Human Resources Committee on Nov. 26th, 2009

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

Can you tell me what assumptions you used in doing the work? Is that something that you would have done? Would you have looked at those numbers and said, that makes sense or that doesn't make sense to me? Would you have done the work yourself? How many people work with you specifically in the Department of Human Resources?

[Luc Taillon]

I supervise a group of 12 employees, but among these 12 employees only three are actuaries, including me.

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

The cost that we found out--kind of late in the process here--from Mr. Vermaeten after significant questioning is that the steady state cost of this program was going to be $78 million, I think. Is that a number that you can vouch for?

[Luc Taillon]

As I said before, we were part of developing the model and the assumptions that went in, and yes, we fully agreed with the results that came out of that modelling.

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

Do you ever disagree with the department on stuff?

[Luc Taillon]

We have some frank discussions sometimes, but nothing major, no.

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

Can you verify that the premium rate that employees are going to pay is the same as what regular employees pay? It seems coincidental that it would fall on that exact same number if the purpose of this was that it would be a break-even process. Do you verify the rate that employees are going to pay in order to be part of this under the self-employed program?

[Frank Vermaeten]

In this case, I think it's more appropriate that I respond, because this was a policy decision on what the appropriate rate was, and that policy decision was based more on whether it would be break-even--exactly break-even, or approximately. There were three factors that we took into consideration. One was that we wanted this to be principles-based; second, we wanted it to be administratively simple; and third, we wanted it to be fair for both those who would be signing up for this, i.e., the self-employed, and for other ratepayers. So it was a broader set of considerations.

I'd be happy to elaborate on those principles and administrative ease, if you'd like.

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

We have some questions about the cost in Quebec, considering the fact that maternal and parental...but I'm reasonably confident that my colleagues in the Bloc will ask those questions. But it is a concern that we share.

My bottom-line question to Mr. Vermaeten is, why did it have to be dragged out that there was going to be a cost? The minister has referred to this as a break-even process. If we knew there was going to be a cost of $78 million steady state after 2014, why did it take this committee to get that information?

[Frank Vermaeten]

I think at the first appearance she made here, she made it clear that this would be essentially self-financing for the most part, and she indicated that there may be a small deficit run by this. She also indicated that it actually may break completely even and could even make a little bit of money. She then directed us to provide additional information on that.

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

Well, she didn't want to give us a cost. We've asked her that question. It was only after some questions that we got the cost from you, for which we are appreciative.

Let me ask you this.

One of the real concerns we have is that this is going to be a drain, conceivably, on the EI fund as it exists today, that regular EI payers who are already going to be facing a significant drawdown on the $2 billion that is going to be transferred over may end up having a further drain on the EI fund because of this program. We think the program is good. I asked the minister if she would assure the committee that if there was an overdraft, if you will, on self-employed.... We're not saying don't give EI to the self-employed, but pay that out of general revenue, as you did with the extra five weeks in January.

If the program has a surplus, which it has to for the first few years--by its very nature, people have to pay in for 12 months before they get money out--does that surplus go into the EI fund? Does it come off the $2 billion? How does that work?

[The Chair, Conservative, Dean Allison]

That's all the time we have, but I do want a response.

[Frank Vermaeten]

Yes. The impact of this is going to be fully amalgamated into the EI account. In the initial year, when we're collecting the premiums and not paying out benefits, it's going to go into the EI account, and vice versa if it does indeed run a deficit or break even. Again, only time will tell exactly what that number will be. These are our best-case projections.

You asked a question about why this is simply not financed out of the CRF to the extent that it is not fully funded. I think in the case of the five weeks and a number of the other measures, that was a special stimulus funding that was provided given the economic situation. They were temporary measures. This was designed to be a long-term measure, a permanent measure that was fully integrated into the EI account. Given that, the minister thought it was only appropriate that it's fully integrated with the EI account.

[The Chair, Conservative, Dean Allison]

Thank you very much.

Mr. Lessard, sir, you have seven minutes.

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

Thank you, Mr. Chair.

I want to thank our witnesses for being here today, including Mr. Taillon, of course.

Mr. Taillon, we insisted on your presence here because you advise on matters pertaining to the employment insurance fund. You are the chief actuary. My questions are mainly for you.

You said that you were away during the summer and that two other actuaries did the work. But you fully agreed with the results that came out of that modelling. Those were your exact words. Mr. Vermaeten said that determining the premium rate is a political decision. I am rather shocked by the fact that you had such little involvement in that, and yet, you said you agreed with the result.

We submitted our concerns about the premium rate. We tried to get answers but got little in the way of clarification. I will give you a document, in both languages. Could someone please hand it out. It is from someone who is fully knowledgeable and qualified, since you said they were qualified actuaries. It is an opinion issued by the former chief actuary. I also have it in English. As soon as my colleagues have it in front of them, I will read it. I am not sure whether my colleagues across the table also have it in English.

[Luc Taillon]

I do not have it yet.

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

We will give it to you in both languages.

I will read it very slowly. It will take about a minute and a half, not that long.

It is Mr. Bédard who....

Mr. Taillon, do you know Mr. Bédard?

[Luc Taillon]

Yes.

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

Is it true that he was your boss?

[Luc Taillon]

Yes.

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

Is it true that he was your boss for a period of ten or so years?

[Luc Taillon]

That is true.

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

So he is someone who is qualified.

[Luc Taillon]

He is a very qualified actuary.

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

Like you, I am sure he is.

I am going to read the document. Mr. Bédard is retired, yet he has generously taken the initiative to give us his opinion on the questions we were asking during the discussions that he saw on television. He writes the following:

At the committee meeting on November 19, you asked Minister Finley and Mr. Vermaeten what were the costs of the special benefits included in the employment insurance benefits package. Please find attached the answer to your question. - Maternity/parental leave benefits: 0.88% - Sickness benefits: 0.41% - Compassionate care benefits: 0.0002% (minor) It is worth noting that premium deductions applicable to the Quebec parental leave benefits program must be included in the total cost calculation, as well as the costs related to the premium reductions applicable, Canada-wide, to private wage insurance benefits (in case of sickness) offered by employers.

In bold characters, he then writes:

The premium rate that Quebecers should pay under C-56 for insurance sickness benefits should be 0.41%. A 1.36% premium rate would be excessively high. If, in accordance with C-56, the 1.36% premium rate is charged (as for the employees), then the reduction granted to employers, which is 1.4 times the reduction granted to employees, is not taken into consideration.

At the end of the document, he invites me to contact him if I need further clarification.

On the following page, there is a list of the employment insurance special benefits. He gives a breakdown of the cost of those special benefits, a breakdown that we could not get from the officials in our two most recent meetings with them. We have checked the breakdown and it seems to coincide exactly with our own figures.

Mr. Taillon, could you tell us if this document could serve as a reference for us in our work today, and whether the information is correct?