Mr. Speaker, you will see as I briefly go through these comments exactly how incisive they are.
I would like to draw to your attention the two reasons why the government believes that Bill C-280 requires a royal recommendation.
My committee colleagues are currently engaged in discussing the advantages of the bill. My objective is simply to clarify the procedural and constitutional issues relating to royal recommendation.
First of all, this bill would create a new employment insurance fund and set out the amounts to be paid into it. Section 71 and subsection 72(a) of the Employment Insurance Act stipulate that the moneys paid into the EI account are part of the Consolidated Revenue Fund.
All of the money currently allocated to EI is virtual. When contributions are made, they become part of general revenue, and the same amount is credited to the EI account.
No amount is actually transferred to an EI account, however, which is why this is a “virtual fund”. When there is an EI expenditure, particularly for a pilot project, it is covered by general revenue and debited from the EI fund.
There is no transfer from the EI account, because there is no money in it. The actual funds are integrated with general revenue. Over time, the EI fund eventually reports some figure which represents the current balance of transactions—annual surplus or, as used to be the case, annual deficit—but this is also a virtual amount.
Section 72 would make it possible for moneys allocated to the Consolidated Revenue Fund under EI to be paid to legal entities other than Her Majesty. I would invite you, Mr. Speaker, to consult section 23 of the Human Resources Development Act.
This represents a potentially significant change in how these amounts are managed and disbursed. Subsection 72(2) requires the amounts in the account to be deposited with a financial institution. Subsection 72(3) provides that the commission is to manage the amounts paid into this account “in the best interests of contributors and beneficiaries” as opposed to the more general public interest. Subsection 72(3) would also require the commission to deposit the amounts with private financial institutions. Section 73 would allow these amounts to be used by Her Majesty subject to a decision of the commission to extend a loan and would be subject to the payment of interest as rates established by the commission. Currently, the commission has no role in such use and the Minister of Finance decides what, if any, interest is to be paid per section 76 of the Employment Insurance Act.
Section 54 of the Constitution Act, 1867, provides:
It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed.
Section 2 of the Financial Administration Act defines the word “appropriation” as meaning “any authority of Parliament to pay money out of the Consolidated Revenue Fund”.
Erskine May, at page 765 in the 22nd edition, specifies that “the following are categories of expenditure provision...which require authorization by Money resolution...” It then provides a list of items which includes at number five: “The authorization of a single payment out of the Consolidated Fund”.
The objective of Bill C-280 is clearly to ensure that the EI account is kept separate from the Consolidated Revenue Fund. The payment to the new account represents “a new and distinct charge” on the public revenue that is not currently provided for under existing legislation. Clearly, the appropriation of a sum of this magnitude, which some members have estimated to be as high as $46 billion, must require a royal recommendation.
The second reason the government believes this bill should be accompanied by a royal recommendation is that the purpose of the original appropriations would be changed by this bill. The Acting Speaker indicated on May 9, 2005, that changing the purposes for which moneys are appropriated requires a royal recommendation:
In this particular case, Bill C-312 contains some provisions which caused the Chair to pause and consider its impact on the financial initiative of the Crown. As most members know, bills which involve new or additional spending for a distinct purpose must be recommended by the Crown. The royal recommendation is also required where a bill alters the appropriation of public revenue “under the circumstances, in the manner and for the purposes set out” in the bill. What this means is 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.
Amendments concerning the Canada Employment Insurance Commission's structure and responsibilities would change the purpose for which money allocated to run the commission would be used. The commission would be assigned new responsibilities for independently managing and investing as much as potentially $46 billion in funds but at least $15 billion, as well as providing independent recommendations for policy and legislative changes to the employment insurance program.
In addition, the purpose of the funds collected and granted under the existing Employment Insurance Act would be altered, since that act clearly did not provide for the investment of these assets as required by subsection 72(3)(b). These are clearly new purposes both for the money granted for the administration and operation of the commission and for the treatment of premiums currently collected under the employment insurance system.
For these reasons, Mr. Speaker, I conclude that this bill requires a royal recommendation and I hope that you will consider these most incisive points very carefully.