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.
3:55 p.m.
Liberal
3:55 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
We should accuse Ms. Hall Findlay of causing me problems because I'm eating one of her cookies. Pardon me for taking a little time, but I'm sure the FTQ people will appreciate it.
I'd like to go back to the $57 billion. This is a notional value, I understood that, and it's no longer there. We're recreating an employment insurance operating account. As you said—and we see it in the figures—there was a $5.8 billion deficit in 2009-2010, we're talking about a $5 billion deficit in 2010-2011, and then we start over: $4 billion, $3.8 billion and so on.
Is it true that, when there's a deficit—for example, $5.8 billion this year and $5 billion next year—the government will charge interest on the employment insurance administration account?
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.
3:55 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
You don't charge interest on the employment insurance account even if the account is going to be in deficit. So there will be an advance from the Government of Canada to the employment insurance account to pay benefits that, for both years, will be greater than premiums. Is that correct?
3:55 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
That is one of the changes in the legislation from the operation of the EI account to the EI operating account. The balance recorded in the EI operating account will neither be charged nor credited interest—
3:55 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
—whether it's in deficit or surplus.
So for the first couple of years, where the account is in deficit, the benefits will obviously be paid from the CRF. If the premium revenue is insufficient, it records a deficit, but it will not be charged interest. Similarly, it will not be credited interest if there is a cumulative surplus recorded, because the cash will be transferred to the CEIFB to invest.
3:55 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
Consequently, it won't pay. The government will definitely advance the funds, but I'm trying to see whether, from an accounting standpoint, interest won't be added in view of the negative balance for the two deficit years. My impression is that there would be interest for those two years. An interest charge would continue because, in cumulative terms, we would be at -$5.8 billion in the first year, at -$10.8 billion in the second year, -$10.4 billion in the third year, -$6.6 billion in the fourth year, and it won't be until 2013-2014 that we have a slight surplus, whereas if we had kept the $57 billion in the fund, the smallest surplus we would have had would have been $46.4 billion in 2010-2011. Subsequently, we would be back up in the stratosphere with $76 billion.
I want to be very certain that this is what you're telling me.
3:55 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The provision that authorizes the Minister of Finance to charge interest on the EI account is being removed. Interest will not be charged on deficits in the EI operating account.
3:55 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
Will you let me continue? On April 15, the Parliamentary Budget Officer produced Table 2 on page 4. In it, he entered $241 million in interest in 2010, $447 million in 2011, $526 million in 2012, $539 million in 2013 and $372 million in 2014, which had to be paid by the fund.
Is this interest to which the Parliamentary Budget Officer refers real or not?
Furthermore, if we had kept this notional value of the $57 billion accumulated in the account, rather than having interest charges, we would have continued receiving interest income, wouldn't we?
4 p.m.
Conservative
4 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
To answer your second question first, if we had continued on with the notional cumulative balance of $57 billion, and this legislation is not passed—
4 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
—which has not yet been passed, yes—it would decline to about $43 billion to $44 billion and it would continue to be credited with interest.
With respect to the Parliamentary Budget Officer's paper....
4 p.m.
Louis Beauséjour Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Human Resources and Skills Development
It should be noted that the budget officer’s office conducted its analysis before the new provisions in Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures, was introduced and that changes were made to the mechanisms for handling deficits and the employment insurance account.
First of all, one of the provisions was deleted. There were no more advances. The advance mechanism in the employment insurance account, whereby interest could have been added, no longer exists. It is a mechanism that no longer exists, and, consequently, there cannot be any interest added to the deficit.
4 p.m.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Human Resources and Skills Development
From now on, deficits will simply be taken into account in the—
May 6th, 2010 / 4 p.m.
Liberal
Martha Hall Findlay Liberal Willowdale, ON
Thank you very much, everyone.
I'm looking at all these numbers. Aside from the establishment of a contingency fund, and I understand that's new, there is in effect a notional account. You can establish revenues, operating costs, the annual surplus or deficit, and obviously, in our case, annual surpluses. That we've seen. The fact that we have all these numbers and can already do all these analyses on the EI numbers, what exactly are we getting that's new with this wonderfully sounding paragraph that we're going to be doing all these things? Because it's only a notional account; you're not setting up a separate new account.
4 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
We're getting a new accounting mechanism, the start date of which corresponds with the start date for the new rate-setting mechanism, the new rate-setting body. The Canada Employment Insurance Financing Board, an arm's-length crown corporation, will be responsible for setting premium rates to break even over time from January 1, 2009, onwards.
4 p.m.
Liberal
Martha Hall Findlay Liberal Willowdale, ON
But why do we need a whole new board? Putting aside the $2 billion contingency fund--which, if you had it, needs to be managed, I understand that--why isn't there simply a decision to say that given that we already have a notional account, the premiums are set on the basis of break-even accounting? Why this fancy new name, new description? I don't understand. We already have all the notional account numbers. We have all the analysis we need. Why doesn't the government just say we're going to insist that going forward we're going to establish premiums on a break-even basis?
4 p.m.
Senior Policy Analyst, Labour Markets, Employment and Learning, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Creating the new account that starts from the starting date of the CEIFB makes it much simpler and more transparent to keep track of the operations of the new rate-setting mechanism from the day it comes into effect.
4 p.m.
Liberal
Martha Hall Findlay Liberal Willowdale, ON
These numbers are pretty complete. Is there an issue with not seeing enough numbers?
