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Liberals were warned EI review could have political consequences: documents

Jean-Yves Duclos, Minister of Families, Children and Social Development speaks o n July 16, 2019 in Levis Que. .
Jean-Yves Duclos, Minister of Families, Children and Social Development speaks o n July 16, 2019 in Levis Que. . THE CANADIAN PRESS/Jacques Boissinot

OTTAWA — The Liberals were warned on the eve of an election year about the political consequences of following through on a four-year-old campaign promise to review the employment insurance system, newly released documents show.

Prime Minister Justin Trudeau had asked one of his senior ministers to conduct a sweeping review of the social safety net program to come up with ways to adapt EI to changing labour force demands.

The program hasn’t had a review in more than two decades, during which time it has become more complex while the number of people qualifying for benefits has dropped.

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Documents provided to Social Development Minister Jean-Yves Duclos late last year warned about how a detailed review could drum up “significant expectations” on the Liberals to enact very costly changes to the program, tailored to each group’s priorities.

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The documents, dated December 2018 and obtained by The Canadian Press under the Access to Information Act, said reconciling and managing “different and sometimes conflicting priorities” from stakeholder groups would be challenging, given that some “may be very costly” or “not in line with the program’s role and objectives.”

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Although the Liberals didn’t launch a review as promised, Duclos’ office said the government is always looking for ways to improve the EI system, pointing to changes to parental leave, new family caregiver benefits, easing eligibility for new or returning workers, and a skills training credit — all done over four successive budgets.

Still, the government has heard growing concerns that more people could find themselves unable to access benefits, straining their finances and the economy over time, due to disruptive technology shifts in the labour market. The rise of the so-called “gig economy,” officials wrote to Duclos, means that “gaps in EI coverage could widen over time.”

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For instance, EI is typically unavailable to self-employed workers, who make up 15.2 per cent of the labour force; causal or temporary workers, who make up three per cent, or contract workers, who make up 6.3 per cent.

The ideas officials presented for the review included looking at how to reshape EI to reflect those labour market shifts, ways to simplify the sprawling program, and how to fund it — including whether the government should also kick in money, or make heavy users pay more.

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There is widespread consensus about the issues facing employment insurance, but less agreement about the policy avenues to follow, said Frances Woolley, an economics professor from Carleton University in Ottawa.

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Any changes will have well-defined losers, particularly if changes affect seasonal workers and high-unemployment regions, she said, while winners spread across the country aren’t going to be as loud.

“Whenever you have a situation where you have a well-defined group of losers and a diffuse group of winners, it’s a politically impossible situation,” said Woolley, who has studied the EI system.

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“You’re not going to be able to build political consensus around that. So what’s the point of having a review when there isn’t something you can build political consensus about?”

The Conservatives learned the perils of making changes to EI when they were shut out of Atlantic Canada ridings in the 2015 federal election. The Liberals swept the region, but are expected to face an uphill battle in the region before voters return to the polls Oct. 21.

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The documents show that Duclos’ department, Employment and Social Development Canada, was ready to launch a review and run it within the Liberals’ “desired time frame” of one year. Department officials wrote that they had started analyzing multiple aspects of the program and possible recommendations, but noted that “broad engagement” on possible changes, “let alone a fully developed policy response,” would be difficult because of the limited time before the election.

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Duclos was given alternate options for a review “in view of time constraints and cost considerations,” but officials have redacted the details from the documents on the grounds that they constitute advice to the government.