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'Perverse' Rules Glitch Impoverishes EI Recipients

Welcome to Chiu Yin Wong's nightmare, increasingly common.

By Andrew MacLeod 2 Jul 2009 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Reach him here.

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'Systemic issue': Crushed between gears of welfare and EI.

A federal government official has told Vancouver resident Chiu Yin Wong that his next Employment Insurance cheque will be for just $26.

Yesterday, Wong's rent of $375 was due.

He's stuck and the government offices, both provincial and federal, that should be helping are instead making things worse.

As more people turn to EI and welfare for help during the recession, it's a story that's becoming increasingly common, says an advocate who works with people in Vancouver's Downtown Eastside.

"How can I afford life?" Wong asked over the phone. "I'm way down now. Very bad position."

'They don't care'

Wong worked for 17 years as a cook and said he would like to be working now. "I'm looking for work," he said. "I like working."

When he lost his job, he was eligible for EI from the federal government, but while he waited for payments to start he took emergency help from the British Columbia Housing and Social Development ministry.

Once his EI payments started, the welfare ministry wanted to be repaid. As he put it, "The welfare office, they take it back."

Like others in his situation, Wong signed a form saying the province would get paid back from his EI cheques. He did not realize, and the form does not state, just how fast the province would want its money back.

Wong is eligible for $330 every two weeks in EI payments. His last cheque though, after B.C. took its share, was $62. On the one that he expects this week the province will swack off $304, leaving him with $26 and far short of covering his rent.

Within weeks of helping Wong the province will have been repaid, but Wong's left where he started—with no money to take care of himself at a time when he's trying to look for work.

He's raised the issue with the offices that administer both EI and welfare, but to no avail. "They don't care," he said. "They don't care about the people."

Spokespeople in neither Rich Coleman's ministry of housing and social development in B.C. nor Diane Finley's human resources and skills development Canada ministries responded to questions by publication time.

Systemic issue

Kirsty MacKenzie is an advocate with the Downtown Eastside Residents' Association who has been helping Wong. He is one of three people she's worked with recently who has had a similar problem, she said.

"It seems to be a familiar pattern," she said. "It seems like it's a systemic issue."

On June 12 MacKenzie represented one of her clients at a B.C. Employment and Assistance Appeal Tribunal hearing.

The 46-year-old man, who MacKenzie said requested that his name not be used in print, worked as a construction labourer for $10 an hour until January 13, according to a submission filed as part of the hearing. When the job ended he applied for EI, as well as emergency welfare from the province to get him through until the EI cheque came.

The province gave him $595 on January 21, with the agreement he would pay it back through his EI payments.

He was eligible for $193 a week in EI, but for each of the first three weeks of February he received just $45 after the province was repaid.

By the middle of February he needed help from the welfare ministry again. They gave him another $595, but started taking back even more money.

"It just created this escalating cycle," said MacKenzie.

In February he received a total of $275 from EI, with the province taking $497. In March he got $204, while the province's share was $761. For some weeks he received not a penny from his EI cheques, which instead went straight to the province.

Clawback counts as 'income', client cut-off

MacKenzie's client might have carried on this way, supplementing the small amount he received from EI with money from the province, but in May the provincial government refused to give him any more welfare. By their calculation, he was receiving too much money.

Here's why: The ministry counts the money it was clawing back as income. In March, for example, the man officially had income of $965 from EI, despite the fact he barely saw $200 of it. That income made him ineligible for welfare.

The panel that heard MacKenzie's appeal in the case saw her point, but ruled that Coleman's ministry had interpreted the law correctly even though the outcome was "perverse".

"The Panel acknowledges that the very method by which the Ministry recovers money owing in this case, is causing the need for further income assistance," the three-member panel found. "The Appellant now receives too much income from Employment Insurance to qualify for Income Assistance, but the quantum of net income, after deductions, is impossible to live on."

They found, "The outcome is perverse, and causes significant hardship to the Appellant, but the legislation is clear."

If the legislation is creating perverse outcomes, it needs to change, said DERA's MacKenzie. There is nothing requiring the ministry to recover its money so quickly, she said. It could take back less each week and still get its money before a person's EI runs out.

"The Ministry's practices show complete disregard for the vulnerable position people are already in when they apply to access welfare while awaiting EI," she said in her initial e-mail to the Tyee. "The Ministry is well aware of the hardship caused by these recovery practices, but nothing is being done, and people are being abandoned by the Ministry."

And while the federal and provincial bureaucracies have put Wong and MacKenzie's client who lost his appeal in tough situations, it could get worse for them as it has for others. MacKenzie had a third client in a similar spot. She's lost touch with that client and figures he's become homeless.

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