Human Resources Committee on May 8th, 2008

[Andrew Jackson]

It's my understanding that the act empowers the minister to spend a certain amount of money from the EI account for active measures under part II. As Mr. Roy stated, when those funds are transferred to the provinces, it's important to have in place effective provincial institutions—business, labour, labour market partners forums—to ensure that the money is appropriately spent. I agree that there should be accountability.

This year, I believe the Government of Canada is underspending by about $1 billion their commitment to active measures. We're spending less than the maximum authorized.

[Denise Savoie, NDP, Victoria, BC]

For training.

[Andrew Jackson]

For training under active measures.

[Denise Savoie, NDP, Victoria, BC]

By $1 billion.

[Andrew Jackson]

When we had the premium rate-setting mechanism, the view was being expressed, from the employer side as well, that there was a need to expand those active measures, given skill shortages, etc.

One concern about this new mechanism goes back to Ms. Sgro's point: if we were to enter into a recession, there would be a temptation on the part of the government to underspend or reduce the allocation for active measures. It's not driven by statute. Essentially, the government determines it. It's discretionary. Parts of it are self-generating, such as funds for apprenticeship. There is a legitimate concern that if we entered a recession the part not driven by statute would be reduced.

[The Chair, Conservative, Dean Allison]

Thank you.

Thank you, Madame Savoie.

That's all the time we have for this round. We'll now move to Ms. Yelich. You have seven minutes.

[Lynne Yelich, Conservative, Blackstrap, SK]

I'll only make a few comments. I have to go to the House, so Jacques will be sharing my time.

I want to get the focus back to where there is no $54 billion. We know that. That is why this new EI account is being formed, because we want the transparency and we want the accountability. All of you have said you would like to see that.

As to the training, I think no government--no future government or the present government--overlooks how important education and training is. It is not something we can ignore. That's why there was a big investment target initiative for older workers, for example, and that was huge. There have been many programs and increases in funding to the provinces, by $39 billion in this budget over seven years, since we got into government. There has been lots of money put into training programs. So to talk about the benefits and programs, you are taking attention away from what we should be talking about, which is what the fund is designed to do. That is transparency and accountability, and the $2 billion is there to make sure premium rates are set.

I don't know if it can be any clearer, and I'm not sure why we keep going back to the $54 billion that's not there. There is $2 billion reserved that has been accumulated since this government became the new government, so I'm thinking that if you can simply look at the legislation for what it is, not what you think should be in it or from the past $54 billion, I think you could be more help to us in seeing what impact it has.

The benefits will not be touched. Nobody is going to take training programs away. Times have changed. It's unprecedented. We're at a time where there are major labour shortages. We do know that with productivity, with competitiveness, with the international economy going as it is, we have to make sure our people--the older workers, our disabled, and our aboriginal programs--are all targeted to make sure we get them employed.

If anything, I wish you could think more about that and help us with how you think it can be more accountable and more transparent, and remember that the purview is under the parliamentarians and the minister, which is why you're here today.

I have no questions, except that if you want to comment on transparency and accountability I would be very pleased to hear what you have to say about that, whether these are the proper steps to make sure that accountability and transparency are a fundamental principle of this legislation.

[The Chair, Conservative, Dean Allison]

Mr. Céré, did you want to make a quick comment?

[Pierre Céré]

Yes.

I understood that there seemed to be some denial of the $54 billion surplus. I have in front of me the Monitoring and Assessment Report submitted to Mr. Solberg by the Employment Insurance commission. It says: "Including notional interest of $2.0 billion, the notional cumulative surplus in the EI Account was reported to be $54.1 billion at March 31, 2007." Those are the official figures.

I know that Mr. Solberg appeared before this committee recently. What I understood, from listening to the sitting, is that he acknowledged the accumulated surplus and that they had been confiscated and siphoned off. He concluded his presentation by saying that this was not going to happen again. I am therefore somewhat surprised that the government could claim that this $54 billion did not really exist.

The Conservative Party was elected on January 30, 2006, if memory serves me. From April 1, 2006, to March 31, 2007, the Employment Insurance Account produced a surplus of $3 billion. Where is that $3 billion?

[The Chair, Conservative, Dean Allison]

Mr. Gourde, did you have some questions?

Mr. Jackson.

[Andrew Jackson]

Very quickly, around the transparency and accountability issues, I'm sensitive to the point being made that it has been most useful to speak to how the legislation reflects the intent of the government.

I think there was a set of motivations in developing this legislation that ought to be commended in terms of the past. I think the legislation reflects an extremely strong role by the Department of Finance moving forward, even over this new and so-called independent fund and commission.

In terms of what this board does, the economic assumptions that they're allowed to take into account in setting the premium rate are those from the Department of Finance. They're not really allowed an independent role around judging the economic situation we're in.

As I said, in proposed subsection 80(1).... I mean, you stated--and you know that Minister Flaherty has said this as well--the Government of Canada stands there to backstop the EI account, so why do we have a bill that says it “may” backstop the EI account? It's basically because the Department of Finance is allergic to having “shall” in a statute that would drive spending.

If we're talking about transparency, to the extent that I believe the government's intentions are what they are, I don't think they're fully reflected in this legislation. I hope the committee would satisfy itself on some of those concerns that are being raised. Is the government really backstopping this new account? How independent a role does it really have?

[The Chair, Conservative, Dean Allison]

Mr. Gourde, do you want us to pick you up in the next round? We could do that.

Mr. Blakely. We are almost out of time, so you may make a quick comment.

[Robert Blakely]

I'll be really brief.

Your idea, your comments on transparency, do we want to see that? The short answer is yes.

You've said there won't be any cuts; everybody knows we have a labour shortage. I'd really like to believe that.

I'm a literate person. I read this bill from cover to cover. I read proposed section 80; I read some of the others. It doesn't say that they're going to maintain some of those things that we think are important. It doesn't say that the Government of Canada is going to backstop this stuff. It doesn't say that the seven wise men will collect enough money to make sure part II training is going to be continued.

I agree with you on the $54 billion to this extent. There is no money bin. Mr. Flaherty is not diving in it like Scrooge McDuck. It's been spent by your government and predecessor governments. We've used it for a number of purposes. There is no pot of money that you're sitting on that could magically appear.

But in terms of transparency, I don't read this bill as a transparency bill. It's opaque to me.

[The Chair, Conservative, Dean Allison]

That's all the time we have.

We're going to move to our second round now, which will be five minutes each.

Mr. Malhi, five minutes.

[Gurbax Malhi, Liberal, Bramalea—Gore—Malton, ON]

Thank you.

Mr. Blakely and Mr. Roy, according to your opinion this seven-member board will be just like a rubber stamp. The board is not going to invest any money. It means the board will be useless. Then why is the government going to create this board? Don't you think this is a waste of the taxpayers' money?

I want an answer from all the representatives of all the organizations who are present here as witnesses.

[The Chair, Conservative, Dean Allison]

Okay, sir. Where do you want to start?

Mr. Valois, if you want to start with an answer on that, we'll just move around.

[Roger Valois]

The board itself presents a problem. It is going to manage premiums, but it will have no input on the question of how those premiums are accumulated in the Employment Insurance Account. That is a problem in itself. We also don't know who will be sitting on its board of directors.

I did not understand the question properly.

[The Chair, Conservative, Dean Allison]

Mr. Faucher.

We'll just try to keep the comments quick. I believe Mr. Malhi wanted to hear from everybody, and if I count all the members around the room, this could take a little bit.

[Claude Faucher]

I am not an expert on the question of creating a separate board. However, it has been pointed out that money has been virtually siphoned off, money from the premiums paid by employers and workers has been looted. This is totally unacceptable.

We had proposed that an independent employment insurance fund be created. However, as it has been set up and presented in the bill, it is certainly missing some pieces, and it seems to us to be completely pointless. If we don't have the tools, if there are no representatives of employers and workers at the board of directors' table to determine needs, this presents a problem. In that sense, the fund is too imperfect for us to approve it as it stands.

[The Chair, Conservative, Dean Allison]

Mr. Roy.

[René Roy]

To answer your question directly, sir, I would say no. It is not a waste of money to create this board; what it is, is a step in the right direction. There are a lot of things in this that need improvement. We have been battling the federal government on this for 15 years, to change what we have now. The status quo is not something we can live with. So let's take a step in some direction!

We want to improve Bill C-50 to have some power. But as my colleagues said, this board has to have something to do, there have to be employer and union representatives. If we start with that, we intend to fight to improve it, so that one day we will be managing the employment insurance fund together with employers. At present, we will take what improvements we can get.

To answer the member who spoke before, I would say that since the Conservative government has been in power at the federal level, the accumulated surplus isn't $2 billion, it is $5 billion or even a little more.

[The Chair, Conservative, Dean Allison]

Mr. Blakely.

[Robert Blakely]

Would I like it to be in a separate bank account? The answer is yes. That may reduce the tendency for people to see it as a discretionary spending pot of money.

Do we need to have this board? In its present form, no. I agree with Mr. Roy that you could set it up so that business and labour could actually run this effectively. As under the current construct, run it with the government, with a separate bank account, without the ability to reach across and borrow a few dollars now and then and have it disappear.

[The Chair, Conservative, Dean Allison]

Mr. Jackson.

[Andrew Jackson]

It's our view that ownership of the program appropriately rests with the federal government, with input from business and labour. So the EI Commission should be playing a role. And it's also our view that there should be a separate financial account for the EI program.

We have a sort of weird hybrid here, actually, because the new EI fund isn't going to be run by those responsible for the program, and it has a very narrow mandate. When you read this bill, you see we have page after page about nominating committees, and there's a real worry it's going to be a very busy, bureaucratic, potentially expensive structure.

I'm told by officials, and I think this is the case, that having chosen that legal form of a crown corporation, then there's a whole lot of things that follow from it that you have to do. Why is it set up as a crown corporation? It's so that it remains integrated with the public accounts.

I'll conclude by saying that the key point is a separate fund so that funds collected for EI purposes go to EI purposes. But I don't believe we need this huge bureaucratic structure to manage it.