HUMA Committee Report
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Following a prolonged period of surplus contributions by employees and employers to the Employment Insurance (EI) program, a new premium rate-setting process was implemented in June 2005. Although this new process respected the rate-setting principles outlined in the 2003, 2004 and 2005 budgets,1 it continues to generate criticism largely because it sets the premium rate on a one-year, forward-looking basis and there is no mechanism for ensuring that program contributors benefit fully from premium revenues collected in excess of those required to finance the EI program. In the Speech from the Throne on October 16, 2007, the federal government announced its intention to take measures to improve the governance and management of the Employment Insurance Account. These measures are contained in Part 7 of Bill C-50, the Budget Implementation Act, 2008.2 On April 1, 2008 the House of Commons Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities agreed to hold several meetings on “the Government of Canada’s intent to create a Crown Corporation for the purpose of administering the Employment Insurance Fund and that the Committee call such witnesses as deemed necessary to assess the implications of transferring the administration of Employment Insurance from the department of Human Resources and Social Development Canada to a Crown Corporation.”3 The Committee held hearings on this matter between May 1 and May 27, 2008, during which employer and employee representatives along with other EI program stakeholders presented their views on the government’s proposal to establish the Canada Employment Insurance Financing Board, a “reserve” to be managed by the Board and a modified premium rate-setting process, as well as other EI-related matters. Our report begins with a brief overview of the government’s proposal to strengthen the EI premium rate-setting process. This is followed by a discussion of the key concerns raised by witnesses during our hearings, including those regarding the proposed Board’s mandate, independence, representation and cost; the proposed reserve; and the need for greater clarity in some areas of the proposed legislation. [1] These principles were: (1) premium rates should be set transparently; (2) premium rates should be set on the basis of independent expert advice; (3) expected premium revenues should correspond to expected program costs; (4) premium rate setting should mitigate the impact of the business cycle; and (5) premium rates should be relatively stable over time (see: Department of Finance, The Budget Plan 2003, February 18, 2003, p. 183 http://www.fin.gc.ca/budget03/pdf/bp2003e.pdf). [3] House
of Commons, Standing Committee on Human Resources, Social Development |