Madam Speaker, I move that the second report of the Standing Committee on Public Accounts presented on Tuesday, November 26, be concurred in, and I would like to speak to this.
I am glad to debate this issue because it is something that should have been debated long ago.
To give some background on this motion, I quote from the Public Accounts of Canada 2001, Volume I, at page 1.28, which is Supplementary Information and Observations of the Auditor General on the Financial Statements of the Government of Canada for the Year Ended March 31, 2001. I quote from the second paragraph where the Auditor General states:
The balance in the [Employment Insurance] Account...$36 billion at March 31, 2001 which is well in excess of $15 billion, the maximum amount considered necessary by the Chief Actuary of Human Resources Development Canada. (...) The [Employment Insurance] Commission did not provide an adequate justification for the size and rate of growth of the Account balance. Accordingly, I am unable to conclude that the intent of the Employment Insurance Act has been observed in setting the 2001 premium rates.
I quote again from the Public Accounts of Canada 2001, Supplementary Information and Observations of the Auditor General on the Financial Statements of the Government of Canada for the Year Ended March 31, 2002. I quote from the article on page 1.30, which states:
The balance in the Employment Insurance Account stood at $40 billion on March 31, 2002, well over the $15 billion that the Chief Actuary of Human Resources Development Canada says is the maximum amount needed. Neither the Employment Insurance Commission nor the Government, in setting the EI premium rates for 2001 and 2002, has clarified and disclosed what they consider to be an adequate balance of the Account, the time required to reach that balance, and the factors considered in setting the rates. Accordingly, for the secondconsecutive year I am unable to conclude that the setting of premium rates observed the intent of the Employment Insurance Act.
Continuing on, page 1.31 of the 2001-02 public accounts, the Auditor General states:
Employment Insurance (EI) is a major program administered by the Government of Canada. Since 1986, its revenues, expenditures, assets and liabilities have been consolidated or combined with those of other Government programs in the Government’s financial statements. Consolidation of EI is the proper accounting because EI isa Government program like any other Government program--it is controlled solely by the Government. It is the Government, either directly or through the EI Commission, that sets EI premiums and benefits.
She continues on in the next paragraph and she states:
Due to its size, the EI program has a significant effect on the Government’s overall financial results. The financial statements show that approximately 10% of the Government’s total revenues come from EI premiums; and approximately 11% of the Government’s total program expenditures is for EI benefits and administrative costs. The Government’s surplus in 2001-2002 of $8.9 billion would have been $4 billion lower were it not for EI.
Continuing on page 1.232, the Auditor General also states:
EI premiums, like most other Government revenues, flow into the Government’s bank account; there is no separate bank account for the $40 billion EI surplus at March 31, 2002. In establishing the premium rates for the years 1997 up to and including 2001, the Chief Actuary of Human Resources Development Canada (HRDC) reviewed the accumulated balance in the EI Account and economic prospects for the next few years. Based on that review, he normally suggested to the Commission a range of premium rates for the following year. TheEmployment Insurance Commission then set the rate, with the approval of the Governor in Council on the recommendation of the ministers of Finance and HRDC. The rates set, however, exceeded the maximum in the range suggested by the Chief Actuary for 1998 to 2001.
A table is attached. The table for 1998 the chief actuary suggested a rate of $2.40. The government set the rate at $2.70. In 1999 the chief actuary suggested a rate between $2.00 and $2.50. The government set the rate at $2.55. In the year 2000 the chief actuary suggested a rate between $2.00 and $2.25. The government set the rate at $2.40. In 2001 the chief actuary suggested a rate of $1.75 to $2.10. The government set the rate at $2.25.
In 2002 the chief actuary was removed because the government did not like the suggestions he made. It said that it did not want to hear from him any more, legislated his report out of existence and set the rate at $2.25, which is still above what he had for the previous year.
The government has played around with EI, got a $40 billion surplus and likes that $40 billion surplus because the money is in, as I pointed out, the consolidated revenue fund of the government. It has come to enjoy the benefits of EI to balance the books and then brag to Canadian taxpayers how well it has done. I think I heard the Prime Minister the other day brag about his surpluses for the last six or seven years. Now we know this has been done on the backs of the employers and the employees.
The government was not interested in listening to the Auditor General's audit observations contained in the public accounts, so the Auditor General wrote a report in chapter 11 of her December 2002 report.
At page 38, chapter 11, is a whole section on the employment insurance account. It starts off by saying that no explanation was provided to Parliament for a surplus reaching $40 billion. That is reminiscent of her remarks the other day when she talked about the gun registry. She said that Parliament had been kept in the dark. It is nothing new about Parliament being kept in the dark. She has also said that we have been kept in the dark about the EI.
She goes on to say that neither the commission nor the government clarified or disclosed key factors in setting the employment insurance premium rates. There is a whole chapter of about three pages where she goes into great depth to say that since 1996 the EI insurance account has collected more revenues than the expenditures it has to pay.
The public accounts committee decided it was time that it became involved. On November 26, the Auditor General appeared before the committee and gave us the note from her opening statement. She talked about the Employment Insurance Act and how the EI account had grown by another $4 billion in the last fiscal year, and is still growing. As of March 31 the surplus was $40 billion, which is $25 billion more than the government's chief actuary said is the maximum amount needed. She said:
I question if this was Parliament's intention with respect to the Employment Insurance Act, even after taking into account recent amendments to the Act.
The Auditor General is saying that if Parliament did not intend to have a surplus of this magnitude in the employment insurance account, why do we have it?
Because the Chief Actuary was consistently saying that the government was wrong, the government brought changes to the Employment Insurance Act and suspended that process for two years. The Liberals said that they would decide themselves without the benefit of the Chief Actuary. During that two years they were to hold private and public consultations to see what should be done.
At the public accounts committee, representatives from the Department of Finance said that the public consultations had not yet begun. It did not appear as if the government had any intention of having public hearings on this issue.
Under questioning the civil servant from the Department of Finance admitted that while the government only had two years to figure out what it was going to do, there was nothing to stop it from extending that for another two years and another two years and for as long as the Liberals were in office. Hopefully that will not be another two years but who can tell.
There is no openness and transparency here. We have a government claiming to take the money and balancing the books and bragging about the surplus on the backs of employers and employees.
The public accounts committee Recommendation No. 1 states:
That the government clarify and disclose to Parliament and the public accounts committee all the relevant factors used in setting the Employment Insurance premium rates, particularly with regard to determining the nature of the employment insurance account balance and deciding on its disposition. That the government table the relevant information to Parliament and the committee no later than March 31, 2003.
Since the government will not listen to the Auditor General of Canada, and it will not listen to the representations of the opposition because we have raised this issue many times in the House, I do hope it will listen to a unanimous report of an all party standing committee of the House of Commons, namely the public accounts committee.
Recommendation No. 2 of the public accounts committee report states:
That during the review of the employment insurance premium-setting process, the government take all necessary steps to include consultations with employee and employer groups, along with the Canada Employment Insurance Commission and the Chief Actuary of Human Resources Development Canada and all other relevant stakeholders.
It is a perfectly honest and reasonable request, that the people who pay the tax, the employers and employees, be asked for their opinions, that the chief actuary of HRDC, who always had the job of having input into the process before, be invited for his input as well, plus any other stakeholders and the people who run the Employment Insurance Commission. They should get together in a public process and decide what to do. That is reasonable. I certainly hope that the government is listening.
Recommendation No. 3 states:
That the government prepare a status report on these consultations, summarizing each participant's position, contribution and conclusions to the review of the employment insurance rate-setting process, and table the document to Parliament and the public accounts committee when the review is complete.
We did not put a deadline on that report because the government admitted that it really had not started the process and could not give us any indication as to when it would. Shame on it. In the meantime, employers and employees are paying far too much. The Auditor General says they are paying far too much. Yet there is not a word out of the government which continues to accept the money without even so much as an apology.
Recommendation No. 4 of the report states:
That the Government formally reinstate the requirement that the Chief Actuary of Human Resources Development Canada prepare and produce full and complete actuarial reports for the EI program for 2002 and 2003. That these reports be made available in a timely fashion to all stakeholders and the public on the Human Resources Development Canada website.
That the government consider legislative amendments that would require the Chief Actuary of Human Resources Development Canada to produce on an annual basis actuarial reports on the EI program. That these reports be made available in a timely fashion to all stakeholders and the public on the Human Resources Development Canada website.
We want openness and we want transparency. I fully understand that when we came here in 1993, which is a long time ago, there was a problem with government finances and there were debts and deficits that were spiralling out of control. That is not the case today.
Why is it when we recognize that it is the private sector employers and employees who go to work each and every day who generate the wealth in this country and provide the prosperity that we all enjoy, that we continue to penalize the very segment of society that creates our wealth by taking more money out of their pockets through an employment insurance program? What is required to fund the program?
We now have $40 billion in there. The Auditor General pointed out that every nickel of the premium paid represents about $425 million in income. The excess revenues are approximately $4 billion each and every year.
It is quite conceivable that the rate could be dropped by 50¢, not the 10¢ that the Minister of Finance is proposing. It is quite conceivable that the rate be dropped by 50¢ per $100 of insured income and the fund would maintain a balance. It would not even be reduced. It would just be balanced and that $40 billion would remain there as overtaxation on the people who create the wealth in the country.
Why can the government not look at that? Is it so important for the Prime Minister, the Minister of Finance and the government to tell us how they are wasting a $1 billion on the gun registry? There was the $1 billion boondoggle in HRDC. The Groupaction advertising contracts for $40 million are being thrown around.
Every rule in the book is being broken by the government. It is so much in need of the cash from the EI that it wants to spend it in that way. It is an affront to the employers and employees in Canada. How can the government justify this type of spending and this kind of taxation on the citizens of Canada? It is absolutely an affront.
The EI program is no longer an EI program. It is a payroll tax. We have known for years that payroll taxes kill jobs. Here we are with some anemic growth where we are trying to avoid a recession and we continue to penalize and destroy the competitiveness of the private sector which creates the wealth that has provided the wonderful lifestyle that we have.
The government wants to wring the last nickel out of people and hope that they do not choke to death. The government thinks that there is no end to how much money they can and will pay. There is an end and the Auditor General said it should have ended before now.
I am asking the government through this report, and the public accounts committee is asking the government through its second report to do something about the rate and to explain itself why it is this way. Why does it continue to hide behind the privacy of the order in council decisions and come out with an announcement from on high saying the rate will be $2.10 when it could be $1.60?