Taxpayer watchdog highlights startling EI statistics, recommends sweeping change

Canada's employment insurance system is a mess.

To that end, the Canadian Taxpayers Federation released a report, Monday, with some new and innovative ideas about how to fix it.

The most interesting thing about the report, however, were some of the statistics — they're just jaw-dropping:

- Last year, Ottawa collected $3.3 billion more in EI tax than they paid out in benefits. This year they're expected to receive a net of $4.2 billion.

- Workers in Newfoundland and Labrador collected $14 billion more than they put in, between 1981 and 2009.

- Between 2008 and 2010, 89 per cent of working-age tax filers in rural Newfoundland and Labrador reported EI income on their tax returns.

- 62 per cent of EI claimants in Newfoundland and Labrador made at least three claims in the past five years, compared to 8 per cent in Alberta.

- Workers in Ontario, Alberta and B.C. and their employers paid $103 billion more into EI than they collected in EI benefits between 1981 and 2009

The CTF says enough is enough and are proposing a new system whereby Canadians would pay their EI taxes into a personal rainy day account — of sorts — rather than to Ottawa.

"EI contributions would not go into government coffers, but into personal unemployment accounts, that could be accessed if the worker became unemployed," notes the taxpayer watchdog's press release.

"If at the time of retirement there was money left over in their unemployment account, it would stay with the employee as their own retirement savings."

The CTF's Gregory Thomas says that plan would benefit most Canadian families.

"This year a working couple between them and their employers will be shipping $4,277 to Ottawa if each of them make at least $47,000 a year," he told Yahoo Canada News.

"So, over the course of 10'd end up with a nest egg of somewhere between sixty and seventy grand. And over the course of a young couple's working career it's over a million dollars."

[ Related: Employment Insurance error cuts some benefits in half ]

Unfortunately, like other debates about EI, this one will invariably become an attack on the high rates of EI usage in Atlantic Canada.

While most Canadians see the EI system as a temporary financial assistance, there are thousands of seasonal workers in that part of the country that use it as an annual income support program.

In a blog post he wrote for the Globe and Mail last year, economic development consultant David Campbell says that EI has become a "dominant labour force characteristic in many communities and this has broader implications for the economy as a whole."

The Atlantic provinces' economies indeed rely heavily on seasonal workers for their key industries like fisheries.

To the chagrin of many in Atlantic Canada, the Harper government has taken steps to address the issue -- frequent claimants, such as seasonal workers, now have more stringent rules around collecting benefits.

But Thomas believes that the system needs structural, not cosmetic change.

[ Related: Canadians using employment insurance feel the pinch of new, stricter rules ]

The CTF fully understands that their plan won't go over well in Atlantic Canada and especially Newfoundland and Labrador.

"If you’re a frequent EI claimant, you’re going to have to make your EI savings go further, or you’re going to have to find work," Thomas said.

"And if you’re rarely without work, you would have a nice little nest egg once you retire."

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