Ontario's Finance Minister Charles Sousa steps out of the chamber after question period in Toronto's Queen's Park Legislature on Tuesday November 18 2014. Kelsey Ingram, a spokesperson for Mr. Sousa, insisted it is possible for Ottawa to reduce EI premiums and increase training transfers, given that it is promising to show a surplus in the next budget.Chris Young/The Globe and Mail
Business groups are accusing Ontario of hypocrisy over its calls for Ottawa to boost job-training cash under employment insurance, noting the province's own budget argued lower EI premiums would give it room to launch a new pension plan.
Canadian payroll deductions include contributions to EI and the Canada Pension Plan, but Ontario announced last year that starting in 2017, it would go it alone with its own supplemental pension plan because Ottawa would not agree to a national enhancement of CPP.
The 2014 Ontario budget argued that 2017 was a good start date because Ottawa plans to reduce EI premiums that year, meaning there would not be an overall increase in payroll taxes as the province phases in new pension premiums.
But Ontario is now urging Ottawa not to reduce EI premiums by as much as planned and instead boost transfers that would allow provinces to provide job training to a greater number of unemployed.
Ontario, along with British Columbia and New Brunswick, has been designated by all premiers to negotiate on their behalf as Ottawa and the provinces work on "transforming" an annual $2-billion transfer for job training programs paid for from EI premiums.
Business groups argue Ontario employers would end up being hit twice on payroll taxes in a province where businesses are already facing higher energy costs and a higher minimum wage.
"There's giant hypocrisy on the part of the Ontario government," said Dan Kelly, president of the Canadian Federation of Independent Business. "They're looking to bring in new payroll taxes, lobby to have current federal payroll taxes maintained at high levels by increasing costs to the EI system and at the same time hoping that the reduction in those same federal EI premiums will provide some cover for their own giant tax hike. This can only be sliced so many ways."
Federal Finance Minister Joe Oliver announced a plan in September that would see the EI premium rate fall from the current $1.88 per $100 of insurable earnings to $1.47 in 2017. Mr. Oliver also announced a two-year tax credit for small business to help offset the cost of premiums. Employees pay the premium rate and employers pay 1.4 times that rate.
Joyce Reynolds, executive vice-president of government affairs for Restaurants Canada, said Ontario's position on pensions and EI doesn't add up.
"For sure that's a contradiction," she said, describing payroll deductions as a tax on jobs. "Employers are counting on payroll tax relief in 2017. They're counting on it to hire, train and retain their workers and to grow their businesses."
Kelsey Ingram, a spokewoman for Ontario Finance Minister Charles Sousa, insisted it is possible for Ottawa to reduce EI premiums and increase training transfers, given that it is promising to show a surplus in the next budget. "These issues are not mutually exclusive," she wrote in an e-mail. "We feel it is within their means and within their responsibility to all Canadians to increase funding for the labour market development agreement and stop shortchanging hard working Canadian families."
One common point of concern in the debate over changing the transfers – which are officially called Labour Market Development Agreements – is that the percentage of unemployed Canadians who qualify for EI has declined from 46.9 per cent in 2006 to about 38.6 per cent last year.
That leaves out most of Canada's roughly 1.3 million unemployed from traditional EI income support and also means they do not qualify for training under the program.
Conservative MP Scott Armstrong, the parliamentary secretary to new Employment and Social Development Minister Pierre Poilievre, said Ottawa agrees that training should be available to more unemployed people even if they do not qualify for EI. He argues this can be done by moving people off of traditional benefits and into training more quickly, creating savings that can be put back into expanded training.
Mr. Armstrong said that while Ottawa is opposed to higher payroll taxes, talks between Ottawa and the provinces on the issue are going well.
"There's a lot of common ground," he said. "I'm pretty positive that we're going to be able to come to a pretty good agreement nationally."
Canadian Labour Congress economist Angella MacEwen said the benefits to citizens and businesses in terms of stronger pensions and better job training paid for by premiums must also be considered in the debate.
"EI premiums are at historical lows," she said. "Just like any tax, you pay for it and you reap the reward of it. These programs are valuable and they play a valuable role stabilizing the economy."