Bill C-280 (Historical)

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, on October 7, you made a statement with respect to the management of private members' business. In particular, you raised concerns about four bills that, in your view, appear to impinge on the financial prerogative of the Crown. One of the bills you mentioned was Bill C-449.

I am, therefore, rising on a point of order regarding Bill C-449, An Act regarding free public transit for seniors.

Without commenting on the merits of the bill, I submit that Bill C-449 effects an appropriation by spending or authorizing the spending of public funds in a manner not currently authorized in legislation and, therefore, requires a royal recommendation.

Bill C-449 would allow the Minister of Finance to make direct payments to a trust established to help provinces, territories and municipalities to offer seniors free local public transit, anywhere in Canada, during off-peak hours.

Page 834 of the second edition of House of Commons Procedure and Practice states:

A royal recommendation not only fixes the allowable charge, but also its objects, purposes, conditions and qualifications. For this reason, a royal recommendation is required not only in the case where money is being appropriated, but also in the case where the authorization to spend for a specific purpose is significantly altered.

Precedents demonstrate that a royal recommendation is required for the creation of a new fund outside the consolidated revenue fund.

On June 13, 2005, the Speaker ruled, in the case of Bill C-280, An Act to amend the Employment Insurance Act , that:

...Bill C-280 effects an appropriation by spending or authorizing the spending of public funds by transfer of the funds from the Consolidated Revenue Fund to a separate EI Fund with the result that these monies are no longer available for other appropriations Parliament may make. ... Such a transfer...constitutes an appropriation within the meaning of section 54 of the Constitution Act, 1867 and for this reason a royal recommendation is required....

Bill C-449 seeks to accomplish by similar means proposed in Bill C-280, which was found to require a royal recommendation. Therefore, I submit Bill C-449 must also be accompanied by a royal recommendation.

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, on October 7, 2010, you raised concerns about four private members' bills, which, in your view, appeared to impinge on the financial prerogative of the Crown and you invited members to comment. One of the bills you mentioned was Bill C-507, An Act to amend the Financial Administration Act (federal spending power). I am rising today on a very lengthy point of order regarding that bill.

Bill C-507 would amend section 26 of the Financial Administration Act, which states:

Subject to the Constitution Acts, 1867 to 1982, no payments shall be made out of the Consolidated Revenue Fund without the authority of Parliament.

In other words, section 26 does not provide authority to make payments out of the Consolidated Revenue Fund but establishes that payments out of the fund can only be made with the authority of Parliament.

Clause 2 of Bill C-507 would add a series of subsections to section 26. A new subsection 26.1(1) would provide that no payment from the consolidated revenue fund shall be made for matters listed in section 92 and paragraph 92A(1) of the Constitution Act, 1867, that are under provincial jurisdiction.

A new subsection 26.1(2) would enable payments to be made from the consolidated revenue fund to provinces which have delegated to the government the power to incur expenditures referred to in subsection 26.1(1) or the responsibility to administer programs associated with those expenditures, or both.

A new subsection 26.1(3) would set out the duration and nature of the delegation referred to in subclause 2(2). A new subsection 26.1(4) would enable the federal government to make a payment out of the consolidated revenue fund to a province where the federal government proposes incurring expenditures or administering a program. A new subsection 26.1(5) specifies that such a payment may be made in the form of a transfer of a taxation field.

The provisions of Bill C-507 have two impacts related to the need for a royal recommendation. The first impact is to alter the terms and conditions of original royal recommendations authorizing existing payments out of the consolidated revenue fund for grants or direct payments to provinces and municipalities.

In the case of grants, under existing statutes, federal grants to the provinces can be either conditional or unconditional. Two examples of conditional grants to provinces are the Canadian health transfer, also known as the CHT, and the Canadian social transfer, also known as the CST.

In order to receive the CHT, provinces must meet federal standards and comply with the requirements of the Canada Health Act in sections 7 to 12. In order for the provinces to receive the CST, grants are subject to a prohibition on minimum residency requirements for social assistance. Bill C-507 would change the terms and conditions of these existing grants or transfer of grants to the provinces by making them unconditional, thereby waiving the conditions related to these transfers.

In the case of direct spending, under existing statutes direct spending in the areas of provincial jurisdiction occurs when the federal government allocates money directly to individuals, agencies or municipalities. An example is the transfer of federal gas revenues to municipalities and the universal child care benefit. Bill C-507 would no longer allow these transfers for direct spending to be made to municipalities but, rather, would only allow the federal government to transfer money directly to the provinces.

This would change the manner in which existing direct payments are made since these payments would no longer be made to the currently authorized recipients but to the provinces. Precedents indicate that changes to the terms and conditions of a royal recommendation require a new royal recommendation.

On June 21, 1972, the Speaker ruled in the case of Bill C-220, respecting regional incentives development data:

...it is not only the amount approved or recommended by the royal recommendation that cannot be changed but there is also a prohibition against a redirection of the amount that is approved or recommended to the House in the royal recommendation.

The second impact of Bill C-507 relates to how its provisions would authorize payments out of the consolidated revenue fund to provinces that choose to opt out of federal programs in areas of provincial jurisdiction.

I would note that on April 14, 2010, the member for Saint-Lambert introduced Bill C-507 and stated that the bill would:

...introduce an automatic and unconditional right to opt out with full financial compensation and would establish permanent compensation in the form of the transfer of tax room.

In other words, the bill would provide for the authorization of payments out of the consolidated revenue fund to provinces for purposes not currently authorized in statute. Page 834 of House of Commons Procedure and Practice, second edition, states:

A royal recommendation not only fixes the allowable charge, but also its objects, purposes, conditions and qualifications. For this reason, a royal recommendation is required not only in the case where money is being appropriated, but also in the case where the authorization to spend for a specific purpose is significantly altered.

Precedents demonstrate that the Crown alone institutes all public expenditure and Parliament may only authorize spending that has been recommended by the Governor General.

On October 13, 1983, the Speaker ruled certain motions in an amendment at report stage that would have directed the government to establish a system of payments to agricultural producers inadmissible because they imposed a charge upon the treasury.

On May 28, 1990, the Speaker ruled motions in amendment at report stage, which would have substituted a different escalator clause for fiscal arrangements, inadmissible because they infringe upon the financial initiative of the Crown.

On June 13, 2005, the Speaker ruled on Bill C-280, An Act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting) and another Act in consequence that:

...Bill C-280 effects an appropriation by spending or authorizing the spending of public funds by transfer of the funds from the Consolidated Revenue Fund to a separate EI Fund with the result that these monies are no longer available for other appropriations Parliament may make. ... Such a transfer...constitutes an appropriation within the meaning of section 54 of the Constitution Act, 1867 and for this reason a royal recommendation is required....

The precedents have parallels to the impacts of provisions in Bill C-507 for authorizing a new and distinct spending in that Bill C-507 proposes a new scheme for making payments out of the consolidated revenue fund in matters and for purposes not currently authorized by Parliament.

I submit that Bill C-507 would change the authorization for grants and direct payments, as well as payments to provinces that choose to opt out of federal programs in areas of provincial jurisdiction. These changes, in our view, would therefore require a royal recommendation.

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, I rise on a point of order regarding Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries, introduced by the member for Scarborough—Guildwood.

I submit that the bill contains provisions which would require new spending for purposes not currently authorized in statute and therefore should be accompanied by a royal recommendation.

Bill C-300 would add new functions to the Department of Foreign Affairs and International Trade Act by requiring the ministers of Foreign Affairs and International Trade to establish a new, quasi-judicial function regarding Canadian companies engaged in mining, oil or gas activities in developing countries. Currently, the Department of Foreign Affairs and International Trade Act does not authorize spending for that new function.

The government did not raise a point of order on the bill prior to second reading. However, during committee consideration of the bill, the issue of new spending was raised, and I now want to bring that to your attention. On December 1, 2009 officials from the Department of Foreign Affairs and International Trade stated in committee:

The mechanism itself would require...the set-up of a whole new procedural framework that is not currently in existence within DFAIT and is not foreseen in the DFAIT Act.

Let me explain why this would require new spending. Clause 9 of the bill would amend the Department of Foreign Affairs and International Trade Act to compel the ministers of Foreign Affairs and International Trade to ensure that mining, oil and gas activities by Canadian corporations in developing countries are consistent with the guidelines in clause 5 of the bill.

Clause 4 of the bill sets out a formal complaints process to require the ministers of Foreign Affairs and International Trade to receive complaints and conduct investigations on whether the guidelines have been contravened.

In a case where the ministers determine that activities contravene the guidelines, the ministers would be required to notify the president of the Export Development Corporation and the chair of the CPP Investment Board that a Canadian corporation's mining, oil or gas activities are inconsistent with the guidelines.

In such a case, the EDC would not be able to enter into, continue or renew a transaction with a Canadian corporation found to have contravened the guidelines and the CPP Investment Board would have to ensure that assets are not invested in any corporations that have been found to be in contravention of the guidelines.

Bill C-300 would alter the terms and conditions in the Department of Foreign Affairs and International Trade Act by adding a new quasi-judicial function. The need for a royal recommendation for a new function is explained on page 834 of the second edition of House of Commons Procedure and Practice. It states:

A royal recommendation not only fixes the allowable charge, but also its objects, purposes, conditions and qualifications. For this reason, a royal recommendation is required not only in the case where money is being appropriated, but also in the case where the authorization to spend for a specific purpose is significantly altered.

On June 13, 2005 the Speaker ruled on Bill C-280, An Act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting) and another Act in consequence, stating:

Second, clause 2 significantly alters the duties of the EI Commission to enable new or different spending of public funds by the commission for a new purpose--

On February 11, 2008, with respect to a new role or function for an existing organization or program, the Speaker ruled on Bill C-474, the National Sustainable Development Act, stating:

Bill C-474 also proposes a new mandate for the commissioner.

However, clause 13 of Bill C-474 would modify the mandate of this new independent commissioner to require, namely, the development of “a national sustainability monitoring system...The clause 13 requirements would impose additional functions on the commissioner that are substantially different from those foreseen in the current mandate. In the Chair's view, clause 13 thus alters the conditions set out in the original bill to which a royal recommendation was attached.

I have explained how the new function proposed in Bill C-300 would alter the terms and conditions of the original royal recommendation for the Department of Foreign Affairs and International Trade Act.

In keeping with the precedents I have mentioned, I therefore submit that Bill C-300 requires a royal recommendation.

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, on February 25, 2009, you made a statement with respect to the management of private members' business. In particular, you raised concerns about five bills which, in your view, “appear to impinge on the financial prerogative of the Crown”.

One of the bills you mentioned was Bill C-309, An Act establishing the Economic Development Agency of Canada for the Region of Northern Ontario. I would note that in the last Parliament, the member for Nipissing—Timiskaming brought forward the same bill as Bill C-499, which the Speaker on June 10, 2008, noted appeared “to impinge on the financial prerogative of the Crown”.

Without commenting on the merits of the bill, I submit that the bill must be accompanied by a royal recommendation because it would require new spending. Bill C-309 would create a new agency of government and provide for the appointment of personnel. Clause 8 of Bill C-309 establishes the Economic Development Agency of Canada for the Region of Northern Ontario as a separate and distinct agency of the Government of Canada.

The requirement of a royal recommendation for organizational changes such as establishing a new agency is referred to in the Speaker's ruling of July 11, 1988, on two motions to amend Bill C-93, An Act for the preservation and enhancement of multiculturalism in Canada. The Speaker said that to establish a separate department of government “undoubtedly would cause a significant charge upon the federal treasury in order for the new department to function on a daily basis”.

When an almost identical bill was introduced in the first session of the 38th Parliament as Bill C-9, An Act to establish the Economic Development Agency of Canada for the Regions of Quebec, it was accompanied by a royal recommendation.

The second reason Bill C-309 would require a royal recommendation is that it provides for the appointment of personnel. There are numerous precedents indicating that appointments must be accompanied by a royal recommendation. For example, on February 25, 2005, the Acting Speaker ruled that Bill C-280, An Act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting) and another Act in consequence required a royal recommendation because it provided for the appointment of 13 new commissioners to the Canada Employment Insurance Commission. The parent act specified that all commissioners were to receive remuneration.

Clauses 4 and 9 of Bill C-309 provide for the establishment of advisory committees in the appointment of a president of the agency, positions that do not currently exist. Furthermore, the clauses explicitly state that the remuneration of the appointees shall be fixed by the Governor in Council. Provisions for salaries to be paid out of the consolidated revenue fund clearly impose a charge on the public treasury. I submit that clauses 4 and 9 would therefore require a royal recommendation.

Clause 13 of Bill C-309 would also require the appointment of personnel, in this case, the officers and employees necessary for the proper conduct of the new agency. Although clause 13 does not specifically provide for the remuneration of these employees, the Speaker ruled on February 11, 2008 with respect to Bill C-474, the Federal Sustainable Development Act:

Section 23 of the Interpretation Act makes it clear that the power to appoint includes the power to pay. As the provision in Bill C-474 is such that the governor in council could choose to pay a salary to these representatives, this involves an appropriation of a part of the public revenue and should be accompanied by a royal recommendation.

These precedents apply to Bill C-309. The bill would create new spending and therefore requires a royal recommendation.

The Deputy Speaker Bill Blaikie

I am now prepared to rule on the point of order raised by the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform concerning the requirement for a royal recommendation for Bill C-357, An Act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting) and another Act in consequence, standing in the name of the hon. member for Gaspésie—Îles-de-la-Madeleine.

I would like to thank the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform for having raised this issue as well as the hon. Gaspésie—Îles-de-la-Madeleine for his comments.

In his presentation, the hon. parliamentary secretary argued that clause 2 of the bill would create an employment insurance account that is outside the consolidated revenue fund, thus transferring money out of the consolidated revenue fund into the employment insurance account where money would no longer be available for any appropriations Parliament may make. He further argued that Bill C-357 would change the duties of the Employment Insurance Commission by allowing it to deposit assets for the financial institution and to invest assets to achieve a maximum rate of return. Finally, he expressed concern that clause 5 would increase the number of commissioners on the Employment Insurance Commission from its current four to seventeen.

The hon. parliamentary secretary claimed that these arguments were supported by a ruling delivered by the Speaker on June 13, 2005, concerning Bill C-280, also entitled An Act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting) and another Act in consequence, and nearly identical to Bill C-357.

The hon. member for Gaspésie—Îles-de-la-Madeleine countered that there is no basis for the claim that this bill would bring about “additional” or “new” expenditures and that the transfer of revenue to an independent fund would not change the circumstances, manner and purposes by which Canada's Employment Insurance Commission will set the premiums and manage its revenue. Although he acknowledged that a royal recommendation would be necessary if the bill were seeking to withdraw revenue from the government's consolidated revenue fund to be used for purposes other than those described in the act, he claimed that this was not the case since the purpose of the bill would not alter anything in the current legislation.

He further argued that having Canada's Employment Insurance Commission invest assets to achieve a maximum rate of return did not constitute a new purpose for the fund since the federal government was “investing” these public monies to pay down the Canadian debt.

He concluded by saying that adding 13 new commissioners will be financed by a small increase in expenses, which will no longer appear as an expenditure from the consolidated revenue fund given that the employment insurance fund will no longer be a part of the consolidated revenue fund.

After examining Bill C-357, the Chair was struck, as was the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform, by its similarity to Bill C-280. Indeed, the proposed amendments to sections 71 and 72 of the Employment Insurance Act included in Bill C-357 are in many respects virtually identical to those in Bill C-280.

For instance, like in Bill C-280, the proposed section 72 in Bill C-357 would credit moneys from the consolidated revenue fund to the commission, which would then place it into a new and separate account, one that would be outside the consolidated revenue fund.

Today, moneys in the consolidated revenue fund are available for eventual expenditure for purposes of claims under the Employment Insurance Act. With the passage of Bill C-357, these funds would no longer be available because, in effect, they have been spent, that is, transferred out of the consolidated revenue fund to a separate and independent account outside the consolidated revenue fund.

When the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities sought clarification regarding the provisions of Bill C-280 as it related to the royal recommendation, the Chair ruled, on June 13, 2005, that:

Such a transfer, in my view, constitutes an appropriation within the meaning of section 54 of the Constitution Act, 1867 and for this reason a royal recommendation is required in respect of clause 2 of the Bill.

The Chair sees no reason to reach a different conclusion on this provision of Bill C-357 than the one that was reached at that time on Bill C-280.

In relation to the argument that the proposed change to subsection 72(6) of the Employment Insurance Act found in Bill C-357 creates new duties for the commission in terms of managing and investing amounts paid into the employment insurance account, the Chair does not accept the argument put forward by the hon. member for Gaspésie—Îles-de-la-Madeleine that the federal government's use of moneys in the consolidated revenue fund to pay down the Canadian debt constitutes an authority to spend funds for a new purpose.

In addition, the Chair is of the view that the bill's proposed alteration of the duties of the EI Commission to enable the spending of public funds by the commission, namely, the investment of public funds to achieve a maximum rate of return, is a new purpose and requires a royal recommendation.

Finally, the increase in the number of commissioners on the Employment Insurance Commission from its current four to seventeen also clearly requires a royal recommendation. Although the hon. member for Gaspésie—Îles-de-la-Madeleine contended that these expenses would not come from the consolidated revenue fund but rather from the newly created employment insurance fund, clause 5 of the bill clearly calls on the governor in council to appoint these new commissioners. Given that the current commissioners are remunerated, it follows that the proposed new commissioners would also be paid. As such, the addition of these new commissioners would involve an additional appropriation of a part of the public revenue.

Consequently, I will decline to put the question on third reading of this bill in its present form unless a royal recommendation is received.

However, the debate is currently on the motion for second reading, and this motion shall be put to a vote at the close of the second reading debate.

Raynald Blais Gaspésie—Îles-de-la-Madeleine, QC

Mr. Speaker, thank you for giving me the floor. As I am sure you recall, a few days ago, I informed you that the Bloc Québécois intended to respond to the Conservatives' request concerning Bill C-357. They called for a royal recommendation concerning the creation of an independent employment insurance fund. I will now raise a few points that will surely enable you to make an informed decision about this issue.

I would like to bring to your attention our argument against requiring a royal recommendation to pass Bill C-357, to create an independent employment insurance fund. That is why I am addressing you today.

At the outset, we recognize that the content of Bill C-357 is very similar to Bill C-280, as introduced in the 38th Parliament. It is clear that the Speaker's ruling on June 13, 2005, included a number of elements that were open to interpretation. The Conservatives are referring to those very elements to support their assertion that the bill now before us requires a royal recommendation. That is why we must take the time to review the Conservatives' arguments point by point.

First, the Conservatives claim that passing this bill would lead to additional expenses. That is totally false, because the current legislation already provides for fluctuations with respect to premiums and conditions of eligibility, which determine the fund's revenues and expenditures that go through the government's consolidated revenue fund. This bill is not designed to change these provisions, so it is not true that the bill would engender additional costs. Therefore, there is no basis for the claim that this bill would bring about “additional” or “new” expenditures.

The Conservatives are saying that the appropriation of public revenue will be altered depending on the circumstances and the way it is managed. The current legislation provides for a contribution to be deducted from every pay cheque and it is understood that this money will be used to ensure supplementary income to contributors who need it because of their own economic circumstances. The eligibility criteria for employment insurance and the premium rates that determine the revenue and expenses of the fund, will serve the same purpose and use the same mechanisms when this bill is enacted. I would add that a change to the eligibility criteria would still require a legislative change. Let us be clear, not only does this bill not require additional expenditures, but what is more, the purpose of and reason for these public funds will not change in any way.

We acknowledge, as the Speaker said on June 13, 2005, that it does involve transferring public funds to an independent employment insurance fund, but royal recommendation is not needed for two reasons. The Speaker himself said, on May 9, 2005, that:

The royal recommendation is also required where a bill alters the appropriation of public revenue “under the circumstances, in the manner and for the purposes set out” in the bill.

Although there will indeed be a transfer of revenue to an independent fund, the circumstances, manner and purposes by which the commission will set the premiums and manage the revenue will not change at all. Furthermore, the spirit of the current act will be better protected since the revenue generated by the premiums will no longer be used to serve interests other than those defined by the act, namely those of the workers. Using revenues that should go into the fund, but instead are taken into the consolidated revenue fund for purposes not listed in the act, will no longer be possible.

A royal recommendation would be necessary if the bill were seeking to withdraw revenue from the government's consolidated revenue fund to be used for purposes other than those described in the act. In this case, it is clear that the purpose of the bill will not alter anything in the current legislation. On the contrary, it will allow the spirit of the act to be respected and prevent the misappropriation of funds that the Liberals and Conservatives are known for.

Fourth, the argument cited on June 13, 2005, that the investment of public monies by the Commission represents new or different expenditures, must have workers seeing red.

The federal government continued to invest—or, in other words, spend—the public monies from the fund to pay down the Canadian debt, which violated the spirit of the law. It clearly did not act in the interests of workers, who watched these monies—that they, with their employers, had paid to ensure themselves against economic downturns—disappear. It was the government, not this bill, that invented a new purpose for the fund and its surpluses.

Finally, adding 13 commissioners will be financed by a small increase in expenses, which will no longer appear as an expenditure from the consolidated revenue fund, given that the Conservatives recognize that the employment insurance fund will no longer be a part of the consolidated revenue fund. Since the Conservatives no longer know how to oppose an idea that they supported in the past for purely populist considerations, today they are attempting to use procedural arguments to avoid openly declaring themselves against a bill that is necessary and that contributors have demanded for many years. Only their neo-conservative ideology, hidden behind a populist facade, can justify such deplorable actions.

With that, I conclude my presentation.

Lynne Yelich Parliamentary Secretary to the Minister of Human Resources and Social Development

Mr. Speaker, in May I rose to speak to important issues put forward in Bill C-357, An Act to amend the Employment Insurance Act, but unfortunately we ran out of time. I would now like to take the opportunity to finish what I have to say on the bill.

From the outset, let me state that the government supports the principles behind the creation of a separate EI account, but there are many aspects of the bill that we cannot support.

On Tuesday, the Speech from the Throne outlined the government's priorities going forward. Rest assured, the changes to the EI program to make it more responsive to the needs of Canadians is one of those priorities.

I note the opposition has proposed several changes to the EI program during the course of this Parliament, often without supporting evidence or clear objectives on what the proposed changes were supposed to address. This is not something in which the government will engage. We will only put forward measured changes backed up by evidence and supported by Canadians who pay for this program with their hard-earned money.

It is important to get these things right. Canadians depend on us to ensure that the EI system remains a system, one that is effective, sustainable and reflects the needs of all who need it. The proposals put forward here put the future of the EI system at risk.

There is a reason we need to have a debate on a separate EI account today, and it is simple. It was mismanagement by the previous Liberal government and it was allowed by the Liberal government over a period of 10 years, a $51 billion surplus to accumulate in what many in the House have called the EI account.

The $51 billion was not government revenue. It was the wages of workers and the contribution of employers. We have always maintained that these were supposed to be used for benefits or premium reductions. Instead it was used for program spending in countless other areas and some of it was lost to fiscal mismanagement.

During study of the previous incarnation of this bill, Bill C-280, during the last Parliament, my colleague from Haliburton—Kawartha Lakes—Brock stated during committee study, “the Auditor General surely did not foresee that the government could continuously and deliberately overcharge employers and workers and allow this massive surplus to build up”, but they did. The Liberals allowed the surplus to grow and they became addicted to it.

Liberal mismanagement comes as no surprise to anyone in the House. We have seen the billion dollar HRSDC boondoggle under the Liberals watch. We have seen a $2 million gun registry turn into a $2 billion gun registry. We have seen $51 billion in workers' and employers' money spent in other areas with no explanation and certainly with no apologies.

As important as the principle of a separate account is to our government, it is nevertheless important that we not look at the EI program in isolation, that the opposition's vision for employment insurance must be examined in its entirety. We must get a picture of what the opposition expects from this program and if it is a realistic vision.

The facts will show that the opposition's vision is anything but realistic. There is currently an incoherent array of 19 opposition private members' bills related to EI on the order paper, with a combined cost of just 10 of these at well over $11 billion annually. This glut of opposition bills exemplifies the ad hoc and inefficient approach to EI reform being proposed by all opposition parties. The sheer magnitude of the changes being proposed to this valuable program leads one to believe that these changes have been proposed for political reasons because all these changes together do not make any sense. Yet the opposition has so far supported them all.

The opposition ad hoc approach to EI reform is telling of a larger problem.

Let us just examine a few of the other bills that the opposition has put forward in this Parliament.

Bill C-269 sought to drastically alter the administration and objectives of the EI system. It proposed a flat entrance requirement, a requirement designed to maximize labour market participation at a time when we had more jobs than people. It proposed vastly expanded benefit terms that were designed to provide a balance between adequate temporary income support and incentives to return to work.

These proposed changes would cost the EI system billions of dollars a year and have not been supported by a stitch of evidence.

Bill C-278 proposed a wide-sweeping change to the EI program by raising the sickness benefits from the current 15 weeks to a maximum of 50 weeks, all this despite the fact that all the available evidence indicates that the current system meets and even exceeds the needs of the vast majority of people who use the system.

There has been no study for either of these bills, which would $4.8 billion annually in new spending on benefits.

We know the people who pay premiums, both employers and employees, have asked for some consideration, especially given this hot job market. They would not get it with either of these bills.

Why does the opposition insist on proposing changes to the program when the evidence does not support these changes? Could it be particularly for political purpose?

I believe that Canadians rejected this type of governance. Almost two years ago, Canadians elected a Conservative government, a government that would restore some accountability to the way things worked in Ottawa.

We cannot and will not make wide-sweeping changes to programs without proper evidence. Without understanding the full implications of these changes, we certainly will not enact these types of changes unless they are in the best interest of all Canadians.

The government will not act like the last government. We have a broad based labour market approach to the EI program. We have aimed our changes at providing opportunities for all Canadians to participate in our healthy and growing economy. This approach is outlined in our economic plan called “Advantage Canada”.

The government has already taken action to address the quantity and quality challenges laid out in “Advantage Canada” by creating the apprenticeship incentives grant as a follow-up to the 2006 budget, working to improve foreign credential recognition and launching the targeted initiative for older workers and an expert panel to conduct a feasibility study on older workers.

We will continue to monitor and assess the EI program. We have made changes to the EI in the past year and we will consider further changes when it is justified.

One of the main reasons we initially advocated for a separate EI account was the previous government's inability to keep premiums in line with benefits.

The EI commission has set the 2007 rate at $1.80. This will save employers and employees $420 million a year. When combined with the increase in the maximum insurable earnings, this is the lowest rate in 14 years, all the while we have acted to maintain and in many instances increase benefits for unemployed Canadians.

We believe this new rate setting mechanism is important. That is why we supported it when we were in opposition.

Canada's new government has shown that we are responsible when it comes to making informed changes to the EI system. The opposition has shown that it is not. I think all Canadians will understand if the government shows a little caution when such broad changes are proposed to a program as important as the employment insurance.

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform

Mr. Speaker, I rise on a point of order with regard to two private members' bills, Bill C-357 and Bill C-362. Without commenting on their merits, I submit that these two bills require royal recommendations.

First, I want to explain why Bill C-357, An Act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting), requires a royal recommendation.

As the Chair ruled on May 9, 2005:

--bills which involve new or additional spending for a distinct purpose must be recommended by the Crown. The royal recommendation is also required where a bill alters the appropriation of public revenue “under the circumstances, in the manner and for the purposes set out” in the bill. What this means is that a royal recommendation is required not only in the case where more money is being appropriated, but also in the case where the authorization to spend for a specific purpose is being significantly altered.

I would note that Bill C-357 is nearly identical to Bill C-280 in the 38th Parliament which the Speaker ruled required a royal recommendation.

On June 13, 2005, the Speaker stated:

--Bill C-280 infringes on the financial initiative of the Crown for three reasons: first, clause 2 effects an appropriation of public funds by its transfer of these funds from the consolidated revenue fund to an independent employment insurance account established outside the consolidated revenue fund.

Second, clause 2 significantly alters the duties of the EI Commission to enable new or different spending of public funds by the commission for a new purpose namely, the investment of public funds.

Third, as indicated in my ruling of February 8, clause 5 increases the number of commissioners from four to seventeen.

All three of these conditions apply to Bill C-357.

Clause 2 would create an employment insurance account that is outside the consolidated revenue fund. The bill would transfer money out of the consolidated revenue fund to the employment insurance account and that money would no longer be available for any appropriations Parliament may make. This would be an appropriation of funds and, therefore, requires a royal recommendation.

However, worthy some aspects of the bill may be, and some aspects of it are, this does not alter the need for the royal recommendation.

Clause 2 would also change the duties of the Employment Insurance Commission, including new requirements for the commission to deposit assets with a financial institution and to invest assets to achieve a maximum rate of return.

These are new and distinct purposes which have not been authorized and are additional reasons why clause 2 requires a royal recommendation.

Clause 5 of Bill C-357 would increase the number of commissioners on the Employment Insurance Commission from its current four to seventeen.

On February 8, 2005, the Speaker ruled that the appointment of 13 new commissioners to the Employment Insurance Commission in Bill C-280 required a royal recommendation. This is consistent with other rulings where the Speaker found that adding remunerated members to commissions requires a royal recommendation. Given these precedents, I submit that clause 5 requires a royal recommendation.

To sum up, Bill C-357 would require an appropriation, it would alter the purpose of funds covered by the act, and it would require new spending for an expanded commission; therefore, it must accompanied by a royal recommendation.

The second bill I want to draw to your attention is Bill C-362, An Act to amend the Old Age Security Act.

This bill would increase old age security and guaranteed income supplement benefits by lowering the threshold for eligibility from the current 10 years to 3. This change would result in significant new expenditures.

Under the Old Age Security Act, applicants must have at least 10 years of residence in Canada after age 18 in order to qualify for benefits.

I would further note that partial benefits are paid to applicants who have less than 10 years of residence if the applicant has credits from a country with which Canada has a pension agreement. Residence has been an eligibility criteria since this program's inception in 1952. Reducing the residence requirement from 10 years to 3 years would have significant costs.

Since eligibility for old age security pensions also qualifies for low income recipients to receive the guaranteed income supplement, the Department of Human Resources and Skills Development estimates that the total cost of reducing the qualifying period would be over $700 million annually.

Precedents clearly establish that bills which create new expenditures for benefits by modifying eligibility criteria or changing the terms of a program require a royal recommendation.

On December 8, 2004, the Speaker ruled in the case of Bill C-278, which extended employment insurance benefits, that:

Inasmuch as section 54 of the Constitution, 1867, and Standing Order 79 prohibit the adoption of any bill appropriating public revenues without a royal recommendation, the same must apply to bills authorizing increased spending of public revenues. Bills mandating new or additional public spending must be seen as the equivalent of bills effecting an appropriation.

On November 6, 2006, the Speaker ruled with regard to Bill C-269, which extended employment insurance benefits, that:

Funds may only be appropriated by Parliament for purposes covered by a royal recommendation...New purposes must be accompanied by a new royal recommendation.

On November 9, 2006, the Speaker ruled in the case of Bill C-284, the bill that enlarged the scope of the student grants program beyond that originally authorized by Parliament, that:

Any extension of the terms of an existing program must be accompanied by a new royal recommendation.

On November 10, 2006, the Speaker ruled in the case of Bill C-278, dealing with employment insurance benefits, that:

--by amending the Employment Insurance Act to extend sickness benefits from 15 weeks to 50 weeks, the bill would require the expenditure of additional funds in a manner and for a purpose not currently authorized.

On March 23, 2007, the Speaker ruled in the case of Bill C-265, dealing with employment insurance benefits, that it was abundantly clear:

--those provisions of the bill which relate to increasing employment insurance benefits and easing the qualifications required to obtain them would require a royal recommendation.

I would also note that when Parliament adopted amendments to benefit criteria in the Old Age Security Act in Bill C-36 earlier this year, this legislation was accompanied by a royal recommendation.

In conclusion, Bill C-362 would increase expenditures for old age security and guaranteed income supplements in ways not already authorized and, therefore, should be accompanied by a royal recommendation.

Lynne Yelich Parliamentary Secretary to the Minister of Human Resources and Social Development

Mr. Speaker, I am happy to discuss Bill C-357, An Act to amend the Employment Insurance Act. I would like to thank hon. colleagues from all parties for their contributions on the bill. All of the opinions put forward on the bill are valuable and provide great input into possible reforms to the EI program.

From the outset, let me state that this government supports the principles behind the creation of a separate EI account. I see other proposals put forward in this bill as well. I note the opposition has proposed several program changes during the course of this Parliament, often without supporting evidence for clear program objectives.

It is important to get these things right. Canadians depend on us and particularly their new government to ensure that the EI system remains a system that is effective, sustainable and reflects their needs.

There is a reason we need to have this debate today. The reason is simple: Liberal mismanagement. The previous Liberal government allowed over a period of 10 years a $51 billion surplus to accumulate in what many in the House have called the EI account.

During a study of a previous incarnation of this bill, Bill C-280, during the last Parliament the hon. member for Haliburton—Kawartha Lakes—Brock stated during committee study that the Auditor General surely did not foresee that the government would continuously and deliberately overcharge employers and workers and allow a massive surplus to build up, but it did. It allowed the surplus to grow and it became addicted to it.

Liberal mismanagement comes as no surprise. We have seen a billion dollar HRSDC boondoggle under the Liberals' watch. We have seen a $2 million gun registry turn into a $2 billion gun registry. They ran a rule-breaking sponsorship program. Now we have seen the accumulation of $51 billion in workers' and employers' money with no explanation and certainly no apologies. This should come as no surprise to the party of adscam and sponsorgate, but nonetheless, it is no less insulting to every Canadian.

Mr. Speaker--