Flaherty to cut EI hike as deficit targets slip

[mentalfloss]

Flaherty to cut EI hike as deficit targets slip

Finance Minister Jim Flaherty will announce measures to boost employment in his economic update Tuesday, while conceding that worsening economic news means Canada will miss deficit-cutting targets set just a few months ago.

Flaherty will announce that an increase in employment insurance premiums planned for January will be reduced by half.

The finance minister is also expected to extend a work-sharing program that allows employees who would otherwise be laid off to work part time and receive EI benefits. The program was first announced in the 2009 federal stimulus budget and has been extended in each of the past two spring budgets.

EI premiums were set to increase in the new year by 10 cents per $100 for employees and 14 cents per $100 for employers. Those increases will now be five cents and seven cents respectively. The changes mean, for example, that companies will pay about $31 more a year for an employee earning just over $44,000, rather than $62 more. An employee earning that much will pay about $20 more per year rather than the planned increase of $40.

The Canadian Federation of Independent Business on Monday called for a delay in the EI hike for 2012, arguing it could dissuade small and medium-sized businesses from hiring. Flaherty froze EI rates in 2009 because of the recession, and last summer held consultations on the premiums.

Flaherty's update, to be delivered with a speech to Calgary's chamber of commerce, follows G20 meetings dominated by discussions of the eurozone crisis, and just days after news that Canada had shed 54,000 jobs in October.

The Conservatives maintain they have helped create 600,000 net new jobs in Canada since 2009.

The government has pledged to cut $4 billion a year from the budget to bring it back into balance from deficit by 2014. Opposition MPs say now isn't the time to cut government programs and jobs, when the economy is already weak.

Finance Department numbers released Oct. 26 show the government isn't likely to meet its deficit target. Based on predictions by private sector economists, the department's numbers forecast an economy generating $83 billion less between 2011 and 2015 than the government projected in its June budget.

That could mean government revenues will fall short by as much as $12 billion by 2015.

Flaherty and Prime Minister Stephen Harper have said they will remain flexible on new stimulus plans, but only in case of a recession.

LIVE: Flaherty to cut EI hike as deficit targets slip - Politics - CBC News

 

[mentalfloss]

We the people apparently don't give a flying f uck about accountability. Way to go folks!


Tories miss deficit targets but don't pay political price

OTTAWA — It was the surprising showcase campaign promise of the Conservative election bid just six months ago.

The federal deficit would be eliminated a year earlier than forecast, Prime Minister Stephen Harper told an adoring, partisan crowd in Mississauga, Ont. "Our platform is realistic, accurately costed and looks four years down the road," Harper, who was introduced at every campaign event as a "trained economist," said that day in early April.

Erasing the deficit by 2014 was more than an accounting triumph en route to Harper's majority government win on May 2. The deficit promise had cascading policy implications for other elements of the Conservative platform.

A $2.5 billion income-splitting scheme for two-parent families? Conditional on a balanced budget. So was the pledge for an adult fitness tax credit.

Not surprisingly, those campaign pledges weren't mentioned Tuesday when Finance Minister Jim Flaherty stood in Calgary and announced his government's worst kept secret -- Ottawa's books will not be balanced by 2014-15.

"Let me be clear: we will not be bound by ideology when it comes to making decisions to keep our economy strong and protect Canadians, their financial security and their jobs," said Flaherty as he released his fall economic update. "We have responded to critical situations with flexibility and pragmatism, and we will continue to do so as situations dictate."

Economists -- and likely many Canadians -- reacted to Flaherty's deficit forecast with a yawn.

"Voters in general are taking a very big-picture view of things: Is the government moving in the general direction they approve of?" said the University of Calgary political science professor.

What's not clear is whether there's any sea change in Canadian public opinion about the necessity of balanced books.

If the Conservatives thought advancing the deficit elimination timetable by a year was a big political winner in April, why is pushing it back a year or two not a big liability in November? "We do see there is a kind of tolerance for deficits but an orthodoxy around balanced budgets, and I think that's what this government is trying to tap dance around," Allan Gregg, chairman of pollster Harris-Decima, said in an interview.

Paul Martin, the Liberal finance minister who slew Canada's debt and deficit dragon in the mid-1990s, said Canadians faced a very different situation then. Canada's debt-to-GDP ratio was approaching 100 per cent, near the same perilous territory that is engulfing Greece and threatens Italy, Portugal and others in Europe.

Voters recognized something had to be done, said Martin, but were loathe to accept the tough cuts that come with deficit reduction.

What made it work, he said, was that his government kept meeting and exceeding its targets.

"In other words, we were not asking Canadians to make a sacrifice in a hopeless cause .... I think that's one of the reasons Canadians got behind us," said Martin. "I felt part of the bargain with Canadians in terms of the cuts that had to be made was that we would either meet or better our targets -- and in the deficit fight we never missed a target."

It's a lesson the Conservatives have yet to learn.

"Let me be crystal clear," Harper said during the 2008 election campaign. "A Conservative government ... will not be running a deficit. We will keep our spending within our means." Two months later, the government delivered a budget that forecast a $33.7 billion deficit in 2009-10, which actually turned out to be more than $55 billion.

"Mr. Flaherty is in the unenviable position of not having hit a single target that he set for himself since becoming minister of finance," said Bob Rae, the interim Liberal leader. Rae acknowledged that "no sensible person is in a state of shock that Canada has been buffeted by what's taking place in the United States and in the European economy at all." But he slammed the Harper government for repeatedly setting targets as though Canada was immune.

"I think what matters is that they are pretending to be masters of the universe and they absolutely are not."


CTV Edmonton - Tories miss deficit targets but don't pay political price - CTV News

 

[JLM]

For politics to work, adjustments have to be made regularly to reflect the reality of the moment.

 

[VanIsle]

Who could have predicted things in Europe would get as bad as they have. It has to have an impact on Canada as well. Why would this news surprize or outrage anyone?

 

[mentalfloss]

Who could have predicted things in Europe would get as bad as they have. It has to have an impact on Canada as well. Why would this news surprize or outrage anyone?

A difference of $83 Billion from what was promised of our economy isn't a surprise and we should be thankful CONFIRMED.

 

[Retired_Can_Soldier]

Why the second thread?

 

[mentalfloss]

Why the second thread?

Different Tory blunders, and mine was posted first.

 

[Retired_Can_Soldier]

Different Tory blunders, and mine was posted first.

Same as you posted in the other thread. But okay, if it was here first I can dig it.;-)

 

[jjaycee98]

For politics to work, adjustments have to be made regularly to reflect the reality of the moment.

The Rate for EI in 1997 was 2.90% for a maximum of $1131.00. The fund had so much excess money it was raided by the Liberals to fund other programs.

The lowest contribution years were 2008 through 2009-only 1.73% and maximum contributions of only $711.03 in 2008, with employers always paying in 1.4% or $995.44 in 2008.

The program has never been used effectively to train workers as needed. We have very few Trades People and are having to hire foreign workers. Would we really mind paying a bit extra if we had better access to Training for ourselves and felt confidant that our Kids would have oportunities after us?

IMO everyone could learn a new skill, more Safety Training, Health instruction even learning to cook healthy meals, effective Exercise programs to stay in shape while unemployed would be a good thing. Leisure time skills and instructions in doing a Hobby that will keep someone busy while unemployed even have value. You should have to be doing something rather than being a couch potato and getting depressed, or worse drunk!

 

[mentalfloss]

The Rate for EI in 1997 was 2.90% for a maximum of $1131.00. The fund had so much excess money it was raided by the Liberals to fund other programs.

The lowest contribution years were 2008 through 2009-only 1.73% and maximum contributions of only $711.03 in 2008, with employers always paying in 1.4% or $995.44 in 2008.

The program has never been used effectively to train workers as needed. We have very few Trades People and are having to hire foreign workers. Would we really mind paying a bit extra if we had better access to Training for ourselves and felt confidant that our Kids would have oportunities after us?

IMO everyone could learn a new skill, more Safety Training, Health instruction even learning to cook healthy meals, effective Exercise programs to stay in shape while unemployed would be a good thing. Leisure time skills and instructions in doing a Hobby that will keep someone busy while unemployed even have value. You should have to be doing something rather than being a couch potato and getting depressed, or worse drunk!

I hope they don't treat CPP like they are treating EI right now..

Paul Martin's CPP Investment Saved us $153 Billion

Without that investment income, we’d all have to be digging a lot deeper to pay for our grandparents’ and parents’ pensions (the average retiree gets $512 a month from the CPP, but it can go as high as $960; Old Age Security and Guaranteed Income Supplements, paid out of general government revenues, can add another $900). And that’s just what Martin was hoping to avoid when, as federal finance minister, he pushed for reforms to the Canada Pension Plan in 1997.

“We had a bit of a magic moment here,” he said of the reforms, which were implemented following a rare degree of cooperation between the provincial governments. “To be quite honest, the provinces rose to the occasion.”

What Martin proposed, and what eight out of 10 provinces accepted, was an increase in premiums to 9.9 per cent of a person’s income, and a small cut in benefits. The resulting excess in premiums was allowed to be invested in the stock market, with the goal of boosting the CPP’s money to the point where it didn’t need to rely as much on current premiums to pay out benefits.

By and large, the strategy has worked, says professor James MacKinnon, head of the economics department at Queen’s University.

“What they did at that time greatly strengthened the CPP. . . The higher contribution rates and more market-oriented investments were a substantial move away from pay as you go,” said MacKinnon. “I don’t see any reason to use the world insolvency and the CPP in the same sentence.”

While some critics at the time suggested it was reckless to have a national pension plan subject to the vagaries of the stock market, Martin still insists that the decision was the right one.

“Look at the alternatives. The status quo had brought the CPP almost to its knees. The second alternative was to individually invest in pension plans, and that would be even more vulnerable to the market,” Martin said.

Besides, says the former prime minister, the proof is in the pudding. The pudding, in this case, being a report from the Chief Actuary of Canada projecting that the CPP Fund will have enough money to pay out pensions until at least 2086.

“It’s actuarially sound for the next 75 years, which is as far out as they go,” said Martin.

http://forums.canadiancontent.net/canadian-politics/102689-paul-martins-cpp-investment-saved.html