Mr. Speaker, I am pleased to have the opportunity to speak to Bill C-280, which seeks to make changes in Canada's Employment Insurance Act and the Department of Human Resources Development Act.
The bill raises two key issues with respect to our employment insurance system. One is the proposed creation of an independent 17 member tripartite commission that would replace the current 4 member commission. The proposed commission is designed to be at arm's length from the government.
The other change is the treatment of the employment insurance account within the general accounts of the Government of Canada. The bill proposes to keep the account separate and under the control of the new commission.
These are important points. In fact, they are similar to issues that have already been raised by the Standing Committee on Human Resources and Skills Development which has made its own recommendations on these matters.
The government welcomes and takes seriously the standing committee's unanimous recommendations and is considering them very carefully. We pledge to report back to Parliament within the prescribed 150 days.
It is important to note that the government has already moved to address issues raised in the bill. In December 2004, the Government of Canada decreased EI premium rates for 2005. As a result, employee premiums are now down to $1.95 per $100 of earnings and the employer rates are down to $2.73 per $100 of insurable earnings.
This latest decrease represents the 11th consecutive reduction in EI premiums since 1993. This means employers and employees will pay some $10.5 billion less in premiums this year than they would have paid under the 1994 rates and, at the individual level, it means employees who make maximum contributions are paying $485 less this year in annual premiums than if the 1994 rates were still in place. This is good news.
The government has also committed to put in place a new rate setting mechanism for EI premiums. Our recent federal budget has done exactly that. Following public consultations, the government pledged to develop a new permanent rate setting mechanism based on five key principles: first, premium rates should be set transparently; second, changes should be based on independent expert advice; third, expected revenues from premiums should correspond to expected program costs; fourth, rate setting should mitigate the impact on the business cycle; and fifth, premium rates should be relatively stable over time.
The proposed new rate setting mechanism is built on the experience that has already led to steady reductions in EI premium rates and it takes into account the views of stakeholders and the standing committee of the House of Commons.
Under the proposed new mechanism, the EI chief actuary would estimate the break-even rate for the coming year. He would then provide a report of this calculation to the EI Commission. The commission would then make this report public as soon as possible. Stakeholders would be consulted, after which a rate would be set by the commission for the coming year. Fifteen cents would be the extent to which an employee premium rate could change from year to year. Our goal would be to ensure premium rate stability and limit any negative impact on the business cycle. The last thing we would want is to see a spike in premium rates during an economic downturn.
In addition, the legislation sets out that the rates for 2006-07 will not exceed $1.95. This is intended to provide additional premium rate stability through the transition to a new rate setting mechanism.
Finally, the Government of Canada would have the authority to override the rates set by the commission, if it were in the public interest to do so, through an order in council.
Let us look now at the proposal in Bill C-280 to separate the employment insurance account from the general accounts of Canada.
In the 1980s the government of the day, a government of a different political stripe than today, acting on the advice of the then auditor general, moved to consolidate the EI account with the government's general account. This was more than a bookkeeping move. It was based on sound public policy principles.
Consolidating the accounts, means the government bears the full responsibility for the obligations of the program.
It is important to remember that some years ago serious concerns were being raised that the old unemployment insurance account was not sustainable because it was operating at deficit. At that time, Canadians were concerned that the program's obligations were greater than its revenues, but were comforted by knowing that the payments were supported by the Government of Canada.
Today the EI account is on a much more sustainable footing and the principle of the government responsibility for paying benefits under the program remains.
Moving the EI account out of the government's general account and to an independent agency requires careful analysis of its effects on the accountability and the government's obligation to pay benefits.
I would also remind the House that from an accounting perspective, today's Auditor General, like her predecessors, also believes the EI account should be consolidated with the government's general account.
In testimony to the public accounts committee on November 2004, for example, the Auditor General said:
--this is the correct method of accounting and it complies with accounting standards for government as promulgated by the Canadian Institute of Chartered Accountants.
She also said:
--I have trouble imagining that the employment insurance program could be excluded from the government's summary financial statements, which include all government activities.
Separating the EI account from the government's overall accounts, as Bill C-280 proposes, may not be consistent with the opinions of the Auditor General.
Finally, there is the issue of structure of the EI commission that Bill C-280 proposes. The bill would replace the current four person commission that administers the EI account by creating a new 17 member commission. I am not sure how the number 17 was arrived at, but I wonder about the implications of this proposal. For example, would a commission more than four times as big cost more than four times as much to operate? If it did, would these funds not be better used to provide benefits to Canadians?
There would also be the issue of achieving consensus on decisions among such a large number of individuals. The current commission is composed of two senior public officials, along with one person representing employers and one representing employees. It is important to note that only one of the two senior public officials gets a vote, which reinforces the parity issue among the three partners. Having a much larger group requires careful examination in terms of cost and effectiveness.
The government is committed to monitoring and assessing the EI program to ensure that it remains responsive to the Canadian people. The Speech from the Throne reiterated this commitment and the February budget as well as the EI program enhancements announced following the budget acted on it.
Clearly, the government has demonstrated its willingness, indeed its desire, to assist workers to adapt to today's labour market, while keeping EI flexible and responsive to the needs of Canadians.
It is for the reasons I have outlined that I am unable to support the legislation changes proposed in Bill C-280.