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.