Finance Committee on March 30th, 2023

[Evelyn Dancey]

I'll start and she may supplement.

Because the EI account is consolidated in the Government of Canada's finances, the $25 billion is $25 billion wherever it is.

If there is an interest to somehow make the EI account whole faster than the seven-year break-even rate would call for, it would mean, from the Government of Canada's consolidated viewpoint—which is my viewpoint and my role—that we would have to forgo $25 billion of revenue in the coming years. That would be the implication of doing this.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you. That was actually my next question.

The significant aspect of allocating that debt to the EI account is to raise $25 billion over seven years through EI premium rates so that EI premium payers pay $25 billion more over seven years than they otherwise would if the debt was on the general ledger.

[Evelyn Dancey]

Mathematically speaking—I'm not going to dispute the math there—the government has directly shouldered from the consolidated revenue account the vast amount of support for individuals, both through that transfer back for the EI-ERB and through all of the individual benefits that were flowing through the CRA. Those were paid for through the consolidated revenue account rather than the EI account.

What remains to be shouldered by the insurance system are other measures that involved adjustments to eligibility parameters. That's Allison's expertise, but I would say again that it is an insurance program and it's not unfair that recipients within the insurance program make a contribution over time. It's the seven-year—

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

The insurance program was effectively paused over the course of the pandemic. The program that rolled out was not employment insurance as we've known it in Canada ever, really. The employment insurance program was inadequate to the task, so it's not that the employment insurance program operated in any real sense of the word during the pandemic. What we had was a replacement program, and ESDC administered part of that program for people who otherwise might have been EI eligible. That was effectively it. It was an administrative decision about how to roll out a program that really had nothing to do with employment insurance, given that EI wasn't up to the task.

We don't have to argue that point. I'm pretty settled in my conviction on that, unless you feel a response is warranted.

I have another line of questioning that I want to come to.

Page 44 of the budget talks about a code of conduct to protect Canadians with existing mortgages. We know there have been reports lately that Canada's major banks have anywhere from 20% to 25% of their books with variable rate mortgages. A significant number of those are on fixed payment schemes where the fixed payment for folks now isn't even covering all of the interest, let alone any of the principal. I'm glad that banks are finding a way to accommodate people and keep them in their homes.

I am looking for an opinion on whether banks are operating within their proper authority doing that and whether there's a need for a public policy response. I take the budget to be indicating that there is some desire to have an official public policy response so that this isn't being decided by banks on their own. I'm just wondering what that public policy response might look like, the nature of the guidance that might be given to banks.

I'm happy to hear from the Department of Finance on this or from our witness from OSFI. I appreciate your role within the organization. You may not feel prepared to comment on that, but certainly if you have a point of view you're willing to share with the committee, it would be welcome.

[The Chair, Liberal, Peter Fonseca]

This will be our final answer to questions.

[Nicolas Moreau]

I can take this one.

Yes, of course, banks have some flexibility right now to help some borrowers make their payments. We know that with the rapid rise in interest rates, some have been more stretched than others. The objective here is to make it public and to encourage banks that have not been as active to call their clients or make some accommodations by doing that. By making that straightforward and explicit in the budget, we hope that more flexibility will be given to homeowners.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Moreau.

Thank you, MP Blaikie.

On behalf of the finance committee, we want to thank the officials for their testimony and for appearing for this study. Witnesses and officials are free to go at this time.

Members, hang on a second; I need your time. I need a couple of minutes with you, quickly.

If members wish to adopt the main estimates today, these are the motions that need to be adopted: Shall I report votes 1 and 5 under the Department of Finance, less the amounts voted in interim supply, to the House?

Are members okay with that?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'm sorry, but maybe someone who's had a bit more time on this committee can share the history on this, or even the clerk. Is this what's normally been done in the last couple of years?

[The Chair, Liberal, Peter Fonseca]

I'll defer to the clerk.

[The Clerk of the Committee, Mr. Alexandre (Sacha) Vassiliev]

The study of main estimates can be done in as many meetings as you wish. The committee can adopt the main estimates today, or it can decide to have other meetings on the main estimates to ask for other witnesses to come. It's entirely at your discretion.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Okay. We're at the end of the meeting, and I don't want to be unreasonable, Chair, but if we could perhaps put it off so we can discuss it, that would be great.

[The Chair, Liberal, Peter Fonseca]

Okay, we can do that. We have until May 31.

Members, just before you head out the door, and so that you are all aware of this, the Bank of Canada governor will be with us on April 18, possibly with the PBO. Thank you.

[Adam Chambers, Conservative, Simcoe North, ON]

I'm sorry, Chair. Is the PBO for only half an hour?

[The Chair, Liberal, Peter Fonseca]

Yes, because we have 90 minutes with the governor. That was the motion adopted by the committee.

Thank you, members.

Now we'll adjourn.