Budget 2008 delivered a focused and prudent economic plan for Canada which benefits all Canadians. Bill C-50 was tabled in the House of Commons this spring to implement key measures of the Budget. One of those key measures was to improve the management and governance of the Employment Insurance (EI) program through the creation of the Canada Employment Insurance Financing Board (CEIFB). This Board would be an independent Crown corporation with a legislated structure which ensures that EI premiums are dedicated exclusively to the EI program.
The governance and management of the EI Account has been an issue for several years. For example, in 2005, the Standing Committee on Human Resources, Social Development, and the Status of Persons with Disabilities heard from stakeholders through a study and later reported its findings in “Restoring Financial Governance and Accessibility in the Employment Insurance Program.”
Bill C-50 responds to concerns raised by many stakeholders representing workers and employers, experts, and elected officials regarding how the EI Account should be managed.
The CEIFB will be set up as a Crown corporation working at arm’s length of the Federal Government. It will ensure that EI financing decisions are taken independently and separate from the Government's responsibilities regarding benefit determination and payment.
The proposed CEIFB will be responsible for: i) implementing an improved EI premium rate-setting mechanism that will ensure EI revenues and expenditures break even over time; ii) managing a new bank account, separate from the Government's general revenues, where any excess EI premiums from a given year will be held and invested until they are used to reduce premium rates in subsequent years; and iii) maintaining a $2 billion cash reserve as a contingency fund that will support relative premium rate stability.
Furthermore, the EI premium rate setting mechanism will be improved so that any surplus premiums and income from investments from one year will be taken into account when setting the subsequent year's rate. This measure will ensure that over time premiums collected won't exceed benefits paid.
The CEIFB will be run by seven part-time directors who have the necessary skills and expertise to effectively carry out the organization's mandate. Qualified members will be selected, following recommendations made by a nominating committee which would include the Commissioners for Workers and the Commissioner for Employers and will be appointed through Governor-in-Council. Through the process, business and labour can be assured that the most qualified individuals are selected to manage decision-making on the financing of the EI program.
The Board of Directors will develop a corporate plan and a budget to be reviewed by the Treasury Board and Parliament as part of the Estimates process. The incremental costs of operation for the new activities and responsibilities of the CEIFB are expected to represent only a fraction of the additional returns on investment not previously realized under the old system.
The proposed Canada Employment Insurance Financing Board modernizes an important Canadian institution and ensures independent decision-making with respect to the management of EI funds and ensures that these funds are used to pay for EI benefits. Furthermore, the CEIFB will ensure that Canadians pay the right premium rates; that the EI program has firm financial footing going into the future; and is well-positioned to withstand changing economic conditions. It's our Government's plan to improve the management and governance of the EI program for all Canadians.