12/13/2012 04:27 EST | Updated 02/11/2013 05:12 EST

EI reforms could have 'serious impact,' Alward warned

Federal changes to the Employment Insurance program could cut benefits to roughly 465 people during peak periods and reduce the amount of EI benefits flowing into the province by $7 million annually, according to documents obtained by CBC News.

Premier David Alward ordered a group of senior civil servants to review the federal EI changes in May and report back to him with the potential impacts on New Brunswick. Alward wanted the review to answer questions being posed by many citizens and organizations that were worried about the potential reforms.

The federal government sent nearly $1 billion in EI benefits to New Brunswick in 2010 and is the most heavily dependent province on the federal program.

Provincial officials advised Alward in a document dated June 28 that a one-per-cent cut to the EI beneficiaries — which was the number given to the province by federal officials in a technical briefing — could be absorbed by the New Brunswick economy.

But, if none of those people re-entered the workforce, the provincial government expects to lose $9 million in personal income, “modest declines in population,” and government revenue would also drop by $1.5 million in the short term.

“However, if the impact is greater than the national average of one per cent projected by HRSDC, there is potential for a more serious impact on New Brunswick,” the briefing document said.

The Department of Finance also advised the premier how a 10-per-cent cut to EI payments would cost the province 800 jobs by 2016 and $100 million in revenue.

The deeper cut would also cause the province’s gross domestic product to dip by $50 million and overall personal income would be slashed by $125 million.

“Provincial government revenue would initially decline by $20 million, rising to $40 million below current economic projections within five years,” the document said.

“The actual impact on NB is one of the most important areas that need to be clarified.”

The document was designed by the senior officials for the premier to use in future conversations with the federal government over EI reform.

“Perhaps the most important message from New Brunswickers to government is that a flagship national program, such as Employment Insurance is of critical economic, social and cultural value to the province and collaborative engagement by the federal government on changes is a prerequisite to any further action,” the document said.

EI reforms announced in 2012

Human Resources Minister Diane Finley announced a series of EI reforms earlier this year, which sparked immediate concern, particularly among provinces with large numbers of EI recipients and seasonal workers.

Among the changes, there is a pilot project that will reduce the clawback on new earnings to 50 per cent, but kicks in with the first dollar earned, not at 40 per cent.

It replaces the previous system that clawed back EI claimants who found part-time jobs once their pay exceeded 40 per cent of their benefits, or $75 a week, whichever was greater.

The effect is that low-income earners will be hurt by the new system. But, those people who work longer hours and at higher pay will keep more of their earnings.

There was also a change that required frequent EI recipients to look outside of their communities for work.

In the first six weeks, a person would need to expand their job search and accept wages starting at 80 per cent of their previous hourly wage. And after seven weeks, the federal rules stipulate they would be “required to accept any work they are qualified to perform ... and to accept wages starting at 70 percent of their previous hourly wage, but not lower than the prevailing minimum wage.”

A person can receive 55 per cent of average weekly earnings up to a maximum of $45,900. So the maximum weekly EI benefit is $485.

Heavily reliant on EI benefits

New Brunswick is traditionally one of the most heavily dependent provinces on Employment Insurance benefits.

In the last 24 months, there were an average of 35,019 EI clients each month, with the number reaching as high as 45,830.

In March 2012, there were 43,410 regular EI recipients in New Brunswick, which represents 6.3 per cent of all EI beneficiaries in Canada. New Brunswick’s share of the population is 2.2 per cent.

Employment Insurance payments also represent a higher portion of the personal income in New Brunswick. In the last five years, EI payments have accounted for 3.6 per cent of personal income in New Brunswick compared to 1.4 per cent in the rest of Canada.

The economic downturn pushed even more people on EI.

Almost $1 billion worth of EI payments were sent to New Brunswick 2010, which is significantly higher than the roughly $780 million in the three previous years.

The premier’s briefing note also pointed out rural areas are still facing higher unemployment rates than urban areas.

New Brunswick’s unemployment rate stood at 10.1 per cent in February, more than a full percentage point lower than the 11.2 per cent in November.

At the time, the province pegged the unemployment rate in the big cities at 8.9 per cent, small towns at 10.8 per cent and rural areas at 16.2 per cent. The document estimated there were 18,200 rural New Brunswickers without jobs in February.

The briefing note also points out as of June that 1,827 people – or 10 per cent of non-disabled social assistance recipients – were collecting social assistance “because they had previously exhausted their EI benefits.”

The provincial government then blacked out any further discussion of the impact of the EI reforms on the province’s social assistance caseload.

Liberals demand document disclosure

The Liberal Opposition demanded in question period on Wednesday the Alward government turn over a full version of the briefing note.

Labour Minister Danny Soucy tried to table the document on Tuesday but it was not translated so the minister withdrew the file.

The provincial government has committed to publicly disclosing a translated version of the document.

Liberal MLA Roger Melanson stood in the legislature to request a document that does not have sections removed.

In a copy of the briefing note received by CBC News, sections relating to social assistance caseload and future recommendations are blacked out.