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.