Human Resources Committee on May 6th, 2008

[The Chair, Conservative, Dean Allison]

I call the meeting to order, pursuant to Standing Order 108(2), as we continue our study on the Canada Employment Insurance Financing Board.

I want to welcome all of our witnesses today. I realize some of you had little notice and some of you had less than little notice. We really appreciate your showing up today.

Just before we get started, there is some housekeeping to take care of, the bulk of which we'll leave until afterwards. We need to approve the request for the operational budget to hear our witnesses. I believe everyone has a copy of it in front of them. Is there any discussion on this? I'm going to pose the question, then, that someone move to adopt the budget.

Mr. Savage, seconded by Tony.

(Motion agreed to [See Minutes of Proceedings])

[The Chair, Conservative, Dean Allison]

Once again, I want to thank all the witnesses for coming in so quickly. I think most of you have been here before, but in case you haven't, I'll identify you. We're going to ask for seven minutes for opening statements, because we're trying to give each organization a chance for questions and answers.

I will start with Mr. Morrison and Mr. Atkinson. They're from the Canadian Construction Association.

[Michael Atkinson, President, Canadian Construction Association]

Thank you, Mr. Chairman.

The Canadian Construction Association welcomes this opportunity to present its views on the proposed new governance and rate-setting reforms for the employment insurance program. We are the national voice of the non-residential construction industry, representing some 20,000 individual firms from coast to coast to coast, 95% of which are small businesses, the majority of them Canadian owned.

The total construction industry in Canada, including the residential sector, directly employs over 1.2 million Canadians, or one out of every 14 working Canadians. Our industry is therefore a major contributor and beneficiary of the current EI program.

Mr. Chairman, CCA supports the proposed reforms as they relate to both the governance of the EI fund and the EI premium rate-setting process. First, the segregation of the EI fund from the consolidated revenue fund ensures that operating surpluses and investment returns remain in the fund and are used for their intended purpose. In addition, the establishment of an arm's-length independent body with private sector financial management experience to manage the fund will maintain its integrity while ensuring that rate-setting decisions are based upon financial considerations.

The proposed changes to the rate-setting process are much improved since, for the first time, the corporation will be able to truly set break-even rates, in that the past performance of the fund and investment returns can now be factored into those calculations that heretofore were not allowed because of the forward-looking restrictions or limitations on the ability of the chief actuary and the commission to set rates. Despite these positive steps, however, there are still further needed reforms relative to premium rates.

CCA believes it is time to reinstate equal premium rates for employees and employers. In other words, eliminate the employer multiple. Prior to 1972, employers and employees made equal contributions to the then unemployment insurance fund. It was only in 1972 that employers started paying a 1.4 multiple. This occurred at the same time as the federal government announced it would cease contributing 20% of the operating program funds.

The apparent rationale behind the employer multiple is that employers have greater control over layoff decisions, thus triggering the payment of EI benefits, and therefore should bear a higher overall share of program costs. In recent years, however, EI benefits totally unrelated to layoffs have been introduced, such as family-related benefits, parental leave, and compassionate family care, which accounted for some 22% of EI expenditures in 2006. In addition, developmental uses or training grants have become a significant part of the program, contributing to much higher program costs, representing 11% of EI expenditures in 2006. In fact, many of the benefits paid by the EI fund currently are now triggered by employee decisions rather than employer decisions.

The rationale for an employer multiple is no longer valid. Eliminate the employer multiple. Equalize employee-employer contributions.

Secondly, employees are refunded for excess contributions over the annual contribution limit, but there is no mechanism in place to refund employer over-contributions. Given the nature of the construction industry, it is not uncommon for a construction employer to operate a group of associated companies. It is also common for the same employee to be engaged by more than one of these associated companies over the course of a year. This group of associated companies is treated as a single entity for tax measures, such as the small business deduction. However, they are treated as different employers for the purposes of the Employment Insurance Act. As a result, especially with the introduction of the accelerated payment system, employers are finding themselves paying more than the maximum levels with no means for a refund, even in situations where the employee is essentially working for the same employer.

We would ask for a mechanism to be introduced to refund over-contributions to employers, which this committee has recommended in the past, and to treat associated companies as a single employer for the purposes of annual EI premium contribution limits and the proposed refund system.

Thank you for your attention. We welcome questions and discussion.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Atkinson, for keeping that well under seven minutes. That's a good precedent to set as we move around the table.

We'll go to Mr. Murphy. I understand, Mr. Murphy, you only found out yesterday, so thank you for being spontaneous and being able to make it out today for your trades. I realize we may have had you on the list for Thursday, but you were in town so you were able to accommodate our schedule. So thanks for being here today.

[Cliff Murphy, President, Cape Breton Island Building & Construction Trades Council]

That's correct, but I wasn't aware I was on a list for Thursday either.

[The Chair, Conservative, Dean Allison]

Your colleagues on the east coast made sure you were on that list.

[Cliff Murphy]

I'm president of the Cape Breton Island Building and Construction Trades Council. We have more than 4,000 members there, and affiliated across the country we have 450,000 to 500,000 unionized building trades workers. As my counterpart has said, in the construction industry our members are beneficiaries of the EI program, because nobody would build anything if they didn't think they were going to finish it. Automatically, at some point, we're going to wind up on unemployment.

I have a concern over the $2 billion initial funding of the Canada Employment Insurance Financing Board. I don't think that's enough. I've been in the construction business for more than 40 years. I've seen during the course of that time several deep recessions in the construction industry. There were a lot of unemployed people. I would agree with the Auditor General and the chief actuary for EI, who suggested that between $10 billion and $15 billion would be a more realistic figure for an amount this board needs to break even in the case of a recession.

Also, I would like to know if the Government of Canada is going to benefit from any profits that come out of the investment of the funds, similar to Export Development Canada and the Business Development Bank profits from the investments that go to the Government of Canada. I would like to see this board be a stand-alone board with the funds that come into it staying in it and the interest that's accumulated staying in it. If there's any kind of profit or excess, it should be dealt with through reduced premiums or a holiday in premiums, to give our contractors a competitive edge in this global economy.

On other issues, we see that the construction business in this country is about 12% of the GDP. We would like somebody from industry on this board: somebody from the management side and somebody from the union side. The CLC, of course, will be here looking for a position. We think that the building trades in Canada should be sitting at this table, on this board, because we're big beneficiaries of both part 1 and part 2 programs.

There is another reason we're here. In the building trades, in the defined benefit plans for industrial plants that are unionized, generally under those circumstances the owners control the pension funds and the money, so most of the industrial unions don't get involved as trustees. In the construction industry we have multi-employer plans, we're jointly trusteed, and we would say that we have a lot more experience than the industrial unions. We would like to see somebody here who knows about investing in pension plans, because there's billions of dollars in the construction industry in this country being invested, and the trustees who are there have to do a good job. They have experience and training. Most of them have taken advanced training management courses in the investment of pension funds.

I was shocked when this thing went through in March. It's a whole change to the social fabric of the country. I was shocked that there wasn't more talk about it in the House.

On the part 2 training, as you know, in 1996 Jean Chrétien kind of gave up training nationally and was going to turn that over to the provinces. I think he wanted to keep Quebec happy at the time. Well, prior to that there were regional industrial training committees, and people in the local areas had a say in where the money would go. We'd like to see some of that $54 billion go to training people. There are shortages in the country. There are people who fell through the cracks in this country.

Not too long ago, we put natives and black people who didn't have grade 12 through a course, and we successfully got them into an apprenticeship. We had to fund that ourselves. I don't think industry should be looking at that.

All this money is a big surplus. We think it shouldn't just go into a black hole somewhere and bring foreigners to the country. We should be using that money to train people.

I'd like to know what powers this board is going to have to fix things like the EI rates. From 1989 to now, I think the benefits have gone up by about $20. If you took a family with one wage earner and two kids, that four hundred and some dollars a week is below the poverty line.

We really don't want to see this $54 billion disappear into oblivion and wind up with this ridiculous $2 billion being offered to this committee. This committee is going to need a lot more money to do the job that has to be done in this country.

With that, I guess I'll wrap it up.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Murphy.

Budget 2008, as well as the officials we had here at the last meeting, indicate the board will be independent and premiums will be returned to employees and employers through lower rates, if that is the case. That $2 billion was indicated as the cushion to make sure....

You indicated your concern if we get into some slow times. I would anticipate that rates will go up as a result of that. That's what we have heard over the last couple of meetings.

I just wanted to let you know what the department is telling us is the direction they're trying to head in.

[Cliff Murphy]

Sir, there's one other thing I'd like to ask you before you move on.

If you get into a situation like that, where there is a recession and there's a shortfall here.... I don't know who came up with the $2 billion, but the $54 billion that was saved up in this plan was put there by employers and contractors or owners. I really feel the government should backstop that. If there's a shortfall, I don't agree that the premiums should go up at all. I think the government should step in and give back some of that money, if you're going to take it. I don't think you should take any of it.

[The Chair, Conservative, Dean Allison]

Okay, thank you.

Mr. Hanson, once again, thank you for being here today. You have seven minutes as well, sir.

[Dannie Hanson, Project Manager, Louisbourg Seafoods Ltd., As an Individual]

Thank you very much, Mr. Chairman and members of the committee. This is my first time in front of the parliamentary committee. I do thank you for the privilege of being asked to give our opinion.

I am one of the managers in the fisheries industry in Louisbourg, Cape Breton. We have 400 employees, 600 at peak time. I'm on many boards; there are a lot of them. We in Nova Scotia are proud, even though sometimes we debate with Newfoundland. We export the most fish in Canada. That's still the truth. We have a large processing industry and of course, as you know, inshore and offshore fisheries.

So every time you move on the EI, you could be doing one of two things: helping us or getting your head cut off, because part of our seasonal employment is simply something we must be proud of in the fisheries resource industry. I'm also experienced in forestry, agriculture, and tourism. We do not have the pleasure in those industries of being considered to be moving into full-time employment. We don't, and neither do you. That's a reality of Atlantic Canada and even western Canada in fisheries.

Even though we do global and free trade, and quality enhancement--and all of these new buzzwords that are used--all of which are very important, fisheries still depend on the weather and the stock. So we're always going to be without income, and you cannot move 45- to 50-year-old employees onto a bus or a plane every time we pull a boat in. These are just realities of the industry.

But some of your work and what you're doing on this bill, as Mr. Atkinson says, indeed is good. Mr. Murphy said that if the fund goes down we shouldn't put in more, and he is absolutely right. Please try to see that happens.

Most of our employees are, as I said, 48 to 52. The past number of years has seen a drop in EI rates, which we are very pleased about. Now, this is good news, but most of the $52 billion has been paid by the baby boomers, which means us, and I believe--I'm 52, so anybody 48 and up is a baby boomer--we're on the way out. So we have paid most of that $52 billion that's moved. I read four media articles, and they all had different numbers, so I just picked 52.

Under the budget introduction for CEIFB, the EI fund will pay benefits only. The CEIFB would set the rates with no more than a 15¢ increase. It would be a break-even fund from the balance of revenue expenses, it would have a $2 billion foundation at all times, and it would be a crown corporation. Now, most of that makes sense. But some of it is very dangerous to us in the fishing industry, because you're moving, in the last part, to a crown corporation. I'll get to that in a minute.

Rate-setting mechanisms. Maintaining a cashflow under a new mechanism will take into account surplus defects that arise on a go-forward basis and allow break-even over time. The maximum new rates will be 15¢. Why allow any new increase? Why only put back $2 billion? Why not put back more of the $52 billion and ensure no rate increases for the next five years while you try this project? Keep enough there. Two billion dollars is just not enough of a security cushion. Where you're asking for that, put more in there for the next five years.

I found out about this meeting on Friday. My neighbour came down on Saturday and asked me to tell you to put it all back...and a few more things I can't say here. I did try to explain that it helped us somewhere.

The 15¢ would mean an increase, if you just automatically did that, to $17,000 for the owners of three of the companies I manage. So that's $17,000 in real dollars on that 15¢ increase. There are still four more companies, and I'm only representing seven companies. For the industry overall in Nova Scotia, that 15¢ is significant. Please don't look at it as just 15¢. More than that $2 billion should be put back.

What will happen with the EI premiums in the areas that have higher than national seasonal adjustment unemployment? I said that in my opening remarks. I won't go on too much about it, because you all understand that.

Eastern Nova Scotia's unemployment rate is 13.5%; Newfoundland and Labrador's is 17.8%; Quebec, Gaspé, Isles de la Madeleine, 17.5%; northern Saskatchewan is 15.2%; Yukon, Northwest Territories, and Nunavut, 25%. All the rest are single digits. Now, if you bring in enough money in rates—the money must come in on a national rate of $2.70 or $2.80, let's say—there's going to be a day when your crown corporation vice-president or president is going to be up here in front of you saying, “You've got to move Cape Breton up. You've got to move Newfoundland and that community in Quebec, because they're on unemployment too much.” That's what's going to happen with this crown corporation.

My last point of concern has to do with the World Trade Organization and EU now looking at fisheries as possibly a subsidy. Look at what happened in the lumber industry. Mind, you did a good job and settled, but it took a long time. A lot of us can be hurt. When we move our resource sector to a crown corporation and have CEOs who have their breakfast every morning down the street next to deputy ministers, they're all on the same page. When they move and then the CEO answers up to your Canada employment commissioner, before it ever gets to you, before we get to our MPs to get that policy changed, we've already been hurt three months down on the ground. It takes three months to get back here to you. So we've been pounded for six months with CEO moves on rates and on concerns of the global economy. That's what happens in a crown corporation.

These are our concerns. I didn't come here to pound you just because you're changing the act. We must move forward. In fisheries, forestry, tourism, and agriculture, we are seasonal, we are proud. In our experience, in crown corporations the CEOs and the presidents get carried away. It doesn't get up to you people quick enough to change it, and you've already hurt us.

So find a mechanism to control that vice-president and CEO and then you'll get some level of comfort from us. But until that time, we will have you looking at us and we have a CEO or vice-president looking at us. I could name a few, but you all know you don't want them looking at you because they're going to cut you.

These are my concerns.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Hanson. We appreciate your testimony.

I would now like to welcome Mr. Gagnon, from the Canadian Institute of Actuaries.

[Bruno Gagnon, Chairperson, Task Force on Financing of Employment Insurance, Canadian Institute of Actuaries]

Good morning, honourable members. I will speak partly in French and partly in English. I hope it doesn't bother you too much. If it does, please let me know.

My name is Bruno Gagnon, and I thank you for inviting the Canadian Institute of Actuaries to share our views on part 7 of Bill C-50 with regard to the creation of the Canada Employment Insurance Financing Board. As actuaries, our area of expertise is basically insurance, which includes social insurance, which in turn includes employment insurance.

Our profession holds our duty to the public above the needs of the profession and its members, and it is in that spirit that we made public our December 2007 report on EI financing and that we are appearing before your committee today.

The initiative outlined in the budget has the potential to create an excellent system. However, there are several elements of C-50 which, unless they are changed, could cause significant problems for workers, businesses and government.

We are very pleased that beginning in 2009, a system will be introduced that guarantees the premiums will track program costs. That will be a very positive outcome. However, it is our opinion that the requirements of the CEIFB to set rates based on estimates of the revenues looking forward only one year is seriously flawed and could cause problems.

The one-year pay-as-you-go approach is flawed, from our point of view. In our notes we have a scenario where we assume that a recession hits Canada. You probably all know that recessions do happen from time to time. The major problem with recessions in our current time is that no two recessions are identical; no two recessions have exactly the same causes. So a recession may hit Canada at some time. If you read the news, according to Warren Buffet the U.S. is now in a recession. So a recession can happen.

Let's assume that a recession hits Canada and unemployment levels rise to 8%, which is not that much; it's not unheard of. The payment to out-of-work Canadians increases by approximately $3 billion. So the $2 billion reserve of the board is depleted and the EI account has to borrow $1 billion from the government, even though we already have this $54 billion to $56 billion in the current notional EI account. So the EI account is forced to borrow $1 billion, and unemployment levels are rising and may rise even further. What happens then? We borrowed $1 billion so we have to repay $1 billion. We have to replenish the $2 billion reserve or cash balance, and we have to increase rates to take into consideration the higher unemployment level to repay the $2 billion reserve and the $1 billion loan.

In this situation we might have to raise the premiums above the legislated limit of 0.15%. Consideration of applying the 0.15% would fall to ministers. It would not be a very easy decision, because if you applied the 0.15% ceiling you would run a deficit and the deficit would accumulate. The impact on Canadian businesses, which pay nearly 60% of the cost of employment insurance, would be huge, because at exactly the same time, profits would be lower and limited. Cashflows would also be lower. Workers would have to pay 40% of the cost when they were already at risk of losing their jobs, and businesses would need to find money somewhere.

So even during an economic downturn that was not very deep--an 8% unemployment rate is not that deep--the one year going forward would necessitate raising premiums on each occasion. We believe this is significantly pro-cyclical, and as actuaries we are not comfortable with a pro-cyclical mechanism and the one-year-going-forward basis.

Under the proposed system, premium rates could vary irregularly from one year to the next, even if nothing unusual happens, simply to offset the errors made in forecasting.

The $2 billion reserve has no preventive effect, because it has to be replenished each year. No financial burden is imposed on the government, because the board's operations are fully consolidated with those of the government. That makes us feel rather uneasy.

There are also a number of restrictions in Bill C-50 that run counter to the promise of independence made by the Minister of Finance in his February 26 budget.

We think it would be preferable to determine premium rates over a five- to seven-year period, which is closer to an economic cycle.

If Canada had kept to an insurance model with a typical actuarial process similar to what we are recommending, the EI system would currently have a $15 billion reserve, not a reserve over $54 billion. So we recommend that premium rates be set taking into account a five- to seven-year period. We recommend that Bill C-50 be amended to allow the chief actuary and board considerably more latitude in the assumptions and projections used to develop the premium rates, taking into account once again the five- to seven-year time horizon. Finally, the institute reiterates its position of principle that the existing surplus belongs to the EI system and its contributors and should be addressed clearly once and for all.

As a final closing comment, if we had applied a typical actuarial process to this whole thing, we would currently have a $15 billion reserve in the EI account, and the remainder would be something else.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Gagnon.

We'll now move to our last presenters, Mr. Chassin and Mr. Kelly-Gagnon.

You have seven minutes, gentlemen.

[Michel Kelly-Gagnon, President, Conseil du patronat du Québec]

Good morning. My name is Michel Kelly-Gagnon. With me is my colleague, Youri Chassin. I will be making my presentation in French.

I think it is important for the Conseil du patronat to be involved in the discussions regarding the financing of employment insurance, because it is the main employer organization in Quebec. In addition, it includes 60 sectoral employer sub-groups, which represent almost all sectors of the economy.

The CPQ has long called for an EI fund dedicated solely to employment insurance, and we are very pleased to see that the government is moving in this direction. In the past, premiums unfortunately became disguised taxes and went straight into the federal government's Consolidated Revenue Fund. This damaged the credibility of the premium rate-setting formula.

We are in favour of this change, but we would like to take this opportunity to tell you about two concerns.

First, it is important to ensure that this new structure not create an additional bureaucracy, but rather rely on existing expertise, particularly that of the Chief Actuary of Human Resources and Social Development Canada. In other words, we must limit the operating costs of this new structure as much as possible, because they will paid by the employers and employees of this country.

Second, like some of our earlier colleagues, we think the $2 billion reserve is inadequate. If we base our calculations on the fact that in 2007 employment insurance cost $16.5 billion, that means that an unforecast variation of one percentage point in the unemployment rate could result in additional costs of about a billion dollars.

We therefore think that the amount of the reserve should be at least 20% of the total current cost of EI. So 20% of $16.5 billion, which would be the base year figure, would produce a reserve of at least $3.3 billion.

However, with respect to the notional EI fund of $54 billion, although, theoretically, we might want employers and workers to receive a full refund and enjoy a premium holiday, in practice, unfortunately it is impossible to rewrite history.

Furthermore, in concrete terms, if we were to go in that direction today, this would mean either an increase in the debt or an increase in taxes. So we would find this an unacceptable solution.

In closing, I would just mention that the cost-sharing formula is a good one. However, as was mentioned by the people from the Canadian Construction Association, the CPQ is asking that the costs be shared equally, rather than as proposed in the current formula. The employees of this country benefit from the program just as much as any other party. So a 50-50 formula would be fair.

The board of directors must be independent, and there must be some parity, in other words, both employers and employees must be represented on it.

For your information, I and the CPQ are part of the executive committee of the Quebec Workmen's Compensation Commission, which has an annual budget of $2.3 billion and a portfolio of $9 billion in assets. So we already have some expertise and experience in this area.

That completes my opening remarks. Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Kelly-Gagnon. We appreciate that.

We'll now start our first round of seven minutes. I have Mr. Savage to start us off.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Chair.

I'd like to thank you all for coming today. I know that the notice was relatively short, very short in some cases, so I appreciate the fact that you took the time to come.

We have decided, as a committee, that we want to have a look at this new EI Commission. As you know, it was indicated in the budget that this crown corporation for EI would be created. It's a big change. One of you, maybe Mr. Hanson or Mr. Murphy, referred to this as a dramatic change. It is a dramatic change. It doesn't mean it's necessarily bad or good, but it's something that I think needs to be evaluated, and I think we need to have that input. So it's a worthwhile thing for this committee to be looking at, and we need to get the input of people who are affected by this move.

I must say that last week we heard from departmental officials about what they know about it, and they allayed some of the concerns that had caused me to bring the motion to study this to the committee. But there are some concerns that remain, notably the fact that outside of these few sessions we'll have as a committee, there hasn't been much consultation thus far. And the officials indicated last week that there probably isn't going to be much more until this board is put in place.

We're concerned about the operating costs. Ms. Sgro mentioned that at the last committee meeting. I think Mr. Kelly-Gagnon mentioned that we want to make sure we're not just creating another bureaucracy, that there are changes that have to be made by government anyway. The issue raised by Mr. Gagnon about whether this is recession-proof is a good question. I want to get into that with you if I have time. If not, I know that other members will. The other issue is the makeup of the board and how we're going to go about doing that.

I thank you all for coming, but you'll understand if I start off with our witnesses from Cape Breton. I think it's very important that we hear from people who are directly affected, both from a worker point of view and from a management point of view, in an area where EI plays a very important role.

My colleague Mr. Cuzner, who pushed very hard to have you included as witnesses, sends his regards. He couldn't be here today.

I want to ask a few questions of you guys. I appreciate the fact that we've had a bit of Cape Breton bluntness brought to this consideration of EI, so feel free to speak your minds and tell us what you really think--not that I need to tell you that.

So Mr. Murphy and Mr. Hanson, first of all, I'd like either one of you, if you could, to tell us how important EI is to the social infrastructure where you work. Perhaps, Mr. Murphy, you could talk from a construction point of view, and Mr. Hanson, you could talk about the kind of fishery that would be possible if EI weren't in fact a part of the social infrastructure of your communities.

[Cliff Murphy]

From the construction industry side, as I said, some construction is seasonal. It's not truly a seasonal industry, because sometimes it rolls through, but most owners would like to do their work in the good weather. We have a lot more activity in the good months than we have in the dead of winter. One thing that's very important, that used to be very important to our industry, was those mobility grants that let people travel across the country. They cut all that out. Now if the employer is in desperate need of somebody in Alberta, he winds up having to pay for somebody to move temporarily or whatever.

I guess there are about 2,000 or more people from Cape Breton working in Alberta, and they're there on a rotating basis. They get home for a month or a couple of months here and there to see their families, and the rest of the time they're 3,000 miles away working in Alberta. Any of you MPs who are away from home for a while will understand what it's like to be away from your families.

Another part--and Mr. Hanson will probably speak to this a bit better--is that tourism plays a big role in Cape Breton. That is truly a seasonal business. We're losing people; we're being depopulated as it is. If EI weren't there, the tourism industry really would be in dire straits when trying to get people to work there in peak season.

So I guess that answers some of your questions.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you.

Go ahead, Mr. Hanson.

[Dannie Hanson]

Thank you very much, Mr. Savage.

The social impact of EI in any industry that has a seasonal dependency can be measured in the way the children are dressed to go to school, whether they have money to go to the ski hill with the child of the government employee who makes $60,000 or $80,000 a year. That's how you have to look at the effects of seasonal employment, be it fisheries, forestry, tourism, or what have you.

These individuals are 48 to 52, as we said earlier. Our companies do not hire young people to go into the processing plants. I personally interview them and say, “Get into trade schools, get into this and that. If you're crazy enough to still want to, come back and see me after you get that.” But we don't get them anymore.

We've had thousands of workers.... This is what you need to understand when you're talking about the social impact of EI. There are thousands of us baby boomers. They've had to work in the steel plants, mines, fisheries, or whatever. They didn't all have the opportunity to go to university, so we still have them. Their education level is not there, but their backs and their hearts are. So when these women--and in the plants, most of them are women--come out of there after a 48- to 50-hour week, and sometimes more between August and October, that EI cheque is simply all that's driving them to work, those stamps. Because after October it gets cold, and they're single income in most cases. You're paid only $10.40. You do not get $18 or $20 an hour. It's not there.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you very much.

I want to ask one question before my time runs out, which is soon. Does anybody feel that the $2 billion is enough of a reserve to start this fund with?

[Dannie Hanson]

I don't. You need more.

[Cliff Murphy]

I certainly don't. I think the administration costs and all of that are going to be rolled into that $2 billion.

My friends from the actuaries have stated this here, and the chief actuary and the Auditor General of this country have said that in the event of a recession there could be a $12 billion to $15 billion cost. It's fine if you want to put the $2 billion there, but you want to attach to it that for any real increases or unforeseen costs, the government is going to backstop it with the $54 billion it has, and the interest it's gaining from that. This board should never have to borrow money from anywhere, because that would certainly drive up the premiums. I'm just astounded that the board would have to borrow money.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Atkinson, do you want to--

[The Chair, Conservative, Dean Allison]

We're out of time, but let's hear from Mr. Kelly-Gagnon first, then Mr. Atkinson.