Human Resources Committee on May 1st, 2008

[Louis Beauséjour]

In fact, that doesn't change the way the benefits side of the business is conducted.

[Tony Martin, NDP, Sault Ste. Marie, ON]

A $200 billion tax relief package just floated out over the last two years. It will reduce the capacity of the federal government to participate in many of the important ways Canadians expect their government to carry them through difficult economic times.

There is now a move to reduce the premiums into EI, which was a source of money for government to keep people afloat, making sure that we were making the best use of their skills to grow the economy. Have you done any analysis of how cutting the money to the EI fund, on top of the $200 billion tax relief package that's been rolled out, is going to affect your ability to deliver the programs that people look to you for?

[Yves Giroux]

The tax cuts were indeed announced by the government, but there were also significant investments in the social area. For example, there was a $39 billion increase in transfers to the provinces, which are the primary deliverers of social services and health services. This was prior to the significant tax cuts of the economic statement. There were also significant investments in aboriginal priorities—investments for post-secondary education—announced in the budget. All these investments were announced at the same time, shortly before or after the significant tax cuts.

Will the tax cuts reduce the ability to make investments? Possibly, in the future. But so far the evidence shows that the government has the means to invest in the social areas where Canadians need to be supported. For example, the budget announced an extension of the targeted initiative for older workers, which was scheduled to sunset at the end of March 2009. But the budget delivered in February 2008 announced its extension until March 2012. So there are significant investments to help those who need government support.

[Tamara Miller, Chief, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance]

The intention of the new rate-setting mechanism in the CEIFB is not to cut rates but rather to ensure that rates charged to premium payers match the cost of running the program. That's why there's authority for the board to raise or lower, based on the needs in the program. The intention is not to have a go-forward cut of the rate premiums unless the program costs less.

[Tony Martin, NDP, Sault Ste. Marie, ON]

We all know, though, the reality over the last number of years. Particularly since we've changed the way EI was managed and the rules that govern that, the surplus in EI went up by some $55 billion over those years. So from that, one would project that there would be cuts.

I say to you, Mr. Giroux, that out there across the country--and I've travelled it for the last year or more, looking at the issue of poverty--provincial governments, and particularly municipal governments, are finding themselves cash-strapped even though, yes, there are some transfers from the federal government to the provinces, and that happens regularly, but they're not as much. There have been cuts to those transfers over the last 15 years in this country, starting with doing away with the Canada assistance plan, then the reduction in the transfer for health, and then the social transfers. It has simply been downloading. Anybody who has watched the political scene will tell you there has been a massive downloading of responsibility for lots of social programs to the municipalities that collect property taxes. That puts the responsibility, then, on a smaller number of already strapped individuals in communities to deliver some of these programs.

So to suggest for a second that somehow a $200 billion reduction in the capacity of government to participate in the overall managing of the social structure of the country is going to be offset by these very modest transfers and investments in some areas, I think, belies the reality here and the truth.

What I'm asking is, has any analysis been done of that and what the impact of this will have on our ability, as government, to actually get out there, particularly given the stats that have come out today from Statistics Canada indicating that the gap between those who have and those who don't and the fact that the middle class are stuck...? Their wage has gone up $1 a week since 1980. Nobody in that category, and the bottom 20% is.... You know, we're all struggling. They're all struggling out there to make ends meet and they're looking to government for some direction.

Dependence on the market, the labour market strategy that governments have adopted over the last 10 to 15 years, is obviously not working to reduce that. Is there any concern about that?

[The Chair, Conservative, Dean Allison]

I remind you that this will be the last comment.

But if you could finish off the answer, sir, that would be great.

[Louis Beauséjour]

The way we can answer that is to say that the purpose of the act is only about ensuring the rate-setting, and the contribution that is collected will be sufficient to deliver on the benefit that has to be delivered, given the current EI Act. There is nothing in the act that limits the ability of the government to make decisions on the benefits.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Except the money.

[The Chair, Conservative, Dean Allison]

We'll leave it at that.

We're going to move to Mr. Thibault, then Mr. Lake and Ms. Yelich. Madam Bonsant will then have a quick intervention and we'll wrap it up with that.

Mr. Thibault, five minutes, sir.

[Robert Thibault, Liberal, West Nova, NS]

Thank you, Mr. Chairman.

If I understand correctly, the difference between what the proposed board could do and what the department can currently do consists in the ability of maintaining a surplus, or a working fund of $2 billion.

[Louis Beauséjour]

There are two modifications. There is, indeed, the ability to maintain a $2 billion fund, but also, in the future, if in some given year—

[Robert Thibault, Liberal, West Nova, NS]

No, it is all right, the department can already do that now. The department now has the ability to set rates that take into account things like expenditures, and to—

[Louis Beauséjour]

—that take into account the expenditures for the coming year, as a matter of fact.

[Robert Thibault, Liberal, West Nova, NS]

The department currently has that power. The difference is the ability to maintain a surplus or a fund.

[Louis Beauséjour]

In fact, this is not the only difference. The surpluses from previous years are transferred into the fund, and this money is taken into account to ensure that the reserve is brought back to the same level.

[Robert Thibault, Liberal, West Nova, NS]

Yes, but the minister already has all the powers to establish rates and premiums. He can do that at will. He can apply any calculations that he wants to all past revenue. I think that the difference consists in the fact that we will be able to maintain this reserve of $2 billion. The surpluses will now go into the reserve. Is this not the big difference?

[Sherry Harrison]

Maybe I could start.

I would suggest that the first change is that currently the rate-setting for the EI is conducted by the EI Commission, which is chaired by the deputy minister, and I believe the associate deputy minister is—

[Robert Thibault, Liberal, West Nova, NS]

Yes, I only have five minutes. I don't want to go into this for a long time.

[Sherry Harrison]

Okay. So right now, under the proposed legislation, it will be moved to an arm's-length—

[Robert Thibault, Liberal, West Nova, NS]

But now the minister, with his structure, has the capacity to set any rate he wishes. The Minister of Finance, the Government of Canada, can tomorrow say the rate is going to be $1 or the rate is going to be 50¢.

[Sherry Harrison]

The EI Commission.

[Robert Thibault, Liberal, West Nova, NS]

But what they don't have the capacity to do now is to maintain a reserve. This bill creates that capacity to maintain a reserve.

And that reserve, I understand, is limited to $2 billion, right?

[Louis Beauséjour]

It is a sum of $2 billion which can be indexed over time.

[Robert Thibault, Liberal, West Nova, NS]

Yes.

[Louis Beauséjour]

The difference is that there is an obligation—