Moving P.E.I. back to single EI zone could cost province millions

Carl Pursey of the P.E.I. Federation of Labour says federal politicians can fix the employment insurance system 'overnight if they want.' (Jessica Doria-Brown/CBC - image credit)
Carl Pursey of the P.E.I. Federation of Labour says federal politicians can fix the employment insurance system 'overnight if they want.' (Jessica Doria-Brown/CBC - image credit)

In a report prepared for the Canadian Senate, the Parliamentary Budget Office says the federal government would save millions of dollars a year by returning P.E.I. to one employment insurance (EI) zone.

That of course means millions of federal dollars not going to Prince Edward Islanders through benefits.

The report was heard by a committee discussing a bill to make the province a single EI zone again.

It was split into two in October 2014, with one zone known as Charlottetown — which includes Stratford and Cornwall and stretches up to the North Shore — and a P.E.I. zone which includes the rest of the province.

Government of Canada
Government of Canada

Ever since the split came into effect, many Islanders have been lobbying to switch it back. In February, former P.E.I. Senator Diane Griffin introduced a bill to merge the two zones again, so that someone seeking benefits in Charlottetown would need the same number of work weeks as someone in Souris.

Presenting to the committee on Thursday, P.E.I. Federation of Labour President Carl Pursey said it's important that every Islander who uses the program gets treated the same, and called for the zone to maximize the amount and length of benefits.

"The ones in extreme poverty that are losing now will gain," he said of the bid to merge the zones. "It will be a level playing field and the government can top this up if they want.

"They brought these changes in overnight. They can fix it overnight if they want."

Natalia Goodwin/CBC
Natalia Goodwin/CBC

The report from the Parliamentary Budget Office estimated the change to one zone would cost the province $13 million in the first year, and $76 million over five years.

Charlottetown MP Sean Casey, one of those lobbying for the change, questioned the analysis.

"It's fair to say that, you know, if this bill goes through, there will be a savings to the treasury in year 1," said Casey.

"I think year 2 was speculative and year 3, 4, 5 is very speculative. So that $75-million number, it's highly unlikely that it will ever come to be."

Why P.E.I. could lose out

Calculating the exact cost would be impossible without knowing who will be working how many hours in each zone and what the unemployment rates will be in each zone, because EI payouts vary with the unemployment rate in the zone.

It is possible, however, to look at the current situation.

Charlottetown's current unemployment rate is five per cent, so for that region applicants require 700 hours of work to qualify for regular benefits, and receive them for up to 36 weeks. The unemployment rate in the P.E.I. region is 10 per cent, so residents in that area require just 560 hours of work to qualify for benefits, which they could receive for up to 44 weeks.

The current rate for the entire province is seven per cent. At that rate 665 hours of work would be needed to qualify, meaning people in the P.E.I. zone with 560 to 664 hours of work would no longer be eligible for EI.

That money, of course, would not only not be going to the worker, it would not be coming to P.E.I. at all.

Presumably some workers in the Charlottetown zone who don't qualify under the current system, would qualify under the new conditions, but the study for the Senate estimated a net loss for the P.E.I. economy.