Proceedings of the Standing Senate Committee on
National Finance
Issue 29 - Evidence - November 21, 2012 (Afternoon meeting)
OTTAWA, Wednesday, November 21, 2012
The Standing Senate Committee on National Finance met this day at 2 p.m. to study the subject-matter of all of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, introduced in the House of Commons on October 18, 2012.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this afternoon, we are continuing our study on the subject-matter of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.
[English]
Honourable senators, this is our fifth meeting on the subject matter of Bill C-45. This afternoon we will continue examining those provisions in Part 4 of the bill that have been referred to our committee.
I will remind honourable senators that there are other divisions of Part 4 that have gone to other committees. We will be hearing from the chairs and deputy chairs of each of those other committees in due course as to what is in those divisions, so that we will be in a position to conduct clause-by-clause examination at the appropriate time.
We will begin with Part 4, Division 11 today. It starts at page 247 of the bill and is entitled Merchant Seamen Compensation Act.
From Human Resources and Skills Development Canada, we are pleased to welcome Pierre Meunier, Manager, Policy. As we did in the past, we will ask for Mr. Meunier to give us a bit of an overview of what is here and then tie in the clauses, if he can group them. That will help us get through the clauses that we are dealing with in Division 11.
Mr. Meunier, the floor is yours.
Pierre Meunier, Manager, Policy, Human Resources and Skills Development Canada — Labour: Thank you. I think you have your briefing notes with regard to the Merchant Seamen Compensation Act and basically how it functions.
Basically, we are attempting with these amendments to transfer the elimination of its authorities to the Minister of Labour.
If I may, I will do the clause by clause of that. Part 4, Division 11 of Bill C-45 provides for specific amendments to the Merchant Seamen Compensation Act. It allows for the elimination of the Merchant Seamen Compensation Board; its authorities will be carried out by the Minister of Labour. Therefore, throughout the proposed legislation, all clauses that make reference to the board have now been replaced with "the Minister of Labour." Examples of this change can be found in clauses 233 and 234, as well as clauses 235 to 256.
Clause 239 clarifies the minister's role in the adjudication process, including the review of the adjudicator's decision. The minister will also have the power to require the production of any information to review a claim. This is in line with modern-day practices.
Clause 247 removes subsection 30(2) of the present act that allowed for the board to detain a ship in any port until the ship's owner complied with the act. This was seen as a somewhat extraordinary power and not in keeping with modern-day practices, so that has been removed.
Since this legislation has not been reviewed for some time, it was also an opportunity to modernize the language and make it gender neutral.
Clause 256 of the bill will cause sections 48 to 51 of the act to be replaced, as those sections presently make reference to the function of the board. They will now make reference to the minister's powers of delegation under this piece of legislation.
That is basically the role for the clause by clause.
The Chair: Could you tell us, Mr. Meunier, what the policy statement was for making this change? Was the board not doing very much work? There are part-time members of the board, I believe.
Mr. Meunier: That is correct; it is part-time. They have a teleconference once or maybe twice a year. We have not had any worker compensation claims under this particular piece of legislation since 2010. We presume that the boards are covering all of the seamen on the ships that operate in international waters. That is why there is not much activity and the role of the board itself has greatly diminished.
The Chair: What types of things would it do? Help my "board" here.
Mr. Meunier: For the access onboard ships, these are seamen basically whose residence may be out of country or out of province of where the ship is operating. These are Canadian-owned ships operating. There are only about five companies that are registered under our act. We are talking about maybe 1,000 employees, and out of that 1,000, maybe 10 per cent may fall into that category of people who are out of province or country.
The Chair: Could you give us the typical type of issue that would have gone before the board that will now go before the minister?
Mr. Meunier: For any accident that would occur, we do the adjudication process. We have staff members who are adjudicators and review the accident, based on medical evidence, and so on. They approve or disapprove the claim. That would go before the board at the time.
It will now go before the minister. If there is a disagreement on the adjudication process, the minister will have the power to review those claims.
The Chair: As you point out, it is common now to have an opportunity for two steps — to have the determination and then the review.
Mr. Meunier: That is correct.
The Chair: Typically, the review would be done by an independent body, would it not?
Mr. Meunier: Yes. This is a very old piece of legislation; we are well aware of that. It will probably be reviewed down the road. We are aware.
The Chair: At the present time, you are asking us to approve the fact that the minister makes a decision and then the minister is the judge, jury and the court of appeal.
Mr. Meunier: Yes.
The Chair: You are indicating that such a situation is likely to be reviewed in the future, but for the time being, that is the way it is.
Mr. Meunier: That is correct. As I mentioned earlier, we think the boards are doing that work now. It is something that we will be discussing with the provincial boards to see if this is something that they would take on.
The Chair: You are telling us this is under active review at the present time, are you?
Mr. Meunier: It is not active but it is under discussion, if I may say so.
The Chair: That is preliminary to an act of review, is it not?
Mr. Meunier: Correct.
The Chair: Thank you.
Senator Callbeck: Thank you for coming here this afternoon.
There are three people on the board. I assume that there are set terms of two or three years, or have they been on there for a long while and built up expertise on that board?
Mr. Meunier: Some have been on there for a while. We have one gentleman who has been there much longer than I have and he has expertise in the area. He is a former seaman and retired, out of British Columbia. Of the others, one is a former public servant and the other is a public servant today.
It is not a piece of legislation that is very active. It was active in its heyday, in the 1940s, 1950s and 1960s, but today it is not an industry that is very active. That is reflected in the way we are handling adjudication claims right now, of which there are very few.
Senator Callbeck: I wondered if there had been expertise built up on that board that will not be there.
Mr. Meunier: No. There is no big expertise now; the expertise is within our office.
Senator Callbeck: How much does the board cost? What are the savings to eliminate it?
Mr. Meunier: The savings are minimal. Basically, it is streamlining and part of the draft process. We reviewed whether we still needed the continuation of the board and it was decided there was no need for the board.
The costs are minimal.
Senator Callbeck: Yet the board members must have gotten a per diem, did they not?
Mr. Meunier: No, they did not. This was a volunteer board.
Senator Callbeck: Okay.
I understood you to say that it is now with the Minister of Labour. The minister has the final say; is there no appeal?
Mr. Meunier: That is correct. Once the minister makes the final decision, there is no appeal mechanism, per se.
Senator Callbeck: That was the same with the board in that the board's decision was final, or was it different?
Mr. Meunier: That is correct. The decision was final.
Senator Callbeck: Thank you.
The Chair: Senator Buth, did you have an intervention?
Senator Buth: No, my question has been answered.
The Chair: That sometimes happens here.
Mr. Meunier: If I may, I will add that the benefits stay the same. There is nothing else that changes under these amendments that are being proposed here today. The benefits are the same.
The Chair: Mr. Meunier, you have explained it well. We look forward to seeing you again after you have had your discussions, your active review and some proposed changes. I think the public would expect that an appeal process, if there is one, would be done independently under current practice.
Mr. Meunier: I concur, yes.
The Chair: Thank you.
The next Division is 12, but that is being handled by transport, so we are moving right along to Division 13, Hazardous Materials Information Review Act.
This is almost like being at university, with all the different things we are learning as we are going along.
Colleagues, we are now going to Part 4, Division 13, at page 260. We are pleased to welcome, from Health Canada, Suzy McDonald, Senior Advisor to the Assistant Deputy Minister, Healthy Environments and Consumer Safety Branch. Ms. McDonald, you will help us through; you know the process we like to follow here. Thank you very much for being here and ready to go on short notice. You now have the floor.
Suzy McDonald, Senior Advisor to the Assistant Deputy Minister, Healthy Environments and Consumer Safety Branch, Health Canada: Thank you very much. As set out in the bill before you today, the Hazardous Materials Information Review Act would be amended to transfer the responsibilities and functions of the commission to Health Canada. As a result, the commission would cease to exist as a stand-alone agency.
The changes presented in the bill before you are mainly administrative in nature, which means that they make the changes needed so that the commission will no longer exist as a stand-alone agency. The responsibilities and functions of the commission will not change as they are transferred to Health Canada and the changes will not alter the operation of the exemptions permitted for confidential business information under the Hazardous Materials Information Review Act.
The amendments to the act will not affect its primary purpose, which is to provide for the granting of exemptions under the Workplace Hazardous Materials Information System, also known as WHMIS, so as to protect the confidential business of industry. All aspects of the act related to the claim for exemption processes remain the same, including formal registration of claims, issuance of registry numbers, determination of claim validity based on prescribed regulatory criteria, the determination of compliance with material safety data sheets and labels, and the convening of independent tripartite boards of appeal for claimants or affected parties on decisions or orders under the act.
Given that a number of the changes are very administrative in nature, I had not planned to note the ones where there is a simple repeal in the clause by clause. I will focus mainly on the ones that provide a broader change to the act.
The Chair: Thank you. However, if there is some fundamental reason for repealing something or it has been replaced, you will highlight that?
Ms. McDonald: I will highlight those, but there are a few that are obvious.
I will start with the definitions because we are repealing the definitions of "President, "rule" and "screening officer." The definition of the rule reflects internal rules that the council may have made. These deal with the election of the chair and the regulations for the council. No rules have been made reflecting the operations of the commission itself. The repeal of that rule does not affect the commission.
The definition of "screening officer" is no longer required as this is defined as a specific function within the commission. Again, the definitions for the "Chief Appeals Officer" and "Chief Screening Officer" are replaced. These individuals will be designated by the Minister of Health, but these positions will continue to be filled by public servants who will be appointed in accordance with the Public Service Employment Act.
Throughout the new bill we have also changed the wording "this Part" with "this Act." When the Hazardous Materials Information Review Act first passed it was one part of a larger bill. It has been a stand-alone act for a number of years and we have used this opportunity to clarify that wording.
The Chair: It is nice that you would take the budget implementation bill to do that.
Ms. McDonald: Under clause 271, a subsection is added to section 23 of the act that allows the minister to appear before an appeal board. This subsection ensures that the minister or departmental representatives can appear before an appeal board to explain any decisions made by a screening officer, as well as to provide information under the Department of Health's jurisdiction.
Clause 272, which is around the notice of decision, ensures that a copy of any appeal board decision is distributed to the Minister of Health. This will ensure that future practices of the department reflect any decisions made by the appeal board.
Under clause 274, section 28 of the act, which established the council of governors, is replaced with a section establishing an advisory council reporting to the Minister of Health with a similar composition of federal, provincial, territorial, industry and worker groups represented.
This council will be able to provide advice on all aspects of the operation of the act and this is a broader mandate than the previous council of governors that could make recommendations to the minister on changes to procedures for the review of claims and with regard to fees.
With clause 275, essentially sections 29 to 42 of the act — relating to the council of governors, the commission and the president, and the nature of the employees of the commission — have been repealed. Items included here relate to the head office of the commission, appointment and reappointment of the president and so on.
Under Clause 276, list of nominees, subsection 43(3) of the act is modified so that the Minister of Health for appeals under the Hazardous Products Act, and the Minister of Labour for appeals under the Canada Labour Code, can determine appropriate nominating organizations for members of appeals boards. We have also modified section 43 of the act to ensure that the minister can consult with the advisory council that will be established to identify organizations representative of workers, suppliers and employers.
Clause 277 removes the requirement to table an annual report. All activities previously undertaken by the commission will be reported on by Health Canada through regular reporting channels, such as the Report on Plans and Priorities and the Departmental Performance Report.
Clause 278 deals with how and when confidential business information can be disclosed. We have changed the wording in this section to reflect the change from "the commission" to "Health Canada." This is important in that if there is a medical emergency, medical officials need to have access to the confidential business information and we need to ensure that they can have that access.
Clause 279 ensures the continuity of the confidential business information claims and that the Minister of Health can process claims and allows the continued operations of the CBI function.
I will skip now to clause 285, but again I am happy to answer questions on those previous clauses. This clause ensures that the staff of the commission, including staff that may be impacted by workforce adjustment, are transferred to Health Canada and that they receive all of the rights and entitlements that other Health Canada employees do.
Clauses 286 to 289 are modified to ensure ongoing operations. Essentially it transfers the assets and any contracts, leases, licences, et cetera.
Any independent agency or government department is governed by a series of federal acts and clauses 290 to 296 delete the commission from these acts. For example, the Financial Administration Act. Health Canada, plus the functions of the commission, will continue to be governed by these acts.
Clause 298 allows the coming into force date to be established by the Governor-in-Council. This will essentially ensure that we can point to a particular time period for the transition to occur. We are aiming for no later than April 1, 2013. This helps to ensure predictability for stakeholders who need to file the claims as well as for staff.
The Chair: I see clause 285 is excluded from that coming into force clause. I look back to clause 285 and that has a specific date of when that would come into force.
Ms. McDonald: That is correct. Again, that is to ensure that staff are transferred on a particular date. We wanted to ensure that we have all of the work done that we need to do so they are transferred without any issues for them.
The Chair: It would probably be at a different time than the other clauses?
Ms. McDonald: That is right.
The Chair: Thank you. I have a number of senators who are interested in having a discussion with you. I will start with Senator Smith from Quebec, who is the Deputy Chair of the committee.
Senator L. Smith: How active was the commission? It seems like you are creating a parallel structure. Was the rationale behind it for efficiencies? How many people are involved? Can you answer those questions?
Ms. McDonald: Absolutely. Health Canada is already responsible for the Workplace Hazardous Materials Information System. That is the overall system that requires a chemical supplier, a petroleum supplier or anyone supplying or importing hazardous products to Canada to provide labels and safety data sheets that allow workers to understand the consequences of coming into contact with the material. The commission is responsible for the confidential business information component of the overall WHMIS program. That means if a company has a chemical product and does not want other companies to know what is in the secret ingredient, they apply to the commission and disclose what is in the ingredients. The commission does an assessment to say whether the information the company plans to provide on the safety data sheet and the label are correct and provide the right information to workers so they can safely handle those products in the absence of knowing specifically what is in the product. The commission processes about 350 to 400 claims a year. Certainly there is opportunity to re-balance this program to bring into the broader WHMIS program that exists at Health Canada and to have those claims processed under the broader program.
Senator L. Smith: How many employees were involved?
Ms. McDonald: There are nine employees impacted by this, and they are all corporate employees. As a stand-alone agency, the commission had responsibility for communications and finance. Those functions will be taken up by existing employees at Health Canada.
Senator L. Smith: The total group at the commission was how many people?
Ms. McDonald: It was 40 people, 31 of whom will be transferred to Health Canada. They will co-locate with the national office of WHMIS and another team that was working on the implementation of the globally harmonized system for classification of workplace chemicals.
Senator L. Smith: Was this change initiated for efficiencies?
Ms. McDonald: It was initiated as a result of efficiencies but it had been discussed by stakeholders in the past that the two programs could and should be brought together. The rationale behind the decision was efficiencies.
Senator Callbeck: You mentioned that people who import hazardous materials report to the commission. They are obligated to report, but there is a hazardous material information review. Does that a review take place every so many years?
Ms. McDonald: Yes. The Workplace Hazardous Material Information System, through the Hazardous Products Act and the Hazardous Materials Information Review Act, sets the standards that industry must adhere to. Industry is not required to report to the commission in any particular way. They only apply to the commission when they would like to have an exemption for confidential business information. Only confidential business information goes to the commission. The National Office/National Secretariat of the WHMIS within Health Canada is responsible for setting the overall standards.
Senator Callbeck: How many people were on the commission?
Ms. McDonald: In terms of staff or the council?
Senator Callbeck: In terms of members of the commission. Was there a commission?
Ms. McDonald: The commission was established and it had a certain structure for staff. There were approximately 40 staff members. In addition, a council of governors provided information to them. The council of governors was made up of representatives of federal and provincial jurisdictions, workers and labourers.
Senator Callbeck: Will the council continue to exist? Will the provinces still have the same input?
Ms. McDonald: There will be a requirement for a legislated ministerial advisory council, which will have the same makeup and composition as the current council of governors. Its role will be advisory in nature. The council of governors has a legal standing under the act. We are creating a ministerial advisory council. That decision was made in consultation with the current council of governors. It was their recommended option for moving forward.
Senator Callbeck: What will be the makeup of that advisory council? How many provincial people will be on the council?
Ms. McDonald: I will refer to that section. I believe it will be a minimum of 4 and a maximum of 12 FPTs.
The Chair: It will be a maximum of 13, as shown in clause 274 on page 262.
Senator Callbeck: This will be in an advisory capacity whereas before they had some real input.
Ms. McDonald: Previously, they provided input to the review of fees and the review of processing claims. We are actually expanding their mandate so that they are able to provide input to any aspect of the Hazardous Materials Information Review Act. We will be seeking broader advice from them.
Senator Callbeck: They were just an advisory council before, so that has not changed.
Ms. McDonald: They were an advisory council that provided advice to the minister around those two aspects.
Senator Callbeck: They will continue to do the same thing. Is that right?
Ms. McDonald: Yes.
Senator Callbeck: You had about 40 people before and 31 have been transferred. Either I read in the material or you said that the commission cost $4.5 million, so there will be some savings. Do you know how much?
Ms. McDonald: As a point of clarification, those people have not been transferred. The transfer will not happen until the bill passes. About $819,000 in salary savings will be achieved through this measure.
The Chair: Thank you for your sensitivity in not acting before the bill is passed. We respect that and are glad that you do as well.
Honourable senators will be interested in knowing that Rita Coshan, Chair, Hazardous Materials Information Review Commission Council of Governors, which we discussed today, will appear as a witness tomorrow. We will be able to talk tomorrow to someone who is impacted by this proposed legislation.
Thank you for filling us in on what is happening and what the impacts are.
[Translation]
Senator Boisvenu: I was a senior official at the ministère de l'Environnement du Québec for 15 years. This was a very sensitive issue, especially when it came to inspectors. If my understanding is correct, the savings will mostly be made in administrative services.
Ms. McDonald: Yes.
Senator Boisvenu: Will there be any impact on highway and environmental inspectors whose job is to inspect hazardous products on the road?
Ms. McDonald: In our context, provinces and territories carry out inspections for the Department of Health. So, no, inspectors in regions, provinces and territories will not be affected.
Senator Boisvenu: As far as the quality of information goes, those people will have the same information after the commission has been abolished as they did before.
Ms. McDonald: Absolutely.
Senator Chaput: My question is also about the commission. You have already partially answered it, but I would like a few clarifications. Why will the duties and activities of the current commission be affected by the transfer to Health Canada? What will be the concrete differences between current and future duties?
Ms. McDonald: Actually, as I explained, the commission will cease to exist in its current form. It was established under the legislation. I will tell you what they do in the current context in English.
[English]
They provide advice on the fees and on the operations.
[Translation]
In the context of Health Canada, a new commission will be established and will be able to provide advice to the Department of Health on all aspects of the legislation. In addition, they will continue to provide information on organizations that represent certain specific areas, and on workers and employees.
Senator Chaput: Will they also have the duty or the responsibility to make assessments? If they provide the department with advice on something, they will want to know what has become of that advice. If the department fails to comply, will they conduct an assessment, or do they just provide advice and move on to something else?
Ms. McDonald: We have not yet implemented the whole structure necessary for that new commission. Normally, in that type of a situation, they would provide advice and would always follow up to see what has come of it.
The Chair: Thank you. I have no other names. That means we are satisfied.
[English]
Thank you very much, Ms. McDonald.
We will now go on, colleagues, to the next division, which is Part 4, Division 15, Employment Insurance Act. Division 14 is going to the Banking Committee, so we are on to 15.
On page 272, I find Division 15. I should never guess that it will only take a short time. It is only half a page, but who knows. It takes three witnesses to tell us about this one.
From Canada Revenue Agency, we welcome Mr. Ray Cuthbert, Director, CPP/EI Rulings Division; from Human Resources and Skills Development Canada, Mireille Laroche, Director General Insurance Policy Directorate; and from the Department of Finance, Tamara Miller, Chief, Labour Markets, Employment and Learning.
Welcome, each of you. Who would like to take the lead? Mr. Cuthbert, go ahead, sir. We are at page 272, dealing with Employment Insurance amendments.
Ray Cuthbert, Director, CPP/EI Rulings Division, Canada Revenue Agency: The Hiring Credit for Small Businesses 2012 is identical to the Hiring Credit for Small Businesses 2011, with the exception of the years involved in the legislation. There is only one clause in the budget that talks about this measure. It is clause 307. It basically outlines how the credit is calculated.
Employers who had employer EI premiums, in 2011, of $10,000 or less and who have had an increase in employee EI premiums in 2012 are eligible to receive a credit. The credit is calculated by the difference between the 2012 and 2011 amounts, but it must be greater than $2 and not exceeding $1,000. The credit is calculated at the time the Canada Revenue Agency processes the employer's T4 information return. The only other part of that clause would be that no interest is payable on that credit. That is essentially how the credit is calculated.
The Chair: If a small business was entitled to a credit in 2011 but hired no new employees, would that same credit entitlement of 2011 apply to 2012?
Mr. Cuthbert: The credit is calculated based on the difference in premiums that are paid. If there has been an increase in premiums, they would be entitled to that credit.
The Chair: Whether or not new employees were there?
Mr. Cuthbert: That is correct.
Senator Callbeck: Thank you for coming.
Would the increase be calculated on the increase in EI? I thought it was also on any wage increases or the hiring of a new employee.
Mr. Cuthbert: It is calculated on the employer EI premiums that are paid on behalf of employees, so it is not based on the wage necessarily.
Senator Callbeck: It is called the Hiring Credit for Small Business, which is a strange name because you do not have to hire anyone to get it, right?
Tamara Miller, Chief, Labour Markets, Employment and Learning, Department of Finance Canada: That is correct. The premise is that it does make it easier for employers to hire. As Mr. Cuthbert mentioned, it is just a question of whether your premiums from 2011 exceed the premiums from 2012.
Senator Callbeck: Do you have any idea how many businesses took advantage of this last year?
Mr. Cuthbert: There were approximately 530,000 businesses that took advantage of it.
Senator Callbeck: There were that many?
Mr. Cuthbert: Yes.
Senator Callbeck: I have here that Budget 2012 says that 536,000 would qualify for the credit, and you are saying 530,000 took advantage last year?
Mr. Cuthbert: Approximately, yes.
Senator Callbeck: That is 90-some per cent. That is nearly 100 per cent.
Mr. Cuthbert: It is not that they took advantage, but the credit is calculated on the premiums paid. If that is how many businesses had an increase, they got the credit.
Mireille Laroche, Director General, Employment Insurance Policy Directorate, Human Resources and Skills Development Canada: I think it is important to note that the businesses do not have to apply for this. It is calculated automatically by CRA. As long as you meet the criteria that your premiums are $10,000 or less and you have seen an increase from one year to the other, the refund will be provided, providing a simple, administrative way to provide this credit to businesses.
Senator Callbeck: I think it is good because anything that helps small business I certainly agree with. I have a problem with the title, though, because I think it is misleading.
The Chair: It is not the witnesses who came up with this title, though.
Senator Callbeck: I know.
Senator L. Smith: For this credit or the implementation of this program, did you target the size of businesses? Could you give us an idea of the type of business size? How many employees would be in these types of businesses? That would help us to understand the scope.
Ms. Laroche: For $10,000 or less, in terms of premiums, that equates to about eight or nine employees.
Senator L. Smith: Are you talking small businesses or start-ups?
Ms. Laroche: Really small businesses.
Senator L. Smith: Is there any thought process going to increases as businesses grow from, say, 10 to 20 so that you continue the incentive for people to grow their business?
Ms. Laroche: That is really a question for the government to answer. If a company had premiums of 5,000 and moved up to 10, they would be included. However, if they are above 10,000, they would no longer be eligible for the credit.
Senator L. Smith: From your information is this set for the 2012 fiscal year or for 2012-13?
Ms. Laroche: This will be available to businesses for this calendar year.
[Translation]
Senator Bellemare: I have some questions about the funding of that tax credit. I understand that we are talking about credit on premiums. So is a loss of revenue related to that credit a loss of revenue for employment insurance funds or is it funded through general revenues?
Ms. Laroche: It is funded through employment insurance premiums, so it has an impact on the funds.
Senator Bellemare: So a higher tax credit can potentially have an impact on premium rates. Is an evaluation of that program's results planned? Has no assessment of short-term effectiveness been carried out?
In itself, this measure could help small businesses with a heavier payroll tax burden. It may provide some relief. I would like to know whether you have looked at the impact on the labour market, and whether this measure has had any kind of a positive impact on the labour market so far.
Ms. Laroche: Given the way tax credit is administered — by increasing premiums — the Canada Revenue Agency has no information and determines credits based on aggregated data. So there is not really a way to obtain information on the number of jobs created. However, the government feels that this reduction will help small businesses hire employees and get through the relatively fragile economic period we are currently experiencing.
Senator Bellemare: Have any consultations been held with business and worker representatives, since those two groups fund employment insurance?
Ms. Laroche: The consultations that have been held are standard discussions as part of pre-budget consultations. I know some organizations, such as the Canadian Federation of Independent Business, support this measure and see the credit as a good way to support small businesses.
Senator Boisvenu: Senator Bellemare asked a question about evaluating this measure. My understanding is that the evaluation be done at a later stage.
Considering that 536,000 businesses have used the measure, what percentage of eligible businesses have not used it?
Ms. Laroche: Since the measure is administered by the Canada Revenue Agency, the process is automatic. So companies do not need to apply.
Senator Boisvenu: Will all eligible companies have access to the measure?
Ms. Laroche: It really depends on the number of companies.
Senator Boisvenu: The government has directed its concerns toward reducing companies' bureaucratic burden in their dealings with departments.
In your opinion — and I know you have some experience in public administration — do the businesses that use this measure feel that the administrative cost is worth their while, or does it contribute to their administrative overload?
Ms. Laroche: There is actually no additional cost for them — and Mr. Cuthbert can confirm this — because it all goes through their income tax return.
Senator Boisvenu: So it is automatic.
Ms. Laroche: It is automatic.
Senator Chaput: Can you tell me where the idea to make this change to employment insurance for small businesses came from? Did small businesses suggest this to you or did you hold consultations? What is the anticipated real impact on additional hiring?
[English]
Ms. Miller: Generally speaking, as in all budget measures, the government conducts pre-budget consultations and a range of ideas are considered. I cannot say specifically where this idea might have come from. As was already mentioned by Ms. Laroche, the CFIB has definitely been highly in favour of this. Through consultations in the pre-budget period, as well as more recently with the government's consultation on EI rates-setting mechanism, there have been requests from small businesses to address the EI premium rates.
[Translation]
Senator Chaput: So it would appear that small business owners agree, that they asked for this?
[English]
Ms. Miller: Yes. They have been very positive in their reaction to it and supportive of the extension through Budget 2012.
[Translation]
Senator Chaput: What is the real impact? How many new jobs do you anticipate will be created through this measure? Has an analysis been conducted?
Ms. Laroche: We expect the cost of this measure to be $205 million, which will remain in the pockets of small businesses, to be used to fund additional hiring.
Senator Chaput: How did you arrive at this figure? What did you calculate? The number of business owners?
[English]
Mr. Cuthbert: The credits are calculated when the returns are processed, so it is automatic. We have access to that information.
Senator Chaput: That is what has been estimated?
Mr. Cuthbert: It is approximately $204 million. I can probably get the exact number. We have the exact numbers.
[Translation]
Senator Bellemare: If I may answer Senator Chaput's question, the impact of employment insurance premiums is high for small businesses that generally offer low wages. So the employment insurance percentage in terms of payroll is higher for small businesses than for large ones. Therefore, the burden of small businesses in terms of employment insurance is proportional to that of large businesses. This credit provides them with some relief.
So, in itself, this is a good measure, but it would be advisable to eventually assess its impact because $205 million is not a lot compared with the $12 billion or $13 billion in total employment insurance premiums. So it is a small relief.
The Chair: Thank you for your comment. Do you have anything else to add? Do you agree with this comment?
[English]
You estimated a year ago that the costs of this would be about $205 million and now it has been determined that it was $204 million. Is that what I am to understand?
Mr. Cuthbert: I think the estimates last year were lower than 204. I do not have them in front of me, but I think they were 165.
The Chair: I am sorry. The information I had was 205.
Ms. Laroche: The number of 205 is what we are expecting for this extension this time around.
The Chair: I have two questions. First, if you were able to determine how much it costs, were you able to make an estimate of how many new positions were created as a result of this initiative? Second, how was that accounted for?
We are the Finance Committee, so we are always interested in knowing. There is a pool of money for Employment Insurance, and that is used to pay out benefits when and if needed. Does this credit come out of that pool?
Ms. Laroche: Yes, the credit is financed through the EI operating account.
The Chair: Okay. Is that supplemented? There is a policy of the government to make that EI operating account self- sufficient. For this initiative, are there funds coming out of general revenue into that?
Ms. Laroche: No.
The Chair: The other people paying into the EI account will have to pay for this?
Ms. Laroche: Yes. It will be funded through the premiums —
The Chair: — the premiums that are being paid by everyone who pays into it.
Ms. Laroche: That is right.
The Chair: My other question was about how many employees you estimate will be created. How many new positions were created as a result of this initiative?
Ms. Laroche: We do not have such an estimate. As we mentioned before, the credit is calculated automatically and is calculated on the difference between the premium paid this year relative to last year. CRA receives that information through the income tax declarations of businesses and ensures they meet the eligibility requirements. If they do, that is where the credit is done.
This being said, the government forecasts that $205 million will be returned to these small businesses at that point in time. It is money that can be used to hire and retain employees in their business.
The Chair: Money that could be used.
Ms. Laroche: To hire.
The Chair: Could be used, but not necessarily.
Ms. Laroche: Yes. Not necessarily.
The Chair: Therefore, you have made no estimate as to the effectiveness of the program. I mean your department — your three departments, or is it your two departments? No one knows how effective this is, yet the government is extending this for a year.
We are looking for a policy basis for this activity.
Ms. Laroche: The policy basis of this measure is to provide some relief to small businesses during this economic recovery to help them hire and retain employees.
As Senator Bellemare has mentioned, these employees have premiums to pay. Proportionally, the EI premiums represent a substantial amount for them to pay. This is seen as a means to help support businesses to go through the economic recovery and to ensure that they are able to retain and hire employees. That is the intent of this measure.
The Chair: But no measurement has been done. There is no estimate of how many, if any, new employees there will be. Yet, this is being extended for a year and it is increasing the premiums that have to be paid by everyone who pays into employment insurance; am I getting this right?
Ms. Laroche: We do not have an estimate, no.
The Chair: Are there any questions that flow from this line of questioning, colleagues?
I have no one else on my list. Thank you very much. I hope you will take back some of our comments to your colleagues.
We will move on to Division 16, which is the Immigration and Refugee Protection Act. Division 16 is at the bottom of page 272 and runs over for a page and a half.
Senator L. Smith: If you had eight to nine employees what would the situation be?
The Chair: I would love to know what the theoretical is. What I was trying to get at with my questions is to find out since something is being extended, it is usually deemed to be a success.
We will now go on to Division 16, Immigration and Refugee Protection Act, page 272. From Citizenship and Immigration Canada, we welcome Maia Welbourne, Director, Document and Visa Policy.
Welcome, and tell us about the Immigration and Refugee Protection Act changes.
Maia Welbourne, Director, Document and Visa Policy, Citizenship and Immigration Canada: Thank you very much. The amendments to the Immigration and Refugee Protection Act support the development and implementation of the electronic travel authorization, or as we call it, ETA program. The ETA was announced by Prime Minister Harper and U.S. President Obama as part of the Perimeter Security and Economic Competitiveness Action Plan in December 2011.
The ETA will be an electronic document that authorizes the holder to travel to Canada by air. It will be required of all visa-exempt foreign nationals, except U.S. citizens. The ETA will allow the Government of Canada to screen these foreign nationals before they board a plane, to determine whether they are admissible to Canada.
Affected foreign nationals will complete an online application, available on the CIC Internet site. It will collect biographic and immigration admissibility information. The vast majority of applicants will be determined to be low risk and will have their applications approved within minutes. Only a small number of applications will be reviewed by a visa officer before a final decision is made. Those travellers who have not obtained an ETA before departure will be denied boarding by the air carrier.
The benefits of the program will include the ability to identify and examine inadmissible foreign nationals overseas, ultimately denying travel to Canada by air to such individuals as appropriate. This will have benefits in terms of reduced costs and resources to process inadmissible persons in Canada, along with related enforcement costs. As well, it is expected to contribute to decongestion at ports of entry, as travellers will have already been screened prior to travel.
The main elements of the legislative amendments are as follows: Clauses 308 to 310 allow for the electronic processing, examination, and issuance of an ETA pursuant to regulations. Currently, IRPA only allows for applications to be made by an officer and for an officer to make a determination.
Clause 309 specifically creates the authority for regulations to specify those circumstances where a foreign national may apply for an ETA through a means other than the electronic system.
Clause 311 specifies that ministerial instructions issued under section 87.3(3) of IRPA may apply to ETA applications.
Clause 312 stipulates that the User Fees Act would not apply to the ETA application fee. IRPA currently provides that immigration services may be cost recovered through fees established in the regulations. Establishing ETA fees through the regulations rather than the User Fees Act will ensure there is flexibility in the setting and adjusting of the fees while ensuring transparency and accountability.
Finally, the last two clauses, 313 and 314, deal with a series of coordinating amendments.
The Chair: Thank you very much. I think we understand the initiative.
Senator Callbeck: Thank you for coming this afternoon. Foreign nationals will have to provide data online or by other means. What are the other means?
Ms. Welbourne: We would make provisions, for instance, for a paper application to be submitted and provided directly to a visa officer.
Senator Callbeck: To a visa officer. If someone is not located near to a visa officer?
Ms. Welbourne: They would be permitted, such as the case with temporary resident visa applications, to mail in an application. Similarly, if for whatever reason they were unable to use the ETA online application, the legislation allows us to circumscribe in regulations how an individual could apply, for instance, for an ETA but through a paper application.
Senator Callbeck: If they decide tomorrow that they are getting a ticket, they have not got time to mail it in and they are not near electronics where they could put it on the Internet, what happens?
Ms. Welbourne: The vision behind the electronic travel authorization, which is similar to the Electronic System for Travel Authorization, or ESTA, the American version of the same, is premised on online application and automated decision making and essentially close to instantaneous approval. That is how it is intended to operate.
We have allowed for circumstances to be specified through regulations, if an individual is unable to access the system, ways in which they could provide an application through an alternative means. The ETA will be valid for up to five years. Individuals will be encouraged to apply for the ETA in advance of travel, so prior to booking their ticket, as much as possible. Once issued, it will allow as many visits to and from Canada as they would like within that five-year period.
Senator Callbeck: It is for five years.
Is there a system set up now to deal with this, or does this mean that a new system has to be set up?
Ms. Welbourne: CIC already has an online system in place that allows individuals to deal with the department and access certain lines of business electronically, so it is building on that system.
Senator Callbeck: There will be a fee levied. How will that be collected?
Ms. Welbourne: It would be collected by credit card, online.
Senator Callbeck: Okay, that is fine. Thank you.
[Translation]
Senator Boisvenu: Thank you, Ms. Welbourne. As the senator said regarding this issue, we are not talking about a new service, but rather an improved one.
Ms. Welbourne: I will answer in English if that is okay with you.
[English]
It is a new line of business. Currently, there are essentially two populations arriving in Canada: those who require a visa and those who do not require a visa. They are currently able to board a plane and arrive in Canada at a port of entry without any systematic screening.
[Translation]
Senator Boisvenu: So this is basically an expansion.
[English]
Ms. Welbourne: We are essentially creating a new line of business in terms of a new documentary requirement to the group that is visa-exempt.
[Translation]
Senator Boisvenu: Clause 309 says something along these lines:
[. . .] would create the authority for regulatory provisions to specify the limited circumstances under which a foreign national may apply [. . .]
What are those limited circumstances?
[English]
Ms. Welbourne: Those would be described in the regulations. I am not in a position right now to describe exactly. However, if an individual had a disability that prevented them from applying online, for example, that is the kind of situation that could be dealt with through the regulations.
[Translation]
Senator Boisvenu: Why not have fees?
[English]
Ms. Welbourne: The intention is to apply a fee. We are seeking an exemption from the User Fees Act, which will allow us to set and adjust the fee without going through the rigorous consultation processes under the User Fees Act.
[Translation]
Senator Boisvenu: Finally, is the objective of expanding that service to improve national security or to minimize delays for obtaining approvals?
[English]
Ms. Welbourne: The purpose is twofold. It will address a gap in terms of determining who is admissible to Canada. Currently, large groups of individuals arrive in Canada without going through any screening. That fits into the North American perimeter vision. We will have a consistent approach with the U.S. in that individuals arriving at our shores will have been either screened through a visa process or through this electronic system. That is essentially the goal. It is hoped that this, in conjunction with a number of the other beyond-the-border initiatives, will facilitate travel in that the more we can push decision making outside and offshore, the more facilitation can be offered once the individual has arrived in Canada.
[Translation]
Senator Boisvenu: With your permission, Mr. Chair, have you assessed the cost of this expansion measure?
[English]
Ms. Welbourne: We are currently working with Treasury Board to finalize the costs and, by association, the fee.
[Translation]
Senator Boisvenu: Once you determine the program costs, will you try to set up a fee structure whereby the program would be self-financed?
[English]
Ms. Welbourne: Exactly. All costs will be fully recovered through the fee.
[Translation]
Senator Rivard: Senator Boisvenu asked a question about the system self-financing. Do you have any idea about that? Will the number of people needing electronic travel authorization be in the hundreds or the thousands?
[English]
Ms. Welbourne: For costing assumptions, we are estimating 3.5 million applications per year.
[Translation]
Senator Rivard: The other issue may not be related to the bill, but it has to do with visas. Canadians need a visa to enter some countries, such as Russia or Brazil. We have the same requirement when those countries' nationals come here. Is the cost of a visa to come to Canada the same for a Russian, a Hungarian, a Mexican, or any other national? Is the price the same across the board, or does it depend on the country?
[English]
Ms. Welbourne: The fees vary depending on whether it is a single entry visa or multiple-entry visa. The country of origin is not a factor.
[Translation]
Senator Rivard: Even in the case of single entry, the price varies from one country to another. Does that have to do with requirements? If a Russian wants to come to Canada, they need a Canadian visa, and the same goes for a Hungarian national. Is the cost the same for a short stay, or is it based on potential administration costs, depending on whether there are more Russians or Hungarians?
[English]
Ms. Welbourne: The fee for the visa to Canada is the same regardless of where the national is from. Behind the issuance of the visa, there may be more or less effort put into processing that visa.
[Translation]
Senator Chaput: You did say, madam, that this new system is somewhat based on the American model — on what is already being done in the United States. How long has this approach been used in the United States?
[English]
Ms. Welbourne: The U.S. ESTA program has been in place since 2009.
[Translation]
Senator Chaput: Have there been any issues with this system, and if so, what are they?
[English]
Ms. Welbourne: There have been no major concerns. My understanding is that they went forward with a soft launch, meaning that they introduced the ESTA — the online application — but did not make it a requirement until a period after it had been introduced, so they were not enforcing the requirement. Generally in our discussions with the U.S. Department of Homeland Security we hear that they are very pleased with the system and have no concerns.
Senator McInnis: The electronic travel authorization will be, apparently, a benefit to Canada in that it may pick up inadmissible foreign nationals before they board a plane or other mode of transportation to Canada.
Do you have an idea how many inadmissible individuals might be here without this system? What cost savings are associated with that?
Ms. Welbourne: I do not have the numbers of inadmissibles or people who might be caught. We can look to provide the numbers, in terms of our experience, of those people who are discovered to be inadmissible once they have arrived at the port of entry.
As an example, the costs that could be avoided by having something like the ETA in place would include enforcement and removal of inadmissibles once they are already here. That can range, depending on the case, between $1,500 and $15,000 per person. That gives you an order of magnitude just for removing an inadmissible person from Canada.
Senator McInnis: Presumably you do not collect that money.
Ms. Welbourne: No, I do not.
The Chair: Ms. Welbourne, clause 308 of the bill proposes to amend section 11 of the act. When you talk about the system, the system is a computer. You enter the information and get your electronic travel authorization. If you did not do that and you arrived at the gate in Canada, the officer could go through that process and issue it for you? Am I interpreting that correctly?
Ms. Welbourne: To take a step back, clause 308 is about changing the way we process for the purposes of an ETA only, how we deal with applications. Currently, IRPA is designed such that a person makes an application to an officer specifically and that officer renders a decision and issues a document. This clause allows for an applicant to make an application via an electronic system, not through an officer, and allows that system essentially to make the determination and issue the document in question.
The Chair: Currently, there is no requirement for people coming to Canada from non-visa countries, such as France or the U.K., to go through this process.
Ms. Welbourne: Essentially, they buy their airplane ticket, get on a plane and arrive at the port of entry. That is where Canada Border Services Agency officers determine their admissibility. It is done once they have arrived in the country.
The Chair: That is the officer we are talking about here, or do you anticipate that they will do that in their home country before they leave?
Ms. Welbourne: That is right. The ETA allows the individual to apply for entry to Canada and for that individual's admissibility to be determined by the system in advance of travel. We are assuming that the majority will be approved automatically within minutes. If there is any reason, such as any adverse information that pops up during the application process, the application would be referred to an officer in Canada who would then be able to look at the file more closely and either decide that everything looked fine and issue the ETA or, if needed, refer back to a mission overseas where that officer could ask for additional information from the applicant, invite the applicant in for an interview. We expect that to happen only in a minor number of cases.
The Chair: Travellers from non-visa-requiring countries would be advised to make this application before they buy their ticket or appear at the airport to fly to Canada.
Ms. Welbourne: Yes. That will be part of the communications once we are closer to launching. We will recommend that people apply online as soon as they intend to come to Canada. As noted, the ETA would be valid for a period of up to five years and allow multiple trips. Certainly, because of our assumptions, if the individual, for whatever reason, had to fly to Canada with little notice, there would be the ability to apply online at the airport if they had to. Given our assumption that the vast majority of individuals would be approved within minutes, that would not prevent them from that.
The Chair: They would have a fairly good chance of getting on.
Ms. Welbourne: They have a very, very good chance.
The Chair: Will there be an obligation on the airline not to let the person on the plane until they have both a passport and a proper ID, plus the electronic travel authorization?
Ms. Welbourne: That is right, just as it is currently a requirement for airlines to ensure that individuals have the proper documentation to enter Canada. If they need a visa, the airlines are required to check that a visa is in place. Similarly, they would be required in this new phase also.
The Chair: For every traveller?
Ms. Welbourne: There would be documents required, yes.
The Chair: Every traveller, in addition to their passport, even if it's non-visa, must have this electronic travel authorization?
Ms. Welbourne: Correct. Apart from U.S. citizens who would be exempt from both the visa requirement and the ETA requirement.
The Chair: The only other question I have is about the user fee. That is in section 89, at the bottom of page 293. You made reference to that in your presentation. That is a piece of legislation that went through this committee, and we understood that the purpose for it was to ensure that the government does not get into generating more revenue, through user fees, than necessary to cover the cost of whatever services are being offered. Why are you asking to be exempt from a very reasoned piece of public protection legislation?
Ms. Welbourne: Part of it has to do with the fact that IRPA and the regulations already provide for CIC to set fees for services in order to cost recover those services in the regulations. We have an existing authority that allows us to do that.
In addition, as you will know, the UFA involves significant and rigorous consultations prior to setting or adjusting a fee and was intended to ensure transparency in the setting of fees that would affect Canadians. The group to be affected here is foreign nationals. To ensure the flexibility and our ability to adjust the fee should costs increase for whatever reason is the rationale for asking for the exemption.
The Chair: Are you satisfied that what is built into the regulations, from an immigration point of view, covers the spirit of what is in the user fee legislation, which is not so much an authorization to charge user fees but rather protection for the public from excessive user fees and an abuse of the user-fee process?
Ms. Welbourne: The regulations will provide for public consultation and discussion of the fees that will be set. As noted, the fees will not apply to Canadian citizens or permanent residents; they will apply to foreign nationals.
The Chair: That is no reason for gouging a foreign national who wants to come to Canada. Would you be satisfied to have the rules of user-fee legislation apply to this immigration process as well, or is there something in the user-fee legislation that you do not like?
Ms. Welbourne: The Financial Administration Act will ensure that the fee that we charge does not exceed the cost of providing the service. There are other acts and requirements that come into play. That is a protection that has not changed. As noted, we are really looking for the flexibility in order to quickly set and adjust the fee as necessary, and the regulatory process provides transparency for the fee setting process.
The Chair: I hear your answer. Thank you. Seeing no further questions, I thank you, Ms. Welbourne, for being here and being so frank and capable in explaining this section to us. Thank you.
Colleagues, I am now moving on to Canada Mortgage and Housing Corporation, Division 17. We need someone to come and tell us what this is all about. It is on page 275.
Ms. Wang, you are from the Department of Finance, and we always welcome people from the Department of Finance. You have the floor.
Ling Wang, Chief, Housing Finance Review, Department of Finance: Thank you.
This measure repeals a provision of the Canada Mortgage and Housing Corporation Act, which currently stipulates that, if you reach the age of 70, you can no longer be considered for appointment to the presidency or the board of directors of CMHC. By repealing this, we are removing the upper age limit for consideration for CMHC's board. This is very much consistent with changes that the government has made recently to other GIC appointments, as well as changes we made recently in the Canada Human Rights Act to remove the mandatory retirement age for federally regulated employers. It is a very simple amendment.
The Chair: All the senators are smiling and wondering when the age limit for senators will be going by the wayside. That is not part of your mandate here?
Ms. Wang: No.
The Chair: That is it; we understand that. We think that is a reasonable and commendable approach.
Colleagues, any questions? Senator Boisvenu?
Senator Boisvenu: Was the age of retirement different before, or do you not have any standard for that?
Ms. Wang: You mean the age requirement generally?
Senator Boisvenu: Yes.
Ms. Wang: Unfortunately, I cannot comment on the overall retirement age; that is not my subject matter or one that I know a lot about. I certainly know that, recently, we made a lot of changes to remove any mandatory retirement age, encouraging people to stay in the workforce longer. This is consistent with the changes that we have made. We have removed the age limit, for example, in other Crown corporations in recent years, such as the Bank of Canada several years back. The Auditor General's age limit was removed, I believe in 2011, as well.
Senator Boisvenu: For Canadian society, what was the standard before?
Ms. Wang: For CMHC? It is 70 currently, and, by repealing it, there will be no age limit.
Senator L. Smith: There is hope for the old guys.
Senator Boisvenu: They can sit there until 90 or 95?
Ms. Wang: If they are capable. They are still subject to the GIC appointment process.
The Chair: Thank you very much. We thank you and your colleagues at Finance for your very progressive way of thinking.
Ms. Wang: Thank you.
The Chair: Colleagues, we are moving along nicely.
We are all in agreement on that one. Division 18 is the Navigable Waters Protection Act that is being handled initially by the Energy Committee. Division 19 is being handled initially by the Agriculture Committee. The chairs and deputy chairs of those committees will come in and see us once they have done their study on that. Division 20 is Transport. The Transport Committee is looking into that one. Division 21 is Energy.
That leaves us Divisions 22, 23 and 24 to deal with. We will now go to Division 22, which is the Canada Employment Insurance Financing Board. That is found on page 336. That goes to clauses 433 to 465 of the bill; it is composed of 30 clauses. That is a bit longer than some of the ones we just dealt with.
I bet you wish you were from one of the other departments, but I am pleased to welcome you back, Ms. Laroche and Ms. Miller. Thank you for being here.
[Translation]
Ms. Laroche, will you go over Division 22?
[English]
Ms. Laroche: Yes. I propose to provide a brief overview and then go through it, clause by clause. The clause-by- clause discussion is lengthy, so I will try my best to make it as succinct as possible, but it is quite a substantial piece of legislation.
The Chair: Take your time; do it properly because we will have to vote on each of these clauses.
Ms. Laroche: Perfect.
As you may recall in Canada's Economic Action Plan 2012, the government stated its intention to review the size and mandate of the CIFB. In light of the fact that the EI operating account was in a deficit and that for the foreseeable years the rate-setting process would be such that the rate would increase by 5 cents annually until the EI operating account reached a cumulative balance.
After careful consideration, the government decided to suspend the activities of the CIFB until the EI operating account is back in balance and until the CIFB can fulfill its full legislative mandates. Therefore, the purposes of the changes in the budget implementation bill are to dissolve the CIFB and to introduce a new interim rate-setting process until the EI operating account is back in cumulative balance.
During the interim period, the premium rate is to be set by Governor-in-Council according to the current mechanism set out in the EI Act. The EI commission and its actuary will support this process through the production of reports as the CIFB currently does. These reports will be tabled in Parliament following the establishment of the rate.
Once the EI operating account is projected to be back in balance, the CIFB will be reinstated and will set the EI premium rate according to the new seven-year break-even rate mechanism approved by Parliament through the first budget implementation act. This is the overview, and I will now go through clause by clause.
The clauses under discussion are structured in a two-step pattern. The first clause typically either repeals some sections or introduces the necessary clause to introduce the interim rate-setting process. It is subsequently followed by a clause that repeals the interim or reinstates the original clause. We will go through them one by one.
Clause 433 regards the maximum yearly insurable earnings. It amends the EI Act to advance the date that defines the date to be set in the use of the calculation of the MIE from April 30 to March 31.
One of the things I can mention is that, as you may recall in BIA 1, one of the provisions was to move forward the announcement of the rate setting from November 14 to September 14. That date will still prevail. However, given that we have a new process with the Governor-in-Council, there are a number of new steps that have been introduced. As a result, there was a need to change some of the dates in the act to ensure that we are able to accommodate the new process and to meet the September 14 deadline. This is one of them.
Clause 434 pertains to definitions. Essentially, it amends sections in the act to replace the word "board" with the definition of what is the actuary for the purpose of the interim regime. The actuary will be engaged by the Canada Employment Insurance Board to conduct the reports.
The Chair: Is this a separate actuary from the Chief Actuary?
Ms. Laroche: Budget 2010 had an amendment to the HRSDC Act whereby the department no longer has a chief actuary. The CEIFB right now has its own actuary that conducts the rates. Basically, the act will give authority to the commission to hire an actuary to perform the actuarial duties for the purposes of rate setting; hence, the switch from "board" to "actuary."
The following clauses basically reinstate the definition.
Clause 435 pertains to the premium rate setting. This is the clause that provides for the premium rate to be set by Governor-in-Council upon the joint recommendation from the Minister of HRSDC and Finance during the period that the CEIFB Act is suspended. As I mentioned before, the EI premium rate will continue to be set with the current provision of the EI Act such that the premium revenues and benefit expected shares break over time.
The following subclause — subclause 2 — again is a question of changing the word "Governor-in-Council" for "the board." It also deletes a reference to the regulation as there will be none undertaken during the interim regime. The following subclause reinstates the original clause.
The following subclause repeals a section that pertains to the CEIFB's excess financial assets. During the interim period, this will not apply. The following subclause reinstates that.
The next subclause is a wording change from "Governor-in-Council" for "the board." Then again, it is reinstated.
Subclause 8 is for the purpose of the interim regime, the clause substitutes "Governor-in-Council" for "the board." This subclause specifies that the EI premium rate must be set by September 14, and the next subclause reinstates the definitions into the original names or actors.
Clause 436 and 437 essentially change the dates for which the Minister of HRSDC and the Minister of Finance need to provide information to the actuary for them to conduct their report. For the Minister of HRSDC and the information on EI expenditures, the date will be moved from July 31 to June 22, and then will be reinstated. There is also a technical, permanent amendment being made to allow that the costs of the commission that will be incurred for administrating the new Social Security Tribunal can be charged to the EI operating account.
The fourth clause, again, removes a reference. Given that there will be no cost to the Crown for administering the CEIFB Act, this has been taken out of the act. After that, it is reinstated.
While the information that will be provided by the Minister of HRSDC is by June 22, there is a provision included in here that, by July 12, the Minister of HRSDC may provide an update to the actuaries if there is any new information between June 22 and July 12. It also repeals an authority to make regulations, because there will be none undertaken during the interim regime. This will be reinstated once the board comes back into force.
Clause 437 is a similar type of amendment but pertains to the Minister of Finance. The Minister of Finance needs to provide information with regard to economic forecasts and charges to the EI operating account, and follows the same dates as the Minister of HRSDC. For example, information must be sent by June 22. The Minister of Finance will also have the opportunity, should he wish to do so, to provide an update to that information to the actuaries by July 12. There are also consequential clauses to reinstate all the original dates within that.
Clause 438 provides for the actuary to prepare an actual forecast for the purposes of rate setting. That forecast needs to be provided to the EI commission by July 22. This clause also sets out the reporting responsibility of the commission and the Minister of HRSDC under the new interim regime.
More specifically, the commission must prepare a summary of the actual report and provide both the actuary's report and the summary that they have prepared to the Minister of HRSDC by July 31. Then the Minister of HRSDC must provide the report and its summary to the Governor-in-Council for them to make a decision. These two reports — the reports from the actuary and the summary report from the commission — will be tabled in Parliament by the Minister of HRSDC within 10 sitting days after the EI premium rate is set.
The following clause reinstates the old way of doing things and the dates.
Clause 439 talks about the charges to the EI Operating Account. It amends the clauses to account for the fact that there will be no cost for administrating the CEIFB Act charged to the EI Operating Account under the interim regime, and then this clause is reinstated.
Clause 440 pertains to forecasts and estimates and essentially advances the dates by which the Minister of Finance is to forecast an estimates credit and charges to the EI Operating Account from July 31 to June 22. Following that, this clause is reinstated.
There is also a provision in the act that pertains to the payments made to or from the CEIFB and this clause is repealed during the interim period as it will no longer apply. Subsequently, there is also a provision that reinstates this clause once the CEIFB is back in operation.
There are also amendments to the Department of Human Resources and Skills Development. The main amendment is to provide that the commission may engage an actuary from the Office of the Superintendent of Financial Institutions to perform actual forecasts for the purpose of EI premium rate setting, and there is a subsequent clause to reinstate the original to remove that clause.
There are also amendments to the Canada Employment Insurance Financing Board Act, clause 442, which changes definitions in terms of the board. It also repeals clause 443, repeals the subsection that established the CEIFB, followed by a subsequent clause that re-establishes the CEIFB by re-enacting the clause that was repealed.
Clause 444 is in regard to the remuneration of the chairperson for the nominating committee for the board of directors. This clause permanently amends the CEIFB Act to provide that the Minister of HRSDC will both fix and pay the remuneration of the chairperson of the CEIFB nominating committee.
Clause 445 pertains to closing out of affairs. This clause amends the CEIFB Act by introducing a new section, section 37, authorizing the CEIFB to sell or otherwise dispose of its assets and close out its affairs prior to its dissolution. It also provides that the Minister of HRSDC may direct the CEIFB to do anything necessary to accomplish this.
Section 38 provides that the CEIFB must transfer its records, other documentation and intellectual property to HRSDC.
Section 39 of the CEIFB Act provides that the CEIFB provides final reports, covering activities involved in closing out its affairs to the Minister of HRSDC. After that, there is a clause that actually repeals the section once the CEIFB is back in action.
Clause 446 is the suspension of the CEIFB corporate reporting obligations during the period in which it has been dissolved, so it basically suspends the operation of certain sections in the CEIFB Act which requires the CEIFB to prepare financial statements, auditors' reports, special examinations, quarterly statements and annual reports.
Clause 447 suspends the operation of the remaining section of the CEIFB Act. Clause 448 provides for the CEIFB Act to be brought back into operation by one or more orders-in-council.
Clause 449 is actually a transition provision, which requires that the CEIFB nominating committee consult the board of directors when selecting potential new appointments, and that this action only applies once the first seven directors have been appointed.
There are two amendments to the Jobs, Growth and Long-term Prosperity Act, BIA 1. The first one is a technical amendment to ensure that the costs of the commission regarding the administration of the Social Insurance Register and the Social Security Tribunal are to be charged to the EI Operating Account.
Clause 451 essentially provides that the new rate-setting mechanism that was approved in Parliament through the BIA 1 be brought into force by order-in-council.
Following that, there is clause 452, which are essentially definitional changes to accommodate this suspension.
Clause 453 terminates the appointment of the members of the board and prevents any of the directors from seeking compensation from the Crown as a result.
Clause 454 dissolves the CEIFB as a corporate entity.
Clause 455 substitutes any reference to the CEIFB during the period of suspension for the Crown as represented by the Minister of HRSDC.
Clause 456 provides that any surplus financial assets remaining after the dissolution of the CEIFB shall be paid through the Government of Canada CRF and credited to the EI Operating Account.
Clause 457 states that any unsatisfied debt and liabilities after the dissolution become those of the Crown. Similarly, clauses 458 and 459 require that any legal proceedings involving the CEIFB after its dissolution will be transferred to the Crown.
Clause 460 requires that the Auditor General of Canada perform an audit and prepares a report following the closing out of the CEIFB.
Clause 461, as a result of all these changes, makes a change to schedule 3 of the Financial Administration Act, which essentially removes reference to the CEIFB in schedule 3. Following that, there is also a clause that reinstates that once the CEIFB is re-established.
Clause 462 makes a number of technical and coordinating amendments to ensure that this all makes sense across the board.
Lastly, clause 463 pertains to the coming into force. Essentially most of the clauses in this act will come into force on the day or days specified by order-in-council, with the exception of some technical and transitional coordinating provisions that will come into force in Royal Assent, but most of these changes will come into force by order-in- council.
That is the end of my clause-by-clause presentation. I am happy to answer any questions.
The Chair: Thanks very much. That is an awful lot of legalese to suspend, dissolve, get rid of, and wind up a board that has never really had a chance to function. We remember when that board was created and when its job was put off for a year or two so the government fixed the rates.
I assume that each one of these terms has a different meaning: suspension, dissolved and winding up. Are these different words necessary for different aspects of the business?
Ms. Laroche: The intent of the government is to suspend the operation of the Canada Employment Insurance Financing Board until the account is back in balance and the CEIFB is able to fulfill its full legislative mandate. Legally there is no means by which we can suspend a Crown corporation. Under the act, the CEIFB is a Crown corporation and will be dissolved. However, all the clauses are in place to reinstate the CEIFB once the conditions are met or when it is projected that the conditions will be met.
The Chair: What is being dissolved? Is it the board?
Ms. Laroche: Yes.
The Chair: Is the legislation put in suspense until these conditions are met?
Ms. Laroche: Yes.
The Chair: In order to do all of that and to look after all the assets, you have the closing out that is referred to at the bottom of page 350.
Ms. Laroche: Yes.
The Chair: I have got it; thank you.
Senator Callbeck: The CEFIB was set up in 2010. How many are on the board?
Ms. Laroche: There are seven members on the board when it is fully staffed.
Senator Callbeck: Is that representation by regions or how are members appointed?
Ms. Laroche: I do not have that information, but members of the board are Governor-in-Council appointees. They are recommended to our minister by the nominating committee, which is composed of the two commissioners for workers and employers and others. Information is provided and recommended to the minister.
Senator Callbeck: The board is being suspended and the existing members will be gone.
Ms. Laroche: Yes.
Senator Callbeck: When it starts up again, will there be new members?
Ms. Laroche: Potentially. We cannot speak to who will be there when it comes back.
Senator Callbeck: The board has been in place since 2010 — for two years. How much does it cost the taxpayer?
Ms. Laroche: The board was created in 2008 as part of Budget 2008, but it set the rate for the first time in 2010. The costs associated with the board in 2010-2011 were $1.4 million, and the projected cost for the 2011-2012 year is $1.8 million.
Senator Callbeck: The total for the two years is $3.2 million.
Ms. Laroche: Yes.
Senator Callbeck: This board was to set the premiums, which it did not do; invest the surplus, but there was no surplus; and manage the $2 billion contingency fund, which the government has not put into the fund. Has the government abandoned the idea of putting in the $2 billion?
Ms. Laroche: The CEIFB set the rate in 2010, 2011 and 2012.
Senator Callbeck: I thought cabinet set the rate.
Ms. Laroche: It set the rate for 2013, for this year, and for 2011 — at least three years. I am sorry, what is the rest of your question?
Senator Callbeck: I was asking about the $2 billion contingency fund. Has the government abandoned the idea of putting that in?
Ms. Miller: Yes. The $2 billion reserve initially envisioned has been removed through legislation. The board is no longer required to retain a $2 billion reserve.
Senator Callbeck: This board was set up in 2008 to do three things. It set the premiums, you say, for one, two, or three years. What did it spend the $3.2 million on?
Ms. Laroche: To set the rate. It did the required work to set the rate. It also calculates a number of things on behalf of the EI Commission, including the maximum insurable earnings, the premium reduction required for the Employment Insurance Premium Reduction Program, and the Quebec reduction.
Senator Callbeck: How many people were working for the CEIFB?
Ms. Laroche: I do not have the total number of people, but I know that most of the people employed by the CEIFB were on contract. There were two full-time employees, one part-time employee, an executive director and a chief operating officer. As well, the board of directors needs to meet whenever it needs to meet. Those Governor-in-Council appointees are paid when they meet. Tangentially to that, a contract was set out with the Office of the Superintendent of Financial Institutions to provide the actuarial expertise required to set the rate.
Ms. Miller: We can get the number for you but it was in the area of six or seven individuals. Not all of them were full-time; and many were part-time on an as-needed basis.
Senator Callbeck: It seems like a lot of money for the amount of work we got. I will not pursue that because of time.
I thought I heard you say that the new tribunal costs can be charged to the EI fund.
Ms. Miller: Yes.
Senator Callbeck: This tribunal, as I recall, is taking the place of two or three groups. Can you refresh my memory on that?
Ms. Laroche: The social security tribunal will be administrative in nature and encompass both the existing tribunals for the OAS, CPP, and EI. On the EI side, it will replace the current board of referees and the umpire level.
Senator Callbeck: Before, the board of referees was charged to the Employment Insurance Operating Account.
Ms. Laroche: Yes.
Senator Callbeck: There is no change.
Ms. Laroche: As I mentioned, it is a technical amendment because something was missed in the first Budget Implementation Act.
The Chair: For clarification on your statement that the board sets the rate, I recall that the board was created with an idea to managing this operating account in a sustainable manner. You said that they set the rate. Were they not restricted in doing that because a limitation was put on how much they could increase?
Ms. Laroche: Yes. Given that the account was in deficit, they had some limitation in terms of the ability to fix the rates. For the past few years, the increase was limited to 5 cents, which was made permanent in the first BIA.
As mentioned in my overview, the intent of this measure recognizes that the CEIFB, given the current economic conditions and state of the Employment Insurance Operating Account, could not fulfill its full legislative mandate. As a result, the proposal in this bill is seen as a much more cost-effective way of setting the rate in the foreseeable future until the account is in balance.
Ms. Miller: If I may, the CEIFB was originally created through Budget 2008. Shortly thereafter, the country faced a global economic crisis. As a result, the CEIFB was not enacted immediately because they would have been in significant deficit. The government made a decision to wait until 2010 to enact it. That is also why the $2 billion reserve was not transferred originally. That was done in accordance with the CEIFB — they were in agreement.
The decision that has come forward now with respect to this has to do with the fact that the CEIFB would continue to be in significant deficit and therefore would no longer have any surplus to manage. As you recall, when they were established, it was to ensure that any surpluses were reinvested to EI premium payers through reduced EI premium rates. As well, they are mandated to set the rate. Since we now know that the EI account is projected to be in deficit at least until 2016, they will have limited ability to set the rate because the rate will have to be increased.
The Chair: Guidelines have been imposed on how much it can be increased by the government.
Ms. Miller: Again, as part of addressing some of this fragility in the current economy, a limit has been placed on the premium rate increases to ensure that there is predictability and stability, as well as affordability for premium payers.
The Chair: That was my recollection, just to clarify the comment that we had earlier.
Senator L. Smith: You mentioned just now the expected deficit until 2016. When is it forecast to be down to zero?
Ms. Miller: The most recent forecast available is on page 241 of Budget 2012. Right now, in the current projections, it is expected to be in cumulative balance in 2016.
Senator L. Smith: Does that estimate still hold true in light of Minister Flaherty's most recent update of the financial situation in Canada?
Ms. Miller: It does. The numbers have changed slightly in the economic and fiscal update but have not changed the year in which the account is anticipated to be in balance again.
The Chair: Were you reading from the budget?
Ms. Miller: Yes, page 241 of the budget.
The Chair: Does it say anything about the board in that? What does it say about the board, the board we have been talking about here?
Ms. Miller: With respect to the board, it says that the government will look at the management and scope of the board. It makes a commitment to examine it. BIA 2 is now the government's decision with respect to that examination.
The Chair: This is the result of that examination?
Ms. Miller: Yes.
Senator Buth: I am pleased to say that all my questions have been asked by Senator Callbeck.
The Chair: I am glad it was not me this time. Thank you.
[Translation]
Senator Hervieux-Payette: How many times a year do the members of the board meet?
Ms. Laroche: That is a good question. I do not have that information.
Senator Hervieux-Payette: But we can conclude that they work part time?
Ms. Laroche: Yes, they work part time. The chair and the directors meet as needed. They have a per diem allowance of $420.
Senator Hervieux-Payette: Where are their employees located? Are they here, in Ottawa?
Ms. Laroche: Yes.
Senator Hervieux-Payette: Are union representatives also sitting on the board?
Ms. Laroche: I do not have that information. To my knowledge, the answer is no. What I can tell you is that nominations come from the Nominating Committee, which is made up of commissioners who are both employees and employers.
Those nominations are submitted to the minister. But the real purpose of the steering committee is to establish the rate, manage any surplus and invest that money. So the committee membership is in line with its mandate.
Senator Hervieux-Payette: In any case, it cannot be said that they have a lot of work when there is no surplus. Perhaps I have not understood properly. Are you saying that the Office of the Superintendent of Financial Institutions sets the fees?
Ms. Laroche: No. The board produces the actuarial report that the Governor in Council uses to support his decision-making process.
Senator Hervieux-Payette: And who does the technical calculations?
Ms. Laroche: Actuaries do.
Senator Hervieux-Payette: What actuaries? Those from the Office of the Superintendent of Financial Institutions or those from this board? Is the director general you talked about involved? You said that a director general had some staff.
Ms. Laroche: No, actuaries take care of this. Currently, the board has an agreement with the Office of the Superintendent to do actuary calculations. This information is transmitted to the board, which currently sets the rate.
In the interim period, the board will produce a report for the commission, and the commission will summarize the report. That summary will be submitted to the Minister of Human Resources and Skills Development, who will in turn bring it to the Governor in Council. The Governor in Council will establish the rate.
Senator Hervieux-Payette: And that will take into account all the limits we determined earlier on potential increases?
Ms. Laroche: Exactly.
Senator Hervieux-Payette: I think I have obtained all my answers, Mr. Chair.
[English]
Senator McInnis: There is a saying today, Mr. Chair, that it is what it is, but I am slightly confused. We had a board that operated under certain guidelines, and now it has been suspended and the Governor-in-Council will make the decisions based on certain information they get. Why could the board not do that? It was not within their guidelines, but guidelines can be changed. We are suspending the board. We are setting a rate by the Governor-in-Council. When it gets to parity or when it gets to a break-even point, you will bring the board back in. For the life of me, I have trouble understanding why we are suspending. What is the reason?
Ms. Laroche: That is the government's decision. I cannot speak to that decision. As my colleague Ms. Miller mentioned, there was a statement in Budget 2012 to review the activities of the CEIFB, given that it is not in a position to fulfill its full legislative mandate. As a result of that examination, the government has decided to suspend the board and provide this interim regime, as it believes it will be done in the most cost-effective manner until the EI operating account is in balance. That probably does not answer your question, but I cannot speak more to that. It is really a government decision.
Senator McInnis: That is why I said, "It is what it is." It could have been accomplished the other way.
Ms. Laroche: The board could have continued to sit.
Senator McInnis: The cost, you said, was $1 million?
Ms. Laroche: We do not have costs for the current year, but approximately — between $1.4 million and $1.8 million.
[Translation]
Senator Bellemare: Does the Employment Insurance Commission still exist?
Ms. Laroche: Yes.
Senator Bellemare: Was the commission in charge of setting premium rates before the board was created?
Ms. Laroche: Yes, the Employment Insurance Commission took care of that for a while.
Senator Bellemare: The Employment Insurance Commission still exists. It could have continued setting the rate as before, but the government preferred to do that itself. What is currently the Employment Insurance Commission's role?
Ms. Laroche: In the interim period?
Senator Bellemare: Yes.
Ms. Laroche: In the interim period, the commission hires an actuary. The actuary produces their actuarial report and submits it to the commission, which drafts a summary report and sends the information to the minister.
Senator Bellemare: And what happens with the employment insurance account in the case of a deficit?
Ms. Laroche: There are currently some deficits.
Senator Bellemare: Does the money come from general government revenues?
Ms. Miller: Yes.
Senator Bellemare: Maybe this explains why all that is being done. The government must have authority over general revenues. That is a theory.
The Chair: Perhaps.
Senator Hervieux-Payette: For those who are following the budget soap opera, I would like us to have at least half of the presentation in French when we are hearing from French-speaking officials. It is strange for a francophone to speak to us in English for a half an hour or three quarters of an hour. We are four francophone colleagues around the table. It would be a good idea to proceed in this way. I am not blaming you. My comment is that at least half of the next presentation should be in French; that way, it is less tiring for us. My colleague could share the burden.
Senator Boisvenu: My question has already been asked by my colleague. I agree with Senator Hervieux-Payette.
The Chair: The time is up. The meeting is over.
[English]
Colleagues, we do not have this room for longer than four o'clock. We have two sections left, and we will get to those next week, the last two divisions. This evening and tomorrow, we are starting with witnesses who are impacted by the legislation that we have already looked at. We also have the Supplementary Estimates (B) hanging in the wings.
(The committee adjourned.)