Thank you for the opportunity to appear.
I might just say, as I had the opportunity to say to you earlier, Mr. Chair, that we really appreciated the recent report of the committee on employability issues. It was a very constructive document and quite an important reference point moving forward.
With respect to the EI Financing Board, I must say I'm a little unclear on process. I appeared before the finance committee yesterday on the bill. We have a number of specific suggested changes to the legislation. I hope it's appropriate to address those with you as well as with them.
This legislation incorporates a lot of what is in the present EI Act, a lot of which we wouldn't particularly like but which really represents no change. As I interpret it, what is really achieved in this bill...I think the intent is to make sure that any future surpluses generated from the EI system, moving forward, would be available to reduce premiums or perhaps to increase benefits rather than be swallowed up in the general government accounts.
I think that's a rather narrow purpose. From my point of view, the key problem and concern is that the past accumulated surplus of $54 billion will just sit there in an EI account, again integrated into the public accounts. In a sense, we're moving from an EI surplus of $54 billion in one account to a new EI account with $2 billion passed over to it—both of which are integrated into the public accounts, by the way. As I understand it, no cheque will actually be issued for that $2 billion by the Government of Canada; it will be made available to them. But if they draw on that $2 billion, the money will have to be repaid to the government. How that moves us forward is a bit unclear, to say the least.
It's important to flag the point that the accumulated surplus was built up from the mid-1990s. Over the first part of that period, the rationale for the surplus was that it was there to backstop the EI account. The rationale that is now being used by the Government of Canada before the Supreme Court to defend building up that surplus has shifted to the general right of the federal government to levy a payroll tax.
This is not in dispute, but I think it is important to flag the fact that the Supreme Court will be holding hearings next week into the legality of collecting that huge surplus through EI premiums. If the previous federal government had intended to reduce the deficit and the debt through a payroll tax, it could have done so. It chose to do it through the EI premium, which is properly constructed as a social insurance program premium. But nobody would have chosen it as a form of taxation to reduce the deficit and the debt.
The key point I would make is that the EI surplus was built up, in significant part, on the justification that it was there to backstop the EI account, that it was there to cover deficits if we entered a prolonged recession. We know that $2 billion is not enough to accomplish that purpose.
I believe this legislation should be amended to explicitly state that the EI account remains available to the Government of Canada to backstop any deficits in the event of a recession. I believe that would actually reflect what Minister Flaherty has said to us--that if indeed expenditures were to exceed revenues over a year, the Government of Canada would make up the difference. I think that should be explicitly stated in the legislation, so that the accumulated EI account isn't just hanging there in limbo.
Going one step further, our preference certainly would have been that an amount of $10 billion or $15 billion be transferred to the new board so that it could cover a shortfall in the event of a recession, which $2 billion is not enough to do.
The other key concern I want to raise is that the mandate of this new board should be very narrow and confined solely to financing the program and managing the investment fund.
I think the intent of the government in subclause 5(2) of the bill is fairly clear, that the mandate is construed to be very narrow. However, at the finance committee yesterday I was quite taken aback by the Canadian Council of Chief Executives. They were saying that they wanted this new board to take on the role of doing research into the program parameters, to take on functions that are now performed by the department. In our view, all of the basic design features of the program, such as who qualifies for what period, how the premium is divided between employers and workers, should be the role of the Minister of Human Resources and Social Development. I don't believe it's the intent of the government to change that, but we suggest a specific wording that I think is important to clarify it.
So with this new board, there are questions of accountability to Parliament and about its function. I think it's extremely important to be very precise on what the mandate is.
Thank you.