The temporary easing of qualifying rules for Employment Insurance benefits is projected to cost $13.5-billion – substantially more than the $10.2-billion projection provided by the federal government in late September, according to a new estimate by Parliamentary Budget Officer Yves Giroux.
In an interview, Mr. Giroux said the difference between his figure and the government’s is likely owing to varying economic assumptions in forecasting models. He noted, though, that his office’s numbers – and the government’s – likely underestimate the cost of the EI measures because they do not account for the widespread business shutdowns recently announced in Quebec and Ontario in response to the rising number of COVID-19 cases.
Mr. Giroux also said the Finance Department should resume the practice of releasing a biweekly breakdown of all pandemic-related spending. That practice stopped in August when Parliament was prorogued.
“It seems we have taken a step back in terms of transparency with respect to COVID-19 spending,” Mr. Giroux said. “The fact that the government has stopped publishing these biweekly updates represents a loss in transparency. … Even with prorogation, they could have still continued to publish that.”
The Parliamentary Budget Office’s EI expansion cost estimate is almost twice the original $7-billion projection federal ministers announced in August, when they revealed the expansion as the core element of the government’s plan for income supports that would be available after the Canada Emergency Response Benefit (CERB) expired in late September.
The EI changes lowered the number of insurable hours required to qualify for benefits to 120 over the previous year. Before the change, applicants needed to have worked a minimum of 420 to 700 hours, depending on the local unemployment rate.
The original August proposal set the minimum potential EI benefit at $400 a week. However, the minority government agreed to increase the minimum benefit to $500 a week in order to secure parliamentary support from the NDP. The CERB had paid $500 a week to individuals who had lost almost all of their income for reasons related to the pandemic.
Employment Minister Carla Qualtrough told reporters on Sept. 29 that the higher minimum benefit would increase the cost of the EI measures from $7-billion to $10-billion. The Finance Department offered the more specific figure of $10.2-billion in an e-mail that day.
In addition to expanding EI, the government’s August announcement included three additional benefits covering self-employed workers and people who need to take time off owing to illness or to care for a family member.
In August, Ms. Qualtrough and Finance Minister Chrystia Freeland said the package of income supports – including the three new benefits, the EI expansion and an $8-billion one-month final extension of the CERB – would cost $37-billion, plus an additional $2-billion in foregone revenue by freezing EI contribution rates at current levels for two years.
After the government made EI and the three new benefits more generous in September, the Finance Department said the revised cost of those benefits would be $34-billion, bringing the total cost of the package of measures to $44-billion when including the final CERB extension and the EI premium freeze.
Monday’s PBO report said the cost of the EI measures alone will be $13.5-billion – $7.7-billion in the current fiscal year and $5.8-billion in 2021-22.
The PBO cautions, however, that its estimates are based on assumptions about the direction of the Canadian labour market that are “highly uncertain” because of COVID-19.
The federal government has not tabled a formal budget since March, 2019. Last month, the PBO said this year’s federal deficit is projected to be $328.5-billion.
Ms. Freeland has suggested a fiscal update will be released at some point this fall.
Credit to The Globe and Mail
