Mr. Speaker, this is a very important proposal to fix the serious problems we have seen for years in the employment insurance system. Employers and workers who have paid EI premiums have seen $48 billion of their hard-earned wages taken by the government and diverted to other spending purposes.
The Liberal government has been doing that for 10 years. It has consistently generated a significant surplus out of the employment insurance system by taxing workers and employers who create those jobs, and taking the money and using it under the pretense of collecting it for employment insurance while using it for other purposes.
We do not believe that is acceptable. In fact, it verges on being less than truthful in the budgeting processes of the government. If it were not for that diversion of surplus funds, members can rest assured that the government would not have balanced the budget as it claims to have done. It is through the pilfering of funds collected from workers and employers that the government has been able to do that.
The present employment insurance system continues to create a situation where employment insurance is not working for workers or employers. It is creating a drag on job creation. It is also creating a situation of overtaxation on workers earning a modest to middle income. EI premiums are capped at a certain level. A form of regressive taxation has taken place here through the theft of those funds from the surplus.
We hear from all kinds of people that it is a problem. The Canadian Federation of Independent Business is concerned about this and has pointed out the impact on job creation. Garth Whyte, executive vice-president of the Canadian Federation of Independent Business, said:
You had a $48-billion surplus in the EI fund. It's disappeared into general revenue. There's no reason EI premiums should be used to build up a new surplus. We would be extremely upset if you do that.
Although we heard from the Parliamentary Secretary to the Minister of Human Resources that we would see a situation now where surpluses will not be collected but, guess what, that was the very situation under the previous legislation.
The premium rate setting mechanism was designed so the government would set a rate that would not exceed the amount necessary to maintain the EI program. Notwithstanding that provision in the law, we continue to see a surplus collected every year; an average of $4.6 billion a year. This overtaxation has gone on for a decade, none of which was contemplated in the legislation. That practice has hurt the economy and job creation, to say nothing of being unfair to ordinary workers.
Another group talked about the impact of this on the economy and on competitiveness, the Institute for Competitiveness and Prosperity, the research arm of Ontario's task force on competitiveness, productivity and economic progress, which is an arm of the provincial Liberal government in Ontario. The study was funded by that government through the Ministry of Economic Development and Trade.
Let me tell the House what those experts said about the problems with the EI system as it is working now.
Our view is that EI is not an insurance program. Rather it is becoming a transfer that places a dysfunctional tax on productive labour and successful businesses. In addition, the excessive surpluses accumulated are a high cost to have provinces and to overall prosperity growth.
They are saying that the way the government runs employment insurance right now is hurting economic prosperity and growth, and taking that surplus is one of the biggest factors. They go on to say:
Our research indicates that the federal surplus surprises are leading to a loss of discipline in fiscal federalism, resulting in potentially unsustainable growth in federal transfers. This lack of discipline is also exacerbating the trend away from investing in future prosperity towards consumption of current prosperity. An important part of this lack of discipline is the growing surpluses in EI, a program that is less and less an insurance program and more and more a transfer program.
That study has some very interesting perspectives on how the transfer has actually discouraged job creation by employers, discouraged people from working and creates the reverse incentives. It creates incentives for people not to keep people employed. It creates incentives for businesses to lay off people, to cause them to lose their jobs. The entire structure has the wrong incentives. That is another discussion for another day.
The focus here has to be on the surpluses and the negative impact of those surpluses and the money that is being taken.
This bill sought to address that. An amendment that I was pleased to propose on behalf of the Conservative Party proposed to return the $46 billion that had been taken from those taxpayers, from the workers and the employers, those job creators. The amendment proposed to restore that money to the fund over a period of 10 years. This would create a genuine balance, money that could be there for a rainy day. It would allow for lower premiums and would encourage more job creation. Workers would have more money to take home at the end of the day. The money that was taken from them over 10 years would be returned to them over a period of 10 years.
We heard from the parliamentary secretary that in view of the Speaker's ruling on the need for a royal prerogative, the government has no intention of providing that royal recommendation. It does not wish to provide that royal recommendation. It is fully at the discretion of the government to do that.
The government could make the decision to be fair, to be equitable and return to workers the hard-earned dollars that they paid into the insurance program but which were taken from the insurance program to be used for other purposes. The government has the ability to do that.
I will make the same case today that we made at committee about why the government should provide that royal recommendation. The notion that the money is in general revenues and that it would be transferred to a separate fund is really a matter of bookkeeping. It has always been recorded as a figure in Canada's books. The money has been a surplus. It has been a recorded amount. That is how we know it is $46 billion. The government is required to record it.
In that sense it is not really new money. It is money that is there. It is money that has been identified. It is money that was collected for a specific purpose. It is money that should be spent for that specific purpose.
Until and unless the government is prepared to do that, then we know that the government is not taking to heart the interests of workers and employers and the government does not really mean what it says when it talks about running the employment insurance system as an insurance system in the future. Only if the government is prepared to do that will it do so.
We are concerned, as I said, that the changes by the government do not do what the government says they will do. Our amendments in the bill that is before the House would have the effect of ensuring that in the future any surpluses that were collected from employment insurance would go into a fund. There would be a fund that would be maintained. The money could never be taken away and spent for other purposes.
That will not be the case here. Much is made of the notion that by restoring the commission all of a sudden there will cease to be surpluses. The fact is there may be some conservativeness built in to the rate premium assumptions every year in the premium setting process which may cause a bit of a surplus. Any time it is a good year there will be a surplus and there is nothing in the government's reforms that will prevent it from once again, as it has for the past decade, raiding that surplus and continuing to divert moneys for other spending purposes.
The government will continue that unfair, unjust and inequitable form of taxation. It is the taxation that hurts the working families in my riding and typical families in our communities all across the country. They are hard-working people. They are honest. They play by the rules. They pay their taxes. They are trying to pay their mortgages. They are trying to get ahead and build a brighter future. They cannot afford to have additional taxes that are set differently every year, specifically for providing them the security of employment insurance and then face the loss of those premiums.
If a private insurance company were to do that sort of thing, it would probably be prosecuted by the government. However, because the government does it and the government sets the rules, it can get away with it. That is what is wrong with employment insurance today. That is what this bill should fix.