Finance Committee on May 6th, 2010

[Daniel Paillé, Bloc, Hochelaga, QC]

All right.

As there will be employer and employee premiums, will the board of directors represent those people who contribute to it?

For example, when I was in private enterprise, my board of directors was managed by the shareholders. Can we say that it will be a joint undertaking—employers and employees? Will there be a relationship between those who pay and those who decide, under the act or in individuals' choices?

[Louis Beauséjour]

A committee is responsible for choosing a number of potential individuals, a list of which is submitted to the minister. The committee consists of three members: the workers' member, the employers' member and another member. The committee will determine a number of names and submit a list to the minister.

[Daniel Paillé, Bloc, Hochelaga, QC]

So the minister can choose—

[Louis Beauséjour]

She chooses from the list.

[The Chair, Conservative, James Rajotte]

Merci.

Mr. McCallum, please.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

I'd like to follow up a little on the questions from my colleague, Martha Hall Findlay.

First of all, I notice subsection 80.(2) of the EI act says that advances shall “be repaid in such manner and on such terms and conditions as the Minister of Finance may establish”. So it's my understanding, as as happened in the last couple of years, that the Minister of Finance can override any decision of the board in terms of setting rates as long as it doesn't increase or decrease more than the maximum allowable rate. Is that correct?

[Mark Hodgson]

Those are two separate parts of the legislation. Part 24 of the budget implementation act, proposed section 2188, repeals section 80 of the Employment Insurance Act. There will no longer be the authority to make advances to the EI account, which will no longer exist. That was a holdover from past rate-setting mechanisms and it's no longer necessary.

There is a provision in the legislation that I think you were referring to at the end of your question, which gives the Governor in Council the authority to set a premium rate where the CEIFB has not set a premium rate by the specified date or to override the rate set by the CEIFB.

[John McCallum, Liberal, Markham—Unionville, ON]

This is what essentially was done in the last two years, correct?

[Mark Hodgson]

The Employment Insurance Commission set the rate for 2009 according to the existing legislation. The budget implementation act of 2009 set the rate for 2010 through legislation.

[John McCallum, Liberal, Markham—Unionville, ON]

Right. So it is correct, then, that the finance minister or the cabinet, if they should choose, can set the rate that they wish to set.

[Mark Hodgson]

There is that authority in the legislation.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay.

I'm not objecting to starting with a zero account, but I come back to the value-added question. The board is always subject to override by the minister, if the minister so chooses. But the board has very little discretion, is that not true? It is required, by legislation, to get out of any deficit as quickly as it can. Is that true?

[Mark Hodgson]

Subject to a 15¢-per-year limit on how fast rates can change.

Similarly, should surpluses occur, it is required to reduce premiums until any cumulative surplus has been repaid, and over time the new EI operating account is intended to break even.

[John McCallum, Liberal, Markham—Unionville, ON]

So the board has essentially zero operating latitude, because it is required, subject to these minimums and maximums, to get rid of surpluses or deficits as quickly as possible.

[Mark Hodgson]

And according to the forecast provided to them by their actuary of what the expected premium revenues and program expenditures for the forthcoming year will be.

[John McCallum, Liberal, Markham—Unionville, ON]

I don't understand the point of having a huge new costly apparatus in a board when you are giving to the board zero latitude. Why can't you just save all that money and do it by a computer program?

[Mark Hodgson]

The budget implementation act of 2008 was passed by Parliament and created this authority and this structure and this board.

[John McCallum, Liberal, Markham—Unionville, ON]

That's not my question. I know that's the case. But I am asking you, as a question of economics or public policy, why have a big apparatus, which has zero latitude in terms of what it does, when exactly the same result could be achieved by a computer program lodged in the Department of Finance?

[Mark Hodgson]

It is an independent, arm's-length crown corporation that will set premium rates and will ensure that any future surpluses are held and invested until they can be returned to premium payers.

[John McCallum, Liberal, Markham—Unionville, ON]

The law could still be the law but without this board to implement it, and the government would still be accountable for whether they had obeyed the law. So I don't understand.

It's the same question about value added. What's the point of having all these people who have no authority to do anything?

I'll leave it at that. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McCallum.

Avez-vous une question, Monsieur Paillé?

[Daniel Paillé, Bloc, Hochelaga, QC]

The government hasn't set the rates until at least 2015?

[Mark Hodgson]

As budget 2010 states, starting with the premium rate for 2011, the CEIFB will be responsible for setting premium rates. What the budget contains is a forecast of economic conditions and the probable application of this legislation, should it pass.

[Daniel Paillé, Bloc, Hochelaga, QC]

I'll be very brief, Mr. Chairman. The costs of the structure, which we just discussed, will be mechanically borne by this account.

[Mark Hodgson]

Yes.