Bill C-50 (Historical)

Budget Implementation Act, 2008

An Act to implement certain provisions of the budget tabled in Parliament on February 26, 2008 and to enact provisions to preserve the fiscal plan set out in that budget

Part 1 enacts a number of income tax measures proposed in the February 26, 2008 Budget. In particular, it
(a) introduces the new Tax-Free Savings Account, effective for the 2009 and subsequent taxation years;
(b) extends by 10 years the maximum number of years during which a Registered Education Savings Plan may be open and accept contributions and provides a six-month grace period for making educational assistance payments, generally effective for the 2008 and subsequent taxation years;
(c) increases the amount of the Northern Residents Deduction, effective for the 2008 and subsequent taxation years;
(d) extends the application of the Medical Expense Tax Credit to certain devices and expenses and better targets the requirement that eligible medications must require a prescription by an eligible medical practitioner, generally effective for the 2008 and subsequent taxation years;
(e) amends the provisions relating to Registered Disability Savings Plans so that the rule forcing the mandatory collapse of a plan be invoked only where the beneficiary’s condition has factually improved to the extent that the beneficiary no longer qualifies for the disability tax credit, effective for the 2008 and subsequent taxation years;
(f) extends by one year the Mineral Exploration Tax Credit;
(g) extends the capital gains tax exemption for certain gifts of listed securities to also apply in respect of certain exchangeable shares and partnership interests, effective for gifts made on or after February 26, 2008;
(h) adjusts the rate of the Dividend Tax Credit to reflect corporate income tax rate reductions, beginning in 2010;
(i) increases the benefits available under the Scientific Research and Experimental Development Program, generally effective for taxation years that end on or after February 26, 2008;
(j) amends the penalty for failures to remit source deductions when due in order to better reflect the degree to which the remittances are late, and excuses early remittances from the mandatory financial institution remittance rules, effective for remittances due on or after February 26, 2008;
(k) reduces the paper burden associated with dispositions by non-residents of certain treaty-protected property, effective for dispositions that occur after 2008;
(l) ensures that the enhanced tax incentive for Donations of Medicines is properly targeted, effective for gifts made after June, 2008; and
(m) modifies the provincial component of the SIFT tax to better reflect actual provincial tax rates, effective for the 2009 and subsequent taxation years.
Part 1 also implements income tax measures to preserve the fiscal plan as set out in the February 26, 2008 Budget.
Part 2 amends the Excise Act, the Excise Act, 2001 and the Customs Tariff to implement measures aimed at improving tobacco tax enforcement and compliance, adjusting excise duties on tobacco sticks and on tobacco for duty-free markets and equalizing the excise treatment of imitation spirits and other spirits.
Part 3 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed or referenced in the February 26, 2008 Budget. It amends the Excise Tax Act to expand the list of zero-rated medical and assistive devices and to ensure that all supplies of drugs sold to final consumers under prescription are zero-rated. It also amends that Act to exempt all nursing services rendered within a nurse-patient relationship, prescribed health care services ordered by an authorized registered nurse and, if certain conditions are met, a service of training that is specially designed to assist individuals in coping with the effects of their disorder or disability. It further amends that Act to ensure that a variety of professional health services maintain their GST/HST exempt status if those services are rendered by a health professional through a corporation. Additional amendments to that Act clarify the GST/HST treatment of long-term residential care facilities. Those amendments are intended to ensure that the GST New Residential Rental Property Rebate is available, and the GST/HST exempt treatment for residential leases and sales of used residential rental buildings applies, to long-term residential care facilities on a prospective basis and on past transactions if certain circumstances exist. This Part also makes amendments to relieve the GST/HST on most lease payments for land on which wind or solar power equipment used to generate electricity is situated.
Part 4 dissolves the Canada Millennium Scholarship Foundation, provides for the Foundation to fulfill certain obligations and deposit its remaining assets in the Consolidated Revenue Fund, and repeals Part 1 of the Budget Implementation Act, 1998. It also makes consequential amendments to other Acts.
Part 5 amends the Canada Student Financial Assistance Act and the Canada Student Loans Act to implement measures concerning financial assistance for students, including the following:
(a) authorizing the establishment and operation, by regulation, of electronic systems to allow on-line services to be offered to students;
(b) providing for the establishment and operation, by regulation, of a program to provide for the repayment of student loans for classes of borrowers who are encountering financial difficulties;
(c) allowing part-time students to defer their student loan payments for as long as they continue to be students, and providing, by regulation, for other circumstances in which student loan payments may be deferred; and
(d) allowing the Minister of Human Resources and Skills Development to take remedial action if any error is made in the administration of the two Acts and in certain cases, to waive requirements imposed on students to avoid undue hardship to them.
Part 6 amends the Immigration and Refugee Protection Act to authorize the Minister of Citizenship and Immigration to give instructions with respect to the processing of certain applications and requests in order to support the attainment of the immigration goals established by the Government of Canada.
Part 7 enacts the Canada Employment Insurance Financing Board Act. The mandate of the Board is to set the Employment Insurance premium rate and to manage a financial reserve. That Part also amends the Employment Insurance Act and makes consequential amendments to other Acts.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the recruitment of front line police officers, capital investment in public transit infrastructure and carbon capture and storage. It also authorizes Canada Social Transfer transition protection payments.
Part 9 authorizes payments to be made out of the Consolidated Revenue Fund to Genome Canada, the Mental Health Commission of Canada, The Gairdner Foundation and the University of Calgary.
Part 10 amends various Acts.

Budget Implementation Act, 2008

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, it is time to pass Bill C-50, this year's first budget implementation bill. Every day constituents are calling and writing asking when Parliament will approve this important legislation.

Constituents know that included in this bill are measures to implement the landmark tax-free savings account. While some politicians might think the best place for taxpayers' hard-earned money is in government coffers, this Conservative government believes that it is better to stay where it belongs, and that is in the hands of hard-working Canadians.

The tax-free savings account would allow Canadians to place $5,000 into a sheltered account and then watch their money grow tax free without the tax collector ever being able to put his hands on it again. Simply put, this is the best thing that has happened to the tax system since the RRSP.

Canadians want Parliament to act before summer. I am asking all members of Parliament to support the important measures in this bill. Let us make Parliament work and give Canadians the tax-free savings account before summer.

Opposition Motion--The Economy

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, yesterday at the finance committee we had both big labour and big business. It was an interesting conversation with respect to Bill C-50, the budget implementation bill, and the EI issue around setting up a separate EI fund. They pointed out that this particular provision in the budget left something to be desired.

If we want to set up an EI fund distinct and separate from the government, we need to put in about $15 billion. The reason we need to put in about $15 billion is because when unemployment times are bad we want to be able to reduce premiums and when employment times are good we want to actually increase premiums. There is this sort of counter-cyclical effect. We would not, in effect, be taxing businesses when they are strained in economic times.

I wonder whether the parliamentary secretary would be interested in amending the budget provision bill so that instead of setting aside a mere $2 billion, which would do absolutely nothing, the government would put aside $15 billion so the EI fund would act in a counter-cyclical manner and would cushion the bad times and help in the good times. It actually was a recommendation that was made by actuaries in Canada.

Budget 2008

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, it is no surprise that Bill C-50, budget 2008's first implementation act, enjoys the support of the overwhelming majority of the members in the House.

While budget 2008 is widely acknowledged for its fiscal prudence, I am exceptionally proud of the many new and worthwhile investments contained in Bill C-50. Some of these investments include the creation of a $500 million public transit trust fund, a $400 million police officers recruitment fund, $110 million to the Canadian Mental Health Commission and $282 million over this and the next two years to extend new supports to survivors of our war veterans who are disabled or in financial need.

Those are but a few examples of the many substantial new investments that are contained in Bill C-50, a bill drafted by our outstanding Minister of Finance under the strong and principled leadership of our Prime Minister.

I encourage all members to assist the government in passing Bill C-50 as quickly as possible as our provincial and territorial governing partners, as well as many worthy organizations, eagerly await these new federal investments.

Opposition Motion--The Economy

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, first of all, I would like to inform my colleague that we will support the NDP motion because we think that since this government presented the budget, it no longer deserves the confidence of the House. We should have triggered an election over these things and given the public the chance to debate and make different choices.

Two specific things in the motion caught my attention. It states that there is a gap fostered by this government's unbalanced economic agenda. The best example is the $10 billion surplus that was put towards the debt, when at least $7 billion of that was needed to stimulate the economy.

In terms of employment insurance, even Canada's actuaries are saying that the reform proposed in Bill C-50 is unacceptable.

My question is for my colleague. The Bloc will support the NDP, and we will see what the Liberals decide to do. Are we not at a crossroads, meaning that the government will have to answer to the public for its actions, because it seems determined to go against the wishes of the majority of citizens?

[René Roy]

To answer your question directly, sir, I would say no. It is not a waste of money to create this board; what it is, is a step in the right direction. There are a lot of things in this that need improvement. We have been battling the federal government on this for 15 years, to change what we have now. The status quo is not something we can live with. So let's take a step in some direction!

We want to improve Bill C-50 to have some power. But as my colleagues said, this board has to have something to do, there have to be employer and union representatives. If we start with that, we intend to fight to improve it, so that one day we will be managing the employment insurance fund together with employers. At present, we will take what improvements we can get.

To answer the member who spoke before, I would say that since the Conservative government has been in power at the federal level, the accumulated surplus isn't $2 billion, it is $5 billion or even a little more.

[Roger Valois, Vice President, Executive Committee, Confédération des syndicats nationaux]

I am going to follow up on what my colleague was saying. There are several points in the bill that we find somewhat bizarre. Pierre Céré spoke a little about them earlier. The question of loans we can be made is somewhat odd. We are going to be lent money that has been stolen from us and on top of that we will be charged interest. We find that somewhat surprising, as we do the dirty hands theory that the government is trying to develop. When it introduced Bill C-50, it said it had dirtied its hands when it took the surplus. It wants to use this bill to wash its hands and take the position that the surplus now belongs to it. We do not agree with this.

We recognize one good thing about Bill C-50, which is that there will be a board that will receive premiums and will prevent the government from blithely dipping into the account. That is the only thing positive we see. The question of the 15¢ has already been settled. Mr. Céré was most eloquent on that point. We did not need Bill C-50 to implement what was already in the Act.

The fact that the board being established will not even have the power to make recommendations is what we find most shocking. It will not even be able to recommend anything to the government at all. We will be able to do it by demonstrating. In fact, we have done that. We are saying that there has been enough stealing from the account. The board that is to be created should at least have the power to recommend things to the government. The government is telling us, is telling premium payers, the employers and employees who pay the premiums, that it will reduce premiums to appease us. That's terrific, for employees. That will come to $30 a year. Thirty dollars a year, that's something you can live on, when you're on unemployment! When 10¢ is paid in premiums, the account has surpluses. If we give the 10¢ a week back to employees, they won't be able to buy anything with it at the end of the year!

The is smugly telling us that it is going to reduce the premium rate and give a bit back to the people who pay the premiums, the employers and employees. That makes no sense. That is not the reason for creating a board, I hope. We thought the board would at least have the power to make recommendations to the government and stop the stealing from the account. We start in the Supreme Court on the 13th. We and the FTQ and the aluminum union will be arguing that our money has been stolen.

The board that is being created is a step forward, because at least we are saying that premiums will be channelled and the government will be prevented from getting its hands on them. But we are concerned about this $2 billion. Once that amount is exceeded, what will they do with the money?

[René Roy, Secretary General, Fédération des travailleurs et travailleuses du Québec]

We have 20 minutes! That will be enough to persuade the federal government to change its mind.

Thank you, Mr. Chair, and thanks to the committee for inviting us. We represent four organizations, although there is no CSQ representative with us today. The FTQ, the CSN, the CSD and the CSQ represent about a million workers in Quebec.

Because we are an umbrella group for four organizations, we have prepared a document that I am going to read to you calmly. I will then give my colleagues the floor. I thought we had only 10 minutes and I had started to make cuts here and there.

As union organizations, we are involved almost every day in supporting employees who, despite themselves, become unemployed when a plant closes down or they are laid off. In recent years, we have repeatedly called for improvements in the employment insurance scheme. The current program, which has been substantially amended since 1990, is increasingly poorly adapted to the new realities of the labour market and no longer meets the income protection needs of unemployed workers.

In Quebec, the overall rate of eligible workers has fallen from 81 percent in 1990 to fewer than 50 percent today. It is with that in mind that we have chosen to speak with one voice on behalf of all of the workers we represent, nearly a million people.

In its last budget, the government announced the creation of the Canada Employment Insurance Financing Board. The bill being considered today provides that the objects of this new Crown corporation, which is to be independent of the government, will essentially be to set the premium rate, manage amounts paid to it under the rules provided in the Employment Insurance Act, and invest its financial assets with a view to meeting its financial obligations.

In addition, section 5 clearly provides that the Board shall not have any involvement in benefits and entitlement. In other words, it has no powers in relation to the design and delivery of the program. That responsibility will remain with the government, which also retains the power to intervene and set a different premium rate from the rate set by the Board, if it deems it necessary.

In order to carry out its objects, the Board will have to establish three committees: an audit committee, an investment committee and a human resources committee. On this point, we welcome the fact that the Board will have to produce quarterly financial statements and an annual report, which will be public. The Board's operating costs will be paid out of revenue in the employment insurance account and will thus be paid entirely by premium payers.

To begin with, we would point out that creating an Employment Insurance Financing Board as a Crown corporation, independent of the government, is certainly a step in the right direction. We have to applaud the government's commitment to creating a separate account and guaranteeing that premiums will be used exclusively for the employment insurance program. However, we believe that there are several important questions that remain unanswered.

Before we comment on the objects and purposes of the Employment Insurance Financing Board, we would like to make a few recommendations regarding the governance structure of the Board.

Under Bill C-50, the Employment Insurance Financing Board will report to the Minister of Human Resources and Social Development. Its board of directors will be composed of seven people, including the chairperson. Those people will be appointed by Governor in Council, on the recommendation of the Minister, from a list established by a nominating committee. The nominating committee is to be composed of a chairperson appointed by the Minister and the two members of the Employment Insurance Commission, the Commissioner for Employers and the Commissioner for Workers.

The Bill does not specify whether there must be formal consultations with employer and union organizations in preparing the list. We are in agreement with the financial and management qualifications. However, the bill does not mention that the board of directors must be representative in terms of premium payers.

Is it necessary to point out that the program is funded exclusively by the premiums paid by employers and workers? They should certainly have a say in the management of the employment insurance account. Bill C-50 therefore needs to be amended to guarantee fair representation for those who pay premiums into the scheme in the governance structure.

We are therefore asking that the board of directors be composed of a large enough, fixed and equal number of representatives of employer and union associations, and that they be chosen from lists supplied by their most representative respective associations.

The bill stipulates that the Board is to set the premium rate under section 66 of the Employment Insurance Act. This amounts to transferring a responsibility that is currently assigned to the Canada Employment Insurance Commission. We are not happy to see the government taking advantage of this transfer to put an end to the obligation to receive submissions from the public when rates are set. Even though consultation often took place too late in the process and seldom produced useful results, it nonetheless gave us an opportunity to state our views concerning the premium rate.

That being said, the Board will start fixing the rate in 2009, but will have to follow essentially the same rules as have been used for setting the premium rate for the last three years. We have had occasion to comment on the flaws in the employment insurance premium setting process. We can only reiterate our disappointment that the government is persisting in taking an equilibrium approach. That principle requires that the actuary, who will now be appointed by the board of directors on its own authority, will have to determine a premium rate that will generate just enough revenue to cover the anticipated costs of the program for the next year, without regard to the current balance in the employment insurance account or future interest on that balance.

I am going to ask Roger Valois to continue.

[Pierre Céré, Spokeperson, Conseil national des chômeurs et chômeuses]

On behalf of the Conseil national des chômeurs et des chômeuses, I would like to thank you, Mr. Chair, and all the MPs from the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities. It is not easy to finalize the list of invited speakers, but we have to thank you for this invitation.

Yesterday, Mr. Jackson and I appeared before the Standing Committee on Finance to talk about Part 7 of Bill C-50, the creation of the Canada Employment Insurance Financing Board. It was not until the end of the meeting, at about 5:15, that I understood that Bill C-50 would probably pass in its present form, without amendments, because the government is making it a confidence issue. It sometimes takes a while to understand; that is how life is.

When I got up this morning, I almost wanted to sing along with Dalida, Paroles, paroles. But we have done our homework all the same, Mr. Chair. We have studied Bill C-50. And in particular, we have compared it with the current employment insurance legislation and found that there are not many differences. I am going to give you a few examples.

Paragraph 66(1)(a) of the current Act, which would be slightly amended, for example to include the Financing Board, says that the premium rate should generate just enough premium revenue to cover payments that will be made. That is what the current Act has said since 2005. The intention is to balance revenue and expenditures by creating the Employment Insurance Financing Board.

Subsection 66(2) of the current law says that the annual variation in the premium rate may not exceed 0.15%. We sometimes think that it is the Financing Board that would impose that requirement. It is already the case. Subsection 66(3) says that the Governor in Council may substitute a premium rate if it considers it to be in the public interest. That is also already the case now. We could keep going with this list for quite a while.

There are not many differences. There is however one difference between the current situation and the planned establishment of the Financing Board: the creation of an independent account. That would mean that workers' and employers' contributions remain in the fund and can no longer be siphoned off and used for other purposes. This is a significant difference.

We know that from 1995 to March 31, 2007, the government confiscated $54.1 billion from the fund. That is the official figure. The announced establishment of the Crown corporation for the sole purpose of managing the fund and setting premium rates is not bad news in itself. The independent account is not bad news. Very little else has changed, however. Most of the provisions of the bill were already in effect and under the Commission's responsibility. It would even be possible to envisage — and I am not proposing this — the establishment of an independent account under the control of the Commission, and this would do the job. In either case, with or without the Financing Board, under the Commission's responsibility or not, this would still not solve all the problems. Some of these problems have been raised here.

What do we do about the $54 billion that has been diverted and confiscated, when it should have been used to protect workers? The employment insurance scheme was severely cut in 1995-1996 and before, and a necessary and unavoidable improvement has to be made.

We have no illusions regarding the proposals that might be made. Section 80 provides that if the Employment Insurance Account is in deficit, the Consolidated Revenue Fund, the government, could lend it money, which the account must repay with interest. What's sauce for the goose is sauce for the gander. The government owes the Employment Insurance Account $54 billion, and Bill C-50 should provide that the Consolidated Revenue Fund owes the Employment Insurance Account $54.1 billion. In other words, if the Employment Insurance Account is in deficit, the government should not lend it money, it should repay it out of the $54 billion.

The primary, crucial and unavoidable issue, and the only one that deserves to be fought for, is the improvement that must be made to the employment insurance scheme.

A few days ago, we got the Monitoring and Assessment Report. One figure struck us right off: the beneficiary-contributor ratio. The way in which the government has assessed the coverage of the employment insurance scheme since 1940 is called the beneficiary-contributor ratio. At the moment, it is 46.1. In other words, out of every 100 workers who have paid employment insurance premiums, 54 will not be entitled to benefits if they need them.

This is the issue! It is eminently political. I invite parliamentarians to debate it. Either everyone closes themselves off in their own truths, their own discourse, their own way of seeing things, or we try together to find a solution we can all rally round to improve the employment insurance scheme and provide the workers of this country with better protection.

Thank you, Mr. Chair.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Yes, but is the answer, really, that there should be more training, taking the funds from the EI to do the training, so that the unemployed manufacturing workers who are now on the street, or the forestry workers, can be retrained? That is number one.

Number two, should we not change the point system and actually allow some of those people to come into Canada? Right now the skilled workers, unless they have degrees and speak fluent English, are not the types of workers you necessarily are looking for. We need carpenters, for example. Carpenters don't have enough points to come into Canada.

So yes, we are all for changing the point system, but this is not what Bill C-50 is doing. Bill C-50 is basically allowing the minister to bring people and move categories of people up and down; it's not changing the point system. I don't see how that would necessarily make the system any better.

[Sima Sahar Zerehi]

Clearly, that's exactly the connection that we are seeing. If we don't do something to fix the system at the front end, we're going to have more people falling through the cracks, and then we'll have to devote more resources at the back end.

Today we read a press release, issued by Minister Stockwell Day, complimenting CBSA for arresting undocumented workers in a factory outside of the Greater Toronto Area. What we're seeing is that at the same time as we're deporting workers, our country is speaking out again and again on the need for more labourers to come in to provide for those shortages of the workers that we're deporting. Definitely we need to see the connection here.

Bill C-50 is going to bring more temporary foreign workers into Canada for a two-year period. After that time, they're going to fall through the cracks again, and we're going to exacerbate the crisis of undocumented immigrants.

[Olivia Chow, NDP, Trinity—Spadina, ON]

I want to speak on two areas: EI and immigration. It's interesting that they do actually connect with each other.

With $54 billion, imagine the funds we could use to retrain workers who are unemployed in forestry, in manufacturing, in auto plants, in various areas of Quebec, older workers, young people who could get apprenticeship training. It's a phenomenal amount of money, and that dollar really belongs to the workers and the workers alone. It shouldn't be taken away.

It connects with the immigration piece, because what is happening is that we have more and more temporary foreign workers coming into this country and it's driving down the wages of ordinary Canadians. We are in fact seeing immigrant women, for example, earning 56¢ per dollar that is being earned by Canadian-born males. As more workers are not entitled to their EI benefits, as the jobs are paying less, as there are fewer manufacturing jobs, you are seeing more and more temporary foreign workers coming into Canada.

It is connected, and that is why tomorrow the NDP has an opposition day motion and we're going to spend the entire day in the House of Commons debating whether the House has lost confidence in this government, given that the government has failed to reform employment insurance to ensure that people who lose jobs are protected and trained. That's an area I wouldn't mind some comments on.

Since the last exchange, I thought I should ask Ms. Zerehi or Mr. Wong a question. Regarding temporary foreign workers or people with precarious status in Canada, if Bill C-50 generates more of those types of immigrants, would we see more people going underground and therefore have more people disappearing? The Auditor General said there were 41,000 so far. Will we get more people going underground, making it even harder for the Canada Border Services Agency to keep track of where the immigrants or undocumented workers are?

Perhaps Ms. Zerehi could answer the question.

[Sima Sahar Zerehi]

First of all, we're working on a campaign; the campaign's point of unity is opposition to Bill C-50 at this moment, and a regularization program that meets the needs of undocumented workers.

[Pierre Céré]

For every 100 salaried workers who have paid EI premiums, only 46 will qualify for EI when they need it. The remaining 54 will be out of luck. In most cases, we're talking about people who are in temporary jobs and who do not accumulate the hours of work required to qualify.

Our message is the same as the one we conveyed with respect to employment insurance. Creating an independent account is probably a step in the right direction. Never again must we allow the surplus to accumulate as we did for 12 or 13 years, as a result of premiums paid by employees, only to see the money misappropriated and confiscated. Quite aside from the creation of the Board, parliamentarians must seek a consensus on ways of improving the EI system. The benefit-contribution ratio of 46% makes no sense. The percentage needs to increase. Eligibility criteria must be eased.

That being said, I also realize that this has nothing to do with Bill C-50. However, parliamentarians must never forget that $54 billion in employer and worker premiums were misappropriated. I hope that the majority of members will refuse to allow this scandal to be swept under the rug.

Section 80 of the existing act and the proposed changes which would create the Board provide that if the account is in a deficit situation, an advance may be authorized from the Consolidated Revenue Fund. However, the Board will have to repay this advance, with interest. It goes both ways, however. The Consolidated Revenue Fund owes $54 billion to the employment insurance system. Obviously, we're not expecting a cheque for $54 billion to be cut next week, but this money should be accounted for somewhere. Each time the account experiences a shortfall, the money to make up the deficit should come from this surplus. The money is there.

[Amanda Aziz, National Chairperson, Canadian Federation of Students]

Good afternoon, and thanks very much for the opportunity to speak here today.

We're obviously here to speak today about Bill C-50's implications on Canadian student financial assistance.

The Canadian Federation of Students is Canada's largest student organization. We represent undergraduate and graduate students at Canada's public universities and colleges, both small and large. Altogether, we unite over half a million students on campaigns for affordable, high-quality, post-secondary education.

One of our longest-standing campaigns is for a national system of student grants. The up-front financial barriers to post-secondary education play a major role in explaining the unacceptable participation gap between families in the lowest and highest income quartiles. Grants are a vital tool for giving students and their families the help they need to afford post-secondary education in the face of skyrocketing tuition fees and other costs. Perhaps more importantly, grants, unlike loans, provide that help without mortgaging the future of Canada's young educated workers.

Student debt owed to the federal government through the Canada student loans program is increasing at $18 per second, more than $1.5 million a day. In July this year, student loans owing to the federal government will surpass $13 billion. That doesn't include student loan debt owed to provincial governments, which could add at least $7 billion more to the debt, nor does it include debt from private sources such as banks.

In provinces where tuition fees are the highest, average student debt is more than $28,000, according to the Maritime Provinces Higher Education Commission. This is an embarrassment for a country as rich as Canada.

Ten years ago the federal government created the Canada Millennium Scholarship Foundation and endowed it with $2.5 billion. The size and scope of this investment should be recognized as a substantial and well-meaning attempt at reducing student debt and improving access to post-secondary education. Sadly, the foundation was a flawed mechanism for social programming and, by most accounts, failed to deliver much relief to Canadian students.

Provincial governments widely abused the funding from the millennium foundation, seeing it as a slush fund for their own experiments or tangential priorities. As an arm's-length and private organization, the foundation was never accountable or transparent, and it used this untouchable status for deeply political ends that in most cases ran contrary to its mandate to improve access to post-secondary education. It provided political cover for increased tuition fees, and it enriched former employees with lucrative contracts. It also paid out nearly $250,000 in subsidies to organizations that supported its renewal.

We could argue for hours about whether or not the government should have seen this coming, but I'm here today to suggest that the best intentions led to a failed experiment. This government was right to listen to expert advice and go in a different direction. The proposed Canada student grant program will avoid so many of the pitfalls of its predecessor and will serve as a predictable and stable funding source for Canada's students.

Students need non-repayable grants, and that's not the issue. As the government has recognized in budget 2008, the issue is how grants are administered by this government, and the record is clear. The Millennium Scholarship Foundation has failed in doing so, and there is a more effective way.

In the coming months and years we look forward to providing feedback about how to maximize the new grants' effectiveness and reach, but in the meantime I encourage all parties to implement budget legislation to wind down the Millennium Scholarship Foundation. I assure you, with an HRSDC-administered program in its place, students will not miss it.

In the last few minutes I have, I want to talk about something that this bill doesn't specifically address, but that should be among the top priorities in the debate on post-secondary education policy, and that's the need for this government to invest in education for aboriginal people.

The gap that exists between low- and high-income Canadians participating in post-secondary education is even more pronounced between aboriginal and non-aboriginal Canadians. Completion rates for high school, university, and to a lesser extent, college for aboriginal people lag far behind those for non-aboriginal Canadians. And while this gap continues to widen, the population growth of aboriginal people in Canada is skyrocketing. A study commissioned in 2006 found that over 30% of the aboriginal population is under 24 years old. Despite these demographics, funding for aboriginal students has not increased. In fact, funding for the post-secondary program at the Department of Indian and Northern Affairs has remained virtually stagnant since 1996, with an inadequate 2% annual increase cap.

The Assembly of First Nations estimates that more than 13,000 eligible students in the last six years alone have been denied funding to participate in post-secondary studies. Despite the recommendations in the sixth report of the Standing Committee on Aboriginal Affairs and Northern Development last June, budget 2008 delivered no new funding for aboriginal learners and continued the cap on funding increases in INAC's post-secondary program.

We recommend the federal government immediately remove the funding cap on the post-secondary student support program and explore opportunities to provide support for non-status and Métis students, who are currently not eligible for support under INAC's post-secondary education program.

In closing, I want to thank the committee again for the chance to speak today, and I'll introduce Ian Boyko, who is the government relations officer. Obviously there are many issues in the budget that the time limit didn't allow us to discuss, but I look forward to your questions.

Thanks.

[Pierre Céré, Spokeperson, Conseil national des chômeurs et chômeuses]

Good day.

First of all, on behalf of our organization, the Conseil national des chômeurs et chômeuses, I would like to thank you, Mr. Chairman, as well as all the MPs from the various parties represented on the Standing Committee on Finance.

Our organization represents various groups of unemployed persons, some of whom have been working for about thirty years informing people and defending their rights. We have been on the front lines of many public opinion campaigns criticizing the misappropriation of the employment insurance fund and above all, demanding a better employment insurance system.

I am here today to share our views on the upcoming establishment of the Employment Insurance Financing Board, as set out in Part 7 of Bill C-50.

We have done our homework and examined this bill very thoroughly. We have also compared it with the current Employment Insurance Act.

In our opinion, most of the provisions in Part 7 of Bill C-50 respecting the Financing Board mean very little in the way of changes to the current employment insurance legislation. I will give you a few examples and I urge you to check for yourself in the bill over the next few days. Section 66(1) of the current act provides for the following:

[...] the premium rate should generate just enough premium revenue to cover the payments that will be made [...]

Balancing expenditures and revenues is the aim behind the establishment of the Financing Board.

According to section 66(2) of the current EI Act, the premium rate for a year may not be increased or decreased by more than 0.15%. The Financing Board will also abide by this provision.

Section 66.3 of the Act provides that:

the Governor in Council may substitute a premium rate if it considers it to be in the public interest [...]

Bill C-50 also contains a similar provision, even though this is covered in the existing legislation.

There is, however, one difference between the current situation and the planned establishment of the Employment Insurance Financing Board: the creation of an independent account would mean that workers' contributions remain in the fund and can no longer be used for other purposes. This is a significant difference.

As everyone here well knows, it was estimated that between 1995 and March 31, 2007, the government confiscated $54.1 billion from the fund and used it for other purposes. Appearing recently—I believe it was last week—before the human resources committee, the Minister of Human Resources and Social Development, Monte Solberg, acknowledged the surpluses and the fact that they had been confiscated and misappropriated. He stated that this must not happen again and we agree with him.

The establishment of the new Crown corporation for the sole purpose of managing the fund and setting premium rates is welcome news. However, as we stated before, very little has changed. Most of the provisions of the bill were already in effect and under the Commission's responsibility. Putting it another way, it would even be possible to envisage the establishment of an independent account under the control of the Employment Insurance Commission, which would carry out the mandate of the announced Employment Insurance Financing Board. Nothing then would change.

In either case, with or without the Financing Board, under the Commission's responsibility or not, the creation of this board does not mean that all problems would be resolved. Some problems are in fact not addressed at all by this initiative. In our opinion, creating the Employment Insurance Financing Board does not resolve the issue of the confiscation of the accumulated $54 billion surplus. Nor does it address the improvements needed to the employment insurance system in order to provide better financial protection for workers when they are between jobs.

On the first point, we propose that section 80 found on page 121 of Bill C-50 be amended so that basically, when the EI fund is in a deficit situation, the Governor in Council and the Consolidated Revenue Fund may authorize an advance to the account. However, the advance to the EI fund shall be repaid to the Consolidated Revenue Fund, with interest.

This is already covered in the current act and this is the intent behind the establishment of the Financing Board. We are proposing that these would not be reimbursable advances, but rather non-reimbursable payments drawn from the accumulated surplus.

As such, we are proposing that Bill C-50 be amended to provide for the keeping of records on this accumulated $54 billion surplus with interest until it is fully reimbursed, and that this surplus be regarded as a debt. It works both ways.

Our institutions, laws and people must never forget what can be described as one of the biggest financial scandals in Canada in the 20th century: the misappropriation of billions of dollars in employment insurance contributions that were intended to better protect Canadians.

Let me explain what I means Mr. Chairman. Global political events can sometimes be instructive.The great politician Nelson Mandela taught us that reconciliation has a price, namely truth, and that reconciliation can only take place once the truth has been established. In other words, we are not showing your our fist, but rather extending to you our hand, in the hope that the truth will emerge about the amounts stolen from the EI fund.

Moreover, the addition proposed with clause 70.1 on p. 119 of Bill C-50 provides for a $2 billion reserve fund. This reserve fund is insufficient. According to the Canadian Institute of Actuaries, it should be $15 billion. We propose, therefore, that this reserve be increased or that provision be made to add future annual surpluses to this reserve without affecting the balance of accounts.

Still with regard to Bill C-50, we propose that the appointment process for the Board of Directors and for the Chairperson of the Board—clauses 9 to 13 of the bill—be subject to the approval of the Standing Committee on Human Resources. This would make the process more transparent and more democratic.

Finally, the main message we wish to send to the members of this committee is that the creation of the Employment Insurance Financing Board does not address the real problem. It means that over 50% of unemployed workers are not eligible for employment insurance benefits, according to figures just released by the department. This is the most important issue to us, the key issue and the only one that we truly should be fighting for.

Whether or not the Employment Insurance Financing Board is created, the employment insurance system must be improved. Sometimes in the course of history, we must all work together, even if only for a very short time, to make progress on a social issue such as the employment insurance plan which is designed to protect workers in Canada. This is a highly political issue.

Mindful of our responsibilities, we are appealing to parliamentarians and to the various political parties represented in the Parliament of Canada.

Thank you, Mr. Chairman.