Order. I am now prepared to rule on the request from the Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities with respect to the need for a royal recommendation for Bill C-280, an act to amend the Employment Insurance Act (Employment Insurance Account and premium rate setting) and another act in consequence.
On June 6, 2005, the Standing Committee presented its seventh report to the House which sought clarification regarding the provisions of this bill as it related to the royal recommendation. The Parliamentary Secretary to the Government House Leader made a submission on this matter as well as the Parliamentary Secretary to the Minister of Human Resources and Skills Development , and the hon. member for St. John’s South—Mount Pearl. The Chair thanks these members for their submissions.
As hon. members may recall, the Chair made an earlier ruling on this same bill at the commencement of second reading debate on February 8, 2005. At that time the Chair stated that it appeared clause 5 required a royal recommendation. The Chair proceeded in this fashion as a result of its responsibility to manage private members' business under Standing Order 94(1) and its responsibility under Standing Order 79(2).
As I explained in the statement of February 8 on Bill C-280, clause 5 mandated the appointment of 13 new commissioners to the Canada Employment Insurance Commission. The remuneration received by these new members would entail additional public spending and this spending required the bill to have a royal recommendation.
The Chair went on to state that debate on the bill could proceed, despite this impediment, until the moment for putting the question on third reading. If by that time no royal recommendation had been received, then the Chair would decline to put the question on third reading.
Since the beginning of this Parliament, matters relating to the financial initiative of the Crown and private members’ bills have been raised by the Chair at an early stage to provide all members with an opportunity to make submissions. In this way, if the House sends a bill to committee for detailed consideration, members of the committee are forewarned of its shortcomings. A committee can amend such bills to remove the spending provisions, or the sponsor can convince the Crown to provide a royal recommendation.
In the case before us today, during its deliberations on Bill C-280, the members of the standing committee considered amendments to remove the spending requirements of clause 5 in order to permit the bill to proceed to a vote at third reading. While this prospect would have responded to the difficulty signaled in the Chair’s February statement, a quite different question arose during its deliberations and the committee decided to seek clarification from the Chair.
Thus, in his incisive submission to the House, the Parliamentary Secretary to the Government House Leader maintained that clause 2 infringes on the financial initiative of the Crown for two reasons: It creates a new fund outside the Consolidated Revenue Fund, and it alters the purpose of the original legislation.
Sections 71 to 77 of the Employment Insurance Act establish the operation of the employment insurance account as part of the consolidated revenue fund. Amounts are paid out of the consolidated revenue fund and charged to the account chiefly for employment benefits and the costs of administering the act.
The parliamentary secretary describes the current employment insurance account as a “virtual fund” since the actual funds are integrated with the general revenues within the consolidated revenue fund. The EI account actually expresses the balance of employment insurance transactions, that is to say, whether it is in a surplus or deficit position.
The parliamentary secretary claimed that clause 2 of Bill C-280 creates an independent EI account outside the consolidated revenue fund and, in so doing, creates an account that represents a new and distinct charge on the public revenue that is not currently provided for in legislation.
The parliamentary secretary raised another point relating to clause 2. As he explained, the purpose of the current Employment Insurance Act would be changed for it does not assign to the EI Commission the role of independently managing the amounts paid into the account, nor of investing the assets with financial institutions. Thus, he contended, the change to the employment insurance regime proposed by Bill C-280, particularly with reference to the commission, is a significant alteration of the circumstances, manner and purposes of the original legislative authority which was accompanied by a royal recommendation. To alter such provisions in this manner infringes on the financial initiative of the Crown. The parliamentary secretary cited a recent ruling on May 9, 2005 where the Chair explained on page 5780 of Hansard that:
--a royal recommendation is required not only in the case where more money is being appropriated, but also in the case where the authorization to spend for a specific purpose is being significantly altered.
The Chair has had an opportunity to reflect on the complexities of this case. I have carefully reviewed the submissions to determine whether Bill C-280 in clause 2 does anything more than rearrange the method of accounting for public funds. If not, then no royal recommendation is required: how public funds are recorded in the government’s ledgers does not constitute an appropriation for which a royal recommendation would be required. On close examination, it seems to the Chair that clause 2 in Bill C-280 involves more than accounting methodology
The Chair acknowledges that the proposed section 72 in Bill C-280 would credit monies from the Consolidated Revenue Fund to the Commission which would then place it into a new and separate account.
As the parliamentary secretary pointed out, this clause converts the Employment Insurance Account from an account within the Consolidated Revenue Fund to one that is outside the Consolidated Revenue Fund. Right now, monies in the Consolidated Revenue Fund are available for eventual expenditure for purposes of claims under the Employment Insurance Act. With the passage of Bill C-280, monies are expended immediately from the Consolidated Revenue Fund even though these funds are not needed for expenditure under the Employment Insurance Act. In other words, Bill C-280 effects an appropriation by spending or authorizing the spending of public funds by transfer of the funds from the Consolidated Revenue Fund to a separate EI Fund with the result that these monies are no longer available for other appropriations Parliament may make. These funds would no longer be available because, in effect, they have been spent, that is, transferred out of the Consolidated Revenue Fund to a separate and independent account outside the Consolidated Revenue Fund. Such a transfer, in my view, constitutes an appropriation within the meaning of section 54 of the Constitution Act, 1867 and for this reason a royal recommendation is required in respect of clause 2 of the Bill.
In relation to the argument that proposed subsection 72(3) creates new duties for the commission in terms of managing and investing amounts paid into the employment insurance account, the Chair believes that, here again, this would involve new spending for a new purpose and, as such, requires a royal recommendation.
Therefore, in its present form, Bill C-280 infringes on the financial initiative of the Crown for three reasons: first, clause 2 effects an appropriation of public funds by its transfer of these funds from the consolidated revenue fund to an independent employment insurance account established outside the consolidated revenue fund.
Second, clause 2 significantly alters the duties of the EI Commission to enable new or different spending of public funds by the commission for a new purpose namely, the investment of public funds.
Third, as indicated in my ruling of February 8, clause 5 increases the number of commissioners from four to seventeen.
In conclusion, let me say that this is the ninth decision that I have delivered this session relating to private members' bills and the financial initiative of the Crown. In light of the new regime for private members' business, the Chair has had to view very seriously its responsibilities with regard to private members' bills, particularly with regard to the requirement that our procedures respect the financial prerogatives of the Crown.
I want to thank all hon. members who intervened in this situation and I want to encourage all hon. members, private members and the ministry, to raise at the earliest opportunity any concerns they may have with any bills the House is considering. Ideally, such concerns will be raised at the commencement of debate at second reading in keeping with the best traditions of this place so that decisions can be taken with full knowledge of the consequences of those decisions. When bills appear to contain financial provisions that should be recommended by the Crown, it behooves us all to ensure that proper attention is given to them.
I thank the House and the Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities for providing the Chair with this opportunity to make the necessary clarifications with regard to Bill C-280.