Evidence of meeting #56 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site.) The winning word was measure.
A video is available from Parliament.
4:45 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Can I ask, why not? Is it wrong, or is it right, or is it in the range?
4:45 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
The department has not done an in-depth analysis of the methodology used by the Parliamentary Budget Officer. At this point, no, we wouldn't be commenting on the reliability of the results.
4:45 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Does the PBO estimate of 800 jobs created for the $550 million less or more than the estimate that the Department of Finance did for the impact of this program?
4:45 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
The Department of Finance did not produce an estimate of the number of jobs. One thing I would flag, as with most policy measures, is it's extremely difficult to isolate the impact of one single measure on something like job creation. There's a number of convergent impacts that can happen on job creation in a given year. It could be coming from the status of the economy. It could be coming from other policy measures like the Canada job grant, for example.
It's very difficult to isolate this measure. I think a testament to that is that two analyses done by two shop staff with economists arrive at wildly different numbers.
4:45 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Is it typical for the Department of Finance to rely on person-years for its estimates around a job creation program?
You're relying on the CFIB's analysis. You referred to it. The minister's referring to it. It uses person-years as part of its analysis. Is that a typical measure that the Department of Finance uses for job creation programs: person-years as opposed to jobs created?
4:45 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
If I understand correctly, your question is whether we would refer to “person-years” as opposed to “job in a specific year”. That would depend on the policy context. That would depend on the actual measure under consideration. That would depend on the methodology that we might use to produce a specific estimate. So it would depend.
4:45 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
With regard to this particular initiative, the EI fund has to maintain a balance over a certain period of time. It has to restore itself. Correct?
4:45 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
That is correct.
4:45 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
What length of time is that? When does the EI program have to get back to that balance point? You've taken money out; it has to go back in.
4:45 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
Yes, that's correct.
The way it works, in last year's budget the government introduced the seven-year rate-setting mechanism. In 2017 that rate-setting mechanism is going to kick in. That means that as of 2017, the EI premium rate is going to be calculated according to the rate-setting mechanism.
The rate-setting mechanism means that over the course of seven years, the account has to be brought back in balance. To be very clear, when we're talking about bringing the account back in balance, it's the total stock of the account. The surpluses that might happen before 2017 will be taken into consideration and will be whittled down, starting in 2017, according to that mechanism.
4:45 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Just to confirm one thing, the reason this program is a two-year program is that clock on the seven-year balance with the EI program doesn't start for two years. I don't want to insinuate it; I just want to understand it. Is that why this program is two years? Then would the new balancing of the EI program start two years from now?
4:45 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
I wouldn't speculate on the why, but I can tell you definitely that this program is for two years and that the rate-setting mechanism does start in 2017, the year after this program ends.
4:45 p.m.
Conservative
4:50 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
My questions are also on the subject of the small business job credit.
I think my colleague opposite might have called it a hiring credit. Although it is designed to increase hiring, it shouldn't be confused with another program that has expired, which was called a hiring credit previously.
The opposition and some others have called this an expenditure. My understanding is that it's a tax reduction. Is it an expenditure or a tax reduction?
4:50 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
It's a return of EI premiums that have been paid by small businesses. Small businesses would be paying the EI premiums throughout the year, and after they file their T4 returns, this amount will be returned to them. It is indeed a return to small businesses.
4:50 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
It's not an expenditure. It's simply a 15% reduction in the premiums.
Who will benefit from this?
4:50 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
There are over 780,000 small businesses across the country that are expected to benefit from the measure in both 2015 and 2016. The small businesses are defined as employers who pay $15,000 in EI premiums or less.
4:50 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
The same entities that are paying into it, contributing to it, are the ones benefiting from it. It's a reduction in their taxes, basically.
4:50 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
That is correct. You have to pay EI premiums to be able to benefit from this measure.
4:50 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Do you know what the average savings would be for these entities?
4:50 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
If memory serves, it's $350.
Exactly, it's $350 per year for each year for 2015 and 2016. That is the average.
4:50 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Okay.
It has been suggested by some people in the opposition that this program would encourage the firing of employees to receive the credit. In your opinion, do you believe that's the case? Would small business owners actually fire people to collect $350 in benefits?
4:50 p.m.
Chief, Labour, Market Employment Learning, Department of Finance
Small businesses that are flourishing will expand based on a number of factors, such as the economic climate, sales growth, and exports. So on balance, across the economy, we would not expect the credit to be a disincentive for small businesses to grow.
4:50 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
So it would be highly unlikely that small businesses would change their business model just to capitalize on a $350 benefit. They would not be firing people just to receive that benefit. Is that your opinion?
