Liberal MP Scott Simms is accusing Conservative Peter Penashue, the regional minister for Newfoundland and Labrador, of political interference in personally telephoning Service Canada employees whose jobs were at risk due to government downsizing and streamlining of the employment insurance system.

Conservative Minister Peter Penashue, seen here in a file photo from October, was accused by Liberal MP Scott Simms Wednesday of personally intervening in Service Canada employee downsizing in his Labrador riding. (Sean Kilpatrick/Canadian Press)

"All these employees in Newfoundland in processing have to relocate in major centres except the riding of the member from Labrador and the regional minister of Newfoundland and Labrador. As a matter of fact, he called individually each employee involved and told them their jobs were fine. He called them at home," Simms said during Wednesday's question period in the House of Commons.

Simms asked Penashue to rise in the House of Commons and confirm that he phoned the employees from Labrador, and asked the minister to call the employees in his Gander riding as well to say the same thing.

Penashue did not respond to the question. Instead Human Resources Minister Diane Finley rose and assured the House that the government was "watching its pocketbook" just like Canadians need to in difficult economic times, and the government's modernizing of employment insurance services is necessary.

Service Canada is in the midst of streamlining employment insurance, consolidating 120 sites into 22 centres across Canada over the next three years in a "modernization program." Employment insurance processing centres and call centres are affected by the consolidation.

A memo provided to The Canadian Press earlier this fall suggested 600 positions across Canada will be cut through attrition and reassignment.

Previous reports have indicated downsizing in Atlantic Canada will occur in a number of towns and cities, including Sydney and Glace Bay, N.S., Montague, P.E.I., and Happy Valley-Goose Bay, Gander and Corner Brook, N.L. Of these, only the Labrador centre is in a riding represented by a Conservative MP, Penashue, who is also Intergovernmental Affairs Minister.

Penashue walked past reporters after question period Wednesday and did not comment.

In September, Liberal MP Gerry Byrne accused Defence Minister Peter MacKay of intervening to save an employment insurance processing centre in his riding. Another centre in the riding held by Conservative MP Gerald Keddy also was said to be spared. A centre in Byrne's riding in Corner Brook, N.L. was reportedly set to close. MacKay and Keddy denied any political interference.

Rallies to protest the cutbacks were held last Saturday in Glace Bay and Sydney locations.

Earlier in question period, both Simms and NDP MPs Jean Crowder and Anne-Marie Day expressed concerns about long delays in service experienced by unemployed Canadians applying for employment insurance in recent weeks.

"Unfortunately there's always a spike in the number of applications that we receive in December. We put extra resources into handling that," said Finley. "Our hearts go out to them."

"We're also working overtime to upgrade and modernize our totally outdated and paper-based EI system," Finley said.

with files from The Canadian Press