Thank you, Mr. Chair.
I would first like to thank the committee for inviting us. I am a professor of social law at the Université du Québec à Montréal and my specialty is the Employment Insurance Act.
I have analyzed Part 7 of Bill C-50, in collaboration with the Mouvement autonome et solidaire des sans-emploi. I would not wish to go back over the circumstances that led to this bill. I think it is a response to legitimate demands, because over the last 15 years the federal government has pocketed a portion of employment insurance premiums to fund things other than the expenditures provided for in the Act, at the expense of the protection that the Act is required to provide for premium payers. We would denounce this in the strongest terms.
We would also denounce the fact that these funds have been siphoned off at the expense of protection for the jobless. This substantial surplus — $54 billion — has been accumulated because of cuts made by the government under the Employment Insurance Act starting in the 1990s.
Is the solution what is being proposed in Bill C-50? We don't think so. I am going to summarize our position briefly, because I do not have a lot of time.
The bill provides for the creation of a Board which would be in charge of determining the premiums, and not of managing the employment insurance account. As my colleague from the CLC mentioned, that account would continue to be public and within the government's accounts. This merely determines the amount of premiums, according to very strict rules which in fact have already been in the Act since 2005. Under this bill, the Board will set the premiums and manage a reserve of $2 billion. Because Mr. Jackson has spoken about this aspect, I will not go into it in detail.
This bill does not improve the coverage provided by the scheme, and that is ultimately its worst flaw. In addition, it ignores the $54 billion surplus. As I said, in spite of the bill's pompous title, the Board will not provide funding. Its mandate will be very limited: it will not set premiums or manage the reserve. Ultimately, the government will be responsible for premium levels. I would also like to mention that this $2 billion reserve will be used in the event of a recession so as not to raise premiums, but it will have to be repaid later. It should also be noted that this is an additional amount that will be charged to the account.
This bill has a number of perverse effects. The Board may not get directly or indirectly involved in the coverage provided by the scheme. The bill expressly provides that the Board may not address that question. As well, the underlying philosophy of the bill is to stress the premiums aspect. We must keep in mind that since 1990 we have been dealing with a self-funded program. Obviously, the goal is to maintain a degree of premium stability. The direct consequence of that is that the protection provided by the scheme is going to remain at substantially the same level as at present, that is, about one third of what it was in 1990. We believe that this is a glaring perverse effect, and that is why we oppose this bill.
The third perverse effect is that since 2005, the chief actuary at employment insurance has no longer been doing the accounting. Changes were made to the accounting system in 2005 so that it must now be done on an annual basis only. This means that this $54 billion has disappeared in the accounts. The bill now takes this even farther.
The Board is told not to take into account the $54 billion credit balance in the Employment Insurance Account. Mr. Jackson just talked about the dispute between the union centrals in Quebec and the Attorney General of Quebec regarding the constitutionality of this surplus. In that case, at the trial level, Judge Gascon said that regardless of the constitutionality of the manner in which the funds were diverted, the Consolidated Revenue Fund, the Canadian government, is still accountable to the Employment Insurance Account for that money.
The efforts to divert attention from the surplus are ongoing. In my opinion, that is a glaring perverse effect. In view of all of its perverse effects, we recommend that this bill be rejected because it entrenches a self-funded system, as I am fond of explaining, and most importantly because it could keep protection at current levels. As my colleague Mr. Jackson said, the Supreme Court of Canada will be hearing a case next week that will address exactly the same question as led to the creation of this Board: the government's use of premiums for other purposes. It would be wise to wait for the Supreme Court to say whether the government had the authority to do that. Afterward, we will be able to provide an opinion.
Thank You.