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37th PARLIAMENT, 3rd SESSION

Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities

EVIDENCE

CONTENTS

Tuesday, March 23, 2004

0900

The Chair (Mrs. Judi Longfield (Whitby—Ajax, Lib.))

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada)

The Chair

Ms. Sheila Fraser

0905

The Chair

Mr. Brian Pallister (Portage—Lisgar, CPC)

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

0910

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

0915

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

The Chair

Mr. Brian Pallister

The Chair

Mr. Yvon Godin (Acadie—Bathurst, NDP)

The Chair

Mrs. Raymonde Folco (Laval West, Lib.)

Ms. Sheila Fraser

Mr. Yves Genest (Principal, Office of the Auditor General of Canada)

Mrs. Raymonde Folco

Ms. Sheila Fraser

Mrs. Raymonde Folco

0920

Ms. Sheila Fraser

Mrs. Raymonde Folco

The Chair

Mrs. Raymonde Folco

The Chair

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

0925

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Ms. Suzanne Therrien (Director, Office of the Auditor General of Canada)

0930

Mr. Yvon Godin

The Chair

M. Yvon Godin

The Chair

Hon. Paul Bonwick (Simcoe—Grey, Lib.)

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

0935

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

The Chair

Mr. Gary Lunn (Saanich—Gulf Islands, CPC)

Ms. Sheila Fraser

Mr. Gary Lunn

0940

Ms. Sheila Fraser

Mr. Gary Lunn

Ms. Sheila Fraser

Mr. Gary Lunn

Ms. Sheila Fraser

0945

Mr. Gary Lunn

The Chair

Mr. Gary Lunn

Ms. Sheila Fraser

Mr. Gary Lunn

The Chair

Mr. Tony Ianno (Trinity—Spadina, Lib.)

0950

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

0955

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

Ms. Sheila Fraser

The Chair

Mr. Tony Ianno

The Chair

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

The Chair

Mr. Tony Ianno

The Chair

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, CPC)

Ms. Sheila Fraser

The Chair

Mrs. Carol Skelton

Ms. Sheila Fraser

Mrs. Carol Skelton

Ms. Sheila Fraser

Mrs. Carol Skelton

1000

Ms. Sheila Fraser

Mrs. Carol Skelton

Ms. Sheila Fraser

Mrs. Carol Skelton

The Chair

Hon. Eleni Bakopanos (Ahuntsic, Lib.)

Ms. Sheila Fraser

1005

Hon. Eleni Bakopanos

Ms. Sheila Fraser

Hon. Eleni Bakopanos

The Chair

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

1010

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

The Chair

Mr. Yvon Godin

Ms. Sheila Fraser

The Chair

Mr. Yvon Godin

The Chair

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.)

1015

The Chair

Mr. Larry McCormick

The Chair

Mr. Larry McCormick

The Chair

Mr. Larry McCormick

The Chair

Mr. Larry McCormick

The Chair

Ms. Sheila Fraser

1020

Mr. Larry McCormick

Ms. Sheila Fraser

Mr. Larry McCormick

Ms. Sheila Fraser

Mr. Larry McCormick

The Chair

Mr. Brian Pallister

Ms. Sheila Fraser

1025

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

1030

The Chair

Hon. Paul Bonwick

Ms. Sheila Fraser

Ms. Suzanne Therrien

Hon. Paul Bonwick

Ms. Suzanne Therrien

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

1035

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

Hon. Paul Bonwick

Ms. Sheila Fraser

The Chair

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Ms. Suzanne Therrien

1040

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

The Chair

Mr. Tony Ianno

Ms. Sheila Fraser

Mr. Tony Ianno

1045

Ms. Sheila Fraser

Mr. Tony Ianno

The Chair

Ms. Sheila Fraser

The Chair

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

Ms. Sheila Fraser

Mr. Brian Pallister

The Chair

Mr. Brian Pallister

The Chair

Mr. Larry McCormick

1050

Ms. Sheila Fraser

The Chair

Mr. Larry McCormick

Ms. Sheila Fraser

The Chair

Hon. Eleni Bakopanos

Ms. Sheila Fraser

Hon. Eleni Bakopanos

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

CANADA

Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities

NUMBER 004

3rd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, March 23, 2004

[Recorded by Electronic Apparatus]

¿ (0900)

[English]

The Chair (Mrs. Judi Longfield (Whitby—Ajax, Lib.)): Good morning, ladies and gentlemen.

I call this fourth meeting of the Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities to order. We're going to have to ask for a few extra minutes every meeting just so we can accommodate the lengthy new title.

Today we have with us the Auditor General, Ms. Sheila Fraser, and she has brought two members of her staff with her. I'll let her introduce them when she begins her remarks.

Today the order of the day is, pursuant to Standing Order 108(2), the study of the Report of the Auditor General of Canada, November 2003, specifically chapter 7, Human Resources Development Canada and the Canada Employment Insurance Commission--Measuring and Reporting the Performance of the Employment Insurance Benefits Program; and chapter 10, Other Audit Observations, more specifically the surplus in the employment insurance account.

Ms. Fraser, we are delighted to have you here. This is not the first time you've appeared before our committee, but somehow you seem so much further away today.

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada): There are more tables.

The Chair: Exactly. Anyway, I know that's not going to be an impediment to you and that you'll be able to get your points across exceedingly well.

Again, I welcome you, and I turn the program over to you.

Ms. Sheila Fraser: Thank you, Madam Chair.

We thank you for this opportunity to discuss our audit chapter on the measurement and the reporting of the performance of the employment income benefits program as well as our audit observation on the surplus in the employment insurance account.

With me today are Yves Genest and Suzanne Therrien, who are responsible for this audit work.

Over the past 60 years the EI income benefits program has been the main income security program for working Canadians. The principal objective of the program is to provide temporary income support to insured Canadians who involuntarily lose their jobs. Over the years the program has evolved, recognizing that workers face other employment risks related to childbirth, parenting, and illness.

[Translation]

In 2001, 15.1 million Canadians contributed to the program and 2.4 million received benefits. In 2002-2003, the Employment Insurance Income Benefit Program provided $12.7 billion in benefit payments to Canadians for temporary replacement of income.

In chapter 7, we examined how Human Resources Development Canada (HRDC) monitors the performance of the EI Income Benefits Program and measures its effectiveness. We noted that overall, HRDC puts considerable effort into measuring the performance of the program and has a good deal of information with which to manage it.

However, we also noted that in many cases, the program falls short of its performance targets; performance of key aspects of service varies considerably among regions; some aspects of performance are not measured or are not measured well; and reports to Parliament do not provide a complete picture of how well the EI Income Benefits Program is serving Canadians.

The available performance information tells a mixed story. In 2002-2003, over 95 per cent of total payments to claimants were correct, and a 2001 opinion survey showed that a majority of respondents were generally satisfied with the service they received.

However, we noted that service in some regions was significantly and chronically below performance targets. For example, the national target for speed of first payment is to make 75 per cent of payments within 28 days. It was not met at the national level. Performance among regions varied in 2002-2003 from 44 per cent in Alberta to 77 per cent in New Brunswick. The numerous efforts to improve performance in meeting service targets have made only a small difference.

We found that some key performance measures need to be improved. For example, the key measure for call centres does not give the whole picture of access to this service. In 2002-2003, it did not take into account that 65 per cent of calls to speak to a service representative got a busy signal.

¿ (0905)

[English]

Madam Chair, we also looked at whether the Canada Employment Insurance Commission and HRDC were properly carrying out their responsibility for monitoring, assessing, and reporting on the performance of the EI income benefits program.

We identified reporting issues that still need to be addressed, even though Parliament has been provided with more information on the EI income benefits program than is required of most programs. The reporting of evaluation results is often selective. In addition, savings as a result of the 1996 changes to the act have not been clearly reported, nor have reports to Parliament described other important issues, such as the uneven service across the country in delivering the program and what HRDC plans to do about it.

I am pleased to note that the department and the EI Commission have accepted all of our recommendations. The committee may wish to ask Human Resources and Skills Development Canada and the Canada Employment Insurance Commission to provide an action plan and a timetable to address these recommendations and then to submit periodic progress reports to the committee.

Madam Chair, in chapter 10 I draw Parliament's attention to the surplus in the employment insurance account. This is the fifth year we have done so. The surplus reached $44 billion by March 2003, and it continues to grow. The current surplus is approaching three times the maximum reserve that the chief actuary of Human Resources Development Canada considered sufficient in 2001. In our view, Parliament did not intend for the employment insurance account to accumulate a surplus beyond what could reasonably be spent on the employment insurance program. Hence, in our opinion, the government has not observed the intent of the Employment Insurance Act. The committee may wish to ask the Department of Finance and Human Resources and Skills Development Canada when and how they plan to take the necessary steps to resolve this long-standing issue.

Madam Chair, that concludes my opening statement. We would be pleased to answer any questions the committee might have.

The Chair: Thank you.

We're going to proceed as usual with eight-minute rounds. We'll start with the official opposition.

Mr. Pallister, I assume you're going to kick off.

Mr. Brian Pallister (Portage—Lisgar, CPC): Thank you very much.

It's nice to see you, Madam Auditor General.

You mentioned that the EI account surplus is approaching $44 billion. In what year did you first bring the concerns about the EI surplus to the attention of the government?

Ms. Sheila Fraser: As I mentioned in my opening comments, this is the fifth year that we have mentioned this concern.

Mr. Brian Pallister: You also said that the department has accepted all of your recommendations. Did they accept your recommendations in 1999, 2000, 2001, and 2002 as well?

Ms. Sheila Fraser: No. They indicated that they were working on a consultation program. As you may know, certain clauses were suspended for two years. The rate for the employment insurance program was set by Governor in Council. A consultation process was started and was to have been completed last summer. We do not know what progress has been made since then. One could speculate that we might find out more this afternoon.

Mr. Brian Pallister: You noted that this was about three times larger than would be necessary, according to the chief actuary. That would effectively mean that several thousand dollars were taken out of every working Canadian's household in unnecessary EI premiums over the last several years. Have you done any evaluation as to the impact that might have on job creation in this country, for example, and keeping the unemployment rate higher than it should be?

Ms. Sheila Fraser: No, we do not do those kinds of evaluations. In fact, we don't have a mandate to conduct evaluations. We do note in chapter 7 that while many studies and evaluations have been done, no study or evaluation has been done on that particular aspect.

Mr. Brian Pallister: What reasons have the Department of Finance and the Department of Human Resources given you as to their failure to address the ballooning EI surplus or EI overcharge?

Ms. Sheila Fraser: The government indicated in the previous budget that it was taking measures. It had set out a series of principles that it wanted to respect in setting the rate. The objective was that for 2003 the premiums would equal the benefits paid. There was an implied statement that the surplus would not continue to grow. The whole issue of how the rate is to be set was under study, and we have not yet seen the results of that study, nor the recommendations from government.

¿ (0910)

Mr. Brian Pallister: The objective wasn't met, and what was the excess of premiums over benefits for that time period?

Ms. Sheila Fraser: For the last year it was about $3 billion.

Mr. Brian Pallister: It was $3 billion more than was necessary, in that year alone?

Ms. Sheila Fraser: That's right, in the last fiscal year.

Mr. Brian Pallister: Okay. How would you define a slush fund?

Ms. Sheila Fraser: I would prefer not to define a slush fund, quite frankly.

Mr. Brian Pallister: Well, how would you define a sinking fund?

Ms. Sheila Fraser: A sinking fund in technical terms is money set aside, usually to pay debts.

Mr. Brian Pallister: How much has the government paid down the debt in the last, say, ten years in this country?

Ms. Sheila Fraser: I'm afraid I don't have that information with me, Mr. Pallister. I could easily get it for you, if you wish.

Mr. Brian Pallister: Which group of employed Canadians would be impacted most severely by excessively high EI premiums? Would it be higher-income earners or lower-income earners?

Ms. Sheila Fraser: Well, there is, as you know, a maximum of EI benefits that can be paid. We haven't done any studies, nor am I aware of any studies the department would do that would indicate an impact.

Mr. Brian Pallister: Wouldn't it seem evident that once EI contributions cease, that obligation is diminished—after about $39,000 and change—and therefore, it would be the lower-income Canadian who would be paying a higher percentage of income in EI premiums?

Ms. Sheila Fraser: Yes, one could make that assumption.

Mr. Brian Pallister: Given the government's tendency to take the overpayment and dump it into their general revenues, and their acclaimed accomplishment of reducing the debt, wouldn't it seem therefore that the burden on paying the debt of Canada falls on the lower-income Canadian, because the EI surplus is being used for that purpose?

Ms. Sheila Fraser: I could not make that assumption.

Mr. Brian Pallister: No? I could, and I will.

Ms. Sheila Fraser: This surprises us.

Mr. Brian Pallister: You noted that administrative costs are one and a half billion dollars for the previous year. Do you consider administrative costs to be excessive?

Ms. Sheila Fraser: We don't make any judgment as to whether they are excessive or not. It's simply a statement of fact.

Mr. Brian Pallister: Okay. What were they the year before?

Ms. Sheila Fraser: The year before they were $1.475 billion.

Mr. Brian Pallister: Okay, and five years ago?

Ms. Sheila Fraser: I'm afraid I don't have that information with me. I could certainly give it to the committee if you wish.

Mr. Brian Pallister: Right. Who pays the administrative costs for EI?

Ms. Sheila Fraser: The costs are charged to the account. It is an allocation of charges from HRDC that are charged to the account to run the program.

Mr. Brian Pallister: Who pays for EI? Who makes the contributions into EI?

Ms. Sheila Fraser: It's through premiums by employees and employers.

Mr. Brian Pallister: And it's totally so, correct? So administrative costs are paid by small business people and their employees.

Ms. Sheila Fraser: Well, it is charged against the premiums, which are paid by all employers and all employees.

Mr. Brian Pallister: So when the government claims they've lowered the premiums and attempts to take some credit for that, but the premiums remain elevated to the extent that we have close to $45 billion of overcharged premiums, in effect the government is simply continuing to overcharge, but at a reduced rate. Is that effectively what happens?

Ms. Sheila Fraser: I think there are two ways of looking at the surplus. The surplus is simply a mathematical difference between premiums collected and benefits paid. Some could argue that the premium rate is higher than it should be; some could argue that the benefits are lower than they should be. That of course is a policy decision.

The point we are making is that the intent of the law was that the premiums over a period of time should equal the benefits paid—and now there has been over a period of time a surplus created—and that the whole rate-setting mechanism has to be looked at.

Mr. Brian Pallister: So in your conclusions, when you observed that the government is not observing the intent of the Employment Insurance Act, it's implicit in your observations that there should be action taken to establish a balance between benefits and premiums.

Ms. Sheila Fraser: That's correct.

Mr. Brian Pallister: Did you make any recommendations similar to this in previous years, or is this the first time you've done this?

Ms. Sheila Fraser: No, as I mentioned, this is the fifth year we have raised this concern. In the initial years we were not as definite about the government not meeting the intent, because the surplus was much lower. We were unable to get a sufficient explanation for the increase in the surplus, but now with a surplus that is close to three times what the actuary recommended would be a sufficient reserve, we feel it is obvious that the rate-setting mechanism is no longer meeting the initial intent of the act.

¿ (0915)

Mr. Brian Pallister: Finally, given the enormous amount of the overcharge—far greater, in fact, than any of the other issues we've dealt with recently; in particular, the $100 million ad scandal money pales in comparison to these multi-billion dollars—and given the fact that the actuary has said this is far and away more adequate than is necessary against recessionary possibilities, do you think the government is planning on a major recession?

Ms. Sheila Fraser: You know that I can't answer that.

Mr. Brian Pallister: Do you think that's the reason for keeping this--

Ms. Sheila Fraser: Madam Chair, you know I cannot answer that question.

The Chair: I do, and you have exceeded your time, Mr. Pallister.

Mr. Brian Pallister: Yes, thank you.

The Chair: And before I go to the others, I would remind members of the committee that the chair is here and that you should work through the chair. I know that you intended to do this.

Madame Folco and then Mr. Lunn.

Mr. Yvon Godin (Acadie—Bathurst, NDP): Is it not the opposition, the government, and back to another opposition?

The Chair: Yes, I'm sorry, Monsieur Godin. Madame Folco.

[Translation]

Mrs. Raymonde Folco (Laval West, Lib.): Good morning, Ms. Fraser.

In your deposition, at paragraph 6, you say with respect to payments:

[...] the national target [...] was not met at the national level [...] The numerous efforts to improve performance in meeting service targets has made only a small difference.

I'm going to ask you a series of questions that appear to me to be related to this statement.

First of all, if indeed the goal is to contribute to the well-being of Canadians in temporary hardship, do you think that it is possible, using the performance measures that you examined in your audit, to determine whether the goal—improving the standard and policies of life of Canadians—has actually been achieved through these benefits?

Ms. Sheila Fraser: Thank you, Madam Chair.

The performance measures that we examined have to do with service performance. We looked at speed of payments, rate of response to claimants and service quality. Indicators like the well-being of Canadians are more of a matter for examination in the evaluations to which reference was made. The government has, I believe, done over 60 studies. Several of those studies are high-quality, although certain shortcomings in those evaluations were also identified. Canadians have not been given any global evaluation.

Mr. Genest might want to elaborate on that.

Mr. Yves Genest (Principal, Office of the Auditor General of Canada): Yes, according to Treasury Board policy, the time to focus on more fundamental issues of program goals is during program evaluation. A certain number of studies have been done in the last seven years.

As Ms. Fraser said, we have identified reporting issues that still need to be addressed. In its response, the department has undertaken to perform an all-inclusive evaluation in the next few years to examine all aspects of performance, or rather effectiveness.

Mrs. Raymonde Folco: It is conceivable that down the road, once Treasury Board has taken steps to evaluate the improvement in the quality of life of Canadians benefiting from this program, you may be called upon to review the evaluation as Auditor General. Will the evaluation be evaluated, in other words?

Ms. Sheila Fraser: We could see to it that the evaluation is done, but we don't have a mandate, as Auditor General, to conduct an evaluation. However, we could review the evaluation to see whether it was done according to the expected quality standards and whether the results were duly relayed to Parliament.

Nevertheless, it might be a good idea for the committee to ask the department for the action plan, and when it intends to do these evaluations and provide Parliament with an all-inclusive report.

Mrs. Raymonde Folco: I'm taking due note of that.

I have one last question about this. Are you going to give me the same answer if I ask you to what extent we can ascertain whether the programs are reaching their goal in terms of target populations, whether it be populations living in regions with a high or fairly low unemployment rate, fishers or other populations that are targeted more specifically?

¿ (0920)

Ms. Sheila Fraser: As I said, the department has done a number of evaluations. We know that there are a few dealing with first time claimants and repeat claimants, for example. It doesn't say in the report whether specific populations are targeted. That would be a question for the commission or for Human Resources and Skills Development Canada.

Mrs. Raymonde Folco: Madam Chair, I move that we deal with the Auditor General's suggestions by putting questions directly to the officials from the department or even by debating these issues here, in committee. In my opinion, it goes to the very goal of employment insurance programs in terms of identified target populations, but it goes particularly to the fundamental performance of these programs. If Human Resources and Skills Development Canada and Treasury Board have anything to say to us or even any evaluations to conduct, it would be a good idea for us to examine the issue.

[English]

The Chair: Madam Folco, on Thursday of this week we have officials from the department coming in. At that time, you can pose those questions to them.

You have a minute and a half left, if you like.

Mrs. Raymonde Folco: No, that's fine.

The Chair: Okay. Monsieur Godin.

[Translation]

Mr. Yvon Godin: Thank you, Madam Chair.

I would also like to welcome you to the Human Resources Development Committee. I'm compelled to say that I am still disappointed, and I am going to tell you why. I find that your reports deal only with the premiums paid and the fund surplus, not the real problem. Employment insurance was created in 1940 to assist workers. I would have liked the report to refer to the number of people currently eligible for employment insurance, as compared to the number of people who pay into the program.

For example, Statistics Canada says that only 33 per cent of women who pay into the program are eligible for employment insurance. Is it possible that this is in the report and that I didn't see it? Could you clear that up for me?

Ms. Sheila Fraser: Madam Chair, there is some indication—perhaps not all of the figures that Mr. Godin would like to see—in appendix B of the report, where it says that...

Mr. Yvon Godin: In chapter 7?

Ms. Sheila Fraser: Yes, it's all the way at the back of chapter 7, on page 32. It refers to regular program beneficiaries and the number of unemployed people available for work, but there is no group comparison between beneficiaries and those who pay...

Mr. Yvon Godin: That's the comparison that I want. I listened to the members of the Conservative Party, and all of their questions are about premiums, never about the clients themselves. I recall that Mr. Pallister, at the last meeting with the minister, said that he paid premiums. He was set straight and told that members of Parliament didn't pay premiums. He said that as an employer, he had six employees and paid premiums. I found that he was in something of a conflict of interest when he said that as a member of Parliament.

This is a program that belongs to workers, and all people are talking about is the amount of money in the account and the surplus, not the effectiveness of the program itself. I'd like us to focus on that some more, because if the program were effective, maybe there would be no surplus.

Ms. Sheila Fraser: I believe that the answer to Mr. Godin's question lies in program evaluation, perhaps by specific group, as Ms. Folco mentioned. Unfortunately, we cannot conduct such an evaluation, but the Department of Human Resources should...

Mr. Yvon Godin: I don't understand why you evaluate the surpluses and make comments like this: “Hence, in our opinion, the government has not observed the intent of the Employment Insurance Act.”

I thought you were being awfully kind to say that, because not observing the intent of the act is breaking the law. If you don't observe it, you break the law, quite simply. Personally, I interpret that as breaking the law. The law says that the speed limit on the highway is 100 km/h. If I don't respect the intent of the law and do 140 km/h, that means that I've broken the law. I don't want to put words in your mouth, but to me, that's breaking the law.

¿ (0925)

Ms. Sheila Fraser: The problem is that the act is not very precise. On the highway, there's a sign that tells you what the speed limit is. But if there were no signs and you were told not to drive too fast, you wouldn't know whether 100 km/h was too fast or whether 140 km/h was too fast.

Mr. Yvon Godin: But can you...

Ms. Sheila Fraser: The act does not set out how the rates are to be established.

Mr. Yvon Godin: If the act doesn't provide any limit or rate, how can you, Ms. Fraser, say that the government has not observed the intent of the act?

Ms. Sheila Fraser: That's why we point out that this is our understanding of the intent of the act. In our opinion, the intent was for premiums to equal benefits over an unspecified period of time. It is therefore understandable that for some period of time, there could be surpluses. However, there is no reference at all to what constitutes a reasonable surplus. That has to be based on the work of the Chief Actuary. There is no mechanism to determine the length of time that has to be taken into account nor any definition to enable us to say that the act has not been obeyed. That is why we need to refer to the intent of the act.

Mr. Yvon Godin: Ms. Fraser, in your opinion, is the intent of the act to assist people who have lost their job? I cannot understand why your office does not point out certain anomalies in the figures. Only 33 per cent of women who pay premiums are eligible for employment insurance benefits. The evaluations by the Department of Human Resources indicate that 85 per cent of those who are eligible for employment insurance qualify. These figures are false because the rate should be 100 per cent. If they are eligible, they should collect benefits. This is about the people who pay into the plan. That is an observation. I think that is the problem.

You also mentioned busy signals. Have you identified the source of this problem? Some employees of the Department of Human Resources told me that they had a table in front of them, on their computer screen, indicating all of the calls. That frustrates them and makes them anxious, so as soon as five calls show up on the screen, they indicate that the line is busy. That has since become habitual. Last month, Radio-Canada investigated. The investigators tried to phone an employment insurance office in New Brunswick all day long and never managed to reach anyone. That story was broadcast on RDI's national bulletin.

Would it be possible for you, or someone else, to get to the bottom of that?

Ms. Sheila Fraser: To answer your first question, as indicated in appendix B, there are two ways of calculating the percentages. The department indicates that 83% of the unemployed potentially eligible for employment insurance benefits had accumulated enough hours to make a claim. The other calculation is that if you take the number of regular beneficiaries as compared to all of the unemployed available for work, the ratio is 45%. So there are two ways of calculating the ratios.

To answer your other question about the call centres, we have observed that 65% of calls get a busy signal. I will turn the floor over to my colleague, Ms. Therrien, who may have more information on that.

Ms. Suzanne Therrien (Director, Office of the Auditor General of Canada): As Ms. Fraser was saying, nationally, when you ask to speak to an officer, the line is busy in 65% of cases. The table on page 10 shows a significant variation. You are talking about New Brunswick. In that province, the line was busy in 40% of cases.

The department is working on improving the service. The reasons for the situation are listed in paragraph 7.39. It says that callers, rather than listening to the automated message, press 0 immediately. So there are a lot of requests to speak to an officer. The fact that there is a shortage of resources, that there is a high turnover, that the program is increasingly complex and that people more and more often want to speak to an officer are all factors that explain why you often get a busy signal.

¿ (0930)

Mr. Yvon Godin: Madam Chair, according to my information...

[English]

The Chair: Monsieur Godin, you're going to have to wait until the next round.

M. Yvon Godin: Okay.

The Chair: We're now going to have Mr. Bonwick, and then Mr. Lunn and Mr. Ianno.

Hon. Paul Bonwick (Simcoe—Grey, Lib.): Thank you, Madam Chair.

I'm heartened by some of your comments and disheartened by others. But I guess the first thing I should do, through the chair, is congratulate you on your work. I think Canadians owe you a significant debt of gratitude. You've done a tremendous job, not simply on your review by way of HRDC but on the public accounts in general.

Ms. Sheila Fraser: Thank you.

Hon. Paul Bonwick: These are strong numbers. I'm encouraged that when you look at the size of the payout, you see that 95% or more have been done in a correct manner. That leaves approximately 4.7% that need to be tidied up. If one wanted to translate that into areas within the private sector, one would see that those are pretty reasonable numbers.

I want to go to your point about the difficulty in meeting a 28-day turnover on these. I think about the system as it was 15 years ago and as it is today and where it should be 15 years from now. Unfortunately, 15 years ago I had to use the EI system when a plant I was working for had to lay off people. I remember people I worked with talking about the driving time involved if they had to come in and correct an error, especially those who lived in rural communities. One error could equate to 12 or 15 weeks in turnaround time, simply because we didn't have the call centres and the electronic era to work within. So I would suggest that some remarkable progress has been made in that regard.

With regard to the 28 days, when a plant is closed in an area like mine, it is very difficult to bank on 300 or 400 employees being laid off within a very defined period of time. It's a great challenge. I am wondering if you have made any recommendations on how HRSD might deal with those significant blips.

Ms. Sheila Fraser: We did not look at all of the specific reasons as to why some of the targets would not have been met. We looked at it more generally across the country. We would have expected the department to have a better understanding of why they weren't meeting the targets and what action plans they were taking to correct it.

When we look at the schedule on page 12 in the English version, exhibit 7.5, we can see that some areas do meet the target. Quebec and New Brunswick are meeting it, but others are significantly below it. The issue is why there is such variability across the country and what is the action plan.

I should also say that this department is one of the very few that have this kind of performance information. We congratulate them for having it, but at the same time, it denotes that there are issues they have to address.

Hon. Paul Bonwick: I am pleased to hear your recommendation to the committee that we should be asking for more reporting from the department. I think that twice a year would be a reasonable consideration for the committee.

I want to go back to my point on the regional aspect of EI demand. For example, in my particular area, if I were to travel south by only an hour and a half, I'd find that within that region of HRSD, they're achieving their targets. In fact, they're exceeding their targets in many cases. In my area 10 years ago, they were not achieving their targets because we had these high blips. So it wasn't even province to province, but actually region to region. I'm always interested in knowing what the potential solutions are to deal with those regional pockets. You can't simply transfer people in on a whim.

On another subject, what is the maximum amount an employee can pay into the EI premium? I know the dollar amount by way of earnings. I'm just wondering what portion that is in the EI premium. What is it per $100?

¿ (0935)

Ms. Sheila Fraser: I was going to say 1.95, but I'm not sure. We can find it for you.

Hon. Paul Bonwick: I'm curious to know what the maximum contribution is that an individual employee can make.

Then I would be, in turn, interested to know, if there were a 10% reduction in the premium, what that would equate to in addressing the surplus. I think it follows on the heels of Mr. Godin's point. It is not simply about premiums, of course; it's about the people who are supposed to be benefiting from it.

The unemployment rate in 1993 was about 12%. Now it is around 7%. I think most economists would suggest that full employment in this country is around 4% or 5%. Being one or two percentage points off full employment, I am wondering if any analysis has been done on that five-point spread that has come into play over the last seven or eight years. What portion of that actually equates to the surplus?

Ms. Sheila Fraser: I don't know if that type of analysis has been done. As I mentioned, the department has done many studies, over 60 of them, and they might have some information on that. I would suggest that you put that question to them at a future hearing. They perhaps would be able to give you that kind of information.

I'm told that the rate--if anybody has a calculator--is 39,500 times 1.98. So somewhere under $800 would be the maximum--

Hon. Paul Bonwick: Arguably, the 10% reduction would save an employee $80. And that's significant, I will acknowledge that. But on the heels of Mr. Pallister's comments, I don't think anybody around this table or anybody in Parliament wants to see the federal government do anything to hurt employment. Based on the reductions we've had, I think you could put forward a reasonable argument that this has not been the case, but I'm wondering what the best use of that 10% reduction would be. Are you going to have a massive impact on jobs or job creation if you reduce it by 10%, or should you be looking at ways you might support society on a greater level by using that 10% and not reducing it?

That's why I'm interested in finding out what the numbers are, and I would hope that you would have those numbers.

Ms. Sheila Fraser: We would not do that kind of analysis, quite frankly. I think that is an analysis that probably would be done by Finance Canada and HRDC, or HR.... I have to remember the new department's name. That's one of the gross economic analyses they would do.

Hon. Paul Bonwick: There's another question that I didn't get an answer to, and I was wondering if you might be able to provide it now or at a later date. Taking into consideration the number of recipients in 1995 versus the number of recipients in 2004, and the 5% drop in unemployment rates, have you done a forecast on how much money that has saved the account?

Ms. Sheila Fraser: No, and again, that is not the kind of work we would do. That is the type of analysis the departments should be doing. One of the other analyses that we suggested they do is to look at the impacts of the changes in 1996 as well.

Hon. Paul Bonwick: — [Inaudible—Editor]— take your recommendations very seriously.

Ms. Sheila Fraser: So there are several broad economic analyses they should do.

Hon. Paul Bonwick: Thank you very much. I'll turn it back to the chair, but thank you again for your wise words.

Ms. Sheila Fraser: Thank you.

The Chair: Just before I turn it over to Mr. Lunn, I would just remind everybody in the room that if you have any kind of electronic device, please turn it off. More than once during the course of this meeting I've heard various different sounds from over here and over there. I think we owe it to those who have come to partake in this to keep those kinds of things turned off. We'll get the messages when we get back to our offices in 45 minutes.

Mr. Lunn, and then Mr. Ianno and Ms. Skelton.

Mr. Gary Lunn (Saanich—Gulf Islands, CPC): Thank you very much, Madam Chair.

Good morning, Ms. Fraser. It's great to have you back before the committee. I'd like to offer my congratulations on your recent work. You've become a household name in Canada. You've become to accountability what Wayne Gretzky is to hockey, I guess.

Ms. Sheila Fraser: It was certainly not an objective, Mr. Lunn.

Mr. Gary Lunn: Unfortunately for you, you didn't get the same salary.

I have a couple of points I want to make. A quick one is with respect to paragraph 7.6 in chapter 7, which mentions the $43.8 billion surplus. Of course, you've been reporting these surpluses for five years, and we've all known that. I just want to confirm with you who in fact now sets the EI rates. Is it the government or is it the Canada Employment Insurance Commission?

¿ (0940)

Ms. Sheila Fraser: The government sets the rate, and has set the rate for 2003 and 2004. The clause in the Employment Insurance Act that dealt with the establishment of the rate was suspended for two years. So if there is not a change to the rate-setting mechanism put in place by government before the end of the year, our presumption is that it would revert back to the former way of doing it, because the suspension was only for a two-year period. The commission would then once again be setting the rate.

Mr. Gary Lunn: Prior to those two years, it was set by the commission, and now, over this two-year period, it's been politicized in that I guess the executive or the cabinet would be responsible for setting the rate. Would that be correct?

Ms. Sheila Fraser: It is true that the government does establish the rate now, and has for this current year and last year.

Mr. Gary Lunn: Okay. I just wanted to confirm that. I believed that to be the case, but I wasn't 100% positive.

Your comments with respect to chapter 7 brought up one of my most serious concerns with government. It crosses all departments, in my view, and it's something I've witnessed in Ottawa as a member of Parliament over the last seven years. I'm referring to the lack of measuring to ensure that whenever you have a program, somebody throughout the process--and even more importantly, at the end of the process--actually measures to see if you're achieving what you're trying to achieve, if the taxpayer is getting value for their money. Of course, there have been numerous examples.

I notice you said this in your comments:

...some aspects of performance are not measured or not measured well; and reports to Parliament do not provide a complete picture of how well the EI Income Benefits program is serving Canadians.

I find this particularly troubling in light of what we've seen for years in Parliament, and I would like you to expand on this. Is this a growing problem? How serious is this problem? It all comes back to ensuring that the taxpayer is getting value, and I think that's really what they're looking for.

So this really twigged something that's bothered me for some time, and I'd like your comments on where we need to go and what the solutions are.

Ms. Sheila Fraser: With this particular program, Madam Chair, we indicate in the report that when we looked at the performance measures for the quality of the service, such as timeliness and accuracy, the department has a fairly reasonable set of measures. In fact, it's probably one of the few departments that does have as much performance information as it does.

The difficulty we noted with some of the measures--for example, the access of callers--was that they didn't take into account people who got busy signals. So if you start with the idea that 65% of the calls get a busy signal and you're only measuring the third who actually get through, our opinion is that the measure isn't accurate. They need to consider the people actually trying to get in and the ones who are getting a busy signal. They need to refine their measures.

The other issue we're trying to raise in here is that there is so much variability across the country. Where is the action plan to analyze why there is so much variability, and what are the steps to be taken to improve progress and even re-evaluate, if necessary, some of the performance measures? There has to be some learning from this, and there has to be continual improvement.

On the question of the actual results of the program, as we note, I think 68 different evaluations have been done, and many studies have been done, but certain aspects have not been studied. An overall resumé or summary of all of these needs to be presented to Parliament. As well, we say that Parliament needs to get more information on the variability of the service quality across the country. It's not enough to simply give the average at the end, given that there is so much variability in service. So with regard to the evaluations, we think there should be much more detailed and broader information, if you will, presented to Parliament.

The department has indicated that they will be carrying out other evaluations. One of the things I would perhaps encourage the committee to do is discuss with the department their plan for doing these other evaluations and when they expect to bring in an overall report on the results of the program.

¿ (0945)

Mr. Gary Lunn: My last question comes back to my first point on the surplus. I talked about who sets the rates. Obviously, in the last few years it's been the Government of Canada. Again, this is another one where I look back on why I got involved as a member of Parliament. The opportunities for young people...and of course I see this as a payroll tax. It's a massive surplus. Nobody can discount that. I mean, it's $43.8 billion, and it's sucking the lives out of our small businesses, and the potential job growth for small businesses, which are the backbone of job creation.

To me, it's troubling that you've raised this since 1999 and we haven't seen it dealt with. Not only that, if you look at the graph in chapter 7, there's been a steady incline in terms of surpluses. Nothing has been done to hold these EI surpluses, and they're maintaining constant growth. It's an enormous tax on job creation. I don't think there's any other way to describe it.

You've raised this since 1999, and I would like to know what has been the government's answer to you during the last five years on specifically why they refuse to address this. Is this something they believe is the right thing to do? Do they--

The Chair: Mr. Lunn, your time is up, so if you want a response....

Mr. Gary Lunn: Thank you.

Ms. Sheila Fraser: As you say, we have been raising this for the last five years. I guess the most indicative response to our concerns was in the 2003 budget, where the government indicated that it would be having consultations on a new rate-setting process for 2005, and indicated a series of principles. Those principles would appear to us to be in line with the intention of the act. Consultations were to have been conducted up until last summer.

Now, we have not been made aware of any progress since then. There could be speculation that today in the budget there perhaps will be some mention of how this issue will be dealt with, but again, that is something I would suggest the committee might like to discuss with the finance and HR departments to see how they are dealing with this issue, how the rate will be set, and how they have responded to the principles that in fact government set out last year in the budget.

Mr. Gary Lunn: Thank you very much.

The Chair: Mr. Ianno.

Mr. Tony Ianno (Trinity—Spadina, Lib.): Thank you very much for appearing here.

I have a couple of questions, but I guess they're more overview than specific. I read your report, and I think most of the things are pretty thorough from the department's perspective, as you indicated. What we have is the issue of whether $43.8 billion is too much, and what the government does to deal with that.

I was elected ten years ago, and one of the things I've concentrated on has been job creation. Small business, of course, has produced a lot of the “new job” number change from 12 million to 15 million Canadians. So those three million Canadians contributing to the workforce...and to the EI perspective, and the employers, equally, in their 1.4 times what the employee pays. I guess that comes out to almost $5 billion to $6 billion a year in additional moneys that otherwise might not have gone in. Just to take a general number, or to give an average, that's maybe $700 or $600 maximum versus the $800.

With this fund, which has been expanded since the thirties, I guess, in terms of ways of ensuring income security, the question becomes the definition of income security. Income security programs are not solely for those who are unemployed. It's also important that those who are employed remain employed so that they don't actually have to use the fund they're paying into. From an overview perspective, from a government perspective, that in effect is achieving the ultimate goal of getting more Canadians working. In the end, that's the best income security program we can possibly have, I believe.

So the question becomes, as it's been expanding into training and other things, such as maternity, etc., where's the line in terms of an overall government perspective? When Industry Canada creates opportunities for small businesses and others to actually create employment and to ensure that those who are already working in the industries get spinoffs of new employment, is that in effect part of an income security program? If people continue working, that is good security, and if there is more work for their businesses, their small businesses especially, that means expansion or stability, etc.

I guess what I'm trying to look at here, even though it doesn't come directly into this, is where the income security program is in relation to the employment insurance program and Industry Canada. Should Industry Canada's job creation and job stability programs be put into this fund as compared to Industry Canada's fund?

¿ (0950)

Ms. Sheila Fraser: We can check this, Madam Chair, but it is my understanding that the Employment Insurance Act sets out the types of expenditures that can be charged to the account. Under part I it is the temporary replacement of income, or the traditional notion of the insurance fund. Under part II it is many of the new employment benefits and support measures, so some of the labour market development agreements. There are expenses that could be charged. But I think it is fairly well defined within the act what can be charged. There obviously could be consideration given, in a policy decision, to how broad that should go, but then, I would think, the act would have to be changed in order to—

Mr. Tony Ianno: Right, as it has been changed to include maternity and other things.

Ms. Sheila Fraser: That's right. It would have to specifically authorize those additional or different kinds of expenditures to be charged to the account.

Mr. Tony Ianno: So that's really what the issue is. It's a matter of adapting the Employment Insurance Act in a way that takes into account the income security program that was set out initially in the 1930s and then adapted in ongoing decades. So if the act were to take in everything regarding income security in some format, with clear definitions, then perhaps the employment insurance fund could be utilized to ensure that more Canadians are working and that fewer have to receive employment insurance. And as long as we adapt the act, then it would meet Parliament's intent, I guess. The question is, though, how far do you go?

Ms. Sheila Fraser: That question is both policy and hypothetical, because when we do our audit and look at our work, we have to look at the current law, at what the current act allows as expenditures. And the point we're trying to make in chapter 10 is that the intent of the act was that over a period of time, or an “economic cycle”, they call it, the premiums collected would equal the benefits paid. The actuary has given some thought to what that economic cycle is and all the rest of it.

Mr. Tony Ianno: Under the current act.

Ms. Sheila Fraser: Under the current act, and even through modifications of the act, over time, the premiums collected have exceeded the benefits paid by some $44 billion. Now, if going forward there's a new definition...and obviously Parliament is quite free to change the definition. But at this point in time, given current legislation, we do not believe the intent of the act has been respected.

¿ (0955)

Mr. Tony Ianno: The intent of the act as of 1930 or the intent of the act as of today?

Ms. Sheila Fraser: The intent of the act as of today.

Mr. Tony Ianno: Right. So it's a changing act.

Ms. Sheila Fraser: It is changing act. New expenditures have been allowed. There were significant changes in 1996 to the benefits program, and rates have been reduced. But this $44 billion is an accumulation, if you will, of all the premiums that have come in and all the expenditures that have been paid since the beginning of the account. We have a situation today where premiums have exceeded benefits by $44 billion.

Mr. Tony Ianno: What was the fund in 1993? What was the actual number?

Ms. Sheila Fraser: I don't have the exact figure, but I would suspect that it was in a deficit position at that point.

Mr. Tony Ianno: So because we've gone through the positive cycle, we've been in the surplus. If a prolonged negative cycle occurs, the actuary thinks $15 billion would be sufficient.

Ms. Sheila Fraser: That's right. The actuary has indicated that immediately before a recession, a reserve of $15 billion would be sufficient.

Mr. Tony Ianno: Right. And how does he determine that? For instance, what is a year's payment for one individual?

Ms. Sheila Fraser: I could certainly get a copy, or the committee might wish to ask the actuary for a copy, of the actuarial study he did in 2001.

Mr. Tony Ianno: But you checked his premises and all of that stuff to make sure that it was sound?

Ms. Sheila Fraser: That it was reasonable, yes.

Mr. Tony Ianno: So if some...I don't want to use the word “catastrophe”, but if there was some great recession where somehow two million people were laid off, and they received full maximum benefit, how much would that be in one year?

Ms. Sheila Fraser: I don't have that information with me, but I could certainly--

Mr. Tony Ianno: But someone there should have it. What's the maximum benefit for one year that an unemployed person would receive?

Ms. Sheila Fraser: I would really prefer that we perhaps provide you with a copy of the actuary's report.

The Chair: Mr. Ianno, we'll ask that they do that.

Mr. Tony Ianno: Someone must have that information. Does the clerk have it?

The Chair: I think she's saying she doesn't have it now.

Mr. Tony Ianno: I understand that, but does the clerk have the information? What's the maximum that one person can get from EI in one year? Is it $6,000, being $500 times 12?

Doesn't anybody know this? We've just done an audit.

Ms. Sheila Fraser: We have the average benefits in chapter 7 on page 5. Depending on the kind of program, it varies from $260 to $400 a week.

Mr. Tony Ianno: Okay. So let's pick $350--

The Chair: Mr. Ianno, you're way over time.

Mr. Tony Ianno: Okay. Thank you. I'll come back, if it's okay.

The Chair: Yes.

Ms. Skelton, Ms. Bakopanos, and Mr. Godin.

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, CPC): Thank you very much, Madam Chair.

Thank you very, very much, Mrs. Fraser, for all you've done for Canadians in the last few weeks.

We heard one minister say that he hadn't read your audit. This morning you said that for five years you've mentioned that the accumulated surplus is much too large. Do you think it would be appropriate to have a minister sign off, saying that they personally have read your report?

Ms. Sheila Fraser: Madam Chair, I would prefer not to respond to that question.

The Chair: Ms. Skelton, I know you wouldn't want to mislead the public. The minister in question did not say that he had not read Ms. Fraser's report. In fact, I think the minister said that he had read it three times. What he hadn't read was an internal audit.

I know you don't want to mislead the public.

Mrs. Carol Skelton: I'm very sorry, Madam Chair; you're right. And I do not want to mislead the public.

Madam Fraser, do you know how much has been spent on Appli-Web so far?

Ms. Sheila Fraser: Yes, in fact we mentioned Appli-Web in our report in November 2003, chapter 1, when we looked at government online projects. As at March 31, 2003, that project had received a total of $32.8 million.

Mrs. Carol Skelton: Did your audit examine how this program was being funded?

Ms. Sheila Fraser: In that audit, in the case study, we indicate where the sources of the funding were from. So there was government online funding of $14.5 million, the EI account was $15.8 million, and $2.5 million came from HRDC.

Mrs. Carol Skelton: Are you satisfied that these EI funds are being used appropriately in this program?

À (1000)

Ms. Sheila Fraser: We didn't look specifically and didn't audit the charges specifically. As you may be aware, we do a financial audit of the EI account every year, and we look at the basis on which HRDC allocates the costs to the account. We have never noted any difficulty or any particular concern with that.

Mrs. Carol Skelton: So you feel that it's a good program and it's working very well, then?

Ms. Sheila Fraser: Actually, we indicate some issues with it. The major issue we raised was that while the front end, if you will, had been automated and people could apply electronically, the department had not changed its way of doing business, and in fact much of the procedure continued manually afterwards. So they weren't taking full advantage of the new technologies. One of the major issues that came out of the government online project was that government really needs to rethink the way it processes transactions, the way it does business, if it wants to make the most efficient use of these new technologies.

Mrs. Carol Skelton: I have constituents with grave concerns about the program. That's why I was interested in asking about it, because they felt it was very ineffective for what they were wanting to do with the program.

That's all, Madam Chair.

The Chair: Thank you.

Ms. Bakopanos and then Mr. Godin.

Hon. Eleni Bakopanos (Ahuntsic, Lib.): Thank you, Madam Chair.

Actually, I was going to piggyback on what my colleague Mr. Ianno said. He actually asked the questions I wanted to ask in terms of the reserve.

What do feel would be an adequate level of reserve? Is it the $15 billion that was recommended by the actuary? It's obviously a number that was chosen with much thought. I don't think it was just picked out of the air.

As Mr. Ianno said, the law itself is constantly evolving. There are new challenges that have to be faced by both the government and workers in terms of how they want to change the way they work and what places they work in; in terms of how they go about creating their families, to balance that out with their work environment. All those challenges are obviously an ongoing process.

There were consultations made in terms of setting the rate. From those consultations, from what I understand, the suggestion made to the government was that, by 2005, there be some sort of new way of setting the premium rate rather than by an order in council.

I have two questions. First--as I said earlier, and piggybacking on what Mr. Ianno said--is it an adequate level because of the fact that we're an evolving working environment situation? Second, should your office also be part of the consultation process in terms of setting the rate?

Thank you, Madam Chair.

Ms. Sheila Fraser: Thank you, Madam Chair.

On the question of the reserve, when we first started raising the concern in 1999, we asked the government to explain to us why a reserve other than the $15 billion was necessary. What other factors had they taken into consideration? The actuary, of course, came up with a number. The government did not provide us with any additional information. If you look back in our reports in the first two years, the issue was more the concern that the government hadn't justified to us why an additional amount was necessary, had not indicated why a reserve of, say, $18 billion, or $25 billion, or whatever, was required.

Now, we recognize that there could be situations and there could be valid reasons for this, but I must admit that after five years I'm starting to question if there are any, because we haven't been given them. Now with the reserve at three times what the actuary... and we would, of course, rely on a professional like an actuary to do these kinds of calculations. We are taking a much firmer stance and saying that it does not respect the intent.

So you are right, there could be additional information, but we certainly haven't been provided with it at any of the hearings we have gone to over the years on this question. Neither the Department of Finance nor HRDC have brought forward any other information.

As to the consultations, we have certainly, over those years, made our concerns known to government about the process used to set the rate. The actual establishment of a rate and the establishment of program benefits is, of course, a policy decision, but we said we would like to see more clarity about the establishment of the rate and the process that was used for it. Many of those concerns were addressed in the 2003 budget when they set out the principles for a rate setting process.

Until now, this has been very much a going-forward question. The issue remains as to what this government will do, if anything, about the surplus that has accumulated in the account.

À (1005)

Hon. Eleni Bakopanos: I have just one more question. Perhaps this is a policy question rather than a question to be addressed to you. Would you agree, then, if the surplus is to meet the needs of the working public, that maybe not only decreasing the premiums but increasing the benefits, as has been done in certain new areas, would also be a way of addressing the fact of a too-high reserve?

Ms. Sheila Fraser: We interpret the intent of the act to be that the premiums collected should, over a period of time, equal the benefits. There are, of course, two ways to bring that into balance. One is to decrease premiums, the other is to increase benefits, and that is a policy choice.

Hon. Eleni Bakopanos: Thank you.

The Chair: Good.

Monsieur Godin.

[Translation]

Mr. Yvon Godin: Thank you, Madam Chair. Personally, I would argue for an increase in benefits. That would be much better.

For my own information and also to hear your reaction, I would like to ask you a few questions about the technology you were discussing earlier, and more specifically the fact that it was not being used enough. This week, I was speaking with someone who has a university degree in environmental studies—someone who is quite intelligent. This individual told me that it took three days to fill in the employment insurance form on the Internet. Originally, it was a four-page form; now there are 17 pages. If someone makes a mistake, this will only be picked up six months later and the person who made the mistake may have to pay back all the money received from employment insurance.

Last week, I met with about 100 people from my riding who were concerned about this issue. They have heard from employment insurance that starting now, they would have to fill in the form using a computer at home, and that if they did not know how to do that, they would have to ask their children to help them. Is it the responsibility of children to fill in employees' employment insurance forms, or is it up to Human Resources to provide this service, as you said in one of your previous comments?

Ms. Sheila Fraser: I think that would be an excellent question to ask the Department of Human Resources, Madam Chair.

Mr. Yvon Godin: Don't worry, we will be asking it.

Ms. Sheila Fraser: We did not look at this aspect of the service; we looked rather at what happened once the application was received. We found that rather than using the electronic data, workers were printing the form and continuing the process as they had before. All the efficiency and effectiveness of a computerized system is lost when there is a return to a paper-based system. So the department needs to rethink the way it works, and, of course, the initial contact is also very important.

Mr. Yvon Godin: Madam Chair, I would like to mention that everyone is very appreciative of the fine work done by Ms. Sheila Fraser. I would not want to imply that she and her team have not done an excellent job.

However, I am concerned, and you know that because I said so at the outset, when you arrived. I think that this program belongs to the workers of this country, not to the government. However, what do you expect us to do about it, when the Prime Minister himself says in the House of Commons... The $250-million scandal is just a drop in the Atlantic Ocean. The $43.8 billion in the Employment Insurance Program, which belongs to the workers, is a bigger scandal in my opinion. The Prime Minister himself said that he transferred the money to the provinces for health care. Does the government have a mandate to take surpluses from the Employment Insurance Fund and invest them in health care and make transfer payments to the provinces? I was listening to the Conservatives and the Liberals earlier, including my friend Tony. They were saying that if this money were ploughed back into the economy, this would create jobs. If I remember correctly, there was a $3.4-billion surplus in the Employment Insurance Fund last year, but the federal government announced income tax reductions of $4.4 billion for corporations. I think this enabled them to recover their employment insurance premiums quite well.

Is it not a violation of the spirit of the Employment Insurance Act when the Prime Minister tells the House of Commons that he transferred the money to the provinces for health care? I did not make that comment; it was the Prime Minister.

À (1010)

Ms. Sheila Fraser: The difficulty is that the employment insurance account is a type of accounting of the benefits paid and the premiums received. There has never been a separate bank account for that. All the premiums received are deposited in the consolidated revenue fund, and it is money like any other. It is like a loan from the employment insurance account to other programs. The act did not establish a separate fund or an entity distinct from other government programs. The Office of the Auditor General has always said that the account should be combined with all the other government programs and presented in the government's consolidated financial statements, because we consider it a program like all the others.

Mr. Yvon Godin: Madam Chair, the government itself said in the House of Commons that no changes can be made to employment insurance, because the money has been spent. This runs counter to the spirit of the act. Although the employment insurance account is part of general revenues, and I agree on that, the money that is deducted from employees' pay, with the changes that have been introduced, is now being used to pay regular benefits, as well as parental, maternity and sick leave benefits, and benefits for fishers, adoption and shared work. I see nothing there for health and transfers to the provinces. This flies in the face of the spirit of the act. You say here that the money was spent in accordance with the spirit of the act, but the government said openly that the money was transferred to the provinces and used for health care. So we should stop crying. It is as simple as that.

Is there not a danger of losing the employment insurance program? Only 33 per cent of women qualify for it, because many women work only 20 hours a week. That is the problem. They cannot accumulate the 910 hours required to qualify. That is one of the major problems with the program. That is why there are so many women who cannot qualify. This runs counter to the spirit of the act. We agree that people should receive training in order to improve their chances of finding employment, but the government goes beyond that when it says that it spent this money on health care, on transfer payments to the provinces.

Ms. Sheila Fraser: The only thing I can say is that if the government had charged such expenditures to the account, then we would have said this was a violation of the act, because the act states clearly what charges can be made to the fund. These amounts were never charged against the account as such, and, in fact, that is why there is a $44 billion surplus. If the fund is subsequently used for another purpose, that is not a violation of the act. However the question remains: what is the government going to do with the so-called surplus of $44 billion in the employment insurance account?

Mr. Yvon Godin: I would like to make one last comment.

[English]

The Chair: Very, very.

[Translation]

Mr. Yvon Godin: I would like to thank Ms. Fraser for the work she did.

I would like to say that I am pleased to see that the department and the Employment Insurance Commission of Canada have accepted all our recommendations. They have accepted them, but they are refusing to implement them. It is not up to you, but rather to us, to Parliament, to force the departments to do this.

Ms. Sheila Fraser: I do think it would be a good idea for the committee to ask the department for its action plan. What does it intend to do? Of course, we will continue to track this file year after year.

[English]

The Chair: Thank you, Mr. Godin.

[Translation]

Mr. Yvon Godin: Thank you.

[English]

The Chair: Mr. McCormick, Mr. Pallister, and then Mr. Bonwick.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you very much, Madam Chair.

Thank you for being here, Ms. AG and staff.

I was just listening to my colleague here from New Brunswick, and I've often said that the challenges in the riding I represent in eastern Ontario—especially as I go north of Highway 7—are about the same as those in New Brunswick, Newfoundland, or wherever.

But I'm thinking back to the Auditor General's excellent work on the HRDC “boondoggle”, to quote the headline in the paper. I'm thinking that all of my friends around the table—especially away from the microphone—would say there's more to job creation than just lowering taxes. I say this just to bring it up to the present tense, but back to the days when one particular minister was on the camera every day... Yes, that's a part of politics, and every party would do it: shoot, shoot, shoot. Yet as soon as the cameras turn off, the people from the other parties come over and personally talk to that same minister they just shot at—as we would have done—and say, “Can you approve this program for my riding?”

I just wonder, Ms. Fraser, about your thoughts on the grants and contributions that we had, because you must do much thinking because of your excellent work. It was necessary to bring us to attention on that, and yet I don't know what the final figure is; it's a few dollars that have been wasted, and it was wrong, and so on. And what you did was right. But the results in rural and small town Canada--that's my beat and my concern. I know that our cities and the communities within those have much the same challenges, but the results have been devastating in some cases. Here in eastern Ontario, unemployment is as high as 17%, and we need this type of program.

And then today, it would be the same with the sponsorships--excellent work. I don't think any one person, or anybody I would trust, in the country wants to see somebody steal money. And yet I hear my friends from down east especially—we'll say P.E.I.—talk about how those small festivals are going to be affected because of the funding. And yes, it's up to the government to do a better program and do a better job of it.

I just wonder, though... You're hired to be the Auditor General, and you do it well, and yet it must be a challenge. When you do your publicity releases, the information and facts, I'm just wondering whether you consider, or can consider, the spin that people are going to put on your good work.

À (1015)

The Chair: I think you understand that you may be asking of the Auditor General something that—

Mr. Larry McCormick: Madam Chair, I'm asking the Auditor General, who is a most capable person, to share her thoughts.

The Chair: Okay, I'm just indicating that—

Mr. Larry McCormick: And that's what I'm asking.

The Chair: I've been very lenient.

Mr. Larry McCormick: I'm able to ask her any question, and it's up to her.

The Chair: Yes.

Mr. Larry McCormick: No, no. My question is directed to the AG, who is most capable of speaking for herself.

The Chair: Madam Fraser.

Ms. Sheila Fraser: I am pleased to respond to the question.

First of all, when we look back at the HRDC program, I think the audit confirmed that there were many issues in internal controls, that there was not sufficient oversight. I would caution the members not to equate the amount of money that was proven to have been overpaid.... To prove that amounts have been overpaid is a very difficult thing to do, and at times when there is complete lack of control and oversight, and money is given out willy-nilly, it's very difficult to get it back because the controls, procedures, and expectations have never been laid out. There are no contracts.

If we look at the sponsorship program, quite frankly, when I see fictitious invoices in the Government of Canada, that is of grave concern to me. I don't think that is acceptable behaviour anywhere, and it is incumbent on the Auditor General to denounce that very strongly.

Am I concerned about an overreaction? Of course. We raised issues in HRDC. In fact, the pendulum often swings too far the other way. We noted in the follow-up report in 2001 that there were too many controls; too much process was put around applications; it was taking too long to deal with normal applications; and the public service had overreacted and overcorrected.

I have repeatedly stated, relating to the sponsorship audit, that it is not a question of more rules and more process. Quite frankly, I think we probably have more rules than we need to have in government. It is simply a question of respecting good management practice and ensuring that public funds are spent with the proper diligence and control.

As to the spin and the political rhetoric, I would suggest that Mr. McCormick is probably more familiar with that and lives in that environment much more than an accountant does.

À (1020)

Mr. Larry McCormick: I think we all read the same newspapers.

Ms. Sheila Fraser: Politicians, and the media particularly, tend to exaggerate certain terms and not always give as balanced a view. They certainly don't give the positive news that appears in many of our reports.

But I think government's reaction to that particular audit has been very serious. It has taken that extremely seriously and has taken many serious actions to deal with it, which confirms to me again that our concerns were appropriate.

Mr. Larry McCormick: I really do appreciate the Auditor General taking the time and sharing from the heart, with her expertise and professionalism, in giving the facts in her comments. I thank her for that.

Again, rural small-town Canada seems to be where I ended up after 10 years. I remember the top person in HRDC in eastern Ontario coming to our caucus and telling us about all these great things, but he had no idea about rural and small-town Canada.

To follow up again and again, do we look specifically to the Auditor General's department in regard to the service that is so poor in some cases in rural and small-town Canada? As my colleague from New Brunswick said, services aren't even available in some of these communities. Most people--80% of the people in this town--have no idea what rural and small-town Canada is.

Thank you, Madam Chair.

Ms. Sheila Fraser: We haven't looked specifically at service to particular areas. We go back and look at what performance measures the departments have in place. As I said earlier, HRDC did have some pretty good and reasonable performance measures that many departments don't have. Because they had them, we are able to tell the story about the variability across the country. They might have more detailed information—I don't know if they do—by regions or even by districts.

Mr. Larry McCormick: Thank you very much, Madam Chair. I appreciate it.

The Chair: Thank you.

Mr. Pallister, and then Mr. Bonwick.

Mr. Brian Pallister: Thanks, Madam Chair.

I think it's fair to say you expressed bemusement at the absence of action in terms of the ongoing overcharging of premiums on the EI account and this seeming lack of action on the part of the government, regardless of your observations and recommendations to it over a five-year period. I hope that's a fair interpretation.

I don't want to sound inattentive to the concerns the government would naturally have about generating revenues. Clearly, the government needs to generate revenues from some source to meet the needs of Canadians in a number of respects. It is true, however, that a 10% drop in the EI premium would result in a reduction in those revenues, about $880 million, give or take, and it would seem understandable that a government concerned about adequate revenue generation would have to consider that aspect of the rate setting for EI.

That being said, what concerns me chiefly in terms of that process is its lack of transparency. The government has taken what once was a tripartite process for rate establishment and made it a unilateral process. The more quickly we return to a process of genuine consultation and real transparency, the better for all of us, I think. This is why I continue to raise the issue.

I think I should make it clear to my government colleagues that I'm not unsympathetic to the need for revenue. I've been on the government side of the House; I understand the need for program moneys to be there. But they need to come in a transparent manner, in an honest manner, and not be generated under the guise of providing benefits for unemployed people when that is not the case.

You make the observation in your report that in your view, it was Parliament's intent that the EI program be run on a break-even basis over the course of a business cycle. How do you define a business cycle?

Ms. Sheila Fraser: Madam Chair, before responding to that specific question, I'd just like to note that in the 2003 budget the government indicated it would be conducting consultations on a new rate-setting process and announced certain principles. One of the principles was that rates should be set transparently and should be set on the basis of independent expert advice. The second principle was that the expected premium revenues should correspond to expected program costs. The government has reaffirmed those two principles, which address in many ways many of the concerns we've raised.

We note in the report that there is no definition in the act as to a business cycle. I believe the actuary used a period--I was going to say seven to 10 years--he felt was a business cycle. Again, it could be appropriate if there were adjustments to the rate-setting process to be more specific about what that term actually means. In fact, they talk about a third principle, that rates should mitigate the impact on the business cycle and be stable over time. We would like to see more specifics given around that. I realize you may not be able to give a precise period, but you could certainly give some indication as to an appropriate length of time and how you take that consideration into account when you're setting the rate. We would hope there would be more clarity around some of those terms in a new process that would be put into place.

À (1025)

Mr. Brian Pallister: There were some very interesting submissions made through this process, and a number of recommendations were made by labour-business groups and the like around their desire to see greater certainty, an earlier rate-setting announcement as well, or perhaps some process where the rates could be announced and then consultation held on the basis of that preliminary announcement. But in each of their submissions, whether it was from the Fraser Institute or the Canadian Labour Congress, they wanted to see more transparency in terms of how the money was used.

Of course, it must make it very difficult for you to evaluate a program when in fact the money that is being raised under the auspices of employment insurance to offer benefits and programs of value to Canadian workers is to such a great degree not being used for that purpose. Isn't there some fundamental principle of business and government operation that would dictate that the money raised for that purpose and under that guise be used for that purpose?

Ms. Sheila Fraser: That is not the way the act was written. Our interpretation is that the EI program is like any other government program. The moneys collected are deposited in the consolidated revenue fund, and the premiums are paid out of that fund.

In the act there is a requirement to do an accounting--almost like a notional account--to track the premiums that have been collected and the benefits that have been paid over time, presumably to help establish rates. But there is no requirement that the moneys be used only for that. There is a notion that only certain expenditures can be charged to this account, but there are no kinds of restrictions, as Mr. Pallister seems to be suggesting, in the act per se.

Mr. Brian Pallister: That's right. I'm not suggesting that the government is incorrect when it raises that argument, because in a previous report you acknowledged that is how the legislation reads. But I am pointing out that it is not fair or right, and that is, of course, a policy issue. Numerous colleagues have made policy-relevant statements, so I'm making one now.

The government's response to your recommendations on greater clarity around the phrases “business cycle” and “relatively stable rates”, which we haven't really adequately defined, was to suspend the rate-setting process as set out in Bill C-111. It gave the government the authority to set the premium rates and determine that the criteria set out were not applicable in those two years. The government's response seems to be that it didn't have to abide by the spirit of the bill in those two years.

Would you care to comment on that response?

Ms. Sheila Fraser: I think you should ask the government what it means by its response.

We go back to the intent of the act overall. Even though the specifics of that section 66 are not required, we still believe the overall intent of the legislation was that premiums should equal benefits. In effect, the government almost confirms in the 2003 budget that was the intent of the act, in one of their principles.

The government is saying it technically didn't have to meet the requirements of that section because it had been suspended for two years.

À (1030)

The Chair: Thank you, Mr. Pallister.

Thank you, Ms. Fraser.

We'll now go to the second round. There's some confusion about time, and the chair tries to be as fair as possible. There are nine members on the committee. The members from the Conservative Party have about four-ninths of the members here--a disproportionate amount of time if you're doing that, in terms of what the opposition is getting in time on the committee. That being said, I try to give everybody some time.

So we're going into the second round on this for people who have spoken more than once. I'll try to limit it to about four minutes.

Mr. Bonwick, you will be followed by Mr. Godin, Mr. Ianno, Mr. McCormick, and Ms. Bakopanos.

Hon. Paul Bonwick: On your comment that 66% of the people want to chat with a live person on the other end, what percentage of people who actually call in want to speak to somebody?

Ms. Sheila Fraser: I'll ask Ms. Therrien to give you that information, if we have it.

Ms. Suzanne Therrien: Maybe 40% of the people would like to talk to a service delivery person.

Hon. Paul Bonwick: So 40% of people who call in want to speak to a live person at the other end. They'll hit zero, or whatever the case may be.

Ms. Suzanne Therrien: Yes.

Hon. Paul Bonwick: So you're dealing with a 75% satisfaction rate in general, I would assume. I'm trying to get to the number of people who are dissatisfied with the service. When somebody says 65% of people who call in are not satisfied because they get a busy signal, I'm curious how many people who call in are quite satisfied with the service and never wanted to talk to somebody in the first place; it was their intention to simply use an automated voice service system. The statistics are skewing very drastically what the service rates are.

Ms. Sheila Fraser: I think the best thing would be to refer you to the opinion survey that was mentioned in paragraph 7.69, showing that the majority of people were satisfied with the service they had received. We don't have the specific numbers, but the majority of the people were satisfied with the service they had received.

Hon. Paul Bonwick: Through the chair, I'm trying to make sure the committee has an accurate a picture as possible about the services being delivered. In one breath, the Auditor General suggests that we need to be more efficient and become more up to date about delivering services. HRSDC responds to that, and they try to move into a more technological era where they are going to provide automated phone service. With all due respect, I think it's critically important that the Auditor General project the image that it's not simply 65% of the people who are using the service, because that certainly seemed to be the message we were receiving, that 65% of the people were getting a busy signal. The clarification, of course, is that a minority of the people who are calling in are wanting to speak to somebody; and out of that minority of people, there again is difficulty in getting through to somebody who is live on the other line.

I think this phone service is a critically important tool, because I come from rural Canada, and it's not so easy for a lot of people in my constituency to make a drive into an EI office to get things resolved in a timely fashion.

So I am wanting to make sure the committee has an appreciation that this is in fact a reasonably decent service. It can become much better, but it is not disproportionately bad based on this 65% number that we used.

À (1035)

Ms. Sheila Fraser: Madam Chair, I'll just go back to the facts in the report.

In 2002-03, according to paragraph 7.36, HRDC received close to 20 million calls, so I don't know that I would quality it as a minority. But anyway, it received 20 million calls “when the caller tried to transfer to a representative, but this figure does include redials”, so it is calls, not necessarily callers.

The main point we were trying to make is in the next paragraph: “In 2000-01”—when they measured this—“34 percent of calls nationally... got a busy signal; in 2002-03, this figure has risen to 65 percent”. So it's the trend line, as much as the absolute number, that is a concern.

Then when you look at the variability across the country, there are areas, in Ontario, for example, where it is up over 70%. It's the variability. Some areas would appear to be doing quite well, like Saskatchewan and others.

Why is there variability like that? What is the department doing to try to reverse the trend line, so that it's not going up, but rather—

Hon. Paul Bonwick: Is there any way to actually verify how many individual callers there were?

Ms. Sheila Fraser: No, because they would only know calls.

Hon. Paul Bonwick: Rather than deal with hypotheticals, is it reasonable to assume that one individual is making a lot of calls?

Ms. Sheila Fraser: One could presume, if they are getting busy signals, probably yes.

Some hon. members: Oh, oh!

Hon. Paul Bonwick: What I'm trying to do is bring forward the case to demonstrate that 20 million phone calls does not mean 20 million unhappy people.

Ms. Sheila Fraser: That's right.

Hon. Paul Bonwick: It's about getting clarity on the numbers; that's where I am coming from. If I was getting a busy signal, I would not be averse to phoning six or seven or ten times in a day.

Ms. Sheila Fraser: That's right, and people could be just pressing the speed dial.

We do not know, and we cannot know, how many actual callers there are. They only track the number of calls.

Hon. Paul Bonwick: Going back to the level of satisfaction of recipients of EI, if I understood correctly, that is 95% approximately?

Ms. Sheila Fraser: No.

Hon. Paul Bonwick: No. That was for correct and accurate payments.

Ms. Sheila Fraser: The mathematical accuracy is 95%.

We also mentioned in paragraph 7.51 that they have a tracking system that measures the quality of the claims processing. In 28.5% of the files, there was an error leading to an overpayment or an underpayment. So 28.5% of the actual transactions had an error in them, but the dollar effect of that was only 4.5%, because they would be small errors, and there could be overs and unders. So the whole effect of all of that on the dollar value was 4.5%.

The Chair: Mr. Godin.

[Translation]

Mr. Yvon Godin: Madam Chair, I would like to thank you once again for the generosity you have demonstrated in allowing us four minutes. We will try to restrict ourselves to that.

On page 12, there are some percentages. Can you explain to us how these percentages were arrived at? For example, the table says that New Brunswick is at about 82 or 83% and Quebec is at about 80%. I am wondering how you arrived at these figures. I receive calls from my constituents, telling me they sometimes have to wait anywhere between seven to nine months before receiving their employment insurance benefits. They are forced to transfer claims from Bathurst to Campbellton, from Miramichi to Moncton.

The study was probably carried out in Moncton, where the unemployment rate is 4.5%, and not carried out in a region such as mine, the Acadian peninsula, where the unemployment rate is at 28%. I believe these figures do not at all reflect the real scenario.

Ms. Sheila Fraser: I will ask Ms. Therrien if she has the details. To my knowledge, these figures are for the whole province, for all centres in the province.

Mr. Yvon Godin: All of the centres are affected.

Ms. Sheila Fraser: I am going to ask Ms. Therrien to answer.

Ms. Suzanne Therrien: Madam Chair, the data contained in the table are indeed an average for the province. Therefore, there may certainly be employment centres where the wait to receive service is much longer. One must understand that in 80% of all cases, claims are processed within 28 days or less, but there is, nonetheless, more precise data. For example, if you were to ask the department for statistics on your region, they will be able to tell you that in perhaps 7% of cases—I am just throwing out a random percentage—the turnover for payments on claims is more than 50 days. So, it is very possible that in your region, there were cases where people had to wait a very long time, perhaps two months.

Here, we are talking about averages. Therefore, on average, 80% of claims are processed within 28 days. The remaining 20% of claims which were not processed within 28 days or less were perhaps processed in 50 days or more. One has to wonder how much time passed before the 20% of claims were processed.

À (1040)

Mr. Yvon Godin: But it may be that this is the area where there is the highest number of claims, where the unemployment rate is 28%. This is not reflected in the overall figure.

Next time, would it be possible to obtain the individual figures for each processing centre?

Ms. Sheila Fraser: Well, Madam Chair, you could always—

Mr. Yvon Godin: I can request that in a report.

Ms. Sheila Fraser: There are 300 processing centres. That is a lot of information. We can always think about it. We wanted to bring out the variability, and the fact that right now, they only provide one average for the entire country. More details would have to be provided, at least by province.

Mr. Yvon Godin: I find it very difficult to see that people in my riding have to wait nine weeks. I am forced to intervene. Currently, people are being sent to other processing centres in New Brunswick. We are the ones who hold the record.

[English]

The Chair: Thank you, Mr. Godin.

Mr. Ianno, and then Mr. Pallister.

Mr. Tony Ianno: Thank you.

I just want to go back to a question I was thinking of, which is more on the overview side of it. I'm reading your information about the history, how in 1940 the Speech from the Throne came in on the basis of being an economic and social security program, and I was listening earlier when you were saying there are no restrictions in the act that allow the act to be interpreted to include other factors that could be determined from decade to decade--if I go on a larger perspective--as compared to year per year, yet you indicated that the intent is what you were determining.

Somehow I'm a bit confused about that. Maybe you can enlighten me a bit on how you get from the original--the act, no restriction--to your defining the intent, meaning it has to be equal-equal, in and out.

Ms. Sheila Fraser: I have two reactions.

First of all, on the no restriction, obviously the act changes over time, but at a given point in time there are restrictions in the act as to what can be considered an expenditure of the Employment insurance account. It is restricted to certain activities. Those activities and programs have changed over time, but say today or five years ago, there were certain activities or programs that could not be charged to the employment insurance account. So there is a definition of what can be considered an appropriate benefit to be charged.

When we talked about the intent, it was the intent in the rate-setting process, not the overall intent of the legislation. When we read the particular sections and when we looked at the discussion, it appeared to us that the intent in setting the rates was that the premiums would, over a period of time and economic cycle, equal the benefits that would be paid out. It was not the intent of Parliament that the program accumulate surpluses or that it be used to generate revenues for any other purpose.

Mr. Tony Ianno: I'm sorry to interrupt you. As I start becoming enlightened you continue, and then I get confused again.

The difficulty is that if the act allows for new items to be included, that would be seen as having economic and social benefit, and then you go back and start talking about how to equate a number that determines that in equals out. I see two different and distinct circumstances, because if the act is adapted in a way that basically includes other things that are related to social and economic stability, to jobs, etc., when you go to this side--equal in and equal out--that may remain constant in terms of the number of people who may go onto the program, but that amount isn't equal to the in if I'm going to expand this side, which is the other avenues, whether it's maternity or other related things.

How do you determine this part if this is going to change?

À (1045)

Ms. Sheila Fraser: That's a good question.

The rate is set annually, as you know, usually late in the fall because it has to come into effect for the payroll deductions. I guess you're right, there could be a disconnect if the rate is set in, to take it theoretically, November 2004, and then government changes the benefits that are allowed under the act in June 2006. There could be a temporary disconnect, because you may not have considered those additional benefits when you set the rate in the fall. That is why it is important to look over a broader period of time. We have never tried to say that it has to be an exact zero every year.

Mr. Tony Ianno: That's the part that I was--

The Chair: Mr. Ianno, you are well past your--

Ms. Sheila Fraser: Could I just explain, though, it is true that you have to look over a period of time. There will be pluses. There will theoretically be minuses. And quite frankly, to think you could ever come to zero is also unrealistic; there will always be some sum. But over a reasonable period of time, premiums should equate closely to benefits, and you have to look at a much broader view than just a specific year.

The Chair: Mr. Pallister, very briefly.

Mr. Brian Pallister: In chapter 7, paragraph 7.83, you say that “the Commission's clear mandate to measure the program's effectiveness warrants a systematic approach to evaluating the program's effectiveness over a reasonable period.” And you go on to say that the department's efforts have not resulted in a common evaluation plan, a plan which would be clearly beneficial. There are 68 studies, but the department has not evaluated or done an analysis of the cost-effectiveness of the EI income benefits program.

What benefit would a cost-effectiveness analysis of the EI benefit program provide?

Ms. Sheila Fraser: That is certainly part of the overall evaluation of the whole program.

Mr. Brian Pallister: Would you suggest the government isn't fulfilling its mandate because it has not done an evaluation of the program itself? Since 1996 major changes were made, and there has been no comprehensive evaluation made of the effects of those changes. It would seem self-evident.

Ms. Sheila Fraser: The EI Act requires that. To my knowledge, there was no limit as to when that had to be conducted. We are pointing out that in spite of a whole series of evaluations and studies that have been done, some significant gaps remain.

Mr. Brian Pallister: It seemed difficult, then, to fulfill one's mandate if there was no time requirement on when one had to do the evaluation of a change made seven years ago.

Ms. Sheila Fraser: That is why the department and the commission have agreed with us that there should be an overall plan for evaluations. We have suggested that the committee might wish to discuss with them actually getting a copy of that plan to see what actual timelines they are holding themselves accountable to.

Mr. Brian Pallister: I would note to the chair that this is something we should be pursuing ambitiously.

The Chair: On Thursday we will have the opportunity to talk to the department.

Mr. Brian Pallister: Thank you, madam.

The Chair: Mr. McCormick.

Mr. Larry McCormick: Thanks very much, Madam Chair.

Probably the one word that sums up what I've learned here in ten years is “perception”, what the public sees, especially as they watch “showtime” at 2 o'clock throughout the week.

For the EI surplus, the pot of money--for the record--what is the perception? Where is this pot of money sitting? Where does it go? How is it used? How much of it goes back to Canadians? I'd like to get an answer to that simple question. You can tag-team on it; I have a short period of time.

How many people--and I know it has been asked many times--work in the Office of the Auditor General? As one CA asked on the weekend, and he was only drinking strong coffee, who audits the Auditor General's department?

Thank you.

À (1050)

Ms. Sheila Fraser: I'm glad you asked that question.

First of all, on the question of the surplus, you were absolutely right that there is no separate bank account. The funds that are collected go into the consolidated revenue fund, as do any other revenues of government. The EI account is simply a tracking of premiums received versus benefits paid. We have tried to make that clear to Canadians, though often when we talk about surplus, people immediately equate that to money.

As for my office, we are now about 575 people. I would remind the committee that we audit the federal government, and the departments and agencies. We also audit about 40 crown corporations. We audit the three northern governments and about 15 territorial agencies. We are also the auditors of two agencies of the United Nations, for which we recover costs.

As to who audits us, we have an annual financial audit done by an outside firm of accountants. In the year 2000, we had a review done of our financial attest practice by a well-known firm in Canada.

This year, actually last week, I presented to the public accounts committee that we conducted a peer review of our performance audit or value-for-money audit, this kind of work, by an international group of peers. The team was formed by the audit offices of Norway, the Netherlands, France, and led by Great Britain. This is a first. We are the first audit office to undergo this.

The report is available on our website. If ever the committee would like to receive copies, we would be glad to give them to you.

The opinion of the team was that our quality management framework and our systems and practices ensured that the products met all of our quality requirements, as well as professional standards. They noted good practices that we had in the office, and they also had several areas of recommendations for improvement.

As we committed at the very beginning, we have made all of that public. We have presented as well to the public accounts committee an action plan for dealing with all of the recommendations.

This is a new process that the international audit offices have started. We are now leading the review of the General Accounting Office of the United States, with six other international colleagues.

The Chair: Mr. McCormick.

Mr. Larry McCormick: I was there when you presented that international report. I commend you for your good work in taking part in this.

Thank you, Madam Chair.

Ms. Sheila Fraser: Thank you.

The Chair: Thank you, Mr. McCormick.

Ms. Bakopanos.

Hon. Eleni Bakopanos: Thank you, Madam Chair.

I understand that you haven't done an audit yet of part II of the Employment Insurance Act. Do you intend to do one in the next year or so? The benefits part is as important, in my opinion, as the premiums.

Ms. Sheila Fraser: We will certainly consider it in our planning. There are several members who would be deeply interested in doing that kind of work.

Hon. Eleni Bakopanos: Yes, on both sides.

Thank you.

Thank you, Madam Chair.

Ms. Sheila Fraser: Thank you.

The Chair: On behalf of the committee, I want to thank you again for coming to visit us. You have always responded quickly to our requests. I also want to commend you for always staying within the initial time period that we give you to do that. You set a fabulous example to other witnesses. Again, on behalf of the committee, I thank you, and I know this is not the last appearance you'll make before this committee.

Ms. Sheila Fraser: Thank you, Madam Chair. We really do appreciate when committees other than the public accounts committee also call us to discuss our work. We're always very pleased to receive invitations to appear, and if any members have any other suggestions of areas that they would like us to do audit work in, we would be very pleased to receive those suggestions as well.

Thank you for your attention to our report.

The Chair: Thank you.

Members of the committee, I would just remind you that at Thursday's meeting you'll have an opportunity to ask of the department some of the questions that the Auditor General has suggested you might want to put forward, and certainly questions of your own. We'll see you all on Thursday.

The meeting is adjourned.