Finance Minister Joe Oliver says the government approved a $550-million tax credit for small business without conducting any internal analysis to find out how many jobs the measure would create.
The minister told the House of Commons finance committee Wednesday that such analysis was deemed unnecessary because it had already been done by the Canadian Federation of Independent Business, a small-business lobby group.
The comment prompted accusations that the government is surrendering its policy development role to private-sector lobbyists.
When he first announced the hiring credit in September, Mr. Oliver raised eyebrows by pointing to a CFIB estimate to make the claim that the move would create 25,000 “person years” of employment. The announcement did not include any job-creation estimates from the government.
The next month, the Parliamentary Budget Officer rejected those numbers, concluding the credit would create only about 800 jobs over two years.
During an appearance Wednesday before the House of Commons finance committee, NDP and Liberal MPs asked the minister to explain the discrepancy between the numbers from the lobby group and the watchdog and also asked whether the Department of Finance had conducted any analysis of its own regarding the credit.
“We don’t do analysis on every expenditure,” Mr. Oliver said.
“So why wouldn’t you have done an analysis on this one?” asked Liberal MP Scott Brison.
“Because we didn’t think that we needed to do another analysis when we already had received one and we knew that this is a good news story for small businesses. The small business organizations have been asking us for a long time for this break,” Mr. Oliver replied.
Opposition MPs had been trying to determine for weeks whether Finance Canada had conducted its own analysis of the credit. The minister’s comment was the first confirmation it had not.
The two-year credit will provide an average payment of $350 to qualifying small businesses to offset the cost of employment-insurance premiums.
The credit was announced instead of an across-the-board reduction in EI premiums, which the government says will occur in 2017.
The day after the government’s announcement, the Office of the Chief Actuary released a report stating that Ottawa will collect $4.6-billion more in EI premiums in 2015 than it will likely pay out in benefits, creating a $3.5-billion surplus after covering the account’s $1.1-billion deficit.
The PBO analysis said that by keeping premiums higher than necessary to break even, the economy will lose more than 9,000 jobs over the next two years – after accounting for the 800 jobs created by the credit.
Surpluses or deficits in the EI account are reflected in Ottawa’s overall bottom line.
The opposition has accused the government of keeping EI premiums artificially high to fund spending and new tax cuts and post an overall surplus during an election year.
NDP finance critic Nathan Cullen said Wednesday that the minister’s comment shows the government is making major decisions based on ideology rather than evidence.
“They’re outsourcing policy to business lobby groups,” said Mr. Cullen. “Would they outsource policy to the Canadian Federation of Students? Would they outsource it to the national unions? They are now just allowing other people to write policy and spend employment insurance money.”Report Typo/Error