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Why Harper should fix EI

I have to admit, I’m surprised that Stephen Harper would be willing to risk the dissolution of his government over employment insurance reforms, but that appears to be the direction he’s headed.
During question period yesterday Harper told the opposition “if that leader wants to go out and tell Canadians that he thinks they should pay higher payroll taxes so that people can work 45 days and then collect EI for a year, every single year in every single region of the country, well, we’re ready to take him on.”
Maybe I’m off base here, but to me reforming EI doesn’t seem like a big deal. More and more Canadians are getting laid off, the Conservatives could use some more economic brownie points (though a recent poll revealed that 46% of Canadians think Harper’s the best choice to manage the economy, while 32% picked Ignatieff), and they’d be able to take Ignatieff’s only promise to date off the table.
Sure, it wouldn’t be cheap in a recent report, TD Economicscalculates that reforming the entire EI system would cost between $400 million to $4 billion. That’s a pretty big range, though simply reducing EI contribution hours, which Ignatieff wants to do, to 360 hours would cost tax payers about $1 billion.
That might still sound like a large number, but TD thinks the government needs to do something to get more people on EI during these tough economic times. Right now one in five potentially eligible Canucks are without benefits.
One of the major problems with EI relates to those contribution hours. Currently, people in low unemployment areas have to work about 700 hours to qualify for benefits, while Canadians in higher unemployment locales need to work just 420 hours. TD suggests Harper should, at the very least, even these hours out.

Ease the VER (variable entrance requirements) in regions with unemployment rates of less than 10% from the current 560-700 hours to the lower floor of 560 hours. For all other regions, criteria would be unchanged. This measure would cost approximately $500 million a year.

Alternatively, the government could standardize the criteria for all EI contributors at 420 hours, which is the current minimum, or even reduce the bar for all, to 360 hours. Cost estimates are $800 million and $1 billion, respectively.

Clearly, the government has options. And all it would take to suck the wind out of Iggy’s sails would be to act in one of these ways. Now, I understand that if the Conservatives do fix the system the Liberal’s will try to take credit. Ignatieff and crew will say they had the idea first and play up that they’re the party of good economic ideas. But Harper could add the EI initiative to his other list of economic accomplishments he’ll trot out come election time.
And in voters’ minds, especially the ones who aren’t working, stealing someone’s idea would be better than not acting at all, right?
(Harper’s done it before remember the Quebec nationalism debate? Ignatieff started that by backing a resolution from the federal Quebec Liberals who wanted the government to officially recognize their province as a nation within Canada. The PM, who was once vehemently opposed to that idea, ended up proposing his own motion to recognize Quebec. The Conservatives spun it in a way to make it seem like it was Harper’s idea leaving the Liberals helpless and he ended up winning desperately needed votes in the country’s Francophone province.)
In the TD report the authors write something else that’s very interesting, and it goes to heart of why Harper shouldn’t just ignore EI.

The truth of the matter is that during an economic downturn, it is no easier to find a job in a region with lower prevailing unemployment that in one with higher unemployment rates. But while such a case is less compelling during periods of expansion, we still believe that such a sizeable discrepancy in the prevailing entrance requirements could be struck down based on the fairness argument.

Now that Harper’s loudly proclaimed he’s not only going to keep EI as it is, but he’s willing to go to an election over it, it’s going to be hard to backtrack if Canadians start looking at their alternatives for PM.