HUMA Committee Report
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Since the middle of the 1990s, the cumulative balance in the Employment Insurance (EI) Account — commonly referred to as the EI reserve — has steadily increased and today is regarded by most as excessive. For many, the EI reserve, albeit notional, represents a serious financial governance problem within the EI program. Many, like the Auditor General of Canada, believe that the government has collected much more than it needs to finance EI expenditures irrespective of the period of time considered and that, in this context, the government has not observed the intent of the Employment Insurance Act.
The government’s unwillingness to limit the size of the cumulative balance in the EI Account and, more importantly, to reduce it, has caused a great deal of consternation among employers and employees who contribute to EI. The growing importance of this issue was also part of a proposed amendment to the recent Speech from the Throne. The Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities, which broached this subject on several occasions in the 37th Parliament, also recognizes the continued importance of this matter and on 21 October 2004 the Committee agreed unanimously to adopt the following motion:
Pursuant to Standing Order 108 and the Order of Reference contained in the address in reply to the Speech from the Throne, the Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities study the issue of the Employment Insurance Funds so that the money accumulated is only used for the Employment Insurance Program in the interest of workers and taxpayers by forming a subcommittee charged to undertake this study and that the Committee report back to the House of Commons by December 17, 2004.
Our report begins with a discussion of the role of the Canada Employment Insurance Commission. This is followed by a review of EI’s financial governance arrangements, the treatment of the cumulative balance in the Employment Insurance Account and safeguarding EI contributions. The fourth section of the report deals with setting EI premium rates. This is followed by a discussion of other financing-related issues and a number of areas in which program enhancements are needed.