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Nova Scotia Premier Darrell Dexter gives an interview at his Halifax offic on March 1, 2012.Sándor Fizli

The premiers of Nova Scotia and Prince Edward Island are warning Ottawa that it is wading into very dangerous political waters on EI reform, calling for a public debate on the highly sensitive issue of seasonal workers.

The two premiers say MPs need to take a very close look at what Ottawa is trying to accomplish with the employment insurance changes contained in the 425-page budget bill.

"Unemployment is one of those electric rails in Atlantic Canada that you want to be careful about," Nova Scotia's NDP Premier Darrell Dexter said Tuesday.

"It's worrying in the sense that if they grant their own discretionary powers to be able to make those changes without them coming forward for scrutiny of Parliament, then that would be obviously very concerning."

Robert Ghiz, the Premier of PEI, said he agrees with Ottawa that future labour shortages need to be addressed, but regional circumstances must be considered.

"The only thing I am asking is that they realize that in January in Prince Edward Island we are not growing potatoes and we're not catching lobsters, which are two of our largest industries," he said.

The budget bill removes from the Employment Insurance Act existing definitions of work that EI recipients can turn down as "not suitable," either because it is not in their field, pays less or does not offer good working conditions.

New rules will come later through regulation, which means that they can be approved by cabinet alone without parliamentary approval once the budget bill becomes law.

Human Resources Minister Diane Finley told the House of Commons Tuesday that new rules would be focused on connecting unemployed workers with jobs in their area and "in their range of skills."

During a Senate committee hearing Tuesday, officials from Ms. Finley's department confirmed that the budget bill will also replace a nationwide system of three-person EI appeal boards, called Boards of Referees, with a new Social Security Tribunal of 74 full-time members, of which 39 will handle EI cases.

Sue Foster, a federal director-general, said the change would save $25-million, largely because the government would no longer be paying about 1,000 part-time staff on appeal boards dealing with EI, the Canada Pension Plan, Old Age Security and disability benefits.

Prime Minister Stephen Harper and his ministers got an earful from opposition MPs Tuesday in the House of Commons a day after Finance Minister Jim Flaherty said Ottawa plans to "broaden" the definition of the type of work Canadians will have to accept if they're job hunting while on EI.

Mr. Flaherty also said, "There is no bad job. The only bad job is not having a job."

Yet federal rules and decades of case law do currently say there is such a thing as a bad job when it comes to EI. A long history of rulings by EI appeal boards have outlined situations where EI claimants can refuse an available job if it does not offer good working conditions.

Based on that case law, the Service Canada website notes that a job could be considered not suitable if the employer's record includes a high turnover, numerous grievances filed, lower pay than other employers, dilapidated premises or a generally dissatisfied work force.

David Campbell, a Moncton-based economic development consultant, said changes to EI should be studied by a royal commission, given the complications. He said a "culture shift" is needed to break the cycle in some rural areas where workers will quit once they are eligible for EI.

"We have to encourage more year-round work," he said.

Critics fear local knowledge about employers and the local job market will be lost if the regional EI appeal boards are scrapped. The current three-person EI panels include a chair, a worker's representative and an employer's representative. Under the new system, only one person appointed by the government will hear appeals from people who have been denied EI.

Ken Georgetti, the president of the Canadian Labour Congress, said provinces should be concerned that Ottawa will deny more EI claims, which could mean more demand for provincial social services. Mr. Georgetti said the existing EI panels tended to overturn government rulings that denied EI benefits.

"That's probably why they want to get rid of it," he said.