Proceedings of the Standing Senate Committee on
National Finance
Issue 1 - Evidence - November 20, 2013 (Evening meeting)
OTTAWA, Wednesday November 20, 2013
The Standing Senate Committee on National Finance is meeting today at 6:46 p.m. to study the subject matter of Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honorable senators, tonight, we will continue our study of the subject matter of Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.
[English]
This is our fourth meeting on the subject matter of Bill C-4. This evening we will begin Part 3, which can be found at page 163 of the bill.
I will remind honourable senators that six other Senate committees have been separately authorized to examine the subject matter of particular elements of Part 3 of Bill C-4, but our committee will ultimately be responsible for doing a clause by clause of the entire bill, so we have the responsibility of understanding the entire bill.
I made some inquiries and it looks like the six other committees that have been authorized will be taking up the invitation, and they are moving on that, so we should anticipate reports from those various committees. That will help us in understanding those sections being taken up by other committees.
The divisions that I propose we deal with tonight are Divisions 1, 6, 12 and 15. We will deal with Divisions 17 and 18 in our two-hour time slot tomorrow afternoon.
We have lots of officials at the table. Mr. Duffy, it is good to have you here. How many times has somebody smiled when they saw that name?
Michael Duffy, Director, Legislative Policy Analysis, Employment Insurance Policy, Employment and Social Development Canada: Good to be back.
The Chair: We're going to deal with Division 1 and Employment Insurance. Who would like to be the spokesperson for Employment Insurance?
Annette Ryan, Director General, Employment Insurance Policy, Employment and Development Canadat: We have three separate items in the legislation. I would propose that my colleague Brian Hickey and I speak to the fishing regulations section but that we proceed in the order of the legislation. So my colleague from Employment and Social Development Canada, Mike Duffy, and François Masse from the Department of Finance will speak to EI premiums, and Mr. Cuthbert from CRA will speak to the hiring credit.
The Chair: You know the manner in which we like to proceed is just to start with the first section, which is clause 125, and work our way through. You explained to us what 125 is related to. We don't have the entire bill that's being amended in front of us, so you sometimes have to give us a bit of context. If you could do that so that we understand, once we've done one clause or a grouping of clauses, if they appropriately can best be dealt with together, I will see if honourable senators need any explanation and then well go on to the next one.
Ms. Ryan: We are all set for that, sir.
The Chair: Okay.
[Translation]
Who would like to begin? Mr. Duffy?
[English]
Mr. Duffy: Clause 125 deals with maximum insurable earnings, a component of premium rate-setting. Basically it starts the premium rate-setting process one month later. The process being put into this legislation for setting the premium rate is, to some extent, streamlined. It saves about a month in terms of processing time so we can use more up-to-date data. The process starts a month later but ends at the same time on September 14. That's what clause 125 does. There will be several clauses that make similar changes.
Clause 126 amends subsection 66(1) of the act to provide for the premium rate to be set annually on a seven-year break-even basis by the commission beginning in 2017.
The Chair: I read this over a little bit earlier, and my recollection is that a few years ago there was a commission or an agency created that would fix the rates. Then their job was delayed and the government fixed the rate for a couple of years because of the downturn in the economy. What's the process that's currently in place for fixing the assessment rate?
Mr. Duffy: This legislation fixes the rate for 2015 and 2016 at $1.88. For 2017 and beyond, the government will be putting in place a new seven-year mechanism that sets the rate so that at the end of seven years, looking forward, the EI Operating Account would break even.
The Chair: For 2013 and 2014, is that fixed now?
Mr. Duffy: Yes, it is set on a calendar year basis, so 2014 was announced by the minister on September 9, and effectively it was set at $1.88.
The Chair: The legislation that exists now allowed the minister to fix it by order-in-council?
Mr. Duffy: Effectively, yes. It was set by order-in-council. There were some complications there.
The Chair: Just generally because that's not the legislation that's being changed, but I'm trying to put this all —
Mr. Duffy: In context.
The Chair: In context. My recollection is imperfect on this, but there was a commitment — and perhaps it was legislation — that we were to top up that account by a certain amount back to a couple of years ago.
Mr. Duffy: In 2009, legislation was passed to create the CEIFB, the Canadian Employment Insurance Financing Board. The idea was that the board would set the rate and manage any surplus funds coming out of the EI program. Effectively, this legislation repeals the board. The board is being dissolved. In the last budget, the government announced that it would review the rate-setting process and the operations of the board. In this legislation it was decided to dissolve the board and have the EI Commission take over the rate-setting responsibility.
The Chair: Any questions flowing from that?
Senator Callbeck: The Canada Employment Insurance Financing Board, as you said, was to set the premiums, invest the surplus, and then there was a $2 billion contingency fund. Is that still there for this new Employment Insurance Commission?
Mr. Duffy: No, the $2 billion contingency fund was never put in place. It was in the legislation but it never came into force. When the recession came in, the account was in significant deficit and it didn't make sense. The purpose of the $2 billion was to create a sort of a backup fund, and so that part of that legislation never came into force. Instead the government backed up the fund through the CRF. All expenditures, EI benefits are paid out of the EI Operating Account, which is part of the CRF, and my Finance colleague may want to jump in at some point here.
If someone qualifies for benefits, they get their benefits. It is a statutory program. The balance in the account is not at issue. The account in the recession went to about $10 billion in deficit.
François Masse, Chief, Labour, Market, Employment and Learning, Department of Finance Canada: At the end of the day, the EI Operating Account is an accounting mechanism to keep track of the balance of what was paid for EI benefits and what was received as EI premiums. Starting in 2009, the government decided to keep the cumulative balance, to keep it on a break-even basis, which brings the balance to zero. What was announced recently is that the new seven-year mechanism would bring that balance to zero for a seven-year horizon. That's the new mechanism that is replacing the mechanism that the CEIFB was intended to run, including the requirement for the $2 billion fund.
Now, with the new seven-year mechanism there is no requirement for $2 billion cushion.
Senator Callbeck: So in 2009 we set up the Canada Employment Insurance Financing Board. Under this legislation we're getting rid of it and we're setting up the Canada Employment Insurance Commission, and the only difference in the functions is that $2 billion isn't going to be there. Is that it?
Mr. Duffy: I would say that's the most apparent difference. I think the way to look at it is the mechanism for setting the rate is a set of parameters. What changed from the time the board was established is that the parliamentary secretaries from our department and the Department of Finance consulted employers and labour groups across Canada, and based on that consultation, the emphasis on rate-setting moved to stability. What the parliamentary secretaries heard was that employers and workers put a high premium on having stable, predictable rates, so there are a couple of things that changed from the board's time. One is that the $2 billion surplus is gone, like you said, but the maximum increase from one year to the next was also changed, from 15 cents to 5 cents.
Also, the new rate-setting mechanism that's been put in place is designed to smooth out rates over the business cycle — looking forward seven years — so that if there is a shock, it would take seven years for it to dissipate through the system in terms of higher or lower premium rates. That mechanism in itself goes a long way to keeping the balance in the account at zero.
So there's a shift from keeping a surplus in the account that is the shock absorber and more towards premium rate and having the CRF acting as the shock absorber for economic shocks.
Senator Callbeck: So why couldn't the board that exists now do that?
Mr. Duffy: The board could do that.
Like I said in the BIA 2012, the government announced it was going to review the operations of the board with a view to ensuring that premium rate-setting is done as efficiently as possible. What came out of that review was a decision, first, to suspend the board during the recovery period, and in this legislation to permanently dissolve the board.
So in a sense, like I mentioned for clause 125, the process is a little bit streamlined. The step of going through the board is not there. The commission, basically, is stepping in as that role for representing both the business side and the labour side in the process.
Ms. Ryan: If I could add, senator, the commission is not a new board that's being set up; it's been running in parallel for some time.
The Chair: What was the role of the commission?
Mr. Duffy: The commission has been an employer/employee partnership since the beginning of the EI program in 1940. It represents almost a 75-year partnership in terms of governance of the EI program. Their role includes making regulations, and they oversee many of the operations of the EI administration, including appointees to the new Social Security Tribunal.
It was only when the board was created that their role in terms of setting the premium rate was set aside; it was given to the board. Prior to the creation of the board, the commission had been responsible for setting the rate. The interesting thing about the commission setting the rate, especially in this legislation, is that they actually set the rate; they don't make a recommendation of what the rate will be. They set the rate.
[Translation]
Senator Bellemare: I am a bit surprised to see that the office created in 2009 is being eliminated. I know that the Employment Insurance Commission has existed for a very long time. But the representatives of this commission versus those of the other office, the employers and the employees, do not participate in the same way, is that correct?
At the Employment Insurance Commission, there is a representative of the employer and an employee representative, who are both full-time employees of the commission. But there is no office made up of labour and management representatives who meet to discuss the issue of employment insurance. Is it only those two people and the head actuary who advise the government?
Mr. Duffy: The structure is really different. I will try my best in French, but at some point, I will have to switch into English. Indeed, the commission represents the workers and the employers, but as far as the office is concerned, it was mainly made up of people who had experience on the financial side of things. Because the main role was to manage the surplus.
So they had less experience with the workers and employers, and more expertise in investment.
Senator Bellemare: If I understand correctly, it is the commission that will set the rate?
Mr. Duffy: Yes.
Senator Bellemare: How would you describe the experience of the commission — which was created in 1940 and which will set the rate — relative to other employment insurance experiences internationally? As it is an insurance program, will the people who pay into it be able to have their voices heard?
Can the people who pay premiums express themselves through the Employment Insurance Commission? Are they able to express their opinions on best practices concerning employment insurance?
In reality, it is a lot of money. Employment insurance represents more than $18 billion in premiums. It is often the people on the labour market, the employers and employees, who are best able to say how the money should be invested.
How do these people make their voices heard, if not through a government commission?
Mr. Duffy: The commission has three members: a representative from our department, an employee representative, and a representative of the employer.
Senator Bellemare: And the fourth person is?
Mr. Duffy: Our deputy minister. Then the deputy minister has an assistant deputy minister as the fourth member. So the person who speaks for the employers and the employees is their representative.
There are more responsibilities apart from funding. They are responsible for making the regulations. It is a very important role. Before implementing a change to the regulations, they are required to sign, and in fact they are the ones who make the regulations.
Senator Bellemare: So they were the ones who made the regulations about temporary workers?
Mr. Duffy: Any change that concerns the EI regulations.
Senator Bellemare: But not those parameters?
Ms. Ryan: If I can clarify, the provisions concerning temporary foreign workers are outside the scope of the EI program. So for that measure, it was not signed.
Senator Bellemare: I was talking about seasonal workers.
Ms. Ryan: Excuse me. For all regulations, yes, they are signed.
[English]
It is part of the provisions, and the act gives considerable power to the commission to make decisions, which in practice are often delegated to different parts of the department. But their role is deeply embedded in different parts of the act.
[Translation]
Senator Bellemare: There has been a lot of criticism among employers and unions about employment insurance reforms, and I was wondering how these people can ensure that their voices are heard? Are the employer representatives appointed by the employers or by the government on the recommendation of employers? How is the appointment of employer and employee representatives made?
[English]
Mr. Duffy: It is an order-in-council appointment. They're appointed in consultation with major labour representatives and major employer representatives.
[Translation]
Senator Bellemare: But it is informal.
Mr. Duffy: It is always a bit informal, but especially in consultation with those who are supposed to represent them. No one wants to end up in a situation where a commissioner is not perceived as a true representative.
Senator Bellemare: Having worked with employers, we know that often the interests of large associations can be different from those of small ones. It depends on the size of the company. I am really trying to see how the employers and unions could express their point of view. You have explained it to me well.
[English]
Senator Buth: Can you tell me how long EI rates have been frozen?
Mr. Duffy: They're being frozen in the legislation for three years. So in 2014, the rate would be the same as it was in 2013, and the legislation freezes it for another two years, until 2015-16.
Senator Buth: What's the estimated financial impact of this?
Mr. Duffy: For 2014, it was over 600 million.
Senator Buth: In 2014 it's 600 million?
Mr. Masse: It is 660 million. No, the 660 million is the impact of the difference between the rate that was previously expected to be coming into force — $1.93 — as opposed to the rate that was fixed by the government — $1.88. The way the current calculations work is that the EI Operating Account is to be brought into balance on an annual basis. Because the EI Operating Account is currently in a deficit, that calculation would have resulted in a 5 cent increase to the premium rate.
Now, what the government announced is that the EI Operating Account is currently on track to come back to balance. Over the medium term there's no need to see that short-term increase in the EI premiums, so they froze in the rate at $1.88.
The difference between the $1.93 and $1.88 adds up to a 660 million difference when we consider both the impact on the employers and the employees. And that number is coming from the calculations of the actuary — of the EI.
Senator Buth: So that is money that essentially is left in the pockets of the employers and employees?
Mr. Masse: That is correct.
Senator Buth: I want to come back to the $2 billion surplus, because I think the way it was worded, it is like the $2 billion surplus is gone. I wrote that down and thought, ``Oh, I just want to clarify that'' — that there was an expectation that there would be a $2-billion surplus. Can you comment further on the expectation of that and what has happened?
Mr. Masse: There was an expectation that the $2 billion surplus would be necessary to the role of the CEIFB and to manage the EI Operating Account so that it would keep in balance.
What has happened, though, is that in 2009, when that was set in place, the recession hit. Because of economic circumstances, decisions were made to keep the rate lower than would have been needed to keep the account in balance.
There was no surplus at this point; actually, the account was thrown into deficit very rapidly. So there was no surplus that was built up. Then the government announced they would look at the role of the CEIFB and whether they would maintain that mechanism once the account was brought back into balance. What is being announced in the current budget implementation act is that a decision was made to strike down the CEIFB and instead replace it with a new rate-setting mechanism that would bring the seven-year mechanism into force starting in 2017.
Senator Buth: I recall from last year, because I was on this committee, that I think the sentence is something like seven years — I'm not sure. We did talk about the fact that the board was set aside, essentially, and that there was a review going on. Did I hear you correctly that the decision to dissolve that board was made in consultation with industry, employers and employees about what the focus of EI should be and that it should be based on rate setting right now?
Mr. Duffy: The consultations were held in a period when the EI Operating Account had a significant deficit. They were not focused so much on the role of the board but more on the broad expectations from workers and employers about how should rates be set and what emphasis do we put on stability for example.
Like I said, the government heard loud and clear that stability was a really important thing and right away introduced temporary measures to reduce the 15 cent year-over-year maximum change to 5 cents during the recession.
So when you asked how long it had been frozen, the rate has increased in the last couple of years by that maximum of 5 cents, and this year, for 2014, the actuary report recommended that it increase by 5 cents. The government effectively overruled that.
Senator Buth: So there's been quite a bit of consultation back and forth, clearly, in reaction to us entering a recession in terms of what needed to be done with EI and what the rates needed to be or the focus of the program would be.
Mr. Duffy: The key component that came out of the consultations is the seven-year rate-setting mechanism.
Senator Buth: Right.
Mr. Duffy: That could be seen as the key mechanism for insurance stability over the long run. Seven years is seen as an effective period to manage the account over the business cycle.
Senator Buth: And can you tell me who is on the commission?
Mr. Duffy: Mary-Lou Donnelly is the representative for employees, and Judith Andrew is the representative for employers.
Senator Buth: What are their backgrounds?
Ms. Ryan: Mary-Lou Donnelly comes from a union background and, by way of region, spent a large part of her career in Nova Scotia. Ms. Andrew spent many years with the Canadian Federation of Independent Business.
If I could add to Senator Bellemare's question, they do consult quite actively with members. In fact, today Ms. Andrew chaired a quite wide-ranging meeting of employer groups, for example. So this is a very active consultation role that they undertake as well.
Senator Bellemare: They do that.
Ms. Ryan: Absolutely.
The Chair: That was helpful.
[Translation]
Senator Chaput: I have a very short question. Mr. Duffy, I believe you said that it is the commission which sets the premium rate?
Mr. Duffy: Yes.
Senator Chaput: In Bill C-4, it is also said:
On the joint recommendation of the Minister and the Minister of Finance, the Governor in Council may.... if he considers it to be in the public interest, substitute a premium rate.... that is different from the one set by the Commission....
Mr. Duffy: Is that section 31?
Senator Chaput: It is section 66.32(1). It also says that if the commission has not yet set the premium rate for the following year, it can also do so.
Mr. Duffy: It is the section that has always been there, it is not new. Even when the legislation about the board was in place, that section was there.
Indeed, we are talking about $20 billion, if something out of the ordinary happens.
[English]
If something out of the ordinary happens, the government can't take a chance on earning that $20 billion in revenue.
[Translation]
Senator Chaput: So it is not new.
Mr. Duffy: No. It has been there for a long time.
[English]
Senator Callbeck: You mentioned the consultations and how the rates should be set. I'm wondering how extensive they were, when were they held and were the provinces consulted?
Mr. Duffy: They were held in I think the fall of 2011 — and I will just double check — yes, the fall of 2011, over several months. I actually attended quite a few of them with the parliamentary secretaries. They were held in — I can't remember every city — Western Canada; Alberta and Nova Scotia; Quebec City; and I think Toronto. There were about a half a dozen different consultations involving academics, labour and employer representatives.
In terms of the provinces, to the extent that the government consulted the provinces, that wasn't part of those public consultations. There wasn't a formal sort of process for consulting with the provinces, but if there was, I wasn't aware of it.
The Chair: This is putting this in perspective. It is very helpful, but I still have a bit of misunderstanding with respect to what was being planned. With this legislation, we're going back, in effect, to an account, but there's no money in this; there's not a pot of separate money for insurance. It is all coming out of the Consolidated Revenue Fund, up and down; is that correct?
Mr. Masse: That's correct. Ultimately, the government is responsible for making sure that the premiums are paid. Whatever happens, it is going to come out of the central revenue fund.
The Chair: Exactly.
Mr. Masse: There's no change to that. The EI Operating Account is simply an accounting transaction where we're isolating the debits and the credits related to EI premiums so that we can keep track. The clear objective is to make sure that over a period of time the account is kept at a break-even point to ensure that the premiums are no higher than they need to be to pay for the benefits.
The Chair: If we go back from 2009 until now, there was a plan to keep a separate account.
Mr. Masse: That's correct, and it has been kept.
The Chair: And money that would be separate from the Consolidated Revenue Fund?
Mr. Masse: No, that would be different.
The Chair: It was still in the Consolidated Revenue Fund?
Mr. Masse: Yes, sir.
The Chair: The $2 billion that was planned as a cushion for the downturn in the economy, there would be a surplus. Where was that surplus kept or intended to be kept?
Mr. Masse: It never materialized.
Mr. Duffy: The idea behind the $2 billion was to absorb smaller moderate shocks to the EI system. EI system benefits are very sensitive to changes in the economy; 1 per cent increase in the unemployment rate can have a shock of about $1 billion or $2 billion in spending. So it was part of the macroeconomic stabilization role of the economy. When the recession hit, the account went roughly $10 billion in deficit.
I guess the $2 billion notion you could see as wanting in that type of situation. It would not have been enough money to get through the recession.
The Chair: That's right.
Mr. Duffy: Yes. So when the recession hit, the government decided not to bring into force that $2 billion surplus, or that cushion, and instead absorbed the shock of the recession and, in fact, contributed another $2.8 billion to the EI fund over that period that was beyond what we collected in premiums. The lesson learned was that the real backstop for the EI benefits is the government's CRF. Having that $2 billion fund to manage small variations was redundant.
The Chair: Did we not vote either in an estimate or in some legislation to transfer money to a separate account out of the Consolidated Revenue Fund so that the employment insurance investment group would have these funds to operate with?
Mr. Duffy: I'm not 100 per cent sure about what vote you are referring to, but there have been funds that passed. There was $2.8 billion during the recession that the government put into the program to cover special measures put in place to extend benefits to those whose benefits were running out.
The Chair: That's what it was, yes, because that was considered to be extraordinary and maybe a little bit out of the normal employment insurance scheme, just to help during that period, so there had to be an injection of extra funds to cover that.
Mr. Duffy: That's right.
The Chair: I recall that now. We're putting that in the group that would have invested some money, any surplus — we're putting that away?
Mr. Duffy: Effectively, I think the government learned from the experience of the recession and that $2 billion is not seen as needed.
The Chair: Understood. I think this questioning will help us with some of the other points.
Is there any other follow-up?
[Translation]
Senator Bellemare: To summarize, you are saying that the government approach would be to balance the employment insurance fund over the year and to set the premium rate based on that?
Mr. Duffy: Yes.
Senator Bellemare: So there would no longer be a surplus. Because we know that in the past there have been gigantic surpluses in the employment insurance fund. And now that there is no longer a surplus, is the premium rate set based on the real needs of the labour market?
Mr. Duffy: I would like to add that if there were a surplus in the account, there would be pressure to reduce the premium rate. In regard to setting the rate, a variable will automatically be entered into the mathematical formula, exerting a downward pressure on the premium rate.
Senator Bellemare: But the benefits would remain the same, that is to say the promises?
Mr. Duffy: Yes.
Senator Bellemare: All right.
[English]
Senator Mockler: Knowing that small business is the backbone of our economy, can you give us an idea about what we call the hiring credit for small business and what impact it will have?
Mr. Duffy: I will refer to my colleague.
Ms. Ryan: That's our next item, Mr. Chair, if you want to move to that.
The Chair: Do you want to hold the question until they give us an explanation and then we will move into it?
Senator Mockler: Absolutely.
Senator Callbeck: I have one question.
The Chair: Still on the points we were dealing with?
Senator Callbeck: Yes.
On the seven years, when the revenue that's taken in has to equal the payments that are going out, when do we start on that? For the next two years, the payments are frozen, right? Then in 2016 to 2017, they can be reduced, I'm reading here, by .05. So when are we starting on this seven years?
Mr. Masse: Actually, as of 2017, the new seven-year mechanism is going to kick into place.
One interesting point, you referred to the 5 cent limit to the change. When the new seven-year mechanism is going to kick in gear, that 5 cent limit is going to be waived. So if the rate has to decrease, it can decrease by more than 5 cents at that point. From then on, the annual variation is going to be limited to no more than 5 cents.
The Chair: Shall we go on, then, in the presentation? We're at clause 126, page 164.
Mr. Duffy: We have talked about everything probably all the way to 137.
The Chair: Is there nothing else you want to tell us about in those, clauses 128, 129 and 130?
Mr. Duffy: I could run through a description of them but, like I said, we have touched on just about everything.
Senator Buth: Clause 130 states, ``The Commission shall, on or before December 14, make available to the public the report. . . .'' What has changed in that clause? It appears like the date might have changed and then ``available to the public.''
Mr. Duffy: That's 130?
Senator Buth: Yes, 130, on page 167.
Mr. Duffy: What changed is the requirement to report to the public. That's been added.
Senator Buth: And the date?
Mr. Duffy: No, that has not changed. September 14 did not change.
Senator Buth: It's underlined.
Mr. Duffy: I'll just double-check.
Senator Buth: This is essentially going towards increased transparency in terms of making the report available to the public.
Mr. Duffy: The date hasn't changed. I think it's underlined because of a drafting convention, but the date is always — like in the previous legislation, it was September 14 that the rate is supposed to be established.
The Chair: The question was: Is there anything in these intervening sections? Quite a few pages we're flipping over, but if there is no new initiative there, and they're incidental to what we've already discussed, then we'll go on to the next point. I would hate to go back to our office and read something we don't understand and say, ``Oh!''
Mr. Duffy: I'm just double-checking my notes to make sure we're thorough.
The Chair: I would like you to do that. Thank you. We've probably got you off your game plan a little bit with these questions.
Ms. Ryan: I wonder, Mr. Chair, if it would be helpful to provide the clause-by-clause or go through it now.
The Chair: You could go through it quickly.
Mr. Duffy: I can do that.
Like I said, clause 125 amends section 4 of the EI Act by changing the date. It's a date-change section for the maximum insurable earnings. It's advancing — delaying by one month the start of the rate-setting process.
Clause 126 amends subsection 66(1) of EI Act to provide for the premium rate to be set annually by the seven-year rate-setting mechanism, which should probably be tested on.
Subclause 126(2) sets the premium rate for 2015 and 2016 at $1.88 per $100 of insurable earnings. It also provides that despite the fact the premium rate was set for those years, the Minister of Human Resources and Skills Development — styled the Minister of Employment and Social Development — and the Minister of Finance, the commission, and the actuary continue to have responsibilities under the act for the operation of the rate-setting regime in place for those years. That deals primarily with reporting and gathering of information for rate-setting.
Subclause 126(3) repeals 66(1.1) and (1.2) of the act as enacted in this act. That's a clean-up, because we're changing regimes. In this legislation, we're going to be changing from the rates being fixed in the legislation to the new seven- year rate mechanism. So as we go from one regime to the next, there is an automatic clean-up of the old regime. Those sections are to try to make the legislation more transparent.
Subclause 126(4) deals with subsection 66(2) of the act, specifying that the commission is to set the premium rate based on certain factors. Subsection 66(2) of the act sets out the factors to be taken into account in setting the premium rate. These refer primarily to the information provided by the Minister of Finance, which is mostly economic data, and the Minister of ESD, which is mostly expenditure data, to feed into the actuary report which in turn would be reviewed by the commission.
Subclause 126(5) of Bill C-4 amends subsection 66(2) of the act to add a new paragraph which specifies that the actuary report is a factor and to be taken into consideration by the commission in setting the premium rate.
Subclause 126(6) amends paragraph 66(2)(e) of the EI Act by changing the date of any announcement made by the Minister of ESD. That must be taken into account in setting the premium rate from July 31 to July 22. Again, this is all part of the accelerated process, streamlined process.
Subclause 126(7) amends paragraph 66(2)(f) of the EI act to provide that the commission — it used to be the Governor-in-Council — may consider other relevant information in addition to the factors listed in subsection 66(2) of the EI Act, which are to be taken into account in setting the EI premium rate. That's a clause that's been there for a long time. It's just another fail-safe.
Subclause 126(8) creates new subsection 66(7.1) of the EI Act to allow the premium rate to decrease by more than five-one hundredths of 1 per cent in 2007, the first year for which the premium rate is to be set according to the seven- year break-even. So we have a 5 per cent limit on increases or decreases, but there's one time in 2017 when the rate can drop by more. In fact, it's forecast to drop by quite a bit more. In the economic update that the Minister of Finance tabled, it's expected to drop to $1.47 in 2017.
The next clause is another clean-up clause going from one system to the other. Subclause 126(10) amends subsection 66(9) of the act to specify that the commission must set the premium rate by September 14. All that's changing there is what used to say ``GIC.''
Clause 127 deals with the information provided by the Minister of ESD. The first one, subclause 127(1), is a date change from June 22 to July 22, for the same reason I mentioned earlier.
Subclause 127(2) repeals subsection 66.1(2) of the EI Act that allows the Minister of ESD to send an update by July 12. That section has been repealed. Like I said, we're streamlining the process. Under the old regime it took months to set the rate, for all the math and information to be gathered. In the old regime, just before the actuary's report was finished, if there is an update of information, the Ministers of Finance or ESD could provide an update. That has been done away with because the process can be a little shorter. That amendment shows up a couple of times, repealing the need for any update.
Subclause 127(3) replaces section 66.1 of EI Act, which sets out the information on the expenditures that the Minister of ESD is to provide to both the actuary and the commission by July 22. It also specifies that seven years of forecast information is to be provided by the minister to allow the rate to be set on the seven-year break-even basis. This clause also authorizes the Governor-in-Council to make regulations prescribing any additional information to be provided by the Minister of ESD.
This is going to be the first time that we look at a seven-year forecast going forward for setting the premium rates, so this idea of adding a regulatory power is again a bit of a fail-safe in case, when our department or the Department of Finance is making forecasts, additional information is needed and is specified in the legislation right now.
Clause 128 is information to be provided by the Minister of Finance.
Subclause 128(1) amends subsection 66.2(1) of the act by changing the date by which the Finance Minister is to provide information for purposes of the rate-setting. Again, it's just that rate change from June 22 to July 22.
Subclause (2) repeals section 66.2(2) of the EI Act, which specifies that the information provided to the actuary must also be provided to the Governor-in-Council. It also amends subsection 66.2(3) to remove the reference to subsection 66.2(2).
This is a confusing section because there are so many references. Basically what it does is, first of all, we're no longer referring to the Governor-in-Council; the commission will be setting the rate. Secondly, we're no longer referring to that update, so that's what that section really does. It's a clean-up related to that update and the fact that the commission is going to be setting the rate.
Subclause 128(3) amends section 66.2 of the EI Act, which provides that the Minister of Finance is to provide information related to economic forecast, as well as credits and charges to the operating account, to both the actuary and the commission, by July 22. It's another date change clause.
That subsection also authorizes the Governor-in-Council to make regulations prescribing any additional information to be provided by the Minister of Finance and repeals subsection 66.2(3) as enacted by subclause 128(2). Again, that's the update and some clean-up.
Subclause 128(9) of Bill C-4 amends section 66.3 of the EI Act by changing the date by which the actuary is to prepare the actuarial forecast for purposes of rate-setting and a report to be provided by the commission from July 22 to August 22. Again, it's part of the streamlining of the process.
Clause 130 deals with the actuary report and the commission summary report. It amends section 66.31 of the EI Act by clarifying the reporting responsibility of the commission and the Minister of ESD in respect of the 2015-16 premium rates. Even though the legislation sets the rates for 2015-16, the reports will still be prepared, published and tabled in Parliament.
Clause 131 amends sections 66.31 to 67 of the act to provide the premium rate-setting by the commission beginning with the 2017 premium rate. Again, we talked about that. More specifically, this clause provides for the reporting responsibilities of the actuary, the commission and the minister, including publication of the rate in the Canada Gazette.
This clause also authorizes the Governor-in-Council to substitute a premium rate for that rate set by the commission when considered to be in the public interest — we talked about that clause — or if the commission does not set the rate by September 14. Further, there is a little item added related to rounding the rates.
Clause 132 repeals section 66.5 of the EI Act in respect of years 15 and 16. Section 66.5 requires the premium rate to be published in the Canada Gazette. We won't be publishing because this legislation is going to be published in the Canada Gazette, and to publish it every year would be redundant. This is a clause that's more related to 2017 and beyond, where the rates will be published in the Canada Gazette.
Clause 133 amends section 67 of the EI Act by deleting a reference to the previous version of section 66.3, which is no longer in force and is not relevant. It's more clean-up.
Clause 134 amends section 77.1 of the EI Act by changing the date by which the Minister of Finance is required to forecast and estimate the amount of revenues to be credited and the amount of expenditures to be charged to the EI Operating Account from June 22 to July 22.
The next clause deals with the hiring credit, so I'll let my colleague talk about that.
Senator Buth: You talk about streamlining and then, as you've gone through this, the dates have changed in quite a few of the clauses from June 22 to July 22. It doesn't sound like a streamlining; it sounds like it's being delayed another month. Could you explain that?
Mr. Duffy: That's actually an easy question. The date that the rate is to be announced, September 14, does not change, but the date that we start the rate-setting process, gathering the information from our colleagues in Finance and from the people that monitor the expenditures for the EI program, all that can start a month later. So it's streamlining in the sense that there are fewer steps in the process.
Senator Buth: You're using the more current information because of that?
Mr. Duffy: Yes. We crunch it as much as we can so that we use the latest available economic data.
The Chair: Mr. Cuthbert, you have the floor.
Ray Cuthbert, Director, CPP/EI Rulings Division, Legislative Policy Directorate, Canada Revenue Agency: Thank you. I'll talk about clause 135, the hiring credit for small business. It is essentially a continuation of the prior year credits, but it is an expansion at the same time. The expansion is with respect to the base year employer EI premium ceiling. It's gone from $10,000 to $15,000.
How does it work? Employers who have had employer EI premiums in 2012 of $15,000 or less and who have an increase in 2013 are entitled to a credit. The credit is calculated as the difference between those two years. It must be greater than $2 and cannot exceed $1,000.
It's calculated automatically when the employer files their 2013 T4 information return. When the CRA processes that, it's calculated automatically and it's credited to their account. The only other thing I can say about that clause is there is no interest payable on these amounts.
The Chair: This is an increase from last year? Was it last year that it was $10,000?
Mr. Cuthbert: That's correct, and the prior year as well.
Senator Mockler: I have a question with respect to clause 135. Knowing that small businesses are the backbone of our economy, and we have seen measures taken by the government to that effect, what impact will that have and how many of those small businesses have been impacted? When I say ``impact,'' who took advantage of the credit across Canada? I was going to ask province by province, but I'll be fair and ask across Canada.
Mr. Cuthbert: I can give you statistics for the two prior measures.
Senator Mockler: Yes, please.
Mr. Cuthbert: In 2011, 550,000 small businesses received the credit. The total amount credited was $210 million, approximately.
For 2012, 542,000 small businesses received this. The amount credited was $216 million.
Senator Mockler: What do you expect for 2013?
Mr. Cuthbert: The budget forecast for 2013 is 560,000 employers with $225 million being credited.
[Translation]
Senator Bellemare: Are these temporary measures still in place? Will they remain in effect?
Mr. Masse: They were renewed for one year, but they are not permanent. It is always a temporary measure that is renewed the following year.
[English]
The Chair: So this is a temporary incentive. In your bookkeeping do you show that against the Employment Insurance account?
[Translation]
Mr. Masse: Just a moment, I want to make sure I give you the right answer.
[English]
Yes. I'm going to try to be very clear.
[Translation]
Mr. Masse: I cannot remember if the question was asked in French or in English, my apologies. Yes, the credit is funded through the employment insurance operating account.
The Chair: Then I understood correctly, thank you.
[English]
No other questions? Then we're ready to go on to the next clause. Thank you for that, Mr. Cuthbert. That would be 136.
Mr. Duffy: Clause 136 establishes the premium rate for the self-employed. It's got a lot of references, so it's hard to figure out, but the people who volunteer to be covered or opt into the self-employment component of the EI program pay the employee rate. It's just housekeeping for all the other changes.
[Translation]
Senator Hervieux-Payette: I would like to know how that works. If a self-employed worker earns $30,000, $40,000, or $50,000, how is that person's premium determined?
Mr. Duffy: In the same way that it is done for an ordinary worker.
Senator Hervieux-Payette: The self-employed worker will contribute the same amount as someone who works for a company, but the difference is that there is no employer to pay the other portion? Is that correct?
Mr. Duffy: Exactly.
Senator Hervieux-Payette: And the self-employed worker does not pay both, only his or her own portion?
Mr. Duffy: Exactly.
Senator Hervieux-Payette: That makes sense.
Mr. Duffy: However, the self-employed worker is not entitled to premiums if he or she loses their job. It is only for special benefits.
Senator Hervieux-Payette: Such as illness?
Mr. Duffy: Yes. Illness, maternity or parental leave, but not for losing one's job.
Senator Hervieux-Payette: If the self-employed worker does not get any contracts, that means there is not any income.
Mr. Duffy: If the person has no income, he or she is not covered by employment insurance.
Senator Hervieux-Payette: Is there a minimum? If a person works part time but only earns $10,000 a year, would he or she still be eligible? Do you use a minimum income?
Mr. Duffy: Yes, it is an income of about $6,000 annually.
Ms. Ryan: If the question pertains to premium rates, as Mr. Duffy was saying, this would not provide insurance to cover a person's income.
Senator Hervieux-Payette: No, we are talking about fringe benefits. It makes sense.
[English]
Senator Buth: How many employees would be declaring themselves as self-employed in using this?
Mr. Duffy: I don't have that number in front of me.
Ms. Ryan: The numbers are relatively low, in the order of 10,000 to 20,000, I believe. We could certainly send that.
The Chair: It would be helpful if you could conveniently find it and send it along to our clerk, and we'll circulate it to everyone.
Senator Callbeck: That was my question. When you say10,000 to 20,000, what percentage would be women?
Ms. Ryan: A very large percentage, senator. The draw of the special benefits has a heavy preponderance towards maternity and parental claims.
Senator Callbeck: Could you get us that percentage?
Ms. Ryan: Yes.
The Chair: We look forward to receiving that.
Is there anything else in Employment Insurance that we should know about tonight?
Mr. Duffy: Clause 137 repeals the CEIFB Act, and the other clauses, 138 to 156, are all consequential amendments related primarily to repealing the CEIFB Act. The last clause, 158, is all the coming-into-force clauses.
The Chair: Is anything retroactive here?
Mr. Duffy: No.
The Chair: It looks like it's all ahead of us, or when it was announced. Clause 157 is deemed to come into force April 7, 2013. Is that budget time or just after budget time, or what was that date?
Ms. Ryan: Mr. Chair, I believe that you're speaking to the fishing regulations. That's the next item. I might propose to give an overview to the committee of the issue. It is quite technical. It speaks to correcting a technical error, but to jump to the retroactive aspect.
The change proposed in the legislation to be made retroactive is to correct a technical drafting error in the regulations that was not intended at the time. The retroactive feature allows us to correct open claims for individuals who currently are being affected by that technical error.
The Chair: Affected in what way? Help me with this, because this would be important to my constituency, the fishing side of things, and for Senator Mockler and Senator Callbeck. We're all in the fishing business here.
Ms. Ryan: If I might back up to the overview, that might be helpful, given that it is quite technical.
The Chair: It always is.
Ms. Ryan: Essentially the issue starts with the 2012 Economic Action Plan through which the government introduced a new permanent legislated approach to the way that Employment Insurance benefits are calculated through the variable ``best weeks'' provision. Effective April 7, 2013, regular EI claimants now have their weekly EI benefit rate calculated based on their best weeks of insurable earnings, so their best weeks during the qualifying period, as reflective of their local unemployment rate.
The intent of this national measure was to give essentially all Canadians the same treatment, to be allowed to base their regular claim on their best weeks of earnings for individuals who have variable work patterns. It replaced a pilot project that had been in force in 25 economic regions that were allowed to choose their best 14 weeks, and instead put a common basis across the country so that the choice of best weeks would vary somewhat with the local unemployment rate so that the best weeks chosen would be between 14 and 22 weeks.
That was the overarching measure announced in Budget 2012. It was subsequently the basis of regulation that came into effect on April 7, 2013.
That was the national policy. The technical issue begins with the situation prior to the variable ``best weeks'' policy. In that period there were also two different methods of calculating how fishing income would be included in the EI benefit rate calculation for people who claim regular benefits but also have fishing income. It's this interaction of the regular income and the fishing income that's at issue here and how it was treated in the regulatory package.
For regular claimants with fishing income, the introduction of variable best weeks essentially introduced a fork in the road in that a common treatment was needed to capture the treatment of fishing income with regular claims. In drafting, the treatment of the regular claimants' fishing income was inadvertently aligned with an additional adjustment in the best weeks benefit rate calculation method rather than the previous and more inclusive treatment that was in place to account for fishing income in the regular benefits.
This regulatory double correction for weeks as well as income was, at its core, the technical error that took place in the regulatory drafting process at the time for the separate national measure, which was about selecting people's best weeks of regular income. That's a technical error that this legislation aims to correct.
The Chair: With this retroactivity in the bill, could you finish your comment by telling me if there will be claimants out there who will have to pay back to the government? Are we likely to see a lot of that?
Ms. Ryan: No, sir, it's the converse. The error was that they have had their claims come in much lower than expected and in a way that was not the intent of the policy measure in any way. It's a complex set of regulations and legislation. The nature of legislating the regulations retroactively is required so that we can work with Service Canada, go back and correct those claims that have been opened since April, so people get a higher level of benefit that incorporates their fishing income in a way that's consistent with the treatment in the past.
The Chair: Thank you for that explanation.
Senator Hervieux-Payette: That partially covered my question. Was it an error — as we say in French the ``bonne fois'' — because I can hardly understand that people whose income is very low in general that it was written in a way that they were in fact earning less and now they are going to compensate. Do they have to claim? Are you going to send them a cheque once the bill has been passed? Even in Quebec we heard about it, so a lot of people were contesting this. It is not a small error; it is affecting thousands of people — 2,000 probably.
Ms. Ryan: Perhaps I could start on the numbers. We have been working very closely with Service Canada to identify the number of people impacted. For this specific interaction of the regular fishing benefits, 142 claims have been identified to date. Our estimate is that it would be up to 800 claims that would be affected as the fall wave of claims comes in, which is more aligned with seasonal industries when the claims are made.
I would point out that this national measure of the variable best weeks will, by its nature, affect a considerable number of Canadians as they make their claims, particularly through the fall. For example, that measure of basing the choice of best weeks on the local unemployment rate with an eye to correcting for a region like Jonquière so that it would be treated like a similar region that was not part of the original pilot, that is the original policy measure that remains unaffected by this legislation. It is the much smaller group of people that claim regular benefits but also have fishing income.
[Translation]
Senator Hervieux-Payette: I do not feel reassured just yet. You consistently use the word ``claim.'' According to my vocabulary, claim means you have to request it. It is not something that is given to you. My question is as follows: are some people, such as some who would be entitled to the old age pension, missing out on benefits because they did not ask for them? This is an extremely important question. You answered by naming Service Canada. I do not know what Service Canada's role is in employment insurance. Perhaps for administrative reasons it is still called Service Canada. However, I thought we were dealing with insurance employment. Service Canada provides information, but it does not calculate how much people have paid, nor their best-paid weeks. It does not look at when the higher premiums were paid and then calculate the difference between what they received and what they should have received, in order to make an adjustment.
I would you like to clarify this issue for my colleagues, who may have more people than I do affected by it. We need to make sure that these people are insured and that they will receive a cheque by Christmas without having to ask for it, and that will solve the problem.
Ms. Ryan: I understand your question better now. Thank you.
[English]
If the question is how the change will be corrected, we are working with Service Canada, which administers the claims, to be ready to move the cheques as quickly as possible.
The objective of tabling the regulatory changes through the legislation has two objectives. One is to allow the changes to be made retroactively so that we can make the corrections to the open claims. I use this word from the perspective that it is a key element of the program that the person has to demand the benefits.
The second reason for pursuing this legislative route is to resolve it as quickly as possible; therefore, we are putting systems in place to correct the errors as quickly as possible. It will be a mixture of automated identification of people's claims to the extent that people can identify themselves to the local Service Canada office in the meantime, immediately, now, so that we are sure that none of these corrections get missed through both channels. That's the intended approach.
It is sometimes difficult to make sure that you have the exact type of record of employment earnings, so the systems aren't entirely geared up to go back and correct these automatically. The mixture of both operational employees trying to identify the people affected, but also the receptive aspect of having people identify themselves, would help us meet the objective of making sure that no claims are affected that we didn't intend to be affected.
[Translation]
Senator Hervieux-Payette: I want to make a comment. My colleagues will agree with me that when these people are supposed to receive something, they need to be notified to that effect. If you are not notified, you do not go to Service Canada to ask for a retroactive payment. I hope that these people are working and are not unemployed.
The process seems a bit complex to me. You are saying that your system is not automated enough to be able to issue these benefits practically at the touch of a button. It is important to know that these people's problem was caused by an error — and I do not think that it was actually an error. I want to make sure that they will all be informed and that the information will get to them. There is money available for action plans. There should be money available to notify people to go get the money that is owed to them.
Senator Mockler: We do have to be careful not to generalize. What is important here is that there are two mechanisms in place. There is the mechanism being proposed in Bill C-4 and the mechanism for administering claims, which come under Service Canada, honourable senator.
But I understand the point you are raising, which is that these people are not being informed. I can tell you that the people in our region are well informed. If they are owed a dollar, Service Canada is there to help them find that dollar.
The Chair: It is not up to us to change the act. If the act is not changed, there will be no dollar.
Senator Mockler: Of course, I was responding to the comments of Senator Hervieux-Payette.
[English]
Senator Buth: Do you have a communications plan around this?
Brian Hickey, Director, Policy Initiatives and Issues Management, Employment and Social Development Canada: In terms of communications, certainly holding lines for front-line staff have been updated. For instance, if there a call were to come in right now and this would be flagged while we're having this discussion, that would be raised on the call with the particular claimant.
I don't know if there's anything else there.
Ms. Ryan: The wider approach that Service Canada will take when the authorities are in place is one of the aspects that they're working on in real time, in parallel to this discussion, to have in place.
Senator Buth: Do you have a sense of how many people Service Canada will pick up versus how many people might be out there?
Ms. Ryan: I couldn't comment on that split. I can check if they have such a tracking number and return to the committee, but I do not know.
Senator Buth: It goes to the issue that I heard you say there are two mechanisms. One is that you're ready if somebody comes in the door and says they think their claim wasn't processed properly, it was affected by a technical error. The other is that Service Canada, as much as they can, will essentially identify the people that this could affect. I would assume what they would be looking for is people that have employment income but also have fishing income so that they could go back, identify those people and then contact them in terms of whether or not they use the best weeks that are added in the fishing income.
Ms. Ryan: The difficulty is that we may not pick up every claim through that centralized kind of approach to identifying people, so we want to have avenues for both channels.
Senator Buth: If this legislation passes, perhaps the department should take a look at a communications plan in those areas where you know there's fishing income so that it is a broader approach to letting people know that they might not have been able to claim the maximum amount.
The Chair: We will stay interested in this issue; you can be assured of that. If you could help out Senator Buth and Senator Hervieux-Payette — because the points they make are good ones — anything that you can tell us in terms of what your communication plan might be would be good.
Senator Callbeck: I want to come back to the self-employment benefits because I'm really shocked at the moment. You say $10,000 to $20,000. Have you had a communication plan for that?
Ms. Ryan: There have been communications about the nature of the benefit and the program and so on, and it was recently launched. We're also currently undertaking an evaluation of all aspects of the program to date and how it is rolled out. The focus of that evaluation will look at issues that touch on the fit for how we have designed the benefits for the self-employed. For example, we have already undertaken a survey of the self-employed to ask have they applied; if not, why not? Is it a question of the level of premiums that would be paid? Is it a cash flow issue? Why is this not something they have pursued?
Senator Callbeck: Has that survey gone to all self-employed businesses?
Ms. Ryan: It would not have. It would be a sample of the self-employed.
Senator Callbeck: How many?
Ms. Ryan: I don't know, senator. I could return that to the committee.
Senator Callbeck: I would like to know that because a number of years ago I was involved with a women entrepreneur task force, and if there was one thing that we heard, it was that.
Now, I sit here and look at $10,000 to $20,000, and I just can't believe that figure. Do people know about it? That's my question.
Ms. Ryan: I think the reasons for it not being pursued can come from any number of directions. I would say that one aspect of the design of the benefit is that when the self-employed opt in to the program, they're making a commitment to stay with the program long term. That provision, I think, is one of the provisions that we would draw more attention to rather than less.
I know there's been considerable work done. I don't have it immediately with me to give you much more detail.
Senator Callbeck: You say ``long term.'' What do you mean by that?
Ms. Ryan: I'm hesitant to misspeak, senator, but it is a multi-year commitment that is required to opt in to this program. Mr. Duffy can answer.
Mr. Duffy: It is a voluntary program, of course.
Senator Callbeck: Right.
Mr. Duffy: When you opt in, you basically opt in for the rest of your career. For regular benefits, it is universal coverage so everybody that is employed is covered. For the self-employed benefit, you opt in and you are in for good.
It is a calculation that the person has to make when they decide to opt in. Is it to their advantage? Because of its voluntary nature, people do rethink a calculation before they decide.
Ms. Ryan: I would that add in terms of motivation for that type of provision, it is to maintain the insurance aspect of that part of the program so that through time the premiums would balance out with benefits so that somebody wouldn't opt in, for example, in family formation years and then out again.
Mr. Duffy: When we first introduced it, the government did promote it. I don't remember the specifics. I worked on it back then. But it was a fairly big announcement, a new benefit for the self-employed.
Senator Buth: You made the comment about fixing the error and essentially using this legislation to move it through as quickly as possible, so I want to make the comment that I appreciate that. Errors happen.
Ms. Ryan: We appreciate your consideration.
The Chair: We're glad you came to ask us to help you sort it out.
We have been hearing, colleagues, all about Employment Insurance this evening from the Canada Revenue Agency, Mr. Ray Cuthbert from HRSDC, Human Resources and Skills Development Canada, Mr. Michael Duffy, Ms. Annette Ryan, Mr. Brian Hickey, and from Finance, Mr. François Masse.
Another panel of HRSDC experts will talk about changes to the Canadian ministry, which is Division 6 of Part 3. You have had the opportunity to see how we like to go through things on a clause-by-clause basis.
Who would like to be the spokesperson? Perhaps, Mr. Conrad, you could begin and help us out. And for anyone else who would like to make a comment, I will try to identify you as you make your intervention.
Alexis Conrad, Director General, Temporary Foreign Workers, Employment and Social Development Canada: There are three main parts to this division. One is around the departmental name change, another one around electronic delivery of programs, and there's another around the Salaries Act. Some parts of that are mixed to other clauses of the bill. It might be easier to group them as three and walk through them as a unit.
The Chair: That would be a fine idea.
Mr. Conrad: Maybe I will turn it over to Catherine Allison to go through the name change amendments, and then we'll move on to the electronic delivery and then the Salaries Act. So clauses 204 to 210, and 221 to 238, with the exception of 234, deal with the name change, and 211 to 214 is the electronic delivery.
The Chair: You are going a little speedily.
Mr. Conrad: My apologies.
The Chair: Tell me the clauses you are dealing with.
Catherine Allison, Director, Strategic Portfolio Communications, Public Affairs and Stakeholder Relations Branch, Employment and Social Development Canada: The first clauses dealing with name changes are clauses 204 to 210.
That segment of the clauses deals with everything relating to changing the department's name in the department, the departmental act itself, so within the Department of Human Resources and Skills Development Act, clauses 204 to 210 reflect the name change from Human Resources and Skills Development Canada to Employment and Social Development.
The Chair: What's the acronym going to be??
Ms. Allison: ESD.
The Chair: ESD — no ``C'' at the end of that?
Ms. Allison: In the applied name, ESDC, yes; the legal name, just the ESD.
[Translation]
Senator Bellemare: I have a comment and then a brief remark.
I think that changing the department's name to Employment and Social Development was a good idea. We are talking a great deal about employment and it does make sense to be able to refer to a particular department.
Given that you work there, I hope that the department's strategic documents contain employment-related indicators and objectives. And since the department is now called Employment and Social Development, both those aspects will be reflected in the department's strategic documents.
That is what I wanted to say. Thank you.
[English]
Ms. Allison: That takes us to clause 210.
The Chair: All of them up to clause 210 are just telling us the name of the new department.
Ms. Allison: That's correct.
The Chair: Or the ministry, and the minister's name, I suppose, too.
Senator Callbeck: What about the costs involved here?
Ms. Allison: In terms of what we spent to date, we're looking at approximately $42,000.
Senator Callbeck: To date. What's the final total?
Ms. Allison: Where we are in terms of the roll-out of the name change, the $42,000 covered some of our building signage, changes to the fleets that needed to be updated, and some of our public facing materials, so booths and displays where you want to have the department's name reflected.
In terms of the other changes that are still to come, the only ones that have dollar figures associated with them are signage for buildings, and those are all being done now only as part of office moves, renovations, where we're already going to be spending money on making changes to buildings. Any costs right now are really being absorbed as part of ongoing business.
Senator Callbeck: What is the estimated cost, the total cost to do this?
Ms. Allison: Since the costs from here on in are being absorbed as part of existing renovation and changes, I don't actually have estimates for that.
Senator Callbeck: I read somewhere where the cost would be at least $400,000.
Ms. Allison: I think those were initial estimates, which were quite high, based on things like not having a full picture of things like the vehicles. I know initial estimates for changing fleets were quite high, but then as more research was done, it turned out a lot of the vehicles were already branded as Government of Canada, so that didn't need to be changed.
Senator Callbeck: But in order to make this change, before you started, there must be a figure that you were aiming for that would be your total figure at the end. You say you spent $42,000
Ms. Allison: We spent $42,000, and there certainly was an initial — I know I have seen that number as well. That number was initially put out there as an estimate, but, again, those are costs that the department would be incurring anyways, as part of renovations, moving to offices, making changes.
The Chair: New business cards.
Ms. Allison: You only get new business cards when the old ones run out.
The Chair: There you have it. There's no additional cost.
Ms. Allison: Well, $42,000 for sure, but then other things, it is as they're run out, as they're being replaced, as our normal business.
The Chair: Senator Callbeck, are you satisfied with that answer?
Senator Callbeck: Well, I mean —
The Chair: She's not satisfied.
Senator Callbeck: — it seems awfully strange to me that the government would decide to change the name without any associated costs or any cost figure. What's going to be the bottom line? You are talking about $42,000, but you say the estimate at first was $400,000. Now, where are we?
Ms. Allison: Well, I have provided where we are. I can certainly go back and see if anyone has further estimates going down the road.
To date, I haven't seen those, simply because of the approach that we're taking, which is to do it as cost effectively as possible without incurring any additional costs that the department wouldn't otherwise be incurring.
Senator Callbeck: Well, it is a different approach than private business, that's for sure. If you were going to change the name of your business, you would know what this was going to cost you before you started to do it.
The Chair: Then they probably wouldn't do it.
Ms. Allison: I can speak to the implementation.
The Chair: If you could go back and determine if your ministry has any —
Ms. Allison: Any further costs, I will.
The Chair: — any estimates that they used.
Ms. Allison: I would be happy to do that.
The Chair: You were taking us over to clause 231 next, were you?
Ms. Allison: The next clauses related to the name change would take us to 217, which is on page 200.
When we get into 217 to 220, these clauses, as opposed to the departmental act, all refer to changes required in other instruments, other legal documents, that previously referred to the names of the ministry, so orders-in-council that would have named the deputy as the deputy of Human Resources and Skills Development Canada. All those clauses create those linkages with the other legal instruments.
The Chair: That's understandable.
Clause 217 to 220?
Ms. Allison: Clauses 217 to 220 are on pages 200 to 201.
The Chair: Yes. Is that it for you on the name change?
Ms. Allison: Clauses 221 to 238, with the exception of clause 234, are also name change amendments. Those are more technical changes that are required to other acts, like the Access to Information Act, the Privacy Act where, again, the department's name is referenced.
The Chair: Included in your cost of the name changes is the cost of the lawyers writing all the documentation here.
Senator Hervieux-Payette: I was wondering why name changes are part of the discussion in the budget. As far as I'm concerned, we either have overall expenditures of $42,000, which, of course, for me is not very significant for the budget, or why would we put these changes there? It should be stand-alone modifying the original law.
The Chair: We have the minister coming in on Monday, and I would suggest that would be a perfect question for him.
Senator Hervieux-Payette: Thank you.
The Chair: Okay. Is that it?
Ms. Allison: That's everything for the name change.
The Chair: Thank you very much.
We're back to Mr. Conrad. We noticed clause 234 with respect to student loans.
Mr. Conrad: I will quickly overview clauses 211, 212, 213, 214 and 234. Effectively what clauses 211 to 214 do is add the Canada Labour Code, the Temporary Foreign Worker Program and the Canada Student Loans Program and the Canada Student Financial Assistance Act to the list of programs that the minister can deliver electronically. The rest of the clauses are technical amendments that follow that. They allow the minister to make regulations with respect to those, to accept an electronic signature, to accept documents in electronic form rather than written, and to make regulations around the establishment of the date and time an electronic document is sent and received, as well as the location from where it's sent and received. These are additional programs that have been added to a list of programs that had been previously amended. They help to bring the department more up to date in terms of being able to electronically deliver our programs.
Clause 234 is actually a repeal from the Canada Student Financial Assistance Act because it was a section that permitted the minister to send certain documents electronically, which is now redundant given the other changes in the bill. I can go into more detail about the clauses if you want.
Senator Hervieux-Payette: I'm always very excited with everything on the computer, but if you don't have a computer, what do you do?
Atiq Rahman, Director, Operational Policy and Research, Learning Branch, Employment and Social Development Canada: These changes are not mandatory, so anyone who doesn't have access to a computer will still be able to submit the documents in paper format, will be able to sign, put the physical signature on the application and send it to us. That process will be there. Our hope is that a significant majority of our clients will use the electronic format. I am from the Canada Student Loans Program, so on our side most of our clients tend to be young.
Senator Hervieux-Payette: They are electronic, but I always think of people who are of a certain age or a certain area of this country too, because we have certain areas where people don't even have access. I'm just wondering: The paper form and the paperwork is still available.
Mr. Rahman: Yes.
The Chair: Mr. Rahman, in terms of temporary foreign workers, would the forms be filled out by the potential employer or by somebody, let's say, from Mexico who wants to come here and work as a farmer?
Mr. Conrad: An application for the Temporary Foreign Worker Program is always from an employer. Employers do hire third parties and registered immigration consultants to act on their behalf, but the request comes from the employer to request a foreign worker. Citizenship and Immigration receives the applications from the worker for a work permit to fill a position.
The Chair: I was thinking in terms of Senator Hervieux-Payette's questions.
Mr. Conrad: These are all —
The Chair: Sophisticated people that would have access to computer technology.
Mr. Conrad: Yes.
The Chair: Anything else on students or temporary foreign workers?
Mr. Conrad: Those are the amendments.
The Chair: You did have three groups, didn't you?
Mr. Conrad: The other is the Salaries Act.
David Dendooven, Director of Strategic Policy, Machinery of Government, Privy Council Office: I'm here to speak to clauses 215 and 216.
Clause 216 is essentially a consequential amendment to reflect the name change, but coming to clause 215, the changes were made to reflect the changes in the ministry this past July. Again, we are changing the name of the Minister of Human Resources and Skills Development to the new name, which is Minister of Employment and Social Development. We are also, at the same time, adding a reference to the Minister of Infrastructure, Communities and Intergovernmental Affairs.
The Chair: Just so he can get paid.
Mr. Dendooven: Yes.
Senator Hervieux-Payette: Does this mean there is a cost, or is it just to call a cat a cat? Is there a cost?
Mr. Dendooven: That's a good question. It depends on whether or not the position is actually filled. It is up to the Prime Minister to determine whether or not that position should be filled. The current minister, his working title, of course, is the Minister of Infrastructure, Communities and Intergovernmental Affairs, but his legal title is the President of the Queen's Privy Council at the present time.
Senator Hervieux-Payette: He will do the same thing?
Mr. Dendooven: He will do the same thing.
Of course, when the Prime Minister decided to change the ministry in July, that title did not exist in the Salaries Act. That position, the President of the Queen's Privy Council, was open, and so therefore, for purposes of paying him a minister's salary, he was appointed the legal title of President of the Queen's Privy Council, but his working title is the title you see here, Minister of Infrastructure, Communities and Intergovernmental Affairs.
Senator Hervieux-Payette: Mr. Chair, I think this one will have his card changed right away.
The Chair: At his own expense.
Senator Hervieux-Payette: I'm not sure.
The Chair: Ms. Alison is not giving him any money.
Mr. Conrad, is that everything? Should we hear from Ms. Baxter on anything?
Mr. Conrad: To confirm, the list of programs around the electronic delivery is Temporary Foreign Worker, Canada Student Loans, Canada Student Financial Assistance Act and the Canada Labour Code. They are all included.
The Chair: You had mentioned that earlier, Canada Labour Code.
Mr. Conrad: All four of them are essentially added to that list in the act.
The Chair: That's helpful. We wish you well on that transition. Thank you for being here from — one of the last times you'll hear this — HRSDC.
Mr. Conrad: Indeed.
The Chair: Catherine Allison, Atiq Rahman, Alexis Conrad, David Dendooven and Brenda Baxter, thank you for being here.
We're going to Division 12 at page 217. Each of these next two items is quite short. However, that doesn't mean we wouldn't have lots of questions. They deal with the Canada Pension Plan Investment Board Act.
Kevin Wright, Chief, Financial Markets Division, Department of Finance Canada: We are dealing with two clauses — we tried to keep the number down for you — 259 and 260.
I will work backwards in 259. The purpose of this provision is to allow up to three directors of the Canada Pension Plan Investment Board to be non-resident —
The Chair: I have number 277.
Mr. Wright: I'm sorry. I may be working from a different one. It is clauses 277 and 278.
The Chair: That's correct.
Mr. Wright: I'm dealing with subclause 277(1), which should have a reference to amending subsection 10(4) of the Canada Pension Plan.
The Chair: Yes, we have it.
Mr. Wright: We're on the same page.
Subclause 277(2) basically removes paragraph (h), which is the original provision that required that all 12 members of the board be resident Canadians. Subsection (1) now adds into subsection 10(4) a requirement for the minister to ensure that no more than 3 of the 12 directors reside outside of Canada.
I will comment quickly on clause 278. What that does is make reference to a formula in the Canada Pension Plan Act, which requires that no provision comes into force with respect to the Canada Pension Plan Investment Board Act unless — and there is a formula which states — at least two thirds of the provinces representing two thirds of the population of Canada pass an order-in-council or equivalent thereof, bringing that provision into force. That's part of the formula of the Canada Pension Plan for ensuring changes — a high standard.
The Chair: Have you started looking for approval? Presumably you'd get some non-official consent or you wouldn't have proceeded with the proposed legislation in the first place.
Mr. Wright: Budget 2012, the action plan, did make reference to this proposed change. The minister committed to consult his provincial counterparts — his colleagues, the finance ministers of the provinces — on the change. He has reached out to the provincial ministers, and we have received responses. It's fair to say that there is widespread support for the change. Now we have to go through the process and the process starts with the passage of the bill, so this is where we're at right now.
Once that passes, then we look for the OICs from the provinces. Our expectation is that we will get enough to satisfy the formula.
[Translation]
Senator Bellemare: I am not sure I really understand the change. Is the rule change amending the Canada Pension Plan requiring two-thirds of the provinces and two-thirds of the population still there?
Mr. Wright: Yes, that formula is still there.
Senator Bellemare: And why has this change been made?
Mr. Wright: It is to enable up to three people —
Senator Bellemare: — on the committee — I understand, it is not for the formula. But does clause 278 deal with the formula? Why is it there?
[English]
Mr. Wright: It makes reference to the CPP Act. It's a bit convoluted because the formula is embedded in the —
[Translation]
Senator Bellemare: It is in the bill, and now you are putting it into the act.
Mr. Wright: To make the change.
[English]
Mr. Wright: You could argue that this provision is not absolutely necessary because the provision already exists in the CPP Act. When someone looks at the legislation in isolation, they might not recognize that there is this other formula that applies. This reconfirms that there is this formula and that the coming-into-force of Bill C-4 does not necessarily bring this provision into force. It's a provision for clarity. Our lawyers describe it as it doesn't take anything away, it doesn't add anything, but it provides more transparency.
Senator Callbeck: All 12 members are Canadians. How are they chosen?
Mr. Wright: Good question. The act requires that the minister recommend to the Governor-in-Council appointments to the board of directors. However, he's also required under the legislation to consult with his provincial counterparts. In addition, he has the ability to create a nominating committee or a committee to look at nominations. That committee does exist, as it has been created and has been in existence since the beginning of the Canada Pension Plan Investment Board.
The process starts with the governance committee of the Canada Pension Plan Investment Board of Directors going through a search process, looking for candidates should there be a vacancy. The candidates identified are then referred to the nominating committee, which is made up of a representative of each of the participating provinces, and the chair is appointed by the Minister of Finance.
It's through that process that if there are any issues with respect to the nominations or the proposals for directors, they are flushed out and discussed. When that's done, the committee makes a recommendation to the Minister of Finance, who now has a candidate or candidates in his hands. He then turns to his provincial colleagues, as part of the consultation process, to ensure that there is support for moving forward with the candidate for a nomination to the board of directors.
Senator Callbeck: On the nominating committee, every province is represented — the territories too, or just the provinces?
Mr. Wright: There is a representative of the nine participating provinces. Quebec is not a participating member at this point.
Senator Hervieux-Payette: Did we have three foreigners on the board before or is this new?
The Chair: No.
Senator Hervieux-Payette: Why? Don't we have 12 people in this country?
Mr. Wright: One of the reasons —
The Chair: That's what it looks like.
Mr. Wright: I think it's a question of trying to provide as much opportunity for the board to be able to identify qualified candidates. Of the excess funds invested by the Canada Pension Plan Investment Board, more than half of the assets are invested outside of Canada. The intersection was trying to find qualified directors who could provide advice and also have an international perspective. You have a reduced pool from which you can choose candidates, so this opens the door to identifying other candidates who may not be Canadian residents but who might be able to add to the competencies of the board.
When the board goes through its review process, it uses a matrix of what gaps they have in terms of qualifications, and this would be one of those factors. If they identify an ideal candidate who meets the gap requirements but does not meet the residency requirement, that gives them the opportunity to propose the candidate without having to worry about the residency requirement being met.
[Translation]
Senator Bellemare: It may be a Canadian.
[English]
Senator Hervieux-Payette: Is it a foreigner or a Canadian residing outside the country, just to be specific?
Mr. Wright: There is the situation where a Canadian sitting on the board could move outside of Canada. They would be disqualified by the old rule, but this would allow them to continue to serve. It also serves to potentially identify candidates who reside in Asia in a market that is very rich in opportunities for the CPP in terms of investments to not necessarily exclude a candidate if they bring a number of the qualifications and competencies that the board is seeking.
Senator Hervieux-Payette: For the record for those listening with great interest tonight, what was the return of the fund last year?
Mr. Wright: I might not have that information with me, but we could certainly get back to you on that.
Senator Hervieux-Payette: Mr. Chair, I was here over the years when we changed where the funds could be invested. We started not outside the country and then a certain amount outside the country. Now, we could finance the rest of the world and not invest in Canada. I know you are not doing that, but I'm saying that with the economic situation we have worldwide, one region is affected and maybe another one is not. It's important to make sure that we are at the upper end of returns, if we have so many qualified people. Maybe it's not an old boys' network, but I would be tempted to say there should be 40 per cent women on these boards.
The Chair: That's another policy matter.
Senator Hervieux-Payette: You agree, Senator Buth?
The Chair: You can ask the minister that, too.
Senator Buth: We are the only ones left here.
The Chair: For the record, this fund has grown tremendously over the years to about $172.6 billion.
Mr. Wright: In fact, I think it's now over $180 billion.
The Chair: There you have it. It makes sense that the administration might evolve into more of a worldwide investment vehicle.
I think we've covered all of the points that you have raised. Mr. Gravelle and Mr. Wright, thank you for being here.
We will move to the final item of the evening, Division 15. There are some changes to the wording in the Conflict of Interest Act.
Mr. Dendooven, you are going to tell us about the Conflict of Interest Act and the changes you think should be made in these two clauses.
[Translation]
Mr. Dendooven: There are two clauses here, but I am going to discuss them together because the first clause is rather technical and is not worth discussing. What I really want to talk about is the second clause.
The Chair: Clause 289?
Mr. Dendooven: I do not have the right number, but it is the second clause that I want to talk about.
The Chair: It is clause 289.
Mr. Dendooven: As you know, the purpose of the Conflict of Interest Act is to set clear rules of conduct when it comes to conflicts of interest, including after a person leaves office.
[English]
We are proposing with this amendment to provide the Governor-in-Council with the authority to designate an individual or a class of individuals as public office-holders or reporting public office-holders for purposes of the act.
The Chair: Prior to that, what was the situation?
Mr. Dendooven: Currently, if you look at the act itself, there are definitions as to who is a public office-holder and who is a reporting public office-holder. Essentially, if you are a minister, a minister of state or a parliamentary secretary, you are subject to the Conflict of Interest Act. It goes on, as well: a member of ministerial staff, a ministerial adviser, a Governor-in-Council appointee, et cetera. And it goes through the individuals who are subject to that.
It's impossible, of course, to provide for everybody who should be a public office-holder or a reporting public office- holder. Therefore, by providing for this broad designation, it's able to capture everyone who essentially should be subject to the Conflict of Interest Act.
Senator Buth: I need to clarify something. So this allows the minister to designate a public office-holder by just doing an order-in-council.
Mr. Dendooven: It's the Governor-in-Council. I am sorry if I misspoke.
Senator Buth: It's the cabinet, then.
Mr. Dendooven: Yes, it would provide them that opportunity to — it's not necessarily the cabinet, per se, but it's the Governor-in-Council that would be given the power to designate someone as subject to the act.
Senator Buth: This is because it's impossible to list everybody.
Mr. Dendooven: Yes — who could possibly be designated in the future.
I should point out that the Access to Information, Privacy and Ethics Committee is in the process of looking and has looked at the Conflict of Interest Act. It's been in effect for a little over five years, so they have been looking at this act. They have not yet submitted their report. I understand yesterday they met in camera to finalize it, I imagine, but I'm not sure because it was in camera. But they have been looking at this and studying the act and what can be done to change the act.
The Chair: I'm sorry, who is doing that study?
Mr. Dendooven: That's the House of Commons Access to Information, Privacy and Ethics Committee.
[Translation]
Senator Hervieux-Payette: Did the old system cover more people, or is it now, with the new system, that more people will be covered by the Conflict of Interest Act?
Mr. Dendooven: It makes it possible to designate people who will be covered by the act. It does not limit those covered by the act, but it gives the governor in council the power to designate others who will be covered by the act.
Senator Hervieux-Payette: So it is at the pleasure of the governor in council, which is the Prime Minister, or cabinet or what have you. At any rate, the decision stops at the Prime Minister's office.
Mr. Dendooven: Yes. And once again, the purpose of the act is to make sure that those who should be covered by the act are in fact covered by it. The act sets rules to be followed by people in high-level positions, who have access to information that could put them in a conflict of interest situation.
Senator Hervieux-Payette: That does nothing to reassure me because I do not know whether it is going to decrease or increase the number of people; and it will be at the pleasure of the Prime Minister. Because there are no criteria, as far as I can see. I find it vague; I understand that a list is limiting, but I also understand that not having any list is totally arbitrary. I see no criteria indicating that Mr. So-and-So should be covered. It will be left entirely up to the Prime Minister's judgment, and I find that a bit, even highly incredible. Because if he decides to designate hardly anyone, there is nothing to be said or done about it because that is what this clause provides. And if he decides that everyone and their dog is covered, well, then we will have an industrial quantity.
It seems to me there are no parameters. As a legislator, usually when we legislate, we know what the legislation is going to apply to and how. For now, you are telling me that if this is to apply, it will be as a result of an order in council. If there is no order in council, it will not apply.
All I would say to you is that I find this to be an unclear way of going about it.
Mr. Dendooven: Yes. I can give you an example in fact. I would also like to point out that the act contains examples of people designated by the governor in council. It is already in the act.
If I may, I will give you a concrete example. In the past, the leader of the government in the Senate was a minister. That is no longer the case since changes to the ministry in July.
At present, Senator Carignan, who is a member of the Cabinet Committee on Operations, is not subject to the act.
Senator Hervieux-Payette: That is my concern.
Mr. Dendooven: The proposed change will give the governor in council the authority to designate someone like Senator Carignan who is a member of the Cabinet Committee, but who is currently not subject to the Conflict of Interest Act.
Senator Hervieux-Payette: He may be, but that is not necessarily the case.
[English]
Senator Buth: So currently there is a list of who is designated, and that is in the legislation right now?
Mr. Dendooven: Yes. If you go through the legislation, it indicates who is a designated or a public office-holder and a reporting public office-holder. It's very clear. If you are a minister, a minister of state or a parliamentary secretary, you are subject to the act and all of the rules and regulations within the act.
It's very clear who is, and they have certain obligations that they must follow. If there are any concerns about what applies to them, they can speak with the Ethics Commissioner to determine what applies to them and what does not, so it is very clear.
Of course, it is always difficult to see into the future as to what might transpire; for example, in the case that happened over the summer, where the Leader of the Government in the Senate is not a minister and is not on the list. It is difficult to determine that. I think anyone would say that someone who attends cabinet and is privy to confidential information should be subject to the Conflict of Interest Act.
This authority is going to allow the Governor-in-Council to make that decision in a case like this, somebody who should be designated and subject to the act. This power will allow for future instances like this to make sure that people who should be subject to the act are in fact subject to it.
Senator Buth: What is the alternative if this isn't passed? Do we come back and revise the legislation in terms of adding on in the next budget?
Mr. Dendooven: Yes. I mentioned, of course, that the house committee is looking at the Conflict of Interest Act, and I imagine they will make a number of recommendations. If this is not passed here, perhaps there will be another kick at the can at a later date.
Senator Callbeck: I always thought that a member of a cabinet committee had to be a member of cabinet.
Mr. Dendooven: Again, it's the Prime Minister who decides who is a member of his ministry; that is up to the Prime Minister to decide. The Prime Minister also decides who will be a minister and who will be a member of his cabinet.
Senator Callbeck: I understand that, but I just thought that cabinet committees were made up of members from cabinet. That's not the case?
Mr. Dendooven: No. If you look to the cabinet committee list, which is available online — anybody can see it — you will notice individuals who are members of cabinet committees but are not actually in the ministry and are not ministers.
The Chair: I have had a chance to check the definitions under the Conflict of Interest Act, and luckily I happen to have it here.
I was concerned initially that we were changing the definition, because section 288 says the definition of public office-holder is replaced, but I see that it is only one subsection, so all the other subsections remain.
Mr. Dendooven: Yes, they all remain.
The Chair: And that covers the point that Senator Buth was making and I was thinking about as well. We already have some defined public office-holders and reporting public office-holders. This gives an opportunity to expand that.
Mr. Dendooven: Yes.
The Chair: It certainly doesn't give an opportunity to reduce that, and that's the concern Senator Hervieux-Payette had.
Mr. Dendooven: I misunderstood the question, but no, it does not reduce. It is just allowing for another section in (2) to potentially broaden the definition of the reporting public office-holders and public office-holders.
The Chair: Mr. Dendooven, you are dealing with the Conflict of Interest Act on a regular basis. Could you take back to the House of Commons committee that we have a private member's bill to amend this act with respect to gifts?
Mr. Dendooven: I'm aware of that.
The Chair: That is a great concern of ours. It is a major loophole in the legislation, and I hope that that gets dealt with.
That's all we have for you tonight on that particular matter. Thank you very much for bearing with us.
Colleagues, that concludes our work for this evening. We will meet again tomorrow afternoon at two o'clock in the usual place.
(The committee adjourned)