Human Resources Committee on May 27th, 2008

[Monte Solberg, Conservative, Medicine Hat, AB]

Right now, the EI Commission as it currently exists, which has a worker representative and also a business representative along with someone we have yet to appoint, would make up the nominating committee that would nominate people to go on the board.

So there is a role for employee representatives, like the current representative on the EI Commission, to nominate people; again, possibly from a labour background, but the primary consideration, which would be made clear to them, is somebody who has expertise in these areas.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Minister, in your present approach to the management of the fund, your main concern is to limit contributions as much as you can. Are you not afraid that you may take too much out of the fund that is intended to provide workers with benefits? That would be the same as the situation at the beginning of the 1990s when you were in power. It subsequently allowed the Liberals to use the money for other purposes each time they increased premiums. Are you not worried about that? My impression is that the philosophy is the same as when you reduced the GST. Your plan is to deprive the next government of as much money as possible for their programs, but most of all for paying benefits.

[Monte Solberg, Conservative, Medicine Hat, AB]

I would make a couple of points about that.

First, the government still maintains the power to override the financing board in terms of setting premiums, so there are several levels of protection.

Currently premiums can go up by a limit of 15¢ to pay for benefits in the event of a downturn. Then there is a $2 billion cushion, the reserve, of course. And then ultimately it's backstopped by the consolidated revenue fund.

It's conceivable that if a government determines that raising premiums would be too damaging to the economy in a downturn, they could override that and say, no, we'll just pay for that out of the consolidated revenue fund because the impact would be too damaging.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You are only keeping a cushion of $2 billion, while the chief actuary recommends that the amount be $10-$15 billion, or the equivalent of one year's reserve.

Given the current employment situation, you seem to think that this is not a useful precaution. I just feel that I am listening once more to the Conservative line from 1989 and 1990. That led to a situation that worries me, as I told you earlier.

[The Chair, Conservative, Dean Allison]

Minister, that's all the time we have. I'll let you finish answering this question before we have two more quick questions.

[Monte Solberg, Conservative, Medicine Hat, AB]

First, Mr. Lessard, I would disagree. The $2 billion exists today, so we do have a cushion. There was no cushion at that time.

Second, the situation is quite different. Yes, economies go up and go down, but because of demographics, we have so many people retiring today and a lot fewer workers coming up, meaning we have big labour shortages around the country. So even if there were some kind of downturn, the job loss couldn't possibly be nearly as great in exactly the same situation because many jobs are going wanting today.

[The Chair, Conservative, Dean Allison]

Thank you very much.

Minister, we got started a little late today. If it's okay with you, we'll have one more question--not five minutes but one more question each--from the Liberals and from the Conservatives. All right?

[Monte Solberg, Conservative, Medicine Hat, AB]

Sure.

[The Chair, Conservative, Dean Allison]

Thanks.

Mr. Savage.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Simply for clarification, Minister, what will be the operating budget, the administrative cost, of this new crown corporation?

[Monte Solberg, Conservative, Medicine Hat, AB]

The administrative cost still has to be established. The board of governors will bring forward a corporate plan that they will present to Treasury Board. Treasury Board will then have to make a judgment about whether or not that's acceptable.

I guess what I would emphasize is that some of the functions that the new board currently undertake are ones that already exist within the EI Commission. So in some cases it would simply be a transfer of responsibilities. It should be less cost on the EI Commission side and within the department, and more assumed by the board of governors.

The other part of it is that they'll be doing things that we don't currently do, like invest funds and get a return, which obviously has a big benefit, and I would think would be worth any additional expenditure.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Will the cost to administer employment insurance be higher than it is now? I think $1.6 billion is now the estimated administrative cost.

[Monte Solberg, Conservative, Medicine Hat, AB]

I don't think we can know that yet. They'll bring forward their proposal. If it is higher, it will be higher for a different set of functions, including investing, which will bring in more revenues.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Savage.

The last question goes to Mr. Gourde.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much, Mr. Chair.

Mr. Minister, thank you for being here before us today. Your evidence is very useful for everyone on the committee.

At the moment, we are enjoying a period of prosperity where the unemployment rate is relatively low. If the unemployment rate remains low for another 5 to 10 years, could the rate of contributions go down by 15¢ per year for two or three years? If not, is it going to stabilize at some stage?

[Monte Solberg, Conservative, Medicine Hat, AB]

There's no question that as the tax base expands, if there is an economic expansion over a period of time, you're talking about an expanded tax base. You have more businesses that pay in. You have more people working, and that would mean that premiums can continue to go down. This has an extraordinarily beneficial effect in all sectors of the economy. It's that virtuous cycle that economists talk about.

We're in a pretty good position in this country today, being fairly deep in important resources, certainly in natural resources but also human resources, and I think that bodes well in the long run for the country. It also bodes well in the long run for the people we all want to serve, those workers who are currently employed and those unemployed for whom we can use some of these premiums to provide training and, ultimately, help them step into a job and enjoy some of the success that most of the rest of us have always enjoyed.

[The Chair, Conservative, Dean Allison]

Thank you very much.

I want to reiterate Mr. Savage's comments, Minister. You've been very accessible and you've come before us many times. We appreciate your candour and your willingness to be here answering our questions on a variety of topics.

Thank you once again for your accessibility. The committee always appreciates that, certainly when we need clarification of these new initiatives that governments are bringing forward.

Once again, Minister, thank you very much for taking time out of your busy schedule. I know that all of us appreciate your willingness to appear before us today.

[Monte Solberg, Conservative, Medicine Hat, AB]

Thank you very much.

[The Chair, Conservative, Dean Allison]

We'll recess for a second and then come back in camera.

[Proceedings continue in camera]