Human Resources Committee on May 27th, 2008

[Monte Solberg, Conservative, Medicine Hat, AB]

Absolutely. When we talked about the CPP Investment Board, no one argued at the time that we should have seniors on that investment board. We argued for people who understood how important it was to be prudent with payroll taxes regarding the Canada Pension Plan, to make sure there was a good return on investment. That has to be the primary kind of consideration when we talk about this as well.

It does not preclude anyone from labour being involved in this. In fact, there are many people with labour backgrounds who would be enormously qualified to sit on this board, and we're completely open to that. But I don't want to leave the impression--which is the very one I think some people in here are concerned about--that somehow this is tied to benefits and we're going to determine benefits through an arm's-length body. We don't want to do that.

So that's my concern, but we're completely open to having someone with a labour background sit on this.

[Judy Sgro, Liberal, York West, ON]

I'm going to share my time with my colleague.

[The Chair, Conservative, Dean Allison]

Sure, yes.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I have one very quick question.

Thank you, Minister, for being here, as always.

My question will deal with benefits. I think we've done some good things over the years with benefits. We've taken some of the disincentives out of the program, and it's making more sense now than it did a number of years ago. Such things as maternity benefits have encouraged more women to take part in, to engage in, the workforce during their childbearing years. Sick benefits have proven to be very beneficial to Canadian workers. I know there's a private member's bill to extend that for catastrophic health reasons. It's been talked about, through some of the testimony, that it would be reflected in some benefits, that this might be looked at as a straight insurance policy and workers in seasonal industries may be penalized for accessing the fund in successive years or subsequent years.

So my question to you, Minister, is this. When I see that this is all about making sure these funds are used only to pay for EI benefits, can you give us the assurance that the benefits side will still be a function of the department and will still be a function of Parliament?

[Monte Solberg, Conservative, Medicine Hat, AB]

Absolutely. We're all sympathetic to people who find themselves in these situations where they lose their jobs, they have a family member who becomes sick, or whatever it is. These are all extraordinarily difficult things for people. As a compassionate society, we want to make sure we have proper benefits in place to help them. The way this will work is that Parliament will decide what the programming will be through employment insurance and then it will be up to this board to ensure that premiums are adequate to pay for those benefits.

[The Chair, Conservative, Dean Allison]

Thank you, guys.

I believe we're going to have time for two more interventions. We'll go to Mr. Lake, followed by Mr. Lessard.

Mr. Lake, you have five minutes, sir.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

I want to start with a little bit of context. Obviously we've talked about how this EI surplus began to accumulate right around the early to mid-nineties and went up to $54 billion under the previous Liberal government, but I'm a little confused as to how the surplus was accumulated. Would there not have been a rate mechanism in place at that time to balance things out?

[Monte Solberg, Conservative, Medicine Hat, AB]

What occurred, of course, is that during that time, the previous government had the ability to set the premium rate, and it was set at a level that was higher than necessary to pay for benefits. So any extra went toward the consolidated revenue fund, and of course it is the source of a lot of concern about how that fund was established. That's why we're talking today about having a separate account, something that is at arm's length from the government, so that future governments can't confuse what is good public policy with what is sometimes good politics.

So we're taking those steps today to ensure that employers and employees have their benefits, their premiums, protected and that the funding is used only for benefits and nothing else.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Moving forward; yes.

Now, the Bloc and the NDP have both suggested, in different ways, that the $54 billion should be paid back. I think Mr. Lessard, at one point in one of the meetings, suggested $4 billion a year. I would think that would have to basically be added to taxes for Canadians. I'm as frustrated about the fact that the $54 billion was spent in the first place, but I know within my own constituency the taxpayers wouldn't want to have their taxes go up by $4 billion a year.

What's your sense on that?

[Monte Solberg, Conservative, Medicine Hat, AB]

Well, I think we have to be realistic about where we're at today. Of course, $54 billion is a lot of money, and I think the best way we can serve workers and employers today is to make sure that never happens again and to put in place an arm's length mechanism that really will ensure that, if we maintain a strong economy, those premiums will go down.

That's the best way to help workers and employers, in two senses. One, of course, is that they're allowed to keep more money in their pockets; and you know, EI premiums are a substantial tax on people. Second, when businesses have lower payroll premiums, of course that means they can hire more people. EI and other payroll taxes like that—if you want to call it a tax—are actually things that impede the ability of business to hire workers. It's a tax on jobs.

So we have to be very cautious about making sure we reduce those charges whenever it's possible, because they have an impact on the ability of businesses to hire workers.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Transitioning to the reserve, it's interesting; Michael Atkinson from the Canadian Construction Association said before the committee the following:

I'm also concerned about having a reserve that's too high and too tempting, quite frankly, to legislators who want to dump programs and other things off the consolidated revenue fund into a fund that's shouldered only by employers and employees.

That would be my concern about having a reserve that's too high.

About the $2 billion that we're talking about here, I'm curious; where does that $2 billion come from? Where would that actual cash that goes into the reserve come from?

[Monte Solberg, Conservative, Medicine Hat, AB]

Well, it comes from general revenues in all the various ways that the government collects revenue.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

So it's a budget item right now--

[Monte Solberg, Conservative, Medicine Hat, AB]

Exactly.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

It would have to be taken as a one-time budget item that goes in to create the reserve. So if you had a $15 billion reserve, you'd actually have to take a $15 billion hit on the budget at some point?

[Monte Solberg, Conservative, Medicine Hat, AB]

I'm sorry, could you repeat the last part?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I was just saying, if you had a $15 billion reserve, you would actually have to find that $15 billion out of the budget right now to put into the reserve in the first place.

[Monte Solberg, Conservative, Medicine Hat, AB]

It would have to be allocated out of the government's fiscal framework, and if $15 billion was moved into the reserve, it would mean the government had $15 billion less latitude to use for other important services.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Other things right now; okay.

Just referring to Mr. Martin's comments about the reserve being too low, it's something that some members have suggested concern with. Dealing with a hypothetical deficit.... Let's say we had a $4 billion deficit in the program. How would that have been dealt with in the past, and how will it be dealt with in the future--maybe there's a contrast, maybe they're pretty similar--with a hypothetical $4 billion deficit?

[Monte Solberg, Conservative, Medicine Hat, AB]

The policy hasn't actually changed at all. Right now, if you have a $2 billion reserve, that would ultimately mean a $2 billion deficit if it's backstopped by the consolidated revenue fund. So at some point, the Minister of Finance would determine how that deficit would be paid back, and that would be up to him, in this case, to make that judgment.

The way it would occur today--without the reserve--is there'd be a $4 billion deficit in the consolidated revenue fund and again it would be up to the Minister of Finance to determine how that deficit would be paid back.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much.

Now we're going to move to our last intervention.

Mr. Lessard, five minutes, sir.

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

Thank you, Mr. Chair.

First of all, I would like to correct a comment made by our friend Mr. Lake, who distorted the facts a little. I recall that a recommendation was passed unanimously by this committee to the effect that the money that had been removed from the fund would be repaid in the amount of $1.5 billion per year. This appears in the December 16, 2004 report and again on February 15, 2005. It was recommendation 3 in a unanimous report.

But when we debated Bill C-280, Mr. Peter Van Loan, the government house leader, proposed putting funds into the fund to the tune of $4 billion per year. Our friend Mr. Lake was perfectly right to describe this proposal as quite irresponsible. But now he is sitting with the government, we are told that it is not responsible to put money back in the fund. When you are a member of the opposition, you sometimes say things that you do not hold to when you become a member of the government. I feel that the Conservatives are presently in that position.

That said, we are very worried about your reasoning on the responsibilities of employees and employers. I recall that, in Quebec, the CSST, like other large public and quasi-public organizations, has employees and employers on its board of directors. This morning, you stated once more that the board's directors, seven in number, would be part-time positions. We must therefore conclude that skilled and specialized people will be in place to advise them.

What is preventing you from adopting the proposals from employees and employers about the way the board's directors should be appointed? I am not talking about the entire board, but at least two people from each group.

[Monte Solberg, Conservative, Medicine Hat, AB]

If I understand your question, nothing prevents someone who comes from a labour background being represented, either on the board of governors or as an employee of this organization. I'm only suggesting that can't be the primary consideration. And I've already gone through that, so I'll just leave it at that.

Am I misunderstanding what you're asking?

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

No, you understood my question very well. You have reserved the right to make the final decision at each stage of the appointment process, whether for the board or for its committees.

What role are employers' organizations and workers' associations going to be able to play in this process?