Everything you need to know about the main challenge facing Quebec is contained in a single sentence from last week’s report by a provincial commission examining federal changes to employment insurance. In this one line, the commission exposed itself as a colossal waste of time.
“In the next 20 years, while the working age population will fall by 3 per cent in Quebec, it will rise by 7.6 per cent across Canada and even by 12.6 per cent in Ontario,” said the report tabled by the commission, which is co-chaired by former Bloc Québécois leader Gilles Duceppe.
The problem facing Quebec, then, is not one of surplus labour. The problem is a shrinking work force, with fewer taxpayers to support an expansive social safety net and ballooning provincial debt. The Parti Québécois’s campaign promise of a provincial EI program is not just unaffordable, but the wrong idea at the wrong time.
The Duceppe commission, appointed by Premier Pauline Marois to make the political argument for provincial repatriation of EI, instead made a powerful case for the status quo. Rather than seeking outright control of EI, the commission concluded that Quebec should leave it to Ottawa to set pan-Canadian contribution rates and benefit eligibility terms. While it said Quebec should seek an agreement with Ottawa to administer the EI program within the province, it shattered the illusion that a Quebec-run fund could be more generous than the federal one.
Yet this has always been the central conceit behind PQ calls for a repatriation of the EI program. Provincial consent was required for Ottawa to create the program in 1940 and federal control has since been constitutionally entrenched. But Quebec has long complained that EI eligibility rules set in Ottawa disadvantage its workers, particularly those in the Gaspé and on the remote North Shore.
Last year, the federal Conservatives imposed the stiffest EI eligibility rules yet, requiring frequent beneficiaries to accept jobs outside their preferred field of employment and salary range and within an hour’s commute of their homes. The reforms were met with large protests in Quebec, and Ms. Marois sought to milk the mood by hiring a seasoned Ottawa-basher to hold hearings on EI across the province.
Rather than bolstering the case for provincial control, however, the Duceppe commission’s report actually underscored just how the federal program has favoured Quebec over the years. A study prepared for the commission by economist Pierre Fortin showed that EI benefits paid out in Quebec exceeded contributions raised in the province for all but four of the past 40 years – by $1-billion in 2012 alone, pushing the cumulative excess into the tens of billions of dollars in Quebec’s favour since 1972.
While that shrinking work force – and, hence, fewer unemployed workers – might reduce the gap in coming years, Quebeckers will continue to rely on EI more than most other Canadians. Quebec is home to the largest proportion of seasonal workers in Canada – it accounted for 37 per cent of seasonal EI beneficiaries in 2011-12, more than all the Atlantic provinces combined.
Since the Quebec government already decides how to allocate about $500-million in EI funds spent on job training each year in the province, any changes to the federal program that result from the Duceppe commission will amount to fiddling at the margins. Which raises the question of why the PQ government spent $1.3-million on this exercise in futility in the first place.
If it really insisted on spending money it doesn’t have, it should have held hearings to ask Quebeckers how they want to tackle the province’s structural budget deficit and intractable debt problem. As bad as the numbers were in Finance Minister Nicolas Marceau’s fiscal update last week, they would be even worse if not for an 11.6-per-cent increase in federal equalization payments next year, stemming in part from the financial hit Hydro-Québec is taking by closing the province’s sole nuclear generating station. (If you can figure out the logic in that, you’re smart enough to join the country’s tiny elite of equalization experts.)
Since the recession, Quebec’s net debt has increased by about a third and is set to surpass 50 per cent of gross domestic product by 2015 – and that’s only if Mr. Marceau meets his revised deficit targets, off-budget infrastructure projects don’t experience cost overruns and more overpasses don’t require major emergency repairs. Good luck with that.
With a declining work force and more seniors than the Canadian average, paying for it all will only get harder and harder. The real commission Quebec needs is the one charged with squaring that circle.