Budget no help for the jobless

Posted on March 2, 2008 in Debates

TheStar.com – comment/editorial – Budget no help for the jobless
March 02, 2008

Talk about closing the barn door after the horses have bolted. That’s what Finance Minister Jim Flaherty did in last Tuesday’s budget when he announced that a new Crown corporation would be established to manage the employment insurance (EI) account.

Starting in 2009, the new EI account managers will set premiums each year at a level projected just to cover the unemployment benefits they pay out. If the projections are wrong and a surplus or a deficit occurs, premiums will be readjusted to ensure the account breaks even over time. The idea is to keep the politicians from using EI premiums for purposes for which they were not intended.

That, of course, does not make up for the abuses Canada’s primary social safety net has suffered over the past 14 years. It all started back in the 1990s, when then-finance minister Paul Martin launched his attack on the deficit. One of the weapons he used was the Unemployment Insurance Account (as it was called at the time), which he deliberately kept in surplus by imposing premiums far higher than needed to cover the benefits Ottawa paid out to the unemployed.

Diverting those annual surpluses (which peaked at $7.8 billion in 1998-99) into general revenues, Martin exploited the jobless insurance program to make a significant contribution to deficit reduction before slowly starting to ease them back down. Over the past 14 years, successive governments managed to divert $65.3 billion from the safety net for the unemployed to other purposes.

Flaherty has decided to put an end to this practice, once and for all. That’s good, as far as it goes.

But that still leaves one other problem, and it’s a major one.

At the same time that Martin was taking billions out of unemployment insurance, he brought in a series of “reforms” that made it much harder for Canadians in low-unemployment regions like southern Ontario to qualify for benefits. As a result of these changes, the renamed program, Employment Insurance, lost much of its usefulness as a social safety net. Today, less than a quarter of unemployed Torontonians qualify for EI benefits.

The Harper government has refused pleas – from the Ontario government, among others – to fix these problems.

And while its decision to turn the financing part of employment insurance over to an arm’s-length Crown corporation has merit, it also appears to signal that the government has no intention of repairing the inequities in the program.

For many Ontarians, Flaherty’s budget change means that, instead of paying overly high premiums for nothing in return, they will now pay normal premiums for nothing in return.

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