Was there any real money, yes or no?
Evidence of meeting #17 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was surplus.
A recording is available from Parliament.
Evidence of meeting #17 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was surplus.
A recording is available from Parliament.
3:45 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Yes.
3:45 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
You say “the money flowed to” because, in fact, the government stole it and allocated it to another purpose than the one for which it was paid.
3:45 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
I can't comment on government spending decisions. What I can comment on is the legislation, which requires EI premiums to be deposited in the CRF, like all other government revenues. In that sense, tax revenue, tariffs, duties, EI premiums, all flow into the CRF. It was a poor choice of metaphor, perhaps, but it is revenue that must be deposited in the CRF. The legislation requires it.
3:50 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
We nevertheless agree that the real money in question was an amount intended to offset the cyclical nature of the job market. We also agree that all businesses had to pay it, regardless whether they made money or not. This created fiscal room that, by definition, can only benefit the companies that pay taxes, and thus those that make the biggest profits. This fiscal room made this $60 billion tax cut possible, and it's this very money that was stolen from workers and business, regardless of who they were, to create this fiscal room.
Do we agree on that point as well?
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
I can't comment on the accusation that the money was stolen or that there was any link between the way premium rates were set by the EI commission and other government decisions with respect to taxation and fiscal matters. I could draw the member's attention to the Supreme Court of Canada's decision in the CSN/Arvida case where they ruled that there was no impropriety in the way premium rates were set and that the government's appropriation of EI premiums in the CRF was perfectly correct.
3:50 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
In its decision, the Supreme Court blamed the government. You forgot that in your explanation.
Thank you, Mr. Chairman.
3:50 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
I have Mr. MacKay and Monsieur Paillé.
I just want to follow up for my own clarification, Mr. Hodgson, because the number of $57 billion or $60 billion is used quite often. It was real money in the form of premiums paid by employers and employees on an annual basis. There was a surplus in terms of what was paid in and what was paid out in benefits. My understanding is that goes back to the mid-nineties. But this was on an annual basis; this was not money set aside over a period of time. On an annual basis, if there were a surplus for that year, then the money flowed to the consolidated revenue fund. If there were a surplus, the surplus was allocated in that or the following fiscal year. Is that correct?
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
To clarify this, the EI premium rate has been set according to legislation by the EI commission each year. To the extent that the premium turned out to be too high relative to the actual outcome of the economy and the unemployment rate, a surplus between premiums and program expenditures would have occurred.
The premium revenues have flowed into the CRF, and the legislation also requires that the benefits, whatever they may cost, are paid from the CRF. At the end of the day, if there is a difference in the year between the two, you have a surplus or a deficit that gets recorded in the EI account and added to or subtracted from the running total.
3:50 p.m.
Conservative
The Chair Conservative James Rajotte
Between say 1995-96 to 2006, or even up to 2009, there was essentially a surplus in each one of those years.
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Yes.
3:50 p.m.
Conservative
The Chair Conservative James Rajotte
But the surplus did not accumulate over time into a larger surplus of $57 billion. The surplus was actually allocated each year.
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The cash, or the premium revenue, formed part of the total government revenues in the CRF—it is not set aside in a separate bank account.
What we have with the $57-billion cumulative number is the addition of each of those individual year's surpluses.
3:50 p.m.
Conservative
The Chair Conservative James Rajotte
So when the government came into office in 2006, there was no pot of money sitting there of say $50 billion set aside. The money had been allocated up to that point.
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
That's correct.
3:50 p.m.
Conservative
3:50 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
It seems to me that the major change that's being proposed here is that you're now going to allocate the costs of running the fund against the account. Is that correct?
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The new mechanism that's been put in place will ensure that to the extent that there are future surpluses, they will be transferred in cash to the Canada Employment Insurance Financing Board to invest, until the funds can be returned to premium payers through lower premiums. The board will be responsible for ensuring that over time, within the 15¢ limit on year-to-year changes in premium rates, the program breaks even on its own.
3:50 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
But where are you accounting for the cost of the program, the administrative costs? You said something to the effect that it cost $1.6 billion to run this program. Where does that accounting lie?
3:50 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The legislation requires that to be charged against the new EI operating account.
3:55 p.m.
Liberal
3:55 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
No, it certainly has been true that in the existing EI account, the operating costs have also been charged against it, and have shown up in the public accounts each year.
3:55 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Okay, so when we get into this notional $57 billion, is that with those numbers already bled out?
3:55 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Yes. That covers the cost of benefits and the costs of administering the program against the premium revenues.