Finance Committee on May 6th, 2010

[The Chair, Conservative, James Rajotte]

I call the meeting to order, this 17th meeting of the Standing Committee on Finance, as we continue our study of Bill C-9, an act to implement certain provisions of the budget tabled in Parliament on March 4, 2010.

Colleagues, we are on part 24 of the overview, with officials. We hope to have about a 30-minute discussion with officials on part 24, and then move to the witnesses who are invited for today. That will depend on the number of questions we have from colleagues.

This part 24 deals with amendments to the Employment Insurance Act, to establish an account in the accounts of Canada to be known as the employment insurance operating account and to close the employment insurance account and remove it from the accounts of Canada.

We'll proceed as we have on other parts, with questions from members for five-minute rounds. We'll start with Mr. McKay.

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

Thank you, Chair.

We have been told by literally dozens and dozens of witnesses that there is a surplus in the EI account. You're now setting up a separate bank account. Will that “surplus” be transferred to that bank account?

[Mark Hodgson, Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance]

The new EI operating account is not a bank account, it's a specified-purpose account on the books of the Government of Canada. I believe you may be referring to the bank account that the Canada Employment Insurance Financing Board will be responsible for.

The amounts recorded in the current employment insurance account are a historical record of past revenues from premiums and program expenditures. It's a cumulative total of the past operations of the program and doesn't represent cash in an account.

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

It doesn't represent real money, in other words.

[Mark Hodgson]

That's right. It's an accounting mechanism.

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

The proposal in this legislation is the actual setting up of a separate EI bank account. Is that correct?

[Mark Hodgson]

It's creating an EI operating account. It's a new account that starts as of January 1, 2009, and it will track premium revenues and program expenditures in the EI program, corresponding with the starting date of the responsibility of the CEIFB to break even over time.

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

So it's already set up; it's operating as of January 1, 2009.

[Mark Hodgson]

This legislation, if it's passed, will establish that account as of that date.

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

So you'll have to do a whole bunch of backdating.

[Mark Hodgson]

There will be restatements of the books of Canada to reflect the creation of this new account.

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

In other words, that's backdating.

So you're going to backtrack to January 1, 2009. Will your fiscal year-end, for the purposes of that particular accounting, be a January 1 date? Or will it be the government's date of March 31?

[Mark Hodgson]

The EI program operates on a calendar year basis, so the public accounts reflecting the creation of the EI operating account and the end of the EI account for fiscal years 2008-09 and 2009-10 would need to be restated.

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

Have the January 1, 2009 to January 1, 2010 figures been published yet?

[Mark Hodgson]

No, they haven't.

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

When do you anticipate those figures will be published?

[Mark Hodgson]

Well, the public accounts are normally published in the fall, so fiscal year 2009-10 would be sometime this fall.

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

So in effect you will know nine months after the fact whether your account was in surplus or in deficit. If you are having a fiscal year-end of December 31, 2009, you won't find out until September 2010 whether it was a deficit or a surplus.

[Mark Hodgson]

That has always been the case. The program has always operated on a calender year basis.

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

It has. Okay, so it is actually three months slower than the government's accounts.

[Mark Hodgson]

Or three months quicker, depending upon which you are looking at. The fiscal year for the EI program starts in January, effectively three months ahead of the new fiscal year.

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

Now, as I understand it, this account is going to work on a swing of about $4 billion--$2 billion to the good, $2 billion to the bad. Is that correct?

[Mark Hodgson]

I'm not sure I understand the question. The new EI operating account will track all premium revenues and program expenditures. To the extent that there are surpluses or deficits in a year, whatever they turn out to be will be reflected in the new EI operating account.

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

So if in fact you have a deficit of whatever magnitude, how will that be covered?

[Mark Hodgson]

That will be recovered through future premium rates. The mandate of--