Mr. Speaker, I stand today to speak in support of our opposition day motion. I want to repeat it for those who may be listening in. It states:
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.
This is yet another example of a hopelessly misguided Conservative policy. The Conservatives' small business job credit is so flawed that it actually discourages job creation and economic growth. Quite simply, the Conservative proposal is bad for employers, bad for workers, and bad for the Canadian economy.
The Conservatives' EI credit plan encourages businesses to stay small and punishes them if they grow and are successful. Under the Conservative scheme, only businesses with EI payroll taxes below $15,000 get any money back. Moreover, despite being billed as a job credit, there is no requirement that companies actually hire new workers to qualify. That in itself is mind-boggling.
The Conservative proposal lowers the EI rate of a business from $2.63 to $2.24 per $100 of salary paid for any employer paying less than the threshold, with no requirement for job creation. Regardless of whether a small business hires new workers, remains the same size, or even fires workers, so long as they remain below the $15,000 threshold, they qualify. This creates a perverse incentive for businesses to fire workers to get below the $15,000 threshold.
Mike Moffatt, professor of economics at the lvey School of Business, expressed his concerns about the effect of this policy on wages, stating:
...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.
Wages are not the only thing in danger under this plan. In fact, the Conservative scheme offers up to $2,234.04 for firing a worker and only up to $190.52 for hiring a worker. This approach sets a dangerous precedent, especially in provinces like Newfoundland and Labrador, where over 5,000 Newfoundlanders and Labradorians who had a job this time last year are now out of work.
My constituents in Random—Burin—St. George's and their fellow Newfoundlanders and Labradorians face unemployment rates well above the national average. On the Avalon Peninsula, unemployment is 8%. In Notre Dame-Central-Bonavista, the rate is 16.4%, and in the South Coast—Burin Peninsula region, the unemployment rate is 17.3%.
More and more of my constituents are telling me that they are struggling to make ends meet, and many of my constituents have had to look for work elsewhere. What we need in Newfoundland and Labrador, and in other parts of our country, are more jobs, not fewer. The current government must do more to help create jobs instead of helping to drive high unemployment.
For young workers, job creation is even more important. The situation faced by youth across Newfoundland and Labrador is even more troubling. Unemployment among youth ages 20 to 24 is 15.3%, which is higher than the average in Newfoundland and Labrador and higher than it is for their peers across the country. More and more young people graduating from college and university programs have high debt loads and absolutely no guarantee of finding jobs. They are forced to move back home with their parents, and in many cases, their parents, some of whom are also having trouble making ends meet, try to assume the debt load and living costs of their children, which jeopardizes the future for all involved.
The best way to combat youth unemployment and to help create secure financial futures for all is with new jobs. There is nowhere more important where this will come up than in Newfoundland and Labrador, where there is such a high unemployment rate and a need for steady employment. At a time when youth unemployment is high and many students and recent graduates are struggling to find jobs or co-op placements, the government is continuing to compound the problem through its actions.
Instead of providing incentives for businesses to eliminate jobs, Liberals believe in providing businesses with incentives to create jobs. We have a solution: an EI premium exemption for new jobs created in 2015 and 2016. This would represent a benefit of up to $1,279.15 for each newly created job. That is an incentive. That is an encouragement to a business. The Liberal plan would represent a benefit of up to $1,279.15 for every new person hired by a company, which, for the same price as the proposed EI premium exemption, could produce over 175,000 new jobs.
This is a plan we know works. Under a previous Liberal government, similar incentives were offered through the new hires program as part of budgets 1997 and 1998. That program, unlike the current Conservative plan, provided an incentive to create jobs rather than an incentive to eliminate them, and experts agree. Today Professor Moffatt concluded in his latest piece:
The New Hires Program provides a great framework for a new Small Business Job Credit. I hope the government will take [the Liberals'] suggestion seriously and correct the flaws in their current proposal.
I too hope that the government will realize its error and admit that there is another way of making sure that we respond to the needs of Canadians and the need for employment, especially among our young people. I hope the government listens to the experts and votes in favour of the motion before us today.
What Canadians from coast to coast to coast need the government to do is encourage job creation and growth, not stagnation. Businesses should be encouraged to create more jobs, whether the company pays $14,999 or $15,001 in EI payroll taxes.
What is more, small businesses agree. Just this afternoon, the Canadian Federation of Independent Business, which government members quote all the time, endorsed the proposed EI holiday for job creators, saying that it had, and I quote, “Lots of job potential”. It is also important to note that EI is a fund paid into by employees and employers, not the government.
According to a report from the Office of the Superintendent of Financial Institutions Canada, in 2015 the government is expected to collect $3.5 billion more in employment insurance premiums than needed. Even with the estimated $225-million proposed tax credit, it still means the Conservative government will be taking in $3.25 billion more than necessary.
What this serves to do is to create the illusion of a larger surplus going into 2015, and we know that. We know what is happening with the cuts that are taking place under the government in terms of trying to create a surplus so it can do things leading up to the next election. As my colleague, the hon. member for Kings—Hants has said:
They're padding their books on the backs of workers and employers to fund a pre-election spending spree. At a time when employment numbers are soft and growth has stalled, it’s irresponsible for the Conservatives to maintain high job-killing payroll taxes just to fund their pre-election budget.
Canadians believe, and rightly so, that the government has a responsibility to not only create the right conditions for economic growth but to also ensure that growth is sustainable. We need to create the right conditions for jobs and growth to benefit all Canadians. What we have here is a tale of two policies: a Liberal proposal designed to create stable, long-term job creation and to spur economic growth, and a Conservative policy that creates incentives to fire workers and that discourages growth.
