Human Resources Committee on May 1st, 2008

[Robert Thibault, Liberal, West Nova, NS]

Okay, enough on the difference. What I want to find out here is this.

So we have a reserve of $2 billion. If unemployment goes down to zero this year because of some miracle in the economy, and revenues are in excess of expenditures, and the surplus is $10 billion, the reserve is holding $2 billion, so there will be another $8 billion. Where does it go? To the consolidated revenue fund?

[Yves Giroux]

No, in this case, the surplus would go into the account managed by the Canada Employment Insurance Financing Board and would be used only for reducing the EI premiums over subsequent years.

[Robert Thibault, Liberal, West Nova, NS]

In how many years must they spend these funds?

[Yves Giroux]

There are limits to rate increases or decreases. It will depend on the economic climate of subsequent years and on the rate, everything else being equal. Thus, it could be entirely spent in one year if the excellent financial climate persists.

[Robert Thibault, Liberal, West Nova, NS]

Thus, the decisions would be more or less the same as those that the department currently makes. Based on economic projections, we will calculate how much we received last year and how much was spent. The issues are more or less the same. The only difference is that the surplus is kept in a fund apart from the Canadian government's consolidated revenues.

[Yves Giroux]

It is kept in a separate account—

[Robert Thibault, Liberal, West Nova, NS]

I will share the rest of my time with Mr. Savage, but I cannot see why we must create a State corporation to do this. I understand that we must amend the current legislation to allow for this surplus, if this is what we want, but why are we setting up a Crown corporation? I find this difficult to understand.

[Yves Giroux]

I think that creating a Crown corporation should ensure more independence and guarantee that the surpluses are really used for reducing employment insurance premiums, if there really are surpluses.

[Robert Thibault, Liberal, West Nova, NS]

Thank you.

[The Chair, Conservative, Dean Allison]

Mr. Savage.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

The point I was trying to make is that we've become used to surpluses in the EI account. In the early 1990s, we had four years in a row where we had deficits. The concern—and what I'm most concerned about—is, yes, we want premium rates to go down, but we don't want this to be a back-door way to reduce benefits for workers. And given that we had four years in a row of deficits in the account are now heading into a period of economic downturn, and rates are lower than they were, I need to be assured that this system will not be used as a back-door way—because how much you can change the premium rate is limited—for the government to turn around and reduce benefits. That's what I'm looking for.

I appreciate the information you've given us. We will be asking other witnesses over the next couple of meetings for their views on that as well, but that is the concern we have. I'm not concerned about this in good times; I'm concerned about it in bad times, which we appear to be headed into.

Thank you.

[The Chair, Conservative, Dean Allison]

Thanks, Mr. Savage.

We're going to have Mr. Lake and Ms. Yelich, and then we're going to finish off with Madame Bonsant.

[Lynne Yelich, Conservative, Blackstrap, SK]

I guess I'll speak first.

I just think, Mr. Chairman, that some of the questions Mr. Martin asked are not for these officials to answer, because they are the ones who are going to help set up this new board. When we talk about benefits and the prosperity gap, I think those questions are for other officials to answer. Other than asking if they have done the analysis, I don't really think the questioning is for them.

I think that on protecting the benefits and making sure the benefits are there, we should be having different officials for that, because I'm sure these officials aren't here to answer that. Today it should be about the EI account—and I thought Mr. Thibault asked a good question on that, because it is important to know some of the things he mentioned.

I just want to reiterate that Parliament will still be overseeing benefits, so that is us—it's the opposition and the government at the time. It doesn't put more powers.... In fact, it just puts in place more transparency.

Am I correct?

[Witnesses]

Yes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Actually, it fits well with what I was going to suggest. The act has nothing to do with political ideology and everything to do with transparency.

Mr. Savage talked about all the private members' bills that have come before the committee, and the Liberals have supported almost all of them. Hypothetically, if the Liberals, God forbid, actually became government and decided to implement all the changes they've supported through private members' business, they could double the benefits and double the rates, if they wanted to, through legislation. If the NDP became government and wanted to decrease the qualification period to three hours and increase the benefits to 120% of income, they could do that through legislation, if they decided they wanted to do that.

Whatever those decisions are, we're talking about transparency here, saying that what's collected for EI is going to be spent on EI, plain and simple, nothing more, which is what we've been asked about. I'm pretty sure the Liberals have employers in some of their ridings who have asked them the same thing: we just want what's collected for EI through employees and employers to be spent on EI.

That's what this bill accomplishes. Correct?

[Yves Giroux]

Yes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I want to finish by going back to what I was talking about before, about this surplus and deficit type of situation. I talked a little bit about a surplus situation, but let's say we had a $4 billion deficit in EI one year. So $2 billion would be covered through the reserve, and $2 billion would basically be loaned by the government, in effect. Right?

[Witnesses]

Yes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Eventually there's a formula—and I just want to try to understand this—that would catch up through an adjustment to the rates. It would basically be a mathematical formula that would catch up over time. Is there a limit to how much time this can take? If you had a disaster and had an $8 billion deficit, could it take 10 years to catch up?

I want to get some clarification on how that mathematical function works.

[Yves Giroux]

It could take 10 years, depending on the economic conditions, the size of the deficit, and the size of the advance from the CRF. It could well take 10 years.

The goal in setting limits on the premium rate, the changes from year to year, is to avoid having big hits on employees and employers, especially in the case of a downturn. That's why it could take a relatively long period of time to repay any deficit, should there be one.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

From a logistical standpoint—again going back to a surplus situation, because it may be a little bit easier to understand—if you collect a $2 billion surplus, that money is considered owed back to employees and employers, but it treats the employees and employers as a group. It doesn't go back necessarily to the employees or employers who paid it, because some of those employers might be out of business and some of those employees might have retired. It goes back to them as a group through lower rates down the road. It treats them as a group.

[Yves Giroux]

Yes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Okay, I think that's enough. Thanks.

[The Chair, Conservative, Dean Allison]

Thank you.

Madame Bonsant.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Let us start again from the beginning, because I want to understand this clearly. Bill C-50 intends to create a board that will manage money, but that will not manage the applications for employment insurance benefits. Will it be in charge of compassionate leave applications, sick leave or maternity leave?