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Ottawa considers $2 billion cut to UI Public support tempts Martin to chop more than he planned; [Final Edition]

By Derek Ferguson and David Vienneau Toronto Star. Toronto Star. Toronto, Ont.: Jul 28, 1995. pg. A.1

Author(s):

By Derek Ferguson and David Vienneau Toronto Star

Dateline:

OTTAWA

Section:

NEWS

Publication title:

Toronto Star. Toronto, Ont.: Jul 28, 1995.  pg. A.1

Source type:

Newspaper

ISSN/ISBN:

03190781

ProQuest document ID:

21215233

Text Word Count

573

Document URL:

http://proquest.umi.com/pqdweb?did=21215233&sid=5&Fmt=3&clientId=58622&RQT=309&VName=PQD

Abstract (Document Summary)

OTTAWA - The federal government is looking at slashing a whopping $2 billion from unemployment insurance, The Star has learned.

That's $400 million more than the 10 per cent cut to the $16 billion fund dictated in Finance Minister Paul Martin's February budget.

And it comes on the heels of a massive $5.5 billion cut to UI imposed by Martin in his first budget in the spring of 1994.

Full Text (573   words)

(Copyright The Toronto Star)

OTTAWA - The federal government is looking at slashing a whopping $2 billion from unemployment insurance, The Star has learned.

That's $400 million more than the 10 per cent cut to the $16 billion fund dictated in Finance Minister Paul Martin's February budget.

And it comes on the heels of a massive $5.5 billion cut to UI imposed by Martin in his first budget in the spring of 1994.

``There has been a genuine shift in the balance of the equation in six months,'' explained one senior government official.

``The attitude of everybody - even those with misgiving - is this is what the country wants. Let's do it, and get behind Paul (Martin).''

Liberal insiders are buoyed by the phenomenal support that newly elected Progressive Conservative Premier Mike Harris has had with his approach to slashing Ontario's deficit.

This makes them believe the country is receptive to even more belt-cinching in Martin's bid to cut Canada's $40 billion deficit further than to a planned $25 billion by 1997 - 3 per cent of gross domestic product.

``The feeling now is that we could have been tougher. We should have gone beyond the 3 per cent (of GDP) target,'' a top insider said.

The proposed cuts will be presented to an economic committee of cabinet on Aug. 28, and Human Resources Minister Lloyd Axworthy will present the proposal to full cabinet the following day.

Axworthy has a senior policy adviser quietly travelling the country testing the waters about deeper cuts to unemployment insurance among business, labor and political groups.

Axworthy's emissary found ``a lot of support'' for deeper cuts.

The $2 billion cut will come out of the benefits of the 712,000 jobless Canadians who now draw on the program. Of that, $800 million will be plowed back into what are being termed ``re-employment measures'' to be run from Axworthy's department.

Currently, only half of Canada's 1.4 million jobless are receiving unemployment insurance, a drop of 40.9 per cent from July, 1992, when the peak was reached with 1.2 million Canadians receiving UI benefits - or 75 per cent of an estimated 1.6 million then-jobless Canadians.

Axworthy is set to introduce more unemployment insurance changes in Parliament this fall. The changes would require people to work longer to qualify for unemployment insurance, shorten the maximum duration of payouts from 50 to 40 months and penalize those who have been frequent users by basing benefits on average earnings over a fixed period of time.

The reform is also expected to employ a graduated penalty for frequent users, which would reduce their benefits in direct proportion to the number of weeks they've compiled in recent years. That is, the more UI benefits they've drawn in recent years, the less their benefits will be.

The $800 million so-called Human Resources Investment Fund, which Axworthy has managed to salvage for ``re-employment measures,'' will be used to establish a wide range of programs and services, from teaching basic skills such as literacy to direct subsidization of low-paid workers.

Sources say the current 39 programs offered through Canada Employment Centres will be reduced to fewer than 10 programs.

Of those, the two programs which will receive the most attention will be targeted wage subsidies to provide direct work experience and earning supplements to directly subsidize the earnings of low-paid workers.

``The money will be funnelled into the programs that work the best,'' a government official said.

*** Infomart-Online ***

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