Evidence of meeting #28 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was money.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Atkinson  President, Canadian Construction Association
Cliff Murphy  President, Cape Breton Island Building & Construction Trades Council
Dannie Hanson  Project Manager, Louisbourg Seafoods Ltd., As an Individual
Bruno Gagnon  Chairperson, Task Force on Financing of Employment Insurance, Canadian Institute of Actuaries
Michel Kelly-Gagnon  President, Conseil du patronat du Québec
Jeff Morrison  Director , Government Relations and Public Affairs, Canadian Construction Association
Youri Chassin  Economic Analyst, Conseil du patronat du Québec
Clerk of the Committee  Mr. Jacques Maziade

9:45 a.m.

President, Conseil du patronat du Québec

Michel Kelly-Gagnon

As we've stated in our presentation, we would hope for at least a 50% increase--so $3 billion instead of $2 billion. But we also believe that there's an issue of an equilibrium between what's desirable--and I think in his presentation Mr. Gagnon said that up to $15 billion would be desirable--and the issue of public finance. I think you, as parliamentarians, will have to decide on an equilibrium between what's desirable and what's doable in terms of public finance.

9:45 a.m.

Conservative

The Chair Conservative Dean Allison

Thanks.

Mr. Atkinson.

9:45 a.m.

President, Canadian Construction Association

Michael Atkinson

I would echo those comments.

I also think there are reasonable concerns that have been expressed about the low limit of the reserve. However, I have a concern about what happens on the other end in the event that the fund generates huge surpluses in that reserve. If the reserve is very high, there is a temptation then--because this is now a stand-alone fund--for our legislators to want to dip into it and use it, particularly now that it's not on the government's books. That has me very concerned.

So on the one hand, while I absolutely agree with all of the witnesses that we have to get a reserve that's reasonable to get us through the recession, to get us over a situation in which there's great demand on the fund, I'm also concerned about having a reserve that's too high and too tempting, quite frankly, to legislators who want to dump programs and other things off the consolidated revenue fund into a fund that's shouldered only by employers and employees. That would have me just as concerned on the other end.

9:45 a.m.

Conservative

The Chair Conservative Dean Allison

Thank you. You're not saying you have little faith in politicians, are you? No, never mind. Don't answer that question.

Mr. Gagnon, I'll have to catch you in the next round. We're way over time here. We're going to move to Mr. Lessard. We'll try to work you in, though.

Mr. Lessard, seven minutes, please.

9:50 a.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

Thank you, Mr. Chairman.

First, I would like to thank you for being here this morning. What you had to say was very instructive. I also think it will help us decide what recommendations we should make regarding Bill C-50. Earlier, the chair was saying that you were a little concerned about politicians. I understand that, particularly in light of what happened to the $54 billion.

My first question will be to you, Mr. Kelly-Gagnon.

I was rather surprised to hear you say that the Conseil du patronat du Québec had given up recovering the $54 billion, which you described as a notional amount. When employers paid 1.4% of salaries and wage earners paid money into the fund too, there was nothing theoretical about it. It was real cash.

Why do you say this was a notional fund? Is that not somewhat pernicious?

9:50 a.m.

President, Conseil du patronat du Québec

Michel Kelly-Gagnon

What I meant to say was that to my knowledge—and please correct me if I'm mistaken—the $54 billion was not deposited in a specific account. We could not go to the bank now and ask for a cheque to be written on an account. For example, in the case of the Caisse de dépôt et placement du Québec, there is real money, which is invested in stocks. The $54 billion, on the other hand, was notional, in that the figure appears in the books, but the money has already been spent.

9:50 a.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

Let us take your view of things a little further. The government borrowed money on the money markets to fund certain projects. It spent this money to carry out concrete projects. This money was not theoretical or notional. It is owed to the government's creditors.

Do you not think that the $54 billion should have been treated the same way as the amount borrowed by the Canadian government on foreign markets? It could have been paid back at a rate that would not compromise the Consolidated Revenue Fund. Do you think this would be a good way of recovering the money? Your affiliates, for their part, have not given up on recovering it.

9:50 a.m.

President, Conseil du patronat du Québec

Michel Kelly-Gagnon

We do not see it as a question of giving up. For the time being, we would like the reserve to be somewhat higher than the figure that has been proposed. With respect to the fund, a press release has already been issued or will be released shortly. We continue to say that theoretically, it would be desirable to return this money. However, and this is where we may differ—we think that there are also some public finance considerations. When we ask our members what they would like to see happen, we note that their priorities include controlling the debt and not increasing taxes. We are trying to take into account the various wishes expressed by our members and to keep a balance in all of this.

9:50 a.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

I understand what you are saying. I do not know whether this committee will repeat its recommendation, but in 2005 it recommended unanimously that the money that was diverted from the fund be returned to it. The idea was that this was a loan that could be paid back over 32 years. At the time, the amount of money that was diverted to other purposes was $46 billion, but it is now up to $54 billion.

Let us take your argument a little further. The government sells savings bonds, which we all buy from time to time. Somewhere along the line, could it say that this money has become theoretical or notional, because it has used it for other purposes? That is precisely what happened to the money that was supposed to be used for employment insurance. I would like you to ponder that argument.

My next question is to all our witnesses.

The government is keeping the commission to assume responsibility for access to employment insurance and benefits. The board would deal with premiums only. Do you think this is a good thing or do you think that a single entity should be in charge of everything?

Mr. Kelly-Gagnon said earlier that he was afraid of creating additional bureaucracy. Would it be preferable to assign the entire responsibility to the Employment Insurance Commission and to give it the appropriate number of commissioners to do the work? Should the commission be given full responsibilities, including a chief actuary, as will be assigned to the board? That is just a hypothetical suggestion. I am not saying that we are headed in that direction.

9:55 a.m.

Chairperson, Task Force on Financing of Employment Insurance, Canadian Institute of Actuaries

Bruno Gagnon

We think what is proposed in Bill C-50 could lead to greater transparency than what we have under the current system. We think the gain in transparency and independence would offset any possible decrease in efficiency.

9:55 a.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

As an actuary, and one somewhat familiar with the ins and outs of accounting, tell me how an argument can be made that there would be greater transparency in this way.

9:55 a.m.

Chairperson, Task Force on Financing of Employment Insurance, Canadian Institute of Actuaries

Bruno Gagnon

The board will be independent, and the various parties involved may have greater representation on it. We think this would make for independence and greater openness to the needs of Canadians.

9:55 a.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

You understand, as we do, that the money in the reserve will continue to be in the Consolidated Revenue Fund.

May 6th, 2008 / 9:55 a.m.

Chairperson, Task Force on Financing of Employment Insurance, Canadian Institute of Actuaries

9:55 a.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

Are you not afraid that the government might once again dip into this reserve, as Mr. Atkinson was saying earlier?

9:55 a.m.

Chairperson, Task Force on Financing of Employment Insurance, Canadian Institute of Actuaries

Bruno Gagnon

That is exactly why we suggest a formula using a longer period and a $15 billion reserve. The chief actuary would be able to include the interest on this reserve when he recommends a premium rate. So the reserve could not exceed $15 billion. Each time it exceeded this figure, the money would be returned to people through a reduction in premiums.

9:55 a.m.

Conservative

The Chair Conservative Dean Allison

Okay, that's all the time we have, but I know Mr. Hanson wanted a quick comment, so I'll entertain that.

9:55 a.m.

Project Manager, Louisbourg Seafoods Ltd., As an Individual

Dannie Hanson

Thank you, Mr. Chairman.

Regarding keeping the crown corporation and the two, that is the EI Commission and the parliamentary system, under the crown corporation I fear our conversations would get too business and corporate minded. With all the EI it is important to run it that way, and I like what you're doing, but you can't just dismiss us. If that Quebec community I mentioned is 17% and we're 19%, and all of a sudden the vice-president says they must go up because they're getting too many benefits, you can't give it all over to a bureaucratic world when you have a touch of socialism and benefits to families, now that you're taking training out.

9:55 a.m.

Conservative

The Chair Conservative Dean Allison

Okay, that's all the time we have. I know there were two more people who wanted to get on the record, but maybe we'll catch them on the next round.

Mr. Martin, sir, seven minutes.

9:55 a.m.

NDP

Tony Martin NDP Sault Ste. Marie, ON

Thank you.

Again, as everybody else said, I want to thank you for coming this morning. This is, I think, a very important discussion, given, as has been said already, that there hasn't been much consultation so far on what I think is a fairly significant move with regard to a vehicle the government has had and has used over a number of years now to create some stability in various regions of the country and in various sectors of our economy. I think we have to be very careful of what we do in that respect.

I appreciated the comments, particularly by Mr. Hanson and Mr. Murphy, in terms of the wider impact that this is going to have. I know in my part of the world, in northern Ontario, we're very dependent on forestry. Right now forestry is in big difficulty. We have communities shutting down. People who have worked 40 to 50 years, who have made investments in homes and cottages, and some of them in small business, are now finding they're losing all of that investment, and they're moving on because they need work to look after their families. I don't know a worker I've come across in my 18 years in public life who doesn't want to work, who doesn't want to have a job. They don't want to be on EI, they don't want to be on welfare; they want to work to support their families. They see EI as a way to bridge that period of time when, through no fault of their own, they find themselves without employment.

So this has a huge impact on the broader community. If all of a sudden this EI fund changes--as it has actually over the last 10 or 15 years--and becomes less generous, the whole community suffers. When there's a downturn in the economy, the only source of income in a small community--I'm sure in Cape Breton or northern Ontario, or in many parts of rural Canada--are some of these government programs that put money in people's pockets. They then almost immediately spend it in the small business sector of that community, buying groceries, paying the rent, and that kind of thing. For us to make this change on, I think, some very narrow grounds and with some very narrow concerns worries me because it also affects each of these people personally.

If we're going to have a good economy—and everybody who talks about this agrees—we have to have a workforce that's ready, willing, motivated, and trained. If you have somebody who has gone on EI because they're 50 or 55 years old and they don't see it within their ability to move to Alberta, to get another job, they want to stay where they are, they end up eventually on welfare, which is what happens in many instances--too many instances. It then becomes much more expensive to lift them back up again and get them into the system and get them working when the economy returns.

I'd like some further comment from you in terms of what changes we might suggest to this new initiative, in terms of this new crown corporation to administer EI, to make sure we capture some of those concerns.

10 a.m.

President, Cape Breton Island Building & Construction Trades Council

Cliff Murphy

I'd certainly say that as far as the new financing board goes, which is at arm's length from the government and is going to handle the money for this, it's a good idea, but it should be jointly trusteed by the people who are putting the money into it. As far as the policy goes, from time to time politicians will make decisions with regard to unemployment rates and that kind of thing. So to me it was a travesty to have the $54 billion going in there--no training money going down to where it was needed, no mobility grants, no relief on premiums. I really think this is a good idea, but on the financing of it, the commission itself has to take into consideration what the trustees of this board have to work with. If the $54 billion has gone off into a black hole, that's a real problem for employers and workers.

10 a.m.

NDP

Tony Martin NDP Sault Ste. Marie, ON

Mr. Hanson, and then I believe Mr. Gagnon or Mr. Morrison would like to respond, if you don't mind.

10 a.m.

Conservative

The Chair Conservative Dean Allison

You have two minutes left.

Go ahead.

10 a.m.

Project Manager, Louisbourg Seafoods Ltd., As an Individual

Dannie Hanson

Thank you, sir.

I believe, just directly to your question, what would satisfy or at least comfort some of our communities, yours and ours in resources and so on, is the board's structure. Make sure there is some industry representation, that there are people there who the CEO or vice-president of the crown corporation must come to before he directly moves and changes our benefit rates, our qualifying period, and our period of payment, so it's being vetted through people in the know who can represent you, as MPs, and make sure these things are on top...and board members--not just a room full of bureaucrats, but some of us right there.

Those three things will directly help rest the minds of people in your communities, that they're not tomorrow night being hit by Mr. Smith, CEO of his crown corporation, that it's going up to 910 to 1,120 hours to qualify. It's those three areas, and then the board members can look after the rest of the concerns.

10 a.m.

NDP

Tony Martin NDP Sault Ste. Marie, ON

Mr. Gagnon, do you want to respond?