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Liberals, Tories at loggerheads over cost of EI reform

OTTAWA - Cost has become the latest flashpoint between Conservatives and Liberals in their potentially election-provoking squabble over employment insurance reform.

OTTAWA - Cost has become the latest flashpoint between Conservatives and Liberals in their potentially election-provoking squabble over employment insurance reform.

Federal officials claimed Thursday that a Liberal proposal to ease access to jobless benefits would cost more than $4 billion a year to implement.

But Liberals charged the governing Tories have "grossly inflated" the number of unemployed who'd be eligible for EI under their plan, thereby producing "astronomical costs" to justify their flat rejection of the proposal.

"I'm incredibly disappointed that they're out (in public) taking information that they have fabricated and distorted and taking it out of our meeting for political purposes," said Liberal MP Mike Savage.

"Their numbers are an absolute and complete distortion of the truth . . . They've virtually quadrupled the cost of our proposal."

Savage is a member of a bipartisan working group that's supposed to be trying to find enough common ground on EI reform to avert a possible fall election. The cost estimates, prepared by Human Resources and Skills Development Canada officials, were presented to the group at a meeting Thursday.

Savage said Liberals will continue trying to find a consensus on EI reform. But his frustration was apparent.

"How do you negotiate with people who, (when) you sit with them and try to produce some kind of common ground, as soon as the meeting's out they're out running around with this kind of stuff?" he fumed.

"It's just not the way to do business or politics or anything else."

Ottawa MP Pierre Poilievre, a Conservative member of the working group, insisted the costing is accurate, produced by "an independent and non-partisan public service."

"Everyone knows that nine-week eligibility for EI is extremely expensive. That's why these numbers are so eye-popping."

Despite the feud, however, Poilievre said he remains optimistic that the two parties can negotiate "a solution that respects hard work, is affordable and improves the system."

Currently, there are 58 different thresholds across the country for qualifying for jobless benefits, ranging from 420 to 700 hours of work depending on local unemployment rates.

Liberal Leader Michael Ignatieff has proposed a single national eligibility standard of 360 hours. He's estimated the proposal would add about 150,000 otherwise ineligible Canadians to the EI rolls, at an annual cost of about $1 billion.

Independent studies, such as one released last April by TD Economics, have come up with similar or identical estimates.

But the analysis done by HRSDC officials pegged the number of additional beneficiaries at 332,580 and the additional annual cost at roughly $2.3 billion.

Moreover, officials said once potential long-term impacts on the labour market are taken into account, the cost would balloon to more than $4 billion.

During the meeting, Liberals said, federal officials admitted that their estimate of the number of people affected by the "360" plan includes new entrants to the work force, re-entrants and those receiving special benefits, such as maternity leave - none of whom Ignatieff's proposal is intended to cover.

Ignatieff's intention is to cover only those unemployed workers who've paid into the EI system but haven't worked sufficient hours to qualify for jobless benefits. Based on HRSDC's own figures, that would be 9.6 per cent - or about 150,000 to 160,000 - of the current 1.6 million unemployed Canadians.

At an average of $6,900 in benefits per individual, Liberals calculate the total cost at just over $1 billion.

As to the potential long-term labour market impacts, Liberals argued such additional costs would only occur if the 360 threshold was made permanent. Ignatieff has been clear that it would only be a temporary measure until the recession-ravaged economy rebounds.

Economist Grant Bishop, co-author of the TD Economics study, said the federal numbers "seem a tad bit high" but he said he'd have to see the methodology and data used before judging their accuracy. HRSDC officials have access to more precise data than he was able to use, he added.

Colin Busby, policy analyst with the C.D. Howe Institute and co-author of new report on EI reform, agreed.

"You really need access to those administrative figures to come up with a really good, precise estimate, which the department of human resource development has," said Busby.

"Everyone else's guess is just a guess."

In a report released Thursday, Busby and co-authors Alexandre Laurin and David Gray propose setting a single national threshold at 560 hours of work, with benefits lasting between 22 and 45 weeks. They argue that their plan would remedy regional inequities without encouraging workers and employers to adjust their behaviour to take advantage of more generous EI access.

In the past, lower thresholds have sparked increases in seasonal unemployment.

TD Economic's report last April proposed a very similar remedy.

 
 
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