CANADA

Cutting back benefits

The Tories act on the unemployment issue

PAUL KAIHLA April 24 1989
CANADA

Cutting back benefits

The Tories act on the unemployment issue

PAUL KAIHLA April 24 1989

Cutting back benefits

CANADA

The Tories act on the unemployment issue

For years, the bureaucrats in Canada’s ministry of employment and immigration had drawn up proposals for their political bosses in the federal cabinet designed to tighten eligibility requirements for unemployment insurance. In 1980, the former Liberal government appeared to be ready to act on those proposals. But to the disappointment of department officials, the Liberals did not introduce tough changes. Then, after Brian Mulroney was elected prime minister four years later, officials in the new Conservative government prepared early plans to overhaul the insurance system. Those plans were delayed while a royal commission studied that goal and, nearing an election in 1988, the Tories postponed any reforms. But last week, the bureaucrats finally prevailed when Employment and Immigration Minister Barbara McDougall announced sweeping proposals to change the $ 13-billion insurance program, including $1.3 billion in cuts to benefits. Said one senior department official: “A lot of these ideas have been floating around for years, but the political timing was not right until now.”

The new rules would touch virtually all of the three million Canadians who use the system annually, including 30,000 claimants who now face disqualification. But, according to department officials, private polls commissioned by McDougall’s ministry now indicate widespread public support for the new measures. Said one senior department official: “You will not find many people who believe that the government should be paying out $13 billion a year so that people can sit around on their arses and drink beer.” But while McDougall said that the overhaul would get workers off assistance and into new jobs, opposition spokesmen accused the minister of launching an attack on Canada’s unemployed. And some experts said that parts of the proposed legislation are discriminatory and, as a result, may be unconstitutional.

The main component of McDougall’s reforms, scheduled to take effect next Jan. 1, is a new formula restricting eligibility for benefits in communities with low unemployment rates, such as Toronto, and reducing the maximum period for receiving payments by five to 10 weeks. This period may range from an unchanged 50 weeks in Newfoundland to a possible low of 35 weeks in Ontario. From the savings, said officials, $800 million will go to worker retraining programs. The other $500 million will go toward other improvements in benefits, including payments to natural fathers taking up to 10 weeks of paternity leave, and a longer benefits period during maternity leave—to a maximum of 30 weeks

from the current 15 weeks. The proposal would also extend payments to workers over 65, in compliance with recent court rulings that cutting off payments then is discriminatory. But some components of the current system will remain. At least one constant:

fishermen will be exempt from the qualification changes.

But opposition critics and economists attacked the proposal to treat claimants according to regional unemployment statistics. For example, a worker in Toronto, where the unemployment rate is just four per cent, will have to work for 20 weeks (instead of 14 now) to be eligible for benefits. But a worker in St. John’s—where unemployment is 11.5 per cent—will be eligible after working only 14 weeks (up from 10 weeks). Some experts, including Claude Forget, a Montreal lawyer and economist who chaired the 1986 federal commission on unemployment insurance, also said that the legislation could be challenged in the courts as a possible violation of the equality provisions of the Charter of Rights and Freedoms. Said Forget: “To discriminate against

claimants solely on a geographic basis is grossly unfair. The plan should be challenged under the charter.”

In the House of Commons, the opposition lambasted the Tories for not mentioning the reforms during last fall’s federal election campaign. Asked Opposition Leader John Turner: “Why didn’t the Prime Minister tell Canadians the truth if this was going to be the result?” In fact, six days before the Nov. 21 vote, McDougall said that she would increase benefits by seven per cent.

Indeed, before McDougall announced the reforms on April 11, senior party officials told Maclean ’s that the changes had been drawn up

last summer—before the election was called on Oct. 1—and that McDougall had tacitly approved them. One of the minister’s advisers said that the government had even briefly considered using parts of the proposals as an election plank. But two days after McDougall’s announcement, another department official contradicted that claim, saying that planning did not get under way until December, and the proposals were only approved by cabinet in February. Meanwhile, many economists predicted that Finance Minister Michael Wilson, in his budget next week, would increase unemployment insurance premiums and take larger deductions from workers’ paycheques.

PAUL KAIHLA

ROSS LAVER

MARC CLARK