Human Resources Committee on May 6th, 2008

[Bruno Gagnon]

I'd like to very quickly express one concern. With the fact that we have this funding of one year going forward, there's a definite risk that if things go very badly and we need to increase the premium rate by possibly more than 0.15% and we want to stick to the 0.15% ceiling, someone will be tempted to reduce the employment insurance eligibility or benefits in order to keep the cost within the 0.15% increase. So if you look at things only on a one-year going forward basis, you are at risk of penalizing Canadians who are, let's say, working in the lumber industry or the fisheries. There's a risk here.

[The Chair, Conservative, Dean Allison]

That's all the time we have, but go ahead, Mr. Atkinson or Mr. Morrison.

[Jeff Morrison, Director , Government Relations and Public Affairs, Canadian Construction Association]

Very quickly, Mr. Martin, first of all, I'm from a community just outside your riding that had its one employer shut down about 15 years ago, so I know the pain you're feeling when you speak of that.

I believe it was Mr. Murphy who mentioned that several years ago the EI account did have a mobility provision, which paid for, essentially, travel from one area of the country of high unemployment to others of low unemployment.

Our industry right now is short of workers. It has not been made public, but a report coming out in several weeks will show that we need roughly 300,000 workers between now and 2015. We need a way to get people from where there is no work to where there is work, and in the construction industry there are a lot of places like that. So one of the recommendations that in fact your committee made in your recent report on employability was to put in place a mobility provision to allow workers from high-unemployment areas to go to low-unemployment areas. We would support that and think that should be reinstated within the EI system.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We'll now move to the last individual in this round, Ms. Yelich, and I think she's going to share her time with Mr. Brown.

You have seven minutes.

[Lynne Yelich, Conservative, Blackstrap, SK]

I just want to ask about.... If we're having a difficult time, what I see today is that many of your concerns are about why we're here today. It's to create an EI account. It sounds more as if we have not shifted our thinking to the fact that this is just about an EI account; it's not about the benefits. The benefits are going to be overseen by Parliament. The government is still going to deliver the programs and make policy. So it's just about having this reserve. The $2 billion reserve was determined in consultation with the actuary from the department, so the $2 billion rate was set to help in the economic downturns.

I'm trying to find out if you could shift your thinking, so that you are thinking just about an EI account and if you were about to set one up, without looking at the past. The $54 billion is not there. It's gone. It's been used. We're trying to prevent this from ever happening again, so that it does not end up being a slush fund, as can happen.

Before I continue, I want to assure you that training and education is really, really important to the Government of Canada. It's important to everyone, to all Canadians. It's important to everyone around this table, and that is the responsibility of all levels of government. That isn't going to be lost because an EI account is being set up. We have to be looking at it as just an account that has some transparency and accountability.

So I think one of the concerns would be perhaps who that board is made up of, and that has been looked at really deeply. Who should be on the board has been looked at. Definitely there should be a representative from labour and definitely a representative from the business world.

So those problems and some of your concerns—and your concerns were loud and clear—I think are being felt and are being implemented in the legislation. But what isn't being understood is—no one seems to be able to forget yet—that there's no $54 billion. We're not going to touch benefits. Do you think there's poor communication? Do you think this is wrong? There is accountability and transparency. Don't you think this is perhaps what this account is doing? You see the accountability and transparency in the new....

And I heard someone say—and I think it was you, Mr. Hanson—that this will be transparent. Isn't that what this is all about, so that we do not have it all going to general revenue? Benefits will still be there. The government will backstop it.

So I'd like a comment. If you were building this account, can you see how important transparency and accountability is by the way it's being done?

[The Chair, Conservative, Dean Allison]

Lynne, I think everyone wants to answer this one.

So we're going to start with Mr. Hanson, and you all can have a little shot at it. Please respond quickly, if you could, so we can keep going.

[Dannie Hanson]

Ma'am, if you don't come out and talk to communities and say what you said and let us talk to you, you'll never move the thought process to the idea that this is just an account. You never will. And there are good things; there's lots of good being done here. So it's definitely communication.

But also, don't forget that if you have a bank account with $2 billion and you're told to keep that there, you're going to do whatever cuts, whatever readjustments, whatever, to keep that money there. This is the problem. We know that our qualifying period will increase and our benefit rate will go down. Even though you say it's just a bank account, crown corporations have a history of starting with no rules and then all of a sudden controlling the rules.

So please come out and see us, and probably we'll help you get this passed.

[Lynne Yelich, Conservative, Blackstrap, SK]

I'd like you to follow it a little closer, because some of your concerns have been alleviated. But I don't want to take Mr. Brown's time, so—

[The Chair, Conservative, Dean Allison]

Just very quickly, we could start over here with Mr. Kelly-Gagnon.

[Michel Kelly-Gagnon]

As we said, we're supportive of that legislation, and I think it's a good move. As a source of inspiration, you may want to look at what they're doing with the Quebec workers' compensation board. By and large it's an organization that works very well. It has a really autonomous, distinct fund that's not even the fund of the workers' compensation board; it's another entity. There's a lot of protection and all sorts of rules around it, and it's managed. It's actual real money that's invested in bonds and so on. There's a whole history of details of how to work with it, and all the money is not within what we call le périmètre comptable.

I think this seems like something you may want to look at, when you get to the details of the transparency and the idea of trying to make sure the government doesn't get its hands on it.

[The Chair, Conservative, Dean Allison]

I apologize, but we're moving to Mr. Brown.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Thank you, Mr. Chairman, and thank you, witnesses, for coming.

The whole reason for these changes is to ensure that we don't have a problem like the $54 billion. The fact is that the money didn't go down a black hole. I'm sure the former government members around the table would say that this money was either spent or had gone to debt repayment.

But our whole purpose is to fix the problem. I have a lot of experience. My background is as an employer in the tourism industry in an area that's somewhat seasonal. So I know of some of the challenges.

We're hearing now—and I know even from the business I was in— that there are worker shortages. Projections tell us that we need to have more workers in Canada. A lot of industries are facing worker shortages, and I heard from a number of our witnesses that there's not enough money, that the $2 billion is not going to be enough. I'd like to hear a little about where you got those numbers and why you don't consider the amount to be enough, in light of the worker shortages we are now experiencing in many industries. I know in my industry, and in the construction industry in some parts of the country, we're hearing that.

[Bruno Gagnon]

We proposed $15 billion. We came to $15 billion as being the excess cost of higher unemployment during a recession over the average cost of the program. That's approximately how we came to $15 billion.

By the way, I think we support all the transparency features that are in Bill C-50. It's a great step forward. On the other hand, I think we might all gain by looking at the $54 billion and seeing it as something that is twofold. It contains what I would call the actuarial reserve. That's approximately $15 billion. That's the money needed to stabilize the program over the long run. Then it contains $39 billion, or whatever. That is the result of a decision made several years ago, a decision not to charge the premium rate recommended by the chief actuary. This was a totally different decision. From my point of view, it's a totally different issue. So within the $54 billion we're dealing with two different concepts.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Brown.

Mr. Volpe.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you very much, Mr. Chairman, and thank you very much, witnesses.

I've listened over the last hour to some of the very interesting things that you've been saying. And of course I share some of the perceptions that have been voiced around the room, including those by colleagues around the table.

I have the unfortunate disadvantage of being one of those people who were listening to all the arguments a few years ago in a decision-maker's capacity. So I hope you will indulge me as I reflect on some of the things you've mentioned with a view to trying to elicit a response from all of you.

The arguments then, as now, don't appear to have changed all that much, judging from what I've heard our colleagues say. Mr. Hanson and Mr. Murphy in particular wanted to get a reflection from us in order to be able to respond and make some of these decisions.

It strikes me that most of the comments today have really focused on whether there is a philosophical basis for establishing a fund or to continue with a consolidated general revenues backstop to all the expenditures of government associated with maintaining an EI fund and the social programming associated with it. Whether we agree that they should be associated with it is another thing. For example, you talked about training. Others talked about parental leave and compassionate care. I think you even talked about income supplement and income substitution. These are all items that have become part and parcel of the EI system.

Mr. Murphy focused mostly on the importance of the EI system to maintaining communities and a critical mass of people to ensure economic viability of some industries that are seasonal, at best, and that are always, always on the verge of collapse. I think Mr. Hanson pointed out the reality of that when he indicated there are more fish exported out of Nova Scotia than Newfoundland. A kind of wry smile hit me immediately. There are probably two words that will explain that: one is John, and the other one is Risley.

But I wonder, gentlemen, whether in fact the public policy objectives associated with the system, with the status quo--I'm not one who says we maintain what's there all the time--are going to be ensured by establishing a fund with all the mechanisms that Mr. Gagnon and Mr. Kelly-Gagnon are asking to be put in place. The question in my mind is that while you may be looking at a focus on the actuarial soundness of a fund that has ranged from $2 billion to $3 billion to $15 billion, is that focus going to work to the disadvantage of other public policy objectives that the government must be putting in place, even with this legislation, to elicit a response through the establishment of this fund? And how do you hope, expect, or suggest that those public policy initiatives will be maintained as you focus on transparency of a fund that is going to be separated from them?

[The Chair, Conservative, Dean Allison]

Who's going to start?

Mr. Atkinson, go ahead.

[Michael Atkinson]

First of all, we saw what happened when the government was backstopping the fund under the status quo system, when bad days didn't really come along too often in the last number of decades and there was no requirement for the federal government to contribute to backstop the fund. However, when the sun was shining and it was generating large surpluses, we saw what happened; the fund was depleted.

From my perspective and that of our members, we don't want to see that happen again. There has to be a balance here. If the government wants to continue to backstop the fund, it has to take the good with the bad and not be dipping into the fund to take surpluses from employers and employees and use them for purposes other than what they were collected for.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Atkinson, you're absolutely right. I happened to be around here when the bad times you're talking about really railed heavily. I use to rail against the government at the time. But the fact of the matter is that the general taxpayer was backstopping EI expenditures--income supplements, income substitutions--because of the high unemployment rate. I've seen that part, and I welcomed it. In fact, at the time, the argument was that we should do more.

Now, I've heard you and others say that we should equalize the premiums amount. To someone else's ears, that sounds as if you want to reduce the expenditures of employers, and I agree that should always be an objective. But the reduction of employers' contribution to a fund when you're eliminating the 1.4 ratio to 1:1 suggests to me that you're looking for--as other, less kind souls than I am might suggest--a further corporate tax cut at the expense of others who are not....

You've got the employers. There are at least 1,000 small businesses--

[Michael Atkinson]

Can I answer that?

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

--around this area that are going to be saying, “Yes, I like that. I'm not sure about the other objectives, but that'll be decided in a election.”

[The Chair, Conservative, Dean Allison]

That's all the time we have, so just a quick response.

[Michael Atkinson]

First of all, it's going back to the way the system used to be. That's what we're asking for, because that multiple was not always there.

Secondly, the one good thing about having this separate, independent fund now is that hopefully legislators and policy-makers will put more attention on whether this new program we want to introduce is best funded under the EI fund or through the consolidated revenue fund? That question often was never asked, whether it should be only employers and employees paying for this or whether the general taxpayer should be paying for this program. At least now, with a segregated fund, hopefully that question will be asked.

[The Chair, Conservative, Dean Allison]

Was your answer employees/employers or general funds?

[Michael Atkinson]

It depends on the program.

[The Chair, Conservative, Dean Allison]

Okay.