact, our strong record in tax relief has seen savings of nearly $3,400 for a typical family of four in 2014. It has allowed people to invest those savings in important family matters that have benefited not only typical families but their communities.
Members should also be aware that this low-tax plan we have has produced the strongest middle class in the world. We have put over $30 billion back into the pockets of everyday Canadians in a number of different ways. It is a shame that the Liberals and the NDP, our opposition, have consistently voted against lower taxes.
Our economic action plan will play a key role in strengthening our economy, not just now but in the future, with positive measures that advance economic progress, and subsequently, the prosperity that runs along with it.
Today let me highlight just one small measure. It is our government's small business tax credit, which will lower EI premiums for small businesses by approximately 15%. Over the next two years, the premium reductions will save employers $550 million, money they can use to hire more Canadians.
The Canadian Federation of Independent Business, of which I was a proud member for many years, estimates that the credit will create 25,000 person-years of employment over the next two to three years alone. The Minister of Finance also confirmed that in 2017, EI premiums will go from the current $1.88 per $100 of earnings down to $1.47. In 2017, we will definitely have moved to the point where we are in an accountable and completely structured program that at the point we might say is self-supporting.
This means that Canadians and employers will have more money to invest in other requirements, such as training and increased wages. Workers will have more money in their wallets at the end of the day.
Yes, it is a positive measure. That fact remains clear. It is something organizations across the country, those that understand small business, recognize will go a long way in helping the Canadian economy, given the importance of small business to the Canadian economy.
Let me quote the Canadian Federation of Independent Business. It said:
|| This will make it easier to hire new workers or invest in additional training to help entrepreneurs grow their businesses....
|| This announcement is fantastic news for Canada’s entrepreneurs and their employees, and as such, can only be a positive for the Canadian economy.
It should be noted that the Canadian Federation of Independent Business represents a huge, broad percentage of small businesses in Canada.
Our government has a responsibility to create the right conditions for economic growth. Clearly, it is one that we do not take lightly. Since the downturn, we have had a steady increase in employment. Interest rates have been low, and we have experienced the kind of economic growth that has made us the envy of every other country. This has been documented by independent organizations such as the IMF and the World Bank.
We got here. How? It was by implementing concrete measures to ensure that Canadians have the skills they need for the jobs that are in demand.
My riding was very pleased to see that we were able to contribute to a new skills development building at Loyalist College, which certainly aids the local trades people in our area in gaining the skills that are necessary to not only compete but gain the jobs that are readily available.
By insuring that federal funding responds to the hiring needs of employers and by giving them the opportunity to participate meaningfully as partners in the skills training, the Canada jobs grant has and will continue to transform skills training in Canada. The Canada jobs grant provides up to $15,000 per person for training costs, including tuition and training materials, which includes up to $10,000 in federal contributions, with employers contributing an average of one-third of the total costs of training.
As important as this milestone is, economic action plan 2014 even went one step further by creating the Canada apprentice loan to help registered apprentices with the costs of their training. It will do so by expanding the Canada student loans program to provide apprentices registered in the Red Seal trades with access to over $100 million in interest-free loans each year. To further support apprentices, economic action plan 2014 takes steps to increase awareness of the existing financial supports available to apprentices through the employment insurance program while they are in technical training.
It also announced that our Conservative government would improve the youth employment strategy to align it with the evolving realities of the job market, and to ensure federal investments in youth employment would provide our young Canadians with real-life work experience in high-demand fields such as science, technology, engineering, mathematics and the skilled trades. There is an evolutionary change that we have taken to match skills to jobs to ensure our young people have a sustainable future.
Although Canada boasts high levels of post-secondary achievement, the transition, as we all know, to the first job in particular can be very challenging. That is why, through our economic action plan, our government dedicated over $40 million toward supporting up to 3,000 internships across the country in these high-demand fields. Lasting between six and twelve months, these internships will give participants the opportunity to gain real-life work experience and skills necessary to succeed in the workplace now and in the future.
All these measures stand in stark contrast to the Liberals' over $6-billion tax grab on Canadian businesses: money from the economy, money from employers, money from businesses and organizations, money they desperately need to compete with. This would lead to a massive increase in payroll taxes, EI premiums of nearly 50¢ and kill thousands of jobs. If we look at just one part of the Liberals' plan alone, the 45-day work week, its cost alone would be over $4 billion. It is abundantly clear that we do not need that measure and certainly not the one the Liberals propose, and continue to propose today.
We will remain focused on what matters to Canadians: jobs, economic growth and ensuring that Canada's economic advantage we have today will translate into the long-term prosperity of tomorrow. Our recent small-business job credit shows a commitment to Canadian employees and employers. They should not take our word for it; we are always standing up for small business. Again, they should take it from a source that we know has and will continue to support our government's actions in this regard, the CFIB, which stated, “Small businesses in Canada should be thrilled with this announcement because they are told time and time again that payroll taxes like EI are the biggest disincentive to hiring. So any relief that the government can provide will encourage them to be hiring more Canadians”.
Therefore, I urge all members to not support this job-killing motion from the Liberal Party, and remember that it is this government that has the best interests of small businesses and every Canadian who is looking, and will continue to look, for a job, albeit in the short term. We are providing a future of hope for all those people who do, can and get the job they need.
Mr. Robert Aubin (Trois-Rivières, NDP):
Mr. Speaker, to begin, I must point out that we do not have enough time to debate a motion such as this one, and since equality and sharing are part of the NDP's DNA, I am happy to be sharing my time with the hon. member for Newton—North Delta. That way, we can hear as many points of view as possible on this issue.
Let us start with where I come from, Mauricie. In light of the many company closures, including Rio Tinto Alcan and Resolute Forest Products, I will be participating in a large-scale public demonstration on Saturday in Mauricie. Actually, it will be in Shawinigan, to be more precise. We are going to take to the streets to show how proud we are to live in the region. We will also be showing our solidarity with the many workers who have lost or will unfortunately be losing their jobs because of these closures.
It is therefore clear that when it comes to measures that would create jobs, I would love to hear the proposals and see how they could benefit my own region. However, when these measures are funded out of EI surpluses while most workers who have contributed to the plan do not receive benefits when they need them, my ears really perk up. Members will have to work hard to convince me that the Liberal or Conservative approach is a good thing.
Of course, as the NDP employment insurance critic, I wanted to take part in the debate since the Conservatives and the Liberals seem to have similar approaches in taking advantage once again of EI surpluses to fund a job creation policy that, in one case, offers no guarantee of job creation and, in the other case, is based on a mathematical and financial calculation that is flawed and would make people fear the worst if these same thinkers came to power some day. The only thing these two measures seem to have in common is that they are a reflection of the two old parties and a direct result of their ferocious appetite for EI surpluses. In addition, the Liberals and Conservatives always make policies at the expense of workers who make contributions and yet are receiving fewer and fewer services. Need I remind the House that the Liberals diverted over $50 billion from the premium surplus for purposes other than EI? Need I remind the House that the Conservatives followed suit when they came to power and took at least an extra $3 billion, in addition to eliminating the EI account and imposing their reform, which had no consequences other than reduced benefits and more and more unemployed people without access to the plan?
To quote Mr. Hassan Yussuff of the Canadian Labour Congress:
|| How is it acceptable to be accumulating annual surpluses in the EI account, when 63% of unemployed workers aren't receiving any benefits?
In fact, 63% of contributors do not receive benefits and the Conservatives and Liberals want to use the surplus to supposedly establish a job creation program.
Instead of addressing the issue, the Liberals and the Conservatives are wallowing in the surplus. They want to siphon it off and are only providing relief to employers or premium holidays in the hope that they will create new jobs. It is still to be defined what qualifies as a new job.
Before we go on to the crux of the matter, let us finish examining the execution. For the time being, all I see in the Conservative and the Liberal proposals on the table is the withdrawal of $550 million or so from the employment insurance program, which will be diverted for other purposes while, I repeat, only employers' contributions decrease.
If they really wanted to talk about a measure that could create new jobs, they would recognize that the only serious proposal that would pass the test and that is both fair and balanced is the NDP proposal. Allow me to cite just the fact that the hiring tax credit proposed by my party will be funded through the government's general revenues. In other words, it will be funded by all Canadians, businesses and corporations, rather than in large part by workers, as proposed by the Liberals and the Conservatives in their approach.
In fact, since the government blithely dips into the employment insurance fund, what exactly is insurance? Before going any further in my speech, I made sure to look up the definition of terms, and I went back to the dictionary definition of insurance, which is:
|| The act or an instance of insuring property, life, etc.; a sum paid for this; a premium; a sum paid out as compensation for theft, damage, loss, etc.
Our employment insurance requires employees and employers to pay a premium to an employment insurance plan, run by the government, in order to provide temporary benefits when the worst possible thing happens in the life of worker, who has to devote his or her time to looking for a new job.
Contrary to what some quite often suggest, on average an unemployed person receives less than 20 weeks of benefits before being placed in a job that matches his or her skills.
The problem right now is not that people are making a lifestyle out of going on EI, but rather that the benefits are not there when they need them. Currently, our employment insurance program allows less than 4 out of 10 workers who contribute to the plan to be eligible for benefits when they lose their jobs. Do hon. members know of any insurance company that would stay in business for long with that kind of record?
The NDP understands how important job creation is to economic growth. However, that growth must be done without undermining the social safety net we have had for so long.
We are proposing a hiring tax credit and my leader, the hon. member for Outremont, has clearly indicated our commitment to abolishing the Conservatives' employment insurance reform when the NDP forms the next government in 2015.
In June, the hon. member for Dartmouth—Cole Harbour introduced a bill in the House that I had the honour of supporting. The bill lays out how an NDP government will protect the employment insurance fund to ensure that the contributions are used for their intended purpose.
Can Canada protect itself from the temptations of the Liberals and the Conservatives to misuse the fund?
Although the Supreme Court ruled on the legality of the successive Liberal and Conservative governments' actions, it did not comment on the legitimacy of this approach.
I believe, as do many Canadians, that the Liberal and Conservative proposals are nothing more than a new employment tax on workers. Workers are clearly being told that they will have a very difficult time getting employment insurance benefits when they fall on hard times, that their contributions will remain the same and that, in contrast, employers will get a tax break for rehiring them. That is quite the imbalance.
In other words, ordinary workers will have to pay for their benefits and for being rehired, since both the Liberal motion that was moved this morning and the position announced by the Liberal leader last week do not define what actually constitutes a new job.
Let us look at an example. An employee of an SME, factory, industry or some other employer is laid off because there are not enough orders coming in to keep the job open. A few months later, new clients are found and more orders start coming in, and the company is in a position to rehire the worker. Does that constitute a new job? God only knows. The Liberals may think so, but they are not admitting it.
Since I am almost out of time, I will end by saying that it is in the Liberals' and the Conservatives' DNA to come up with reverse Robin Hood measures. While workers continue to pay for services to which they no longer have access, many employers will be relieved of some of the burden of participating in the employment insurance program in exchange for a job creation dream that will not necessarily add new jobs to our economy.
The societal model that the NDP is proposing to all Canadians is based on the principle of strong solidarity. Canada is a rich country where no one should be left behind, a country where economic development and the solidarity that comes from developing our social safety net are not mutually exclusive.
Ms. Jinny Jogindera Sims (Newton—North Delta, NDP):
Mr. Speaker, it is a delight to stand in the House today to speak on behalf of my constituents and other Canadians across this country who are probably listening to this debate and wondering what planet many of these parliamentarians live on, when they see the challenges they are facing.
We have a high unemployment rate, but we also have many workers who have to work two or three part-time jobs, with many working seasonal jobs. They have seen access to EI go down.
Let us remember that employment insurance is a shared insurance plan paid for by the employer and the employee so that employees can access the plan at times of unemployment. However, what we have seen happening, both under the Liberal government and now under the Conservatives, are more and more barriers placed in the way of people accessing an insurance plan they have paid into.
By the way, this is an insurance plan that was very well funded. The Liberals did not hesitate take over $50 billion—I'm not talking about millions here; I'm talking about billions—out of the EI plan in order to fund tax cuts for corporations and whatever other pet projects. The Liberals also reduced access to EI during their tenure from 80% of the unemployed getting EI to 45%. Working people were hit with a double whammy. This huge surplus was taken out instead of being paid to workers or used to train workers for other employment.
The Conservatives continued to raid the EI account as well. When too many questions were asked, they just shut that account. They had created even more barriers and challenges. I have talked to many constituents in Newton—North Delta who say that it is so difficult to get EI now that many do not even bother to fill out the forms. Now, under the current Conservative government, we have seen that only 36.5% of the unemployed will get access to the insurance plan that they paid into. I think that is shameful and something that needs to be addressed.
However, neither party has apologized for the stealing from the workers that took place. At the same time, once they did away with the discrete account and used the surplus, the Conservatives then raised the EI premiums.
Members will notice that this EI holiday, break, or tax credit, and I do not see why they call it a “tax credit”, is only being given to the employer. The employees will still be paying their insurance premiums, but there is no evidence and no guarantee that this will lead to greater job creation.
As a matter of fact, the Conservative government has given billions in tax cuts to huge corporations and we have seen very little job growth flowing out of that. Economists have studied this and have not seen the links. However, we see a history of companies that take our tax breaks and subsidies and then go over the border anyway, taking the jobs with them and leaving Canadians struggling.
Once again, I see that my colleagues in the Conservative and Liberal parties are trying to treat the EI contributions made by employees and employers as something that they own. I would say that the NDP is the only party that can be trusted to stick up for workers. The Liberals are always so full of rhetoric. They make promises galore, yet when it comes to real action, there is very little there.
I am proud of our leader, the leader of the official opposition, the NDP, because our party has tabled a motion to protect EI contributions so that no government and no political party, no matter what its colour—orange, red, blue, or whatever—when it is in government can raid the EI fund and use it as a slush fund. That money would be targeted to assisting those who are unemployed.
A lot of disillusionment has resulted from only 36.5% of people being able to access EI. There is a psychosis that sets in when people cannot get work. I can still remember today a young man who came to see me in my office. By “young”, I mean 55, because 55 is the new young. He had been out of work for over 12 months. I asked him if he had applied for EI, as he would have qualified. His response was “I went, and they were asking me these questions and they gave me all these forms, and you know what? I just couldn't get over those hurdles.”
Those are the kinds of hurdles that the government has put in the way of workers being able to access EI.
The government cannot keep doing the same things and expecting different results. We should use the EI fund for what it is meant for, but we should also look at real job creation ways. Let us take a look at real tax credits for small and medium-sized businesses to have job creation. There are many other ways that we could support our businesses.
I know that my colleagues across the way have very little respect for those who lose their jobs through no fault of their own. That happens because of the conditions that the Conservatives helped to create with a vast number of temporary foreign workers, which has led to a lot of instability. We have seen the government calling those who are unemployed “repeat offenders” over and over again. Is that not an offensive term? I can tell members that unemployed people who are unemployed through no fault of their own find that very offensive, and let us not forget the Conservative minister who stood and attacked the EI eligibility by saying, once again, the NDP is supporting the bad guys.
Surely this is the 21st century, and knowing today's reality, that is no way for our parliamentarians to speak.
I pointed out the very high number of people who are not qualifying. As a result, many Canadians end up having to appeal once they are turned down. With only 36% getting approval, we can imagine that the appeal rates are very high, but the government has broken the social security appeal system by creating the Social Security Tribunal, and the EI appeals under this new system that the Conservatives created have a dismissal rate of 80%. The government has made the system so dysfunctional that it is almost impossible for those who are denied EI to make a presentation except through written submissions. There were over 1,000 referees all over the country; the government has replaced them with 75 tribunal members.
This system is working exactly the way the Conservatives wanted it to work, and they are making sure they are denying the rightful access to EI that unemployed workers who paid into that system deserve.
Hon. Wayne Easter (Malpeque, Lib.):
Mr. Speaker, I am indeed most pleased to second, and to speak on, the motion by my colleague, the member for Kings—Hants, which reads:
|| That, in the opinion of the House, the Employment Insurance...plan announced by the government on September 11, 2014, and which will begin on January 1, 2015, will not create jobs and growth but will instead provide a financial incentive for employers to lay off workers; and therefore, the House urges the government to re-direct those resources by providing employers an EI premium exemption on newly-created jobs in 2015 and 2016.
The proposal that we are presenting today is a tangible response to the need to create jobs across Canada. We are seeing that need everywhere in the country. We know that the manufacturing sector is down in terms of job creation. We know that the middle class is suffering. We know that in many of the regions, my own in particular, there is a shortage of jobs, and that shortage is causing great difficulties for communities and families across the country.
The proposal is based on the proposition that there should be an incentive for those who create jobs, and that is what is seriously missing from the Conservative proposal.
The Conservatives recently announced the creation of what they call the small business job credit, which many economists have called a disincentive for companies to grow. This Liberal counter-proposal would reward companies that are growing and creating new jobs.
The Conservatives' small business tax credit has a design flaw that discourages job creation and economic growth. My colleague, the finance critic, has outlined that fairly extensively in his remarks. Simply put, under the Conservative scheme, only businesses with EI payroll taxes below $15,000 would get any money back. This creates a perverse incentive for businesses to fire workers in order to get below the $15,000 threshold. I know that earlier some colleagues disputed the fact that would happen, but in fact it does. That is the reality of the world.
The Conservative scheme offers up to $2,234.04 for firing a worker and only up to $190.52 for hiring a worker. Those are the extremes at both ends. The mix would be somewhere in between.
My colleague also outlined in detail the tragedy of the Conservative proposal. He used quite a number of quotes, but let me add a couple.
I will first quote from Stephen Gordon, who is an economics professor at the University of Laval. He was quoted in Maclean's magazine on September 11. He stated:
|| Reducing payroll taxes is usually a clear win-win situation, resulting in increased employment and higher wages. The Conservatives have passed up this opportunity by creating yet another targeted boutique tax credit.
Clearly, he does not see that this incentive is really a win-win solution that is going to work.
Mike Moffatt, an economics professor at the Ivey Business School, was also quoted in Maclean's on September 15. He stated:
||...it is clear that firms under the $15,000 EI threshold have a big incentive to keep wage increases to a minimum so they do not lose their tax credits. Conversely, firms that are just over the $15,000 EI threshold have an incentive to cut the pay of their staff in order to gain the tax credit.
Mr. Moffatt's remarks make the point that there is also the perverse situation where, because of the $15,000 threshold, there is pressure on companies to either cut back a bit on wages or cut back on employees to stay within that $15,000 threshold.
Why would the Conservatives put forward this proposal? Why would they not go with the better proposal that we are proposing today? I would submit that to a great extent, it is all about spin, with a little Conservative manipulation thrown in.
The minister knows that the business community is incensed about the changes made to the temporary foreign worker program and the blanket treatment across the country. Those changes were made without any real consultation. All of us are hearing concerns from small businesses, from large businesses, from fish companies, from trucking companies, you name it, about the temporary foreign worker program. While changes need to be made, the way they have been made by the government, without consultation, could shut down some small businesses, some larger businesses, and some trucking companies and could hurt the economy.
The government has been told that in some instances, the temporary foreign worker program will shut down the economy and could cause small businesses to shut down, with a loss of jobs for Canadians. That is part of the reason a number of ministers are now concocting a scheme to throw a little bone to the business community. The problem is that the bone does not have much meat on it in terms of creating jobs.
Some of the statements made by the Minister of Finance himself indicate to us that this proposal is really a lot about spin. It is a lot about leaving Canadians with the impression that the government is doing something positive for small businesses with the EI insurance program, when it really is not doing that at all. It is all about leaving the impression it is doing something, when really it is not.
My colleague from Vancouver Quadra summed that up best last week when she asked a question of the Minister of National Defence. She said that what we have had from the Conservative government has been 10 years of deception. We know that it is not really 10 years. It is really eight years, but it certainly feels a lot longer than eight. The fact is that there have been years of deception by the government.
The deception in this policy is that it is support for small businesses for a limited period of time, when in reality, it could have the perverse reaction of costing some jobs in the small-business sector. The reality is that when we compare the Conservative proposal with what we are proposing here today, it is an opportunity lost. If the government does not support the proposal coming from my colleague, the Liberal finance critic, it is an opportunity missed for Canadians, for the small business sector, and for job creation in this country.
That is where the House of Commons comes in. This should be a place, and it has not been for some time, where proposals come forward from a member and are looked at seriously, rather than through the entrenched positions, without discussion, we get from the Government of Canada. We know that the Conservatives do not consult. They only consult with a few people, and they are usually their friends. It does not consult generally.
This is an opportunity for the government and the House of Commons to show that things can change in this chamber in the fall of 2014 to make better policy for Canadians. My colleague, the critic for finance for the Liberal Party of Canada, has put that proposal on the table. I encourage those backbench members who really do not have to take their direction from the cabinet to stand up in their own right and support this proposal. It would be quite a change on the government side.
While on the point of deception, we have seen it in a number of other areas. I talked to a lot of construction companies in my province this summer. I have talked to both the rural section of the Federation of Canadian Municipalities and the big city sector, and they are crying for infrastructure. If we raise the question in the House, the minister or a backbench government member gets up and says that they have announced the biggest infrastructure program in Canadian history. If we look at this over 10 years, it may look that way, but again, it is deception by the government. The Conservatives, in fact, cut the infrastructure program, from this year up to 2019, by somewhere around 87%, because the big numbers are only over a 10-year period, and the program does not really kick in until 2019. As a result, communities' infrastructure deteriorates. Construction companies are not creating the jobs that they could. I am making the point that it is another case of deception on the part of the government.
We have seen this deception in my area, in a serious way, with regular EI changes by the government in the last couple of years. It claimed there would be an incentive to work longer. It has had the opposite impact in my riding, and certainly in P.E.I. Worse, it has taken money directly out of Prince Edward Island's economy and right out of the back pockets of Prince Edward Island's seasonal workers. Between the clawback of 50¢ on the dollar the minister proudly announced and the loss of the five-week pilot project, it has cost Prince Edward Island workers and its economy about $18 million this year. That is a loss. As I said, it comes right out of workers' pockets. It is money that would have been spent, whether on heating oil or groceries or other things for businesses, in my community. That is what the minister took out of Prince Edward Island when he said that it was an incentive to work. That is so sad and so wrong.
Let me get back to the subject at hand. The results achieved by the government are failing to address a growing need for jobs across Canada, and the proposal being presented today by the Liberal Party would address that vacuum. I am surprised by some of the questions coming forward from government members. They should not see this proposal as divisive. They should see it as an opportunity for this chamber. Yes, we have our partisan differences, and that is fine, but we are talking about ways to do a better job of creating jobs for Canadians.
I look especially to the MPs in the Conservative Party and the backbench from Atlantic Canada. This is an opportunity for them to stand up and be counted, to create more jobs in this country, and to be seen to be allowing this place, this chamber, this House of Commons, to work as it should.
What is being proposed by the Liberal Party is an EI premium exemption for firms that actually hire new employees. That is the essence of what this proposal is all about. Our proposal would represent a benefit for every newly hired worker in 2015-16.
With the Conservative plan, only businesses with EI taxes below $15,000 would see savings, creating an incentive for businesses to either cut back on salaries or lay off workers.
The Conservatives have announced an annual $225-million measure that is unlikely to produce anywhere near the number of jobs that this proposal would produce. The plan we are putting forward would represent a benefit of up to $1,279.15 for every hire, which, for $225 million, could produce over 176,000 jobs. I heard New Democrats speak to the figures earlier. The fact of the matter is that not everyone would be at the maximum level. Some would be less and some would be more. Therefore, that estimate we believe to be pretty accurate.
The Liberal plan would grant every business that creates a new job, regardless of the size of the business, an EI premium exemption for the employee who fills that new position. Unlike the Conservative plan, the Liberal EI exemption would actually reward businesses that are growing their payrolls. It would not reward companies that reduce wages or staffing levels to make it under an arbitrary $15,000 threshold.
The Liberal plan would reward companies up to $1,280, the maximum annual employee contribution announced in 2014, for each new job they created. The employer would not have to pay EI premiums for the employee working in that new position. For the same cost as the Conservative proposal, the Liberal plan could create more than 176,000 new jobs.
To move a little further afield on the issue of employment insurance, the latest measures taken by the regional minister and the minister in charge of employment insurance have impacted my province really seriously. With respect to my home province of P.E.I. and my constituency of Malpeque, the damage the government has inflicted is having a devastating impact on a number of families. That relates to the new Charlottetown region and rural region. We are receiving endless numbers of calls from people confused about the new program and where it will leave employers and employees with respect to this new change.
When we call Service Canada to get answers, we cannot get any. We are getting confusion around the new zone in the rural area, where one needs more hours to work for less in benefits. Who is in the zone and who is out? Service Canada is saying that it could apply to the postal code or it could apply to the address.
Service Canada cannot give us the answer. Can the minister outline specifically these zones and whether it is the postal code or the address? Who is in and who is out of the zone, because it really matters to these folks in terms of how they survive the winter months, the off-season. If he cannot answer now, can he answer later?
The regional minister promised answers. It is time we had some.
To conclude, I ask for people's support of the Liberal plan to create jobs in this country.
Ms. Lois Brown (Parliamentary Secretary to the Minister of International Development, CPC):
Mr. Speaker, I will be splitting my time with the hon. member for Sarnia—Lambton.
Let me begin by reminding the hon. member that the new small business job credit is only the latest of our government's actions to create jobs, growth, and long-term prosperity. We have been taking numerous measures to lower the tax burden on small businesses since we came to office. By leaving more money in the hands of entrepreneurs and businesses, they can hire more Canadians and expand their operations. We understand that lower taxes make Canada's economy stronger and create good long-term jobs for Canadians.
According to the Canadian Manufacturers and Exporters:
|| Reducing business taxes creates jobs, boosts investment, makes Canada more competitive and puts more money in the pockets of the Canadians....
||...business tax cuts are critical drivers of the Canadian economy.
As a result of our Conservative government's low-tax plan, a small business earning $500,000 now saves over $28,000 in taxes. That includes tax cuts such as reducing the small business tax rate from 12% to 11%, increasing the amount of income eligible for the small business tax rate, and increasing and indexing the lifetime capital gains exemption.
Every time our government lowers taxes, the Canadian small business community and the workers they employ receive concrete benefits, and they benefit greatly from our fantastic small business job credit. However, no one has to take my word for it. Let me quote Monique Moreau of the Canadian Federation of Independent Business, who stated, “Small businesses in Canada should be thrilled with this announcement because they told us time and time again that payroll taxes are the biggest disincentive to hiring”.
The Canadian Federation of Independent Business also estimates that the new credit would create 25,000 person years of employment over the next few years alone. Indeed, job creation is one of the many reasons that our government is committed to keeping payroll taxes and all other taxes low for Canadians.
However, we know that more needs to be done. We are well aware that Canada must continue to generate the highly skilled individuals and new ideas that will help our businesses innovate, secure new markets, and create well-paying jobs. That is why I would like to devote my time today to our government's commitment to strengthen education, skills training, and innovation in Canada.
For example, it is important for young Canadians to have access to information on a variety of careers in order to make informed choices about their education early in life. Good choices early on can help to ensure that young Canadians obtain the skills and experience necessary to find work quickly, avoid unnecessary debt, and get a better start on their careers. For instance, if young Canadians are interested in lifelong careers as skilled tradespeople, they need to know when, where, and how they can obtain the training that will secure them the real jobs that are in demand.
I would like to refer hon. members in the House to an article in the August 23 edition of The Economist. It is the Schumpeter article entitled “Got Skills?”, and it refers to the issue of vocational training at length. I would encourage members to take a look at it.
Of course, there are many different career options in Canada. Our government will continue to promote education in high-demand fields, including the skilled trades, science, technology, engineering, and mathematics. We take youth employment very seriously. Since coming to office, we have helped over two million youth obtain skills, training, and jobs.
In economic action plan 2013, we reallocated $19 million, over two years, to inform young people about fields of study that are relevant to existing and forecasted demand for labour in particular occupations. As well, our government is providing more information on the job prospects and benefits of working in various occupations. It is developing new outreach efforts to promote careers in such high-demand fields as science, technology, engineering, mathematics, and the skilled trades.
Although Canada boasts high levels of post-secondary achievement, the transition to a first job can be challenging. To ease this transition, the career focus program supports paid internships for recent post-secondary graduates, ensuring they get valuable hands-on work experience. Economic action plan 2012 provided funding for an expected 3,000 additional paid internships in high-demand fields. Economic action plan 2013 announced an additional investment of $70 million over three years to support an additional 5,000 paid internships.
Building on these measures, economic action plan 2014 introduced the flexibility and innovation in apprenticeship technical training pilot project to expand the use of innovative approaches to apprenticeship technical training. With this initiative, we are continuing to work with provinces and territories to harmonize apprenticeship systems and reduce barriers to certification in the skilled trades so that apprentices can more easily work and train where the jobs are. To further support apprentices, economic action plan 2014 takes steps to increase awareness of the existing financial supports available to apprentices through the employment insurance program while they are on technical training.
It also announced that our government will improve the youth employment strategy to align it with the evolving realities of the job market, and to ensure federal investments in youth employment provide young Canadians with real-life work experience in high-demand fields such as science, technology, engineering, mathematics and the skilled trades. Our future certainly depends on these high-demand fields to create the well-paying jobs of the future. This is especially the case when it comes to research and innovation. The government plays an important role in Canada's science, technology and innovation system. Since 2006, the government has provided more than $11 billion in new resources to support basic and applied research, talent development, research infrastructure and innovative activities in the private sector, including more effectively aligning federal support for research with business needs.
To be successful in the highly competitive global economy, Canada must continue to improve its ability to develop high-quality talented people performing world-leading research and generating new breakthrough ideas. In 2013, our government's support exceeded $3 billion for research in the post-secondary education sector alone. Economic action plan 2014 builds on these commitments with the creation of the new Canada first research excellence fund. The fund will provide significant flexible resources to further drive Canadian post-secondary research institutions to become the world's best.
Our government's investments in science, technology and innovation have helped ensure Canada leads the G7 in post-secondary research expenditures as a share of the economy, and our commitment remains strong. In economic action plan 2014 alone we announced the largest annual increase in funding for research through the granting councils in over a decade. This includes $46 million per year on an ongoing basis to be allotted as follows: $15 million per year to the Canadian Institutes of Health Research for the expansion of the strategy for patient-oriented research, the creation of the Canadian consortium on neurodegeneration in aging, and other health research priorities; $15 million per year to the Natural Sciences and Engineering Research Council to support advanced research in the natural sciences and engineering; $7 million per year for the Social Sciences and Humanities Research Council to support advanced research in the social sciences and humanities; and $9 million per year for the indirect costs program.
If I had more time today, I could easily continue highlighting our government's many initiatives to position Canada at the forefront of innovation and excellence in education. Unfortunately, I must conclude.
Mrs. Patricia Davidson (Sarnia—Lambton, CPC):
Mr. Speaker, first of all, I would like to thank the member for Newmarket—Aurora for sharing her time with me. Also, since this is my first time speaking this fall session, I would like to welcome back all of my colleagues and wish them the very best as we continue serving Canadians in this very august chamber.
As hon. members can see from the debate today, our government clearly recognizes the vital role that small businesses play in spurring economic growth and creating jobs for hard-working Canadians. That is why we have consistently cut taxes and reduced red tape for small businesses.
It is under this government that Canadian businesses have seen savings of more than $60 billion since 2008. In 2012, we lowered corporate taxes from 22% to 15%, leaving more money in the pockets of small businesses to help them grow and thrive. We also extended the temporary accelerated capital cost allowance for manufacturing and processing machinery and equipment through 2015, which has enabled companies in this industry to plan and invest for the future.
Both of these actions are part of our government's commitment to foster job creation, a commitment underpinned by a firm belief in keeping taxes low for Canadian businesses. Unfortunately for Canadians, both of these actions were also voted against by the same opposition that brought today's motion forward.
This government's commitment to tax relief has delivered real benefits to our country. Canada now has the lowest overall tax rate on new business investment in the G7. Moreover, Bloomberg recently ranked Canada as the second-best place in the world to grow and start a business. That is a record we can and should be proud of.
Unlike the reckless calls by the opposition to drastically hike taxes on businesses to pay for their risky spending plans, our government will remain committed to helping businesses in Canada succeed. That is why we are building on our success by introducing the new small business job credit. The credit is expected to significantly help over 780,000 small businesses in 2015, which is more than the number of businesses that benefited from the 2013 hiring credit.
In addition, while the amount of the EI hiring credit was capped at $1,000, there is no maximum capping for the small business job credit. In fact, small businesses could receive significantly more tax relief under the job credit than under the EI hiring credit. All in all, the small business job credit is expected to save small businesses more than $550 million and lead to the creation of several thousand jobs.
In contrast, the opposition have supported a 45-day work year that would drastically increase premiums by 35% at a cost of $4 billion directly out of the pockets of Canadian employees and employers. Instead of providing small businesses with the tax relief they need to spur job creation, this burden would cause needless harm to important job creators in Canada.
Our government is constantly looking for ways to help create jobs and better connect Canadians with those available jobs. Indeed, many employers continue to identify the shortage of skilled labour as an impediment to growth. Recently, the Canadian Chamber of Commerce listed skills shortages as the number one barrier to Canada's competitiveness. I know first-hand about challenges like this as many skilled labourers from my own riding of Sarnia—Lambton are looking outside of my community for work right now, which represents a drain of skilled labour from an area that drastically needs it.
Faced with this challenge, our government has taken concrete action to support the development of a skilled, mobile and productive workforce. Last year alone, our government transferred $2.7 billion to the provinces and territories to support labour market programming.
Moreover, we have also remained committed to fostering internship opportunities for Canada's youth. In economic action plan 2014, we invested $40 million towards supporting up to 3,000 internships across the country in high-demand fields. In addition, we are reallocating $15 million annually within the youth employment strategy to support up to 1,000 full-time internships for recent post-secondary graduates in small and medium-sized enterprises.
All the while, we are continually improving our strategy to better align it with the evolving realities of the job market and to ensure federal investments in youth employment provide young Canadians with real-life work experience in high-demand fields such as science, technology, engineering, mathematics and the skilled trades.
At the other end of the spectrum, our government also recognizes that many older Canadians want to remain active participants in the workforce. That is why we have taken many steps over the years to support the labour market participation of older Canadians, including the budget 2011 extension of the targeted initiative for older workers and the budget 2012 expansion of third-quarter project, an initiative that has helped more than 1,200 experienced workers who are over 50 find a job that matches their skills.
Going forward, our government will renew the targeted initiative for the older workers program for a three-year period, representing a federal investment of $75 million.
These are all important measures, measures which have helped to ensure that Canada has had the best record of job creation in the G7 since our government came to office.
The real game changer in our efforts to connect Canadians with available jobs has to be the introduction of the Canada job grant. By ensuring that federal funding responds to the hiring needs of employers and by giving them the opportunity to participate meaningfully as partners in skills training, this initiative is transforming skills training in Canada.
The Canada job grant could provide up to $15,000 to individuals for training costs, including tuition and training materials, helping them to gain the skills they need to succeed. Once implemented, this measure will offer real support to Canadians toward improved employment and earning prospects.
While our government remains focused on creating jobs, we hear the same tired strategies from the opposition, policies that form a high-tax, high-spending agenda that would seriously threaten job creation and set hard-working families back a decade to a time when the government thought surplus belonged in its pocket and not the families.
Our government is clear in its priorities. We will cut taxes to allow businesses to thrive and we will make targeted investments to help connect unemployed Canadians with available jobs.
These are just some of the central initiatives that continue to drive our government's jobs and growth agenda. I am proud of our record and would like to thank the hon. members for providing the opportunity to discuss it here today.
By helping Canadians acquire the skills that will get them hired or help them get better jobs, we are directly investing in our country's greatest asset, our people. The return on this investment is not just helping individuals, but it is also supporting their families, their communities and the country as a whole.
Given these measures and the ones listed by my colleagues, I would strongly encourage members to reject today's unilateral and ill-considered motion brought forward by the opposition. I would encourage all members to support our government's comprehensive plan to create jobs, spur economic growth and promote long-term prosperity for all Canadians.
Ms. Kirsty Duncan (Etobicoke North, Lib.):
Mr. Speaker, I am pleased to rise today to speak on the Liberal opposition day motion regarding our premium exemption plan. I will be sharing my time with the member for Vancouver Centre.
My community of Etobicoke North and indeed all Canadians deserve a plan for jobs and growth. Unfortunately, the Conservatives' EI plan provides neither.
I have the privilege of serving a wonderful community. It is a place where I was born and raised. Etobicoke North is proudly one of the most diverse ridings in the country. Our constituents face challenges with family reunification, language barriers, a lack of jobs, and that is particularly for our youth.
Students' tuition, food, rent, transit and other costs have all been going up, yet student debt levels remain constant. The average post-secondary graduate carries $28,000 in debt. The unemployment and underemployment rates for youth have long-term consequences because it takes years to repay their debt. Parents and grandparents often step in to financially support their adult children.
This is scarring a generation of young Canadians and contributing to higher household debt and poor retirement savings.
Let me share some stories from the summer in my constituency office. I have permission to share each in the House of Commons. In fact, one of my constituents said, “Tell my story, I'm a person, I need a job, I have a family to feed. Make them care, make them do something that actually helps and doesn't hurt my family or me”.
From my community, an international doctor cannot practise medicine, bringing the total to dozens and dozens of international medical graduates I have met. A man previously had his own law firm back home for almost two decades, came to Canada for a better life for his children, repeated his law education in Canada and still cannot find a job. A countless number of students, parents and even grandparents came looking for summer jobs so they and their family could pay their fall tuition. An equally high number of college and university graduates have been out of work for one, two and three years.
A woman who had a good-paying job for 20 years lost her job to outsourcing. After months without work, she was living out of her car, afraid to go to sleep at night and unable to pay for her lifesaving drugs. We called her specialist and explained the problem, paid her gas money so she could drive to the doctor and she was able to pick up sample medication. Another woman could not afford the pain killers after her surgery. She came to my office in tears with an ice pack to kill the pain, so I bought her medication and paid for her trips to and from the hospital.
I am tired of hearing the government's rhetoric about jobs. It is time for the government to take unemployment, and particularly youth unemployment, seriously and provide meaningful support to Canadians who are struggling. I was in my constituency office almost daily this summer and almost 80% of those who came to see me needed a job. Because of unemployment, they also needed clothing, food and other supports. We helped them find jobs and got them the supports they needed. Just last week I spent six hours in the community with business leaders as part of a program to create jobs in Etobicoke North.
Etobicoke North residents and all Canadians deserve a plan for jobs and growth. Unfortunately, the Conservatives' EI plan provides neither. The Liberals' EI premium exemption plan would reward businesses for each new job created in 2015 and 2016. This would represent a benefit of up to $1,280 for each newly created job, which for $225 million could help to create over 175,000 new jobs.
On the other hand, the Conservatives' EI rate reduction only encourages businesses to stay small and punishes them if they grow and are successful.
With the Conservatives' plan, only businesses with EI taxes below $15,000 would see any savings, creating an incentive for businesses to fire workers. The price tag for the Conservatives' new small business EI tax credit is estimated at $550 million over two years; that is, the Conservatives have announced an annual $225 million measure that is unlikely to produce jobs.
The Conservatives' EI tax credit is getting slammed by economists ranging from Jack Mintz to Mike Moffatt.
From Jack Mintz of the University of Calgary: “It becomes a disincentive to growth.” From Stephen Gordon of Laval University: “But the Conservatives have yet again eschewed a straightforward and effective measure and adopted one that is complicated and most likely to have little effect on employment or wages.” From David MacDonald of the Canadian Centre for Policy Alternatives: “So if you're an employer and your payroll is slightly over that $550,000, you've got a strong incentive to cut your payroll.” From Mike Moffatt of the Mowat Centre: “...the proposed ‘Small Business Job Credit’ has major structural flaws that, in many cases, give firms an incentive to fire workers and cut salaries.”
The Globe and Mail says that it is “...creating a perverse disincentive for small companies to grow”.
The tax credit gives firms about $200 to hire someone but over $2,200 to fire someone.
The Liberals have a solution: use the money to give job creators an EI premium exemption for new jobs. I have heard from members of my community, who want to know when the Conservatives will drop their poor plan and adopt the Liberal plan, which would actually reward job creation and growth.
Under the Conservatives, 527 mid-sized firms of 100 to 499 employees vanished between 2007 and 2010. Canada has a lack of medium-size and large companies compared to the United States and most other developed countries. Also under the Conservatives, 9,000 exporters disappeared between 2008 and 2012 and may never come back.
Not only have jobs been lost, but Statistics Canada does not know where job vacancies exist in communities across Canada. The Auditor General's 2014 spring report confirmed that the Conservatives' undermining of Statistics Canada has left the government unable to accurately address the economic needs of Canadian communities.
Liberals believe the government must not only create the right conditions for economic growth but must also ensure that growth is sustainable in order to finally help the struggling middle class. We understand that we must create the conditions that allow for economic prosperity, including investment in education, infrastructure, and trade expansion. The Liberal focus is on creating new jobs and hiring more Canadians. This is the only way that we can grow the middle class and expand opportunities for Canadian families.
The people of Etobicoke North need jobs, and I have worked hard to get them jobs. I obtained funding for a Completing the Circle program, a $500,000 jobs program in our community in remembrance of Loyan Gilao. I personally review and edit resumes late into the night, sometimes doing two and three drafts. We get our people into job programs and we follow up with them to make sure their job searches are going in the right direction. While they search, we help them with food, clothing and whatever other supports they might need.
I buy medicine. A lady was looking for help because she was in agony from an ear infection that had raged for three weeks. She had pus and blood running down her face. The sad reality is that she could not afford antibiotics because she could not find a job.
A constituent asked of me “How come you have to find me a job? Why doesn't the government make it easier for me to get a job so I can pay taxes, contribute, and have my dignity?”
Hon. Hedy Fry (Vancouver Centre, Lib.):
Mr. Speaker, I am pleased to rise to speak to the Liberal opposition motion.
One of the things I want to stress is that this will be about jobs, jobs, jobs. When we look at what has happened with job creation in this country, we see that in the past year Canada has experienced negative job growth. In fact, as my colleague just said, from August 2013 to August 2014, the entire country created a net 81,000 jobs, but only 15,300, or 19%, of these are full time.
How do we expect families to live, to work, to pay their mortgages, to feed themselves, to send their kids to university, to do all the things that families have to do when they are working part time? It is not a sustainable way for people to live, so creating full-time jobs is what we need to talk about, not part-time jobs.
We can look at the United Kingdom. My colleague spoke about the number of jobs, but I want to put it into perspective. In the same period of this year, the United Kingdom created a 2.6% increase in new jobs, the United States 1.5%, and Canada 0.5% only.
Therefore, Canada is not doing very well. In spite of what we hear from the Conservative government, Canada is not creating new jobs, and when we do not create jobs and people keep losing their jobs and try to live on part-time jobs, there are huge effects that no one is talking about.
The health effects of unemployment were well documented in the 1990s, when many countries in the world were facing recession. We know there is a high incidence of high blood pressure, a high incidence of anxiety and depression, and a high incidence of suicide. A lot of people cannot afford to feed their families and a lot of people cannot afford to buy the prescriptions they need for chronic diseases. That is another impact that we are not even counting when we think about jobs and the ability of people to work, to pay taxes, to produce, and therefore to grow the economy. These things are inextricably linked.
The Liberal Party is not just saying that this is a terrible plan that the Minister of Finance announced; we are also offering a solution. We are offering an opportunity for the Conservatives to change the plan and moderate it so that it can actually start creating the kinds of jobs we are looking for.
The Canadian Federation of Independent Business suggests that this plan the minister tabled could create about 20,000 to 25,000 jobs. However, we also have economists saying that it could create no new jobs and actually cause a loss of jobs. These are things we have to take into consideration.
What we are presenting is evidence-based. I will go on to say why it is evidence-based, but we are talking about a way the government could help to stimulate businesses to create about 175,000 new jobs. We can compare 20,000 jobs, or a possible loss of jobs, to the creation of 175,000 jobs.
If the government is serious about doing the right thing to help stimulate the economy and create jobs, then the government will listen. This is not about politics. This is not about the Liberals saying they know better than the Conservatives and pointing out what they did; it is about finding the best solution when Canadians are having a difficult time.
This is where we in Parliament should work well together. All of the political parties should look for the best evidence-based solution.
The government has heard our solution. We are suggesting that for every new job created by any kind of business, small, medium or large, the business will get a holiday from EI premiums for two years, the same length of time the government is proposing for its plan. That is the first thing we are proposing.
I want to explain why I say it is evidence-based. When we became government in 1993, we had an unemployment rate of about 14%. By the time we left government, that unemployment rate was down to 6.5%, so that measure surely worked. The evidence shows that when we did something, it achieved the objective.
In 1997 we brought in a new hires program for two years. In this program, for every new job that was created, the company, regardless of its size, was given freedom for two years from EI premiums. That was an important thing. Then we topped that up in 1998 with a new hires program for young people, who were facing an 18% unemployment rate. We brought that down to about 12%.
We are talking about stuff that worked. We said that every business, regardless of its size, that hired a young person between the ages of 18 and 24 would actually get a holiday from EI premiums.
As a physician I have talked, and as a party we have talked, about being evidence-based. It means looking at what works. We can say that it worked. The figures are there. Everyone may deny it, but they are there. Members can go and look them up. It is true. We also started bringing down EI premiums overall. Every year, we dropped those so that by the time we left government in 2005, EI premiums across the board were down for all businesses. That is the way to stimulate work, agreeing that, in fact, it is small and medium-sized businesses that create the majority of jobs in this country.
We are offering a very important solution. This is not something that, again, looking at the evidence, we made up. We can see that this plan the Minister of Finance tabled was a very bad one.
Barrie McKenna, of the The Globe and Mail, said, “Put simply: Growing companies, not small ones, drive economic growth”. He said that growing companies, period, drive economic growth.
He continued, “Governments should want more of them. But [these] policies are sending exactly the opposite signal: Stay small. Don’t grow”.
Then we have Mike Moffatt saying, “...it is clear that firms under the $15,000 EI threshold”, which the current government is setting, “have a big incentive to keep wage increases to a minimum so they do not lose their tax credits”.
Those firms can do a couple of things once they get over $15,000 in EI premiums: they can lower the incomes of their employees, or they can cut their hours of work. This is a disincentive, not an incentive to create jobs.
Sometimes I think the government across the way has to put big flashy things in the window. The Conservatives think it is going to work, but they have not done their homework. They have not actually looked at the consequences of what they are going to do. They have not looked at the outcomes. This is where their plans are nearly always flawed and blow up in their faces.
I also talked about the evidence the Liberals had when we brought in an across-the-board payroll decrease in EI premiums, year after year. Here is what Stephen Gordon, who is an economic professor at Laval University, said:
|| Reducing payroll taxes is usually a clear win-win situation, resulting in increased employment and higher wages. The Conservatives have passed up this opportunity by creating yet another targeted boutique tax credit.
Instead of making things easier for everyone, the current government has actually created a more complex tax system. It has created these little boutique tax credits. It seems to thrive on giving little boutique tax credits to certain groups, and we have seen that this has not worked. It has not actually resulted in what the government wants.
I like to say that this particular plan by the finance minister is right up there with the brilliant plan, with a $13-billion surplus left by a Liberal government, to cut the GST by two percentage points, which cost $13 billion. One does not have to be an economist to know that 13 from 13 is zero, so the current government ended up with a zero balance at the time it needed it most, because a year later, there was a recession. The government was unable to deal with this. We have seen the snowballing consequences of what the government does.
If the Conservatives really mean to do well by Canadians, it is important that they pay attention. We are not asking to take all the credit. We are saying that if they do it, we will back them up. We will support them on this, because in this House, this is not about playing politics. Sometimes, yes, we do play politics. We are in politics, after all. However, it is most important, at a difficult time in our history, for us to come together, all political parties, to do the best thing, based on evidence and based on what the outcomes are going to show us we will achieve. We would work together to do the right thing to create jobs at this particular time, when people are losing jobs and suffering as much as we know they are.
Mr. Andrew Saxton (Parliamentary Secretary to the Minister of Finance, CPC):
Mr. Speaker, I would like to address the points raised by the hon. member opposite with respect to the employment insurance credit the government is offering small and medium-sized enterprises, and more generally, what this government has done to create more and better jobs for Canadians in addition to the small business job credit.
Let us start with the obvious one.
Canada has had a remarkable job creation record in recent years. Our prudent management of the nation's finances and careful targeting of incentives to spur our economy's job creators, particularly small and medium-sized enterprises, are, in large part, the drivers behind this success.
The core strength of the Canadian labour market became especially evident following the recent global recession. Despite a weak economic framework, the Canadian economy is one of the strongest in the G7 in terms of growth, production and job creation. Over 1.1 million net new jobs have been created since the beginning of the recovery in July 2009. Today, the number of jobs in Canada has increased by over 675,000 since the pre-recession peak.
That is not all. Over 80% of all jobs created in Canada since July 2009 have been full-time positions. Nearly 80% are in the private sector, and over two-thirds are in high-wage industries. However, while we are extremely proud of our job creation record, as long as there are still Canadians looking for jobs, our work is not done.
Since the end of the great recession, Canada's employment growth has been second only to that of the United States among the G7, at 6.6% compared to 7.3% south of the border.
In light of this, I am pleased to inform the House that the government has a clear plan to do even better. That is imperative given that there are still too many Canadians who are out of work or unable to find a job in their area at a time when skills and labour shortages are emerging in certain sectors.
The need for increased employment and better jobs is the reason why the government published the Jobs Report earlier this year.
The results speak for themselves. Despite significant labour mobility in Canada, Canadian firms are having more difficulty in hiring than the unemployment situation would normally warrant, with imbalances between unemployment and job vacancies persisting in certain regions and occupation groups.
Our government believes that the solution requires a more mobile, flexible, and highly skilled labour force to keep up with rapidly advancing technology and increased worldwide competition.
At this point, I would like to say that I will be splitting my time with the Parliamentary Secretary to the Minister of Employment and Social Development.
The solution also requires putting small and medium-sized businesses in the best position to create new jobs for Canadians. These businesses play a key role in the economy, and our government recognizes that one way to create jobs is to limit the barriers preventing small businesses from flourishing and becoming more effective job creators.
This brings us to the motion today. The Liberals will suggest that our recent small business job credit will not create jobs and growth but will instead provide a financial incentive for employers to lay off workers. Let me begin by saying how absurd this assertion is.
It is only our government that clearly recognizes the fundamental importance of small businesses in fueling the Canadian economy.
Our government is taking ongoing steps to support jobs and growth, particularly in small businesses. We have frozen EI premiums in order to give small businesses certainty and flexibility. We have cut red tape by eliminating over 800,000 payroll deduction remittances to Canada Revenue Agency by thousands of small businesses in Canada. We have increased the income threshold for small businesses to $500,000. We have reduced the small business tax rate from 12% to 11%.
All in all, small businesses have, in total, seen their taxes reduced by 34% since 2006, but there is more. A recent small business job credit will lower EI payroll taxes by 15% and save small businesses over $550 million over two years. In addition, we have made certain that beginning in 2017, premiums will be set according to a seven-year break-even rate, ensuring that premiums are no higher than they need to be. It is estimated that this measure alone will create 25,000 person-years of employment.
Therefore, I am a bit confused why the Liberals would accuse us of not creating jobs when the facts speak quite the opposite. It reminds all members here today how they just do not understand small businesses. To suggest that small businesses would cut jobs to receive this credit is, frankly, insulting to small business owners across Canada.
I would like to share two quotes that reiterate how out of touch the Liberals are with small businesses and their needs. The Canadian Federation of Independent Business had this to say about the Liberal accusation:
|| Some have suggested companies will lay off staff or hold off hiring just to stay under the threshold to receive the credit. I’ve got news for them, a small business owner doesn’t have time to research the eligibility requirements and then carefully manage their payroll to receive a few hundred dollars over two years. But $550-million in the hands of Canada’s entrepreneurs instead of the federal government just can’t be a bad thing.
If the Liberals do not feel like listening to the CFIB, they should listen to Canada's largest trade and industry association, which stated:
|| The cost of labour is one of the top five challenges hurting Canadian companies.... The Small Business Job Credit will help a powerhouse—the thousands of small businesses—of the Canadian economy become more competitive.
Our government is not saying that this is the only thing that we are doing to connect Canadians with good-paying jobs. However, it is a major step in the right direction. I am proud that our government is taking practical measures to help Canadian employers and workers. We are listening to experts, and we are definitely not taking any lessons from the Liberals.
These are the same Liberals who raided the EI account of nearly $60 billion when they were in power. Premiums paid by hard-working employees and businesses, they used as a political slush fund. It is these same Liberals and the NDP attacking job creators with massive tax hikes and ideas like a 45-day work year that would drastically increase EI premiums by 35%, at a cost of over $4 billion.
Today, as the Minister of Finance noted at the recent G20 meeting, many challenges remain and they are no less important than the recent global downturn. With a fragile global economy, we must stay the course with our low-tax plan for jobs and growth.
Canada's labour market has succeeded in meeting recent challenges and performs extremely well compared to most other nations in job creation, yet we can continue and will continue to do better for Canadians. The small business job credit is part of our economic efforts, but as I have described, it is only one very important part. We have demonstrated yet again how we are lowering payroll taxes for 90% of businesses, which is why our government will remain focused on the policies we put in place to create an environment conducive to new investment, economic growth, and most importantly, job creation.
Mr. Scott Armstrong (Parliamentary Secretary to the Minister of Employment and Social Development, CPC):
Mr. Speaker, I want to be clear from the beginning that I do not think Canadian businesses are so selfish that they would fire employees just so they could continue to be eligible to receive the small business tax credit.
My family has been in small business for over 100 years in Truro, Nova Scotia. To say that small businessmen like my father, grandfather and great-grandfather would lay people off just to stay underneath the limit to get this credit is absolutely ludicrous. They are more interested in hiring good employees, training those employees and keeping those good employees in place so they can be more productive and the business can run better. That is what small businesses do. They grow the economy. They hire people. They build the employment structure in this country. That is what the small business people are all about, not firing people or laying people off to get underneath some limit to get a credit. That is not what small businesses typically do.
All businesses would rather put their efforts into making their enterprises grow, and hire new workers and expand their business. I do not understand why our colleagues across the way are opposed to the small business tax credit, which the Canadian Federation of Independent Business said will create over 25,000 new jobs for Canadians. This measure is the next step in the government's economic action plan, which has made Canada the envy of the world. Job creation and economic growth are the top priorities for our government, unlike the Liberal Party, which would tax businesses and treat the EI fund like a slush fund to pay for reckless investment schemes.
Now let us start with the EI changes that were introduced under the connecting Canadians with available jobs initiative. This helps Canadians get back to work more quickly. The changes were not about restricting access and benefits, but they were about giving unemployed Canadians the information and tools they need to get back to work. We have heard success stories from employers who have said those changes have helped them to find available workers. We have also heard success stories from workers who have been able to connect themselves to jobs that are available.
This was the case, for instance, in a company in Quebec that included 1,500 employees. Now this company, Regroupement des employeurs du secteur bioalimentaire, was able to connect and hire new Canadians because of the connecting Canadians to available jobs program.
As part of the EI changes, we have enhanced our jobs alert system, which has so far sent out 165 million job alerts to over 354,000 subscribers since January of last year.
These changes are just one part of the government's broader agenda to equip Canadians with the skills and training they need to help create jobs. While this country has weathered the global recession better than most, the recovery has varied across regions and across different parts of our economy. By connecting Canadians with jobs that are available and putting our priority on skills and training, we are ensuring that continued economic growth, job creation and long-term prosperity remain the priority of the government.
The measures we are taking fit into Canada's economic picture right now. We have recently completed free trade deals with the European Union and South Korea, giving us access to over 550 million consumers. Over half of the global GDP is now available to Canadian businesses to export their goods to. Under the leadership of the Prime Minister, Canada enjoys free trade with a total of 44 countries. This will have a tremendous impact on the economy and create tens of thousands of new jobs. It is a win-win.
It means growth opportunities for Canadian firms and also more jobs for Canadian workers with the right skills. This is especially true in the extraction and resource industry where hundreds of major projects are scheduled to come on stream over the next decade. For these sectors, projects like this hold much opportunity for prosperity, but they also carry real challenges.
As Canada's population ages, so does our workforce. The pipefitters, engineers, draftsmen and technicians will soon be in short supply because of the retiring baby boomer generation. This is particularly the case in the construction sector, the mining industry and the petroleum sector. At the same time, there will be 550,000 unskilled workers who will not be able to find work by 2016, according the Chamber of Commerce. That number could be well over a million by 2021.
How are we going to meet these challenges? We are going to meet them by moving towards a better way to match skills and training with in-demand and about to be in-demand jobs.
One of the elements of our plan is the Canada job grant, an innovative, employer-driven approach to help Canadians gain the skills and training to fill new and available jobs. Agreements have now been signed with all the provinces and territories to implement the grant. It is a critical step to ensuring that Canadians are equipped and prepared for the jobs that are going to be out there.
At the same time, we are providing incentives for young people to consider studying a career in the in-demand skilled trades. Since 2007, we have provided Canadians with nearly $700 million in apprenticeship grants. Through economic action plan 2014, we are creating the Canada apprenticeship loan to give apprentices interest-free loans of up to $4,000 during their training. It is estimated that starting in January 2015 at least 2,600 apprentices a year will benefit from this loan.
The government is also working to ensure the well-being of under-represented groups, such as Canadians with disabilities, aboriginal people, and new Canadians. The late finance minister had a special eye on helping those who are less fortunate, by creating the registered disability savings plan. These qualified people are too often sitting on the sidelines without jobs to go to every morning when they are perfectly able to work. For example, there are currently 800,000 working-age Canadians with disabilities who are not working, but whose disability will not prevent them from doing a job. Almost half of these, 340,000, have post-secondary education. That situation needs to change. To this end, we are providing $220 million each year through our labour market development agreements for programs and services, helping Canadians with disabilities to join the labour force.
Recently our government also reformed the temporary foreign worker program, to ensure that Canadians would always come first when it comes to the hiring of new Canadians in available jobs.We have introduced tough measures so that the program remains a last and limited resort when employers cannot find Canadians to do these jobs. Our government recognizes the fundamental importance of small business in fuelling this Canadian economy. That is why our government has announced the introduction of a small business tax credit.
It is estimated that this will result in savings of approximately $550 million for small businesses over the next two years. The introduction of this credit builds on our government's strong support of small businesses since 2006. We froze EI premiums to provide certainty and flexibility for small businesses; we reduced the small business tax rate from 12% to 11%, and we increased the small business limit to $500,000. The results are clear: a typical small business with $500,000 in taxable income is seeing a savings of approximately $28,600. In total, small businesses have seen their tax rate reduced by 34% since 2006, and the list goes on.
I think I have made the point. Our government is wholly committed to helping Canadians find good jobs, and Canadian small businesses are creating these jobs to support our families and communities. Therefore, there is no need for the measure that the Liberals are now promoting. For that reason, I urge my fellow members to join us in saying no to this motion.
Mr. Scott Simms (Bonavista—Gander—Grand Falls—Windsor, Lib.):
Mr. Speaker, I would like to start on the tail end of that conversation. There is something that is starting to annoy me as a representative of many constituents who are in this situation, as well as others, and that is the concept of this disincentive created by a 45-day work year. Keep in mind that the 45-day work year as it is proposed would put benefits into the employment insurance system that allow people with seasonal work, for example, to bridge into the next season.
Essentially what the members are saying is that the 45-day work year is a disincentive. We have to make the basic assumption that these people are absolutely lazy; we have to assume that all of them are. That is a very broad sweeping generalization that is not true.
Of all the seasonal workers in my riding, the vast majority of them want to work for more than 45 days per year. The rest of the year, they are only making 55% of their total wages. Certainly many of them want to make a full salary and to enjoy a standard of living for both them and their families.
Putting that aside for a moment, I want to get into the motion we have today. To take an excerpt from it, I believe it would create the incentive by which we would be able to hire new people. Certainly it would create the incentive to hire young people.
When the people in my riding get to the age of employment, whether they are educated or not, many of them drift further west to seek higher wages. Many of them go around the world seeking higher wages. Many of them who receive higher wages do not actually have trades skills, but because the incentive is there to make the big bucks very quickly, they go about doing that. That drains the pool of employees who are available for small businesses in my area. The perverse thing about it is that even though the demand for their goods and small business in the riding is high, the disincentive is there.
Let us be honest: most of these small businesses cannot compete with the wages being supplied by the industries in western Canada. I do not mean to isolate just that one area of Canada, but what I am isolating is the oil and gas sector. I use that as an example. The wage rates of these places are incredibly high. Small businesses cannot compete.
However, there are those who want to receive an education to have lifelong high wages because of the talents they possess, rather than filling a gap here or there. People want to have work in their own areas. To do that, we have to create incentives. They may be small, but at least they would create some incentive to allow people, especially young people, to be hired into areas where they can reduce their premiums such that it makes it more feasible.
In addition to premiums, we had a discussion last week about the minimum wage. Of course, we have to talk about the minimum wage in the sense that it is a provincial jurisdiction, but it has an effect. We would love to pay people a higher minimum wage, but it has an effect on small business.
I would like to point out, and I am honoured to do so, that I will be sharing my time with the prestigious member for Winnipeg North. He will be able to provide us with some great explanations of why we should be voting yes for this today. I, like all other members, am eagerly awaiting the words he will bring to us today and his experiences in his riding of Winnipeg North.
However, going back to the situation at hand, I would like to talk about the incentive we would be providing here. One of the things I like is that we are not just saying we would downgrade a particular measure that was brought forward by the government. We would provide an answer and another part of a suite of programs that would allow us to create incentives for smaller business.
The Conservatives recently announced the creation of the small business job credit, which many economists have called a disincentive for companies to grow. This counterproposal we are bringing today would provide this holiday, which we believe is a far more flexible situation for small businesses.
Over the years, we have seen evidence of this. We did this as government back in the 1990s. The new hires program serves as a good example.
However, the Conservatives' small business tax credit has a design flaw that discourages job creation and economic growth. Under the Conservatives, only businesses with EI payroll taxes below $15,000 get any money back. This creates a perverse incentive for businesses to fire workers in order to get below the $15,000 threshold.
My hon. colleague from Nova Scotia pointed out that really small businesses would not do that just to take advantage of a small credit. However, if people have a marginal small business, there are certain things they will do to look after their bottom line. It may seem small, but they will certainly take advantage of it.
I believe this plan could provide a disincentive. It may started out with the greatest of intentions, but certainly it has morphed into something that may create disincentive, which we need to address.
Therefore, what we are proposing today is certainly a greater alternative. It was endorsed earlier by the CFIB. In a Tweet from Dan Kelly, the president of the Canadian Federation of Independent Business, he said that he the loved the Liberal Party of Canada plan to exempt small businesses from EI premiums for new hires over two years and that it had lots of job potential. Indeed, there is a lot of job potential.
However, the Conservative plan offers up to $2,234 for firing a worker and only up to $190 for hiring a worker. Again, it may have started out with the best of intentions, but unfortunately we can see the discrepancy in dollars. This tells us that the plan we are proposing today would certainly be a better spearhead toward creating more employment, especially when it comes to new hires.
Over the past year, Canada has experienced little job growth. From August 2013 to August 2014, the entire country created net jobs of 81,300, with 15,000 of them full-time. By contrast, the United Kingdom created 775,000 jobs over 12 months and the United States 2.2 million jobs.
On September 11, the current Minister of Finance announced the creation of this plan. For small businesses, we are looking at an estimated cost of $550 million over the next two years, or $225 million per year. The minister said, “We believe it will encourage growth and employment opportunities”.
Any business that pays less than $15,000 in EI premiums in 2015 or 2016 will receive a refund when it files its tax returns for those years. However, $15,000 in premiums represents a total payroll of about $567,000, assuming no employee makes more than the EI contribution maximum, which in 2015 will be set at a $49,500 yearly salary.
The employer EI premium rate is $2.63 per $100 of paid salary. The rate for companies that qualify for the credit will be $2.24, which means the rebate is essentially 14.9% of the EI premiums that businesses pay.
Therefore, the maximum benefit for a company that pays just under $15,000 in EI premiums would be $2,234. However, a company that pays one dollar more than that would receive zero. Economists have pointed out that this could result in companies holding back on pay increases, reducing hours, or in the worst case scenario, actually laying people off.
Stephen Gordon from the University of Laval said:
|| Reducing payroll taxes is usually a clear win-win situation, resulting in increased employment and higher wages. The Conservatives have passed up this opportunity by creating yet another targeted boutique tax credit.
Mike Moffatt, assistant professor at the Richard Ivey School of Business, had this to say:
||—it is clear that firms under the $15,000 EI threshold have a big incentive to keep wage increases to a minimum so they do not lose their tax credits. Conversely, firms that are just over the $15,000 EI threshold have an incentive to cut the pay of their staff in order to gain the tax credit.
The Liberal plan could reward companies up to $1,280 for each new job they create. Now that is a decent incentive.
Mr. Kevin Lamoureux (Winnipeg North, Lib.):
Mr. Speaker, it is with pleasure that I rise today to speak to what I believe is a very important issue, an issue that affects all Canadians, no matter where we live in Canada. It is ultimately an issue to which Canadians can relate. For the first time, they see a political party that actually has an idea to create jobs.
The New Democrats can wish all they want where they might be on this position, but the Conservatives might want to reflect on their idea, and I would encourage them to do so. I will provide some comments on their idea and how that could be improved upon.
The Liberal caucus and our leader are very much focused on the middle class. We recognize that if we want to assist the middle class, we need to work on job creation. Jobs are very important. We get that message in the Liberal caucus. However, we do not understand why the Conservative government has missed the mark so badly.
To give an example, since May 2013, there has been a net loss of full-time jobs to the Canadian economy. Everyone here should be concerned about that. At least one party wants to see direct action taken by the government that would have a positive impact on the creation of full-time jobs. This debate is all about that.
We come to the table with experience on the issue. As has been already pointed out, back in 1993 the unemployment rate in Canada was at 14%. I remember the commercials and I remember former prime minister Kim Campbell saying that we would have to settle for double digit unemployment rates into the future.
Back then, Jean Chrétien of the Liberal Party said that we did not have to settle for that. At the end of the day, the Liberal Party of Canada was able to bring down that double digit unemployment rate of 14% under the Progressive Conservatives to 6.5% when Paul Martin left office in 2006.
Not only did we bring down the unemployment rate to 6.5% nationwide, we handed the Conservative government a multi-billion surplus as well as a multi-billion trade surplus. The Conservative government had a wonderful opportunity to really develop our economy, to provide the jobs that were important to Canadians, to ensure that there were full-time jobs for those individual Canadians who wanted full-time work and it blew that opportunity.
In the last couple of weeks we have seen a great example of government incompetence, the inability of the government to recognize that it made a mistake. All the Conservatives have to do is look at the small business jobs grant. The program is flawed. An honourable government, a strong leader in the Prime Minister's Office, would recognize that it blew it. It is time the Conservatives changed the program, and I have an idea for them.
Mr. Kevin Lamoureux:
Mr. Speaker, I trust and hope I will get an additional two minutes added to my time because of that point of order.
Having said that, I am very passionate about this issue. I recognize what Canadians want us to be talking about. They want us to be talking about full-time jobs. They want their members of Parliament to be talking about ideas that are going to have a positive impact on that particular front. Canadians believe that is the number one issue, because if we can create the jobs that are necessary, we will be able to improve the circumstances of the middle class and in fact of all Canadians, no matter where they live in our country from coast to coast to coast.
I want to get back to that flawed small business job credit program that the current government introduced earlier this month. If the Prime Minister had the political courage to recognize that his ministers have actually made a mistake here, we could improve this program so that more full-time jobs would be created.
Some of the quotes I saw in our media are interesting. In Macleans.ca, I thought this was interesting on September 11. Referring to the government's program, it said:
||...the government has set up a tax credit that can only be claimed by small businesses whose EI contributions are less than $15,000 a year.... As Kevin Milligan noted on Twitter, this sets up yet another “kink” in the tax schedule: small businesses will lose this tax credit if they grow too large.
The article goes on:
|| For firms that are just under the $15,000 threshold, hiring a new worker would mean crossing the line and losing the tax credit entirely. For firms that are just over the threshold, the incentives are even more perverse: firms may choose to actually reduce employment in order to be eligible for the tax credit.
That means losing jobs. It means jobs being lost because of this federal program. It is not creating the jobs that it could be creating, and that is why we are saying that they are losing an opportunity to do something good.
The Liberal Party has brought forward what I believe is a reasonable opposition day motion that would do something that the current government has not been able to do with regard to EI premiums, which is to clearly demonstrate that it will create full-time jobs across our country. We believe that if the government opened its mind somewhat, it would recognize the value of providing an EI premium exemption for every new hire to fill a new job in 2015 and 2016, because that particular program has been cited as being able to generate in excess of 150,000 jobs. Compared to what the Conservatives are creating, whereby there will even be some losses of jobs among certain employers, it is night and day.
We call on and challenge the government to recognize that, because those 150,000 jobs that I just referred to are not going to cost any more than what the Conservatives are proposing in their plan.
My colleague made reference to NDP voodoo economics, and I do not know where they get their numbers. What we do know is that the Liberal proposal would cost no more than the Conservative proposal, yet it would exceed by 100,000 new jobs what the Conservatives have on the table today.
Therefore, the question that I have for the government is this: why not? Why not allow for the Liberal plan to become a part of the government policy? There is no additional cost to it, and at the end of the day we would have 150,000-plus Canadians with full-time or part-time employment.
In the last 12-plus months, we have seen a net loss of full-time jobs. We have before us a resolution that would create jobs. This is an opportunity for the government of the day to recognize that it has made a mistake and adopt an idea that has been well spoken of even outside the Liberal caucus.
It is time that we move forward and look toward the future, one in which we can generate the types of jobs that are important to Canadians, full-time jobs, and ensure that opportunities will exist well into the future. That is what we in the Liberal Party—