Posted June 29, 2009
Letter to the Editor

Canadian Government Reveals Plan to Short-Change Workers and Employers on EI

Biggest scam in Canadian history would recognise only 5% of EI surplus

TORONTO—Late on Thursday June 25, The Honourable Diane Finley, Minister of Human Resources and Skills Development, issued a press release revealing the Harper government’s plan to start generating renewed surpluses from the EI program as early as 2011, when the new Canada Employment Insurance Financing Board (CEIFB) becomes operational. The plan will force employees and employers to pay for most of the increased use of the program during this recession through higher premiums despite a large EI surplus and supposed premium rate freeze .

The government also indicated it plan to recognise only $2.9 of the EI surplus. However, the EI fund surplus held by the Government of Canada was $57 billion ($56,952,606,000) as at March 31, 2008, the most recent figure available according to Public Accounts of Canada for 2007-2008, Vol. I (page 4.16).

According to the former Chief Actuary of the Employment Insurance program, the EI fund surplus could reach approximately $58 billion when the next public accounts report is release in the fall of 2009. Even after the anticipated higher draw on the EI program during the current 2009-2010 fiscal year is accounted for, the EI surplus is estimated to remain close to its current level of $57 billion.

“Just before they formed government, the Conservatives said ‘the slate must not be wiped clean’,” said Winnie Ng, Co-chair of the Good Jobs for All Coalition. “Unemployed Canadians need their EI surplus – all of it – to fund the Employment Insurance they paid for. If only $2.9 billion of the $57 billion EI surplus is transferred to the proposed new EI account, Stephen Harper will be committing the biggest scam in Canadian history. We need our EI surplus to be used to extend EI coverage now and we certainly don’t need Stephen Harper’s plan for higher premiums. The opposition must stand up to Harper and stop this creative book-keeping.”

“The Canadian Institute of Actuaries published its report on Employment Insurance financing in November 2007. We still hold that the government should set up a truly independent, arm’s length financing system for EI, along the lines of the Canada Pension Plan,” said Michel Bédard, principal researcher for the Institute and former Chief Actuary of the Employment Insurance program. “The government should also provide this new body with the $10 to $15 billion reserve fund which we estimate would be needed to stabilise EI premium rates through good and bad times, for example over a 5-7 year cycle. Such an endowment appears to be the least government can do given the $57 billion surplus collected from EI contributors over the years.”

• In a February 2005 report of the House of Commons Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities, then Official Opposition HRSDC critic Peter Van Loan said:

“The Conservative Party believes that the government needs to be held accountable for the cumulative balance in the Employment Insurance account which continues to grow year after year, despite repeated objections by the Auditor General that it violates the Employment Insurance Act.” (page. 71).

“We believe that the slate must not be wiped clean. It is important to all contributors that the government be held accountable. The ‘notional surplus’ (now $46 billion) has been tracked for a reason – that is to recognize what contributors have paid into Employment Insurance. The Conservative Party believes that this surplus is the property of those who have made the contributions to Employment Insurance – the workers and employers of Canada.” (page. 72)

Source: Restoring Financial Governance and Accessibility in the Employment Insurance Program

• In its November 2007 report on EI financing, the Canadian Institute of Actuaries stressed that, “EI premiums and surpluses belong and must eventually revert to insured persons and their employers.”

• The accumulated EI surplus under the Conservative government grew by $6.2 billion before unemployment increased significantly as a result of the recession (it was $50.8 billion as at March 31, 2006) and the EI fund surplus has earned approximately $1.7 billion in interest annually.

• The CEIFB’s mandate is very restrictive, leaving it only to balance the books on a future-looking, pay-as-you-go basis, with no room for stabilising rates in any way.

• According to the Public Accounts of Canada 2008 report that was prepared by the Receiver General for Canada, “The Employment Insurance Act provides for a compulsory contributory employment insurance program applicable to all employees and employers, with few exceptions.”

• The latest EI coverage data for April 2009 that was released by Statistics Canada on June 22, confirm that only 47.6% of unemployed people throughout Canada and 37% of unemployed Ontarians are receiving EI benefits.

• At the end of March, a public opinion poll conducted by Harris-Decima found that the majority of Canadians – throughout all regions of the country and across income brackets – believe that the scope of employment insurance should be expanded.

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