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.
4 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The CEIFB is responsible for breaking even from January 1, 2009, onwards. A new account starting at zero shows clearly how they're breaking even with the new rate-setting mechanism and the new rate-setting body that was created in budget 2008.
4 p.m.
Liberal
Martha Hall Findlay Liberal Willowdale, ON
I'm still really struggling that you have a notional account now, that you have a notional account going forward, you have a date starting 2009, you have dates here. With all these numbers it seems pretty clear that each year you have the ability to establish program revenues, program costs, annual surplus or deficit. I'm thinking that's a value-add. With all this information you can start with each calendar year at zero, whether it's a calendar or not, asking what the right premium is to achieve break-even. You have all these annual numbers. I'm just questioning the actual value-add we're getting here, as opposed to nice-sounding new names for different accounts.
4:05 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The CEIFB is not responsible for breaking even year by year but for breaking even over time. Forecasts will always be wrong, actual program expenditures. A new account starting at zero makes it very clear to everybody that the new CEIFB is setting rates to balance from this date forward, and starting from zero is a perfectly reasonable point to start or refresh from.
4:05 p.m.
Liberal
Martha Hall Findlay Liberal Willowdale, ON
Mr. Chair, I'll just say, because I'm still not getting an answer, that there doesn't seem to be any reason we can't start with the numbers and be able to do that with the account we already have. I'm still confused. In any event, I'm not getting it.
I'll just leave it there, Mr. Chair. Thank you.
4:05 p.m.
Conservative
4:05 p.m.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
Thank you.
Earlier it was said that a $19 billion premium surplus was anticipated for the period from 2011 to 2015. In my opinion, that would mainly be caused by the increase in premiums already included in the budget.
We can clearly see in the budget that the surplus associated with premiums will be paid into the government's consolidated revenue fund. The government is once again appropriating that surplus. It isn't staying in the independent fund.
Can you confirm that for me?
4:05 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The income for the new rate-setting mechanism and the new EI operating account began on January 1, 2009. There are significant deficits for 2009 and expected for 2010. The figures that you have seen I expect leave out the administration costs. But setting that aside, the forecast is for about a $12 billion cumulative deficit in the new EI operating account, which will then be repaid through annual surpluses, and by 2014 the balance in the new EI operating account is expected to be roughly at zero, so the surpluses will be required to repay the deficits that we're incurring to date.
4:05 p.m.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
I don't see the $12 billion deficit you refer to in the figures presented. I see a $5.8 billion deficit for 2009-2010 and a $5 billion deficit for 2010-2011.
4:05 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
My mental math may be slightly off, but then again the revenue and expenditures leave out the operating costs in each year, which run around $1.8 billion on average, so cumulatively for 2009 and 2010, off the top of my head, I'm not 100% sure, but it's around $11 billion, and in the Parliamentary Budget Officer's report he similarly showed that the cumulative balance reaches break-even by about 2014.
4:05 p.m.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
From an accounting standpoint, the figures are somewhat similar, but it's nevertheless indecent to forget the cumulative surplus of $57 billion and to start over with a new account, in deficit for the moment, requiring us to increase premiums.
Like others before me, I find it indecent that we can so easily set aside $57 billion provided by the workers who pay their premiums, week after week, out of their pay. I want to tell you I find that quite indecent.
Mr. Chairman, if I have any time left, I am going to hand it over to my colleague.
4:10 p.m.
Conservative
4:10 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
I'm going to take the ball on the run.
You're with the Department of Finance?
4:10 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.
4:10 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
I'm going to make a Mr. Mulcair of myself by saying I find it somewhat embarrassing to hear a representative of the Department of Finance say
“my mental math may be slightly off”.
One of you said that the account managers have a mandate to be profitable. So profitability will be measured. We seem to be getting ready to make a gift to this account. There's a difference between what the budget officer has told us and what's on the table right now. We've changed our minds. In the first two years of deficit, no interest will be charged, and in accordance with the principle of concordance—and I see the logic of finance—no interest will subsequently be paid.
At one point, as you emphasized, the deficit in the first two years will be stopped. That deficit was created because the $57 billion surplus, which had accumulated since 1995, incidentally, was withdrawn. The account managers have a mandate to ensure it is profitable, but how will we evaluate their performance when the surplus won't provide them with any interest? They obviously won't be paying interest during the first two years of deficit, but there's only one choice in order to ensure the account's profitability: increase the premiums. Is my accounting and financial logic correct?
4:10 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The mandate of the CEIFB is to break even over time, not to be profitable. There is a balance of premium revenues with program expenditures. To the extent that there are surpluses in the future, the cash will be transferred from the CRF to the CEIFB to invest until it can be repaid through lower premium rates in the future, below break-even premium rates to repay the surplus from previous years.
4:10 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
I'm a bit surprised. I'm going to pick up on two of your quotations. The mandate is to break even, or the mandate is to be profitable. I was the financial director of a company for a very long time, and I didn't have a mandate to break even or to be profitable; it was one or the other. I'm trying to understand how employment insurance benefits or, conversely, premiums are set. The idea is to increase premiums or to lower the benefits that claimants receive. On this subject, a new committee has been in place since 2009, from what you said. That's been changed. Who appoints the members of this new committee?
4:10 p.m.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Human Resources and Skills Development
In fact, it's a Crown corporation that was established and that is called the Canada Employment Insurance Financing Board. There's a board consisting of directors appointed by the minister from a list submitted to her by a selection committee.
4:10 p.m.
Bloc
4:10 p.m.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Human Resources and Skills Development
No, this Crown corporation was created in 2008 under the 2008 budget implementation bill.
4:10 p.m.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Human Resources and Skills Development
This corporation was created in 2008 under the 2008 budget implementation bill.
4:10 p.m.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Human Resources and Skills Development
That corporation serves to determine the future premium rate, to ensure that the employment insurance account remains balanced over time, and to transfer surpluses, if every any surpluses are generated, to its bank account so that they can then be invested and generate income.
