Finance Committee on Nov. 18th, 2013

[The Chair, Conservative, James Rajotte]

Thank you very much.

Ms. Ryan, please, for your presentation....

[Annette Ryan]

My name is Annette Ryan. I'm director general of employment insurance policy at Employment and Social Development.

I'll speak to the changes to the fishing regulations.

In the 2012 economic action plan, the government introduced a new permanent and legislated approach to the way EI benefits are calculated with respect to variable best weeks. Effective April 7, 2013, all regular claimants now have their weekly EI benefit rate calculated based on the best weeks of insurable earnings during the qualifying period reflective of the local unemployment rate. That was the policy intent of the national variable best weeks change that was made.

Prior to the variable best weeks, however, there were two different methods of calculating how fishing income would be included in the EI benefit rate calculation for regular benefits. There was a technical error in the drafting of those regulations which this legislation aims to adjust. For regular claimants with fishing income, the introduction of the variable best weeks introduced, essentially, a fork in the road in that a common treatment was needed to capture the treatment of fishing income within regular claims.

In drafting the treatment of the regular claimants' fishing income, the fishing income was inadvertently in line with an additional best weeks benefit rate calculation method rather than the previous more inclusive method that included essentially all of the fishing income in the qualification period. This regulatory double correction, if you will, for best weeks was essentially that technical error the budget implementation act aims to correct.

To remedy the situation, the EI fishing regulations are proposed to be amended to allow all regular claimants with fishing income to have their gross fishing earnings over the qualifying period added to their regular employment in the best weeks, as had previously been the case in the best 14 weeks pilot projects. This will allow for more inclusive treatment of fishing income and correct the anomaly created by the technical amendments. The intent is to apply this change retroactive to the time of the regulatory change of April 7, 2013, so that all current claims may be corrected in the most timely manner possible.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation as well.

We'll begin members' questions with Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Chair.

Thank you to the officials for being here.

My questions start with the EI Financing Board.

I'd like to begin by asking you what the balance in the EI account was before it closed back in January 2009, before this fund was created.

[François Masse, Chief, Labour, Market Employment Learning, Department of Finance]

That would be $57 billion.

[Peggy Nash, NDP, Parkdale—High Park, ON]

The balance was $57 billion.

[François Masse]

That's correct.

[Peggy Nash, NDP, Parkdale—High Park, ON]

What was the balance of the new EI operating account that was subsequently created at that time?

[François Masse]

The balance of the new EI account was made available in the recently released economic and fiscal update. As of, let's say, 2013-14, the cumulative balance is a negative $5.3 billion, so it's in deficit right now.

[Peggy Nash, NDP, Parkdale—High Park, ON]

You just said that on January 1, 2009, the old EI account was at $57 billion. What happened was the EIFB was created and that's why the old account was no longer maintained.

Back in 2009 when the new account was opened, the EIFB, what did it contain at the time?

[François Masse]

I'm sorry, are you asking about the new account, when it was created?

[Peggy Nash, NDP, Parkdale—High Park, ON]

When it was created in 2009.

[François Masse]

When the new account was created, the balance started at zero.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Okay, so the old account had $57 billion.

[François Masse]

That's correct.

[Peggy Nash, NDP, Parkdale—High Park, ON]

The new account had zero.

[François Masse]

That's correct.

To be clear, though, the old account was an accounting mechanism built to record transactions over time. There was no physical cash account there. Closing the old account resulted in no fiscal impact.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Okay, but the moneys that were generated in the old account, the $57 billion, were premiums collected presumably from employers and employees who had paid their EI premiums.

[François Masse]

The $57 billion was an accounting mechanism tracking the balance of premiums. There was no physical bank account.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Right, but the $57 billion was money that employers and employees had contributed.

[François Masse]

The $57 billion figure comes from the accounting entry. It's related to the contributions; that's correct.

[Peggy Nash, NDP, Parkdale—High Park, ON]

So these premiums were paid in. The new account had zero. What happened to the $57 billion?

[François Masse]

Again, because that $57 billion was the result of an accounting mechanism to track those transactions, there was no physical cash balance, no physical cash account. So when the account was closed, that was another accounting entry that had no fiscal impact in the year in which—

[Peggy Nash, NDP, Parkdale—High Park, ON]

When you say there was no accounting entry, the $57 billion in premiums that employers and employees had paid into the EI fund was basically rolled into general revenue. Is that correct?

[François Masse]

The fact that the account was closed is slightly different from rolling it into the general revenue, because there was no transfer of funds.