Scott Brison

[Employment Insurance, September 29th, 2014]

Mr. Speaker, the Conservatives—

[Employment Insurance, September 29th, 2014]

Mr. Speaker, economists like Jack Mintz and Mike Moffatt have warned the finance minister that his new EI tax credit will actually discourage job creation. They have called it a “disincentive to growth”.

Does the minister understand that his tax credit perversely rewards employers for laying off workers? Does he see the flaw in his tax credit and, most importantly, will he agree to fix it, because Canada needs growth and jobs, not incentives to fire workers?

[Employment Insurance, September 24th, 2014]

Mr. Speaker, the Liberal plan to provide an EI break for new hires is endorsed by Canadian job creators.

Restaurants Canada says, “This Liberal proposal for an EI exemption for new hires would help restaurants create jobs”. Canadian Manufacturers & Exporters says, “Liberal plan would create jobs”. CFIB says, “Love the [Liberal] plan.... Lots of job potential”. They all agree that the Liberal plan would help create jobs and growth.

Will the Conservatives listen to Canadian business and adopt the Liberal plan for jobs and growth?

[Employment Insurance, September 23rd, 2014]

Mr. Speaker, economists from Jack Mintz to Mike Moffatt have slammed the Conservative plan, saying that it will discourage job creation and economic growth. Liberals have a better idea: an EI break for firms that actually create jobs.

Today the CFIB endorsed our plan, saying:

Love the #LPC plan to exempt small biz from EI premiums for new hires.... Lots of job potential.

Will the Conservatives listen to reason and adopt the Liberal plan for jobs and growth?

[Business of Supply, September 23rd, 2014]

Mr. Speaker, I thank my hon. colleague, the member for Malpeque, for his comments and understanding of the economic challenges faced by businesses of all sizes in creating jobs in this environment. That is the flaw with the Conservative plan. It limits the capacity for businesses above a certain size to benefit from their policy and create jobs.

We recognize the importance of small business in Canada. They are an important segment of our economy. I would appreciate the member's thoughts on the comments from Dan Kelly, the president and CEO of the CFIB, who said this morning, “Love the [Liberal Party of Canada] plan to exempt small [business] from EI premiums for new hires over 2 years. Lots of job potential”.

Does my colleague from Malpeque agree with the CFIB that there is a lot of potential for jobs in this Liberal policy?

[Business of Supply, September 23rd, 2014]

Mr. Speaker, I appreciate the speech and the remarks from my colleague in the New Democratic Party.

Does the member agree with her party's finance critic, the member for Skeena—Bulkley Valley, who said last week 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?

Does the member agree with her critic? We certainly do. If she agrees with the member for Skeena—Bulkley Valley that we ought to offer tax breaks to businesses when they actually create jobs, can we count on her support for the Liberal policy that does exactly that?

[Business of Supply, September 23rd, 2014]

Mr. Speaker, I thank my hon. colleague for the question.

Clearly, the government was wrong to propose this. It was ridiculous to create a program with such a flawed design. A program with bigger incentives can reduce the number of jobs, rather than create jobs.

We are trying to be constructive in this debate, which is why we proposed a more reasonable and more effective option—a Liberal program that reflects the principle espoused by the NDP finance critic. This program will help all businesses that create jobs. I do not understand why the government refuses to work with us to improve its approach and develop a stronger program that is more likely to create economic growth across the country.

[Business of Supply, September 23rd, 2014]

Mr. Speaker, I thank my NDP colleague very much for his question.

It is always important to strike a balance with respect to the employment insurance fund. The Conservatives were foolish to increase employment taxes during a recession, a time when economic growth was very slow and the unemployment rate was higher.

Now we have to correct the design flaw in the Conservatives' policy and come up with another way to stimulate economic growth and create jobs.

We have come up with a better approach that reflects the principle espoused by the NDP finance critic, who says we should support businesses that create jobs. I hope the NDP will support this motion.

[Business of Supply, September 23rd, 2014]

Mr. Speaker, I appreciate the question from my friend, the member for South Shore—St. Margaret's, with whom I served as a Progressive Conservative. Ten years ago the word “progressive” was removed from the Conservative brand. It was a reflection not only of style but of substance in that party. I understand that the member, after distinguished service to the people of South Shore—St. Margaret's and Canada, is retiring from public life and I wish him well in his future.

The question here is whether this public policy will work to create jobs and encourage small businesses to grow. The reality is that—and this is according to Jack Mintz, a significant economist at the University of Calgary, or Mike Moffatt—the Conservative measure would, perversely, provide a disincentive to grow businesses. In fact, it would potentially pay a small business $2,200 to fire someone while only $190 to hire someone.

There is a flaw in the design of this policy and I would urge the hon. member to stick to the public policy on this. He is a smart fellow. He has been a small business person and he understands business. I think he would agree with me that it does not make sense to encourage businesses to fire people. We should encourage them to hire.

[Business of Supply, September 23rd, 2014]

moved:

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.

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.