Mr. Speaker, I am pleased to be able to address the subject of the Employment Insurance Act. I want to thank the member for Manicouagan for giving us an opportunity to debate these important issues.
Bill C-280 proposes some fundamental amendments to the EI act and I think it is important to provide some historical context for the present structure. This historical context I think will illustrate the importance, complexity and challenges presented by the proposals contained in the bill.
Let me begin with the employment insurance account, which the member mentioned. It is important to appreciate why the EI account is reported within the consolidated revenue fund and not, as the bill proposes, separate from the accounts of Canada.
In the early 1980s, the Auditor General of the time expressed concerns about the fragmented reporting of government activities. To rectify the situation, that Auditor General was of the opinion that the EI premiums paid by employers and employees were federal revenues that, given the government's control over EI policy and programs, should be included in the reported Government of Canada revenues.
That was a decision of the Auditor General of the day. I know the member respects the Auditor General. The change in accounting was a response by the government of the day to what the Auditor General said.
On the Auditor General's advice, in 1986 the EI account was fully integrated into the government's general finances. This practice follows appropriate accounting methods consistent with the standards of the Canadian Institute of Chartered Accountants. This reasoning still holds true with today's Auditor General. Ms. Fraser indicated support for the current EI accounting procedure at last November's public accounts committee meeting.
At that meeting Ms. Fraser said:
In our view, this is the correct method of accounting, and it complies with accounting standards for government...Employment insurance is considered to be a government program: government determines the rate of premiums, eligibility criteria and benefits....
She went on to say:
--I have trouble imagining that the employment insurance program could be excluded from the government's summary financial statements, which include all government activities.
Clearly the Auditor General of Canada strongly endorses current accounting procedures for the EI account.
It is important to note that because the EI account has been consolidated with other accounts of Canada in reality it is not an actual account containing cash, but rather it is a bookkeeping tool.
However, this government is committed to transparency. That is why the reply to the Speech from the Throne contained an order of reference to the Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities instructing it to recommend measures which would ensure that all future uses of the employment insurance program would only be for the benefit of workers and not for any other purpose. The committee is seized with that at the present time.
The standing committee tabled its report with its unanimous recommendations last December. We intend to analyze these recommendations carefully and give them serious consideration before responding to the committee. I am confident that the government's response will represent improvements and address some of the concerns raised by the member in Bill C-280.
I would now, however, like to note particular elements contained in the bill that require careful consideration. One of these refers to ensuring that the difference between the assets of the employment insurance account and its liabilities does not exceed $15 billion. The member mentioned this.
Placing a cap on the account is something that would need to be examined carefully to ensure that it meets the test of time and future cyclical needs of the EI program. In other words, unemployment demands vary with the economy. Does this cap which is being mentioned cope with those variations?
This point raises the larger issue of an independent fund as recommended in the bill, requiring the replacement of the federal government's at present unlimited obligation to pay EI benefits with the liability of a separate account. Although the bill recommends that the federal government should still be required to lend the account money if it was unable to meet its obligations, this would mean that the account could not be operated at arm's length from government.
It is clear, therefore, that the changes proposed in the bill would be sufficient to cause EI account activities to be outside of the consolidated revenues.
I would now like to return to the other major proposal of this bill: the establishment of the new 17 member tripartite Canada employment insurance commission.
This proposition raises several potential issues, not the least of which is that an independent commission could have important effects on the capacity of government to set direction on the policy and program elements of the EI program. It is important that the government have the ability to ensure the program responds to the labour market needs of all Canadians.
EI plays a key role in Canada's economy and social safety net by providing temporary income support and helping workers adjust to the labour market. It is crucial that the government retain the ability to serve the labour market needs of Canadians.
In addition, a jump from a commission of 4 members to one of 17 could affect the commission's ability to reach consensus and get issues resolved in an efficient and effective manner. My colleague raised that question earlier. Departing from the commission's present composition of the Deputy Minister and Associate Deputy Minister of HRSD, as well as a commissioner of workers and a commissioner of employers, requires careful analysis and needs to be cost effective.
Finally, the establishment of an ongoing administration of a 17 member commission that would operate and oversee the EI account would be a costly undertaking. Canadian premium payers do not want their money spent on administration. They want it spent on benefits. That said, it is an important issue and one that the government will consider carefully in developing a response.
Returning to the issue of EI premium rate setting, the government is reviewing the rate setting process and will be considering approaches for a new mechanism in responding to the standing committee. It would therefore be premature to make changes to the process prior to the completion of that work.
That said, it is important to note that the government has demonstrated prudent financial management over the EI account. Over the past 11 years, premium rates have steadily gone down while the benefits to Canadians have been steadily enriched since 2000.
Just last December, the Government of Canada announced that the 2005 rate for employees is $1.95 and for employers $2.73 per $100 of insurable earnings. As a result of these rate reductions, employers and employees will pay $10.5 billion less in premiums than they did under the 1994 rate when this government came to power.
Canadians can be proud of their efforts to strengthen the Canadian economy. It is that strength and the number of Canadians working that have allowed us to lower the rate yet again.
While I appreciate the member's contribution to the debate on the EI Act and welcome this opportunity, as I said, to share ideas, for the reasons that I have outlined I believe that it would be premature to move forward with this bill.
