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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, April 20, 2004

0900

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

Mr. Charles Nixon (Acting Assistant Deputy Minister, Insurance, Department of Human Resources and Skills Development)

0905

0910

The Chair

Mr. Brian Pallister (Portage—Lisgar, CPC)

Mr. Réal Bouchard (Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance)

0915

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

The Chair

Mr. Brian Pallister

The Chair

Mr. Brian Pallister

The Chair

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Réal Bouchard

0920

The Chair

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Ms. Wilma Vreeswijk (Senior Director General, Employment Program Policy and Design, Department of Human Resources and Skills Development)

Mr. Brian Pallister

The Chair

Hon. Eleni Bakopanos (Ahuntsic, Lib.)

Mr. Charles Nixon

Hon. Eleni Bakopanos

Mr. Charles Nixon

0925

Hon. Eleni Bakopanos

Mr. Charles Nixon

Hon. Eleni Bakopanos

Mr. Charles Nixon

Hon. Eleni Bakopanos

Mr. Charles Nixon

Ms. Liliane Binette (Director General, Insurance Services, Department of Human Resources and Skills Development)

Hon. Eleni Bakopanos

The Chair

Ms. Libby Davies (Vancouver East, NDP)

0930

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

0935

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

The Chair

Ms. Libby Davies

The Chair

Mr. Charles Nixon

The Chair

Mr. Charles Nixon

The Chair

Mr. Charles Nixon

The Chair

Mr. Charles Nixon

0940

The Chair

Mr. Charles Nixon

The Chair

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

0945

Mr. Brian Pallister

Ms. Wilma Vreeswijk

The Chair

Ms. Wilma Vreeswijk

The Chair

Mr. Eugène Bellemare (Ottawa—Orléans, Lib.)

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

0950

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

Mr. Eugène Bellemare

Mr. Charles Nixon

The Chair

Mr. Eugène Bellemare

The Chair

Ms. Libby Davies

0955

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Libby Davies

Mr. Charles Nixon

Ms. Wilma Vreeswijk

1000

Ms. Libby Davies

Ms. Wilma Vreeswijk

Ms. Libby Davies

Ms. Wilma Vreeswijk

Mr. Brian Pallister

1005

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Réal Bouchard

Mr. Brian Pallister

1010

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

The Chair

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

Mr. Charles Nixon

Mr. Brian Pallister

The Chair

Mr. Eugène Bellemare

Mr. Réal Bouchard

1015

Mr. Eugène Bellemare

Mr. Réal Bouchard

Mr. Eugène Bellemare

The Chair

Mr. Brian Pallister

The Chair

Mr. Brian Pallister

Mr. Réal Bouchard

1020

Mr. Brian Pallister

Mr. Réal Bouchard

Mr. Brian Pallister

Mr. Réal Bouchard

The Chair

Ms. Libby Davies

1025

Ms. Wilma Vreeswijk

Ms. Libby Davies

Ms. Wilma Vreeswijk

Ms. Libby Davies

Ms. Wilma Vreeswijk

The Chair

CANADA

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

NUMBER 006

3rd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, April 20, 2004

[Recorded by Electronic Apparatus]

¿ (0900)

[English]

The Chair (Mrs. Judi Longfield (Whitby—Ajax, Lib.)): Good morning, ladies and gentlemen. Welcome to the sixth meeting of the Standing Committee on HumanResources, Skills Development,Social Development and theStatus of Persons withDisabilities.

It's good to see colleagues back after what the media would say is your two weeks of rest and recreation in parts otherwise. However, knowing all of the members of the committee, I suggest that it was anything but rest and recreation and that you were all hard at work, as were the officials before us today.

Again, we apologize very sincerely for having you come back to reschedule. I would say, on behalf of all of my colleagues, thank you for your patience with us. I welcome you back.

Without further ado, I'll go to Mr. Nixon.

Mr. Nixon, you've brought a wonderful team with you. Perhaps you might introduce your team to the committee and begin your presentation.

Mr. Charles Nixon (Acting Assistant Deputy Minister, Insurance, Department of Human Resources and Skills Development): Thank you.

With me today is Liliane Binette, director general of insurance services, and Donna Achimov, the director general of call centres. Also with me is Wilma Vreeswijk, who is director general of employment program policy, and Réal Bouchard, who is the director of social policyfrom Finance.

Thank you for providing me with this opportunity to discuss the employment insurance program specifically with respect to measuring and reporting client service, as raised by the Auditor General's report.

Our service delivery goal is continuous improvement of client service, and we are very committed to this. We constantly examine and develop ways to enhance the consistency, quality, and speed of our performance. We are also developing timely and meaningful performance measures to improve our management reporting of the EI program.

[Translation]

We take very seriously all of the issues raised in Chapter 7 of the Auditor General's report. We appreciate the Auditor General's recognition of our efforts in measuring performance, of having a reasonable set of performance measures and of having a good deal of information with which to manage the program. She also confirmed that 95 per cent of benefits paid to Canadians in 2002-2003 were accurate. Furthermore, a 2001 study showed that EI claimants were generally satisfied with the service they receive.

¿ (0905)

[English]

We issue close to $13 billion worth of benefits a year, process almost three million claims, and process 22 million biweekly claim reports through our automated telephone service called Teledec.

Naturally, with an operation this size, it is not always smooth sailing. There are peaks and valleys in the workload that occur not only due to the seasonality of employment but also due to unforeseen circumstances, such as the events witnessed across Canada in 2003, namely SARS, BSE, the Ontario power outage, the B.C. forest fires, and the hurricane in Halifax.

As a result of these and other events, we are continually adjusting in order to ensure we process claims quickly, giving the right information to provide resolution at first contact.

We do, however, make every effort to keep pace with demand. For example, during the Ontario power emergency last summer, we continued to pay clients and were able to direct client calls to other regions, allowing us to provide uninterrupted service to Canadians.

Our service delivery goal is continuous improvement. We know these benefits are important to Canadians, so we believe we need to get things right the first time, and this means ensuring that the client receives the right benefit at the right time.

We recognized a few years ago that with the growing complexities of EI resource issues and the different approaches being taken by the regions, we had to take action. What we wanted were sustainable improvements, not short-term solutions.

We are addressing service improvements to Canadians by undertaking initiatives that will improve the quality and timeliness of claims processing, ensure a similar service experience wherever and however EI clients approach us, and ensure that parliamentarians are provided with meaningful information.

Furthermore, the department is working to transform the way it delivers traditional services to Canadians. The modernizing service for Canadians initiative will ensure that departmental polices, programs, and service delivery are refocused to ensure that better, more responsible client centre programs and services are developed for Canadians.

[Translation]

Speed and quality of claims processing is at the heart of our business. That is why in 2004-2005, we are introducing new key indicators which will ensure that our measure of timeliness is inclusive and addresses both aspects of client service—timely decisions and timely payments.

[English]

In fact, we are improving the quality and timeliness of claims processing by putting in place a suite of electronic tools and opening a new service channel, the Internet.

We are building the system for the future, and to ensure a good foundation we are standardizing and simplifying our processes to improve consistency and outcomes.

We have already put in place an Internet EI application system, known to us as Appli-Web, and we have received over 1.25 million Internet applications this year. This includes interactive fact-finding elements that allow us to complete information gathering the first time, resulting in faster payments to clients. We expect to receive over two million Appli-Web applications in 2004-05.

We have developed a web-based reporting system for employers so that they can electronically send record of employment information. This will ensure timeliness and quality of employer information. Employers are supporting this initiative very strongly, and we anticipate receiving half or approximately four million of our ROEs, records of employment, in this way in 2004-05.

Five years ago, all biweekly client reports were filed using paper--the famous cards. We transformed reporting, and now more than 22 million biweekly reports are filed through an automated telephone service. This year we further transformed this process by putting in place a web-based biweekly reporting tool, which we call Interdec, that allows clients to submit their bi-weekly reports online. This tool has just been rolled out nationally, and we are currently receiving about 5% of reports this way. Next year we expect to achieve our target of 30%, or six million reports.

Our client feedback survey results tell us that 96% of clients are satisfied with this service and would recommend it to others. We will make this tool even better and more interactive when we migrate to secure channel, which will allow for improved information gathering and reduce calls.

We are building a system for medical practitioners to provide medical certificates securely over the Internet.

We are proposing the means for clients to check their EI account over the web with secure channel. This should reduce the number of calls to call centres, as many of the calls we get are from claimants wanting to know the status of their claim.

Furthermore, we are developing our capacity to process claims through automation. We are currently piloting automated processing of renewal claims and expect to roll this out nationally soon, in 2004-05. As call centres currently process some of these renewals, we expect a reduction in their work, allowing more calls to be answered.

We have undertaken a comprehensive unit costing study, where each element of the EI program is being reviewed. This will allow for a more sophisticated resource allocation model for 2005-06, thereby ensuring that all activities are properly resourced.

[Translation]

The department's key performance indicators are identified and communicated publicly in the Report on Plans and Priorities annually. The RPP is used as the department's primary strategic level planning document and is intended for both parliamentary and public scrutiny.

¿ (0910)

[English]

We will undertake to explain regional differences in performance as appropriate in our ongoing efforts to ensure that parliamentarians are provided with appropriate and meaningful information.

Taken together, we expect all these initiatives will improve the quality, consistency, and speed of EI claims processing and ultimately reduce the number of people wishing to speak to a service representative in our call centres.

Reports and surveys have repeatedly told us that our clients' preferred channel of access is the telephone. In 2002-03 we received approximately 35 million calls, and approximately 64% self-served through our automated voice response system. We value the relationship we have with our clients and are taking important steps to improve access to the phone.

[Translation]

HRSD is addressing the high volume of calls in EI Call Centres by: increasing the number of people answering calls;

[English]

promoting and improving access to automated electronic telephone services and expanding the services offered on the Internet; making the best use of technology through a transfer call system to the first available agent to reduce waiting times; currently harmonizing all departmental call centre operations and standardizing call handling procedures across all call centres;

[Translation]

and, as mentioned earlier, improving our electronic services.

[English]

By focusing on providing clients with timely payments and resolution at the first point of contract through other channels, such as our Internet services, we have received three million fewer calls this year. Together these steps will help manage our call volumes, especially with improved timeliness of claims processing.

I would now like to touch briefly on other areas raised in the Auditor General's report.

With respect to appeals, the department has made the filing of umpire appeal dockets a key corporate performance indicator, and in fact, the filing of these dockets within 60 days has reached 96%.

We are in the process of introducing a risk management approach regarding the investigation and control function and the accompanying savings involved. Part of this approach includes amending the actuarial tables to ensure that indirect savings are credited accurately.

[Translation]

The Auditor General acknowledged that the annual Monitoring and Assessment Report which provides an annual assessment of the EI program has made a significant contribution to the understanding of the impact and effectiveness of the EI program.

[English]

In fact, the annual EI monitoring and assessment report provides more in-depth reporting to Parliament than most other federal programs and departments. Future monitoring and assessment reports will include further improvements, including ensuring that key findings from effectiveness studies are more fully reported and that sufficient information is provided.

The results of the consultations and the future of EI rate-setting are now being reviewed. A summary of the consultations is available on the Finance website. In the recent budget, government indicated that it would introduce legislation to implement a new mechanism that would be consistent with the principles set out in the 2003 budget, taking into account the views expressed during those consultations.

To conclude, we will continue to work closely with the Auditor General, Treasury Board, and government departments to ensure that Canadians receive quality programs and services and that the resources of the Government of Canada are used responsibly.

Thank you. We'd be happy to answer your questions.

The Chair: Thank you, Mr. Nixon.

We're going to hear from the Department of Finance, Mr. Bouchard. No? Okay, you're here as a resource. Excellent.

We'll start with Mr. Pallister, then someone from the government side, and then Ms. Davies, for seven-minute rounds, please.

Mr. Brian Pallister (Portage—Lisgar, CPC): In the last couple of budgets the government said it would introduce new legislation and implement a new rate-setting mechanism consistent with certain principles that were made public prior to consultations completed last June. It's 10 months later. Where are you at on that rate-setting proposal?

Mr. Réal Bouchard (Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance): I think the answer to that question essentially is spelled out in the budget. The results of those consultations are currently being reviewed. What the budget said was that the government is committed, as it indicated a year ago, to having a new system in place to set premium rates in time for setting the rate for 2005. Legislation will be introduced to that effect later this year. In the meantime, just to protect ourselves against the possibility that the legislation would not be passed in time to set the rate for 2005, in the budget--and it's in the budget legislation that is currently in the House--the government proposed to give itself the authority to set the rate for 2005, just in case.

Now, what the budget added is that if this is the authority that will be used to set the rate for 2005, the rate will be set in a manner consistent with the new rate-setting mechanism that will be put in place and consistent with those five principles that were set in budget 2003.

¿ (0915)

Mr. Brian Pallister: Given that the consultations were completed 10 months ago, to what do you attribute the fact that they're only now being reviewed, that the input you received 10 months ago is only now--at this point--being reviewed? What possible reason would you have for that?

Mr. Réal Bouchard: Simply that the work has not been completed, and the government decided to basically give itself the authority to set the rate while the work is being completed.

Mr. Brian Pallister: So consistent with the status quo position, the government is setting the rate. Last year the government set the rate supposedly based on the concept that, I believe the wording was, premium revenues would equal projected program costs. They're off by a couple of billion dollars. So you can understand I have a little bit of distrust in the ability of the government to actually set the rate honestly.

That being said, it seems that under the statements made by the finance minister relative to the budget, the government has no intentions of taking into account the approximate $45 billion it has overcharged; it says that it's not going to look back. This is similar to committing a crime repeatedly over a number of years and then giving yourself absolution, I think. The reality here is that this money is gone now from private sector hands and it has been in the government's hands.

Now, is it your understanding that there will be no provision whatsoever in any future rate-setting for the fact that the government has overcharged working people in this country, as of last budget, over $43 billion?

Mr. Réal Bouchard: It would be premature for me to answer that question, given that the proposal has not been finalized yet and it has not been made public.

Mr. Brian Pallister: Well, certainly the minister, in his comments in this book, said that the look-back provisions in the report will be eliminated. It would seem clear that's the fact. Is that not evident to you?

Mr. Réal Bouchard: This was the finance committee back in 1999 that said that.

Mr. Brian Pallister: Right, and the minister's saying he concurs, that it would create difficulties. He says, and I quote now, that it would cause “serious disruptions to the overall management of the government's budget”. So because of the government's concern that taking into account the overcharge over the last number of years would cause disruption for future budget-setting capabilities, they're not going to take it into account. That's what he says here.

I just want verification from you that this is the case: that the Minister of Finance has said he's not going to take into account the $40-billion-plus overcharge on EI premiums over the last several years.

Mr. Réal Bouchard: That's what is being said in the budget document: that the rate will be set in a forward-looking manner, rather than looking back.

Mr. Brian Pallister: Right. So....

The Chair: I might point out that Thursday's meeting is going to be devoted entirely to the review mechanism.

Mr. Brian Pallister: No, I'm interested in asking these questions now, Madam Chair.

The Chair: I appreciate that, but we also have officials here who came to talk specifically on the Auditor General's report. There will be officials who will come prepared to--

Mr. Brian Pallister: With all due respect, Madam Chair, I'll choose my questions.

The Chair: All right, I'm just pointing out, again, that we are here to talk about the Auditor General's report and that there is an entire meeting devoted to rate-setting mechanisms, and that will be on Thursday.

Mr. Brian Pallister: That's very interesting, but there are comments in this report relating to the EI surplus and rate-setting, which I am addressing because I have an interest in those issues. Everything else is secondary to me, as you know.

So the fact remains that there is $45 billion taken away from working people across Canada, and no consideration in future rate-setting will be given to that fact. Is that your understanding?

Mr. Réal Bouchard: I can't tell you more than what's in the budget right now.

Mr. Brian Pallister: That's interesting.

Mr. Réal Bouchard: Madam Chair, can I add one additional comment to correct what Mr. Pallister said at the beginning about the premium rate of $1.98 not covering program costs?

¿ (0920)

The Chair: Yes.

Mr. Réal Bouchard: The $1.98, which is the rate in 1994, which was set in the 2003 budget, covers only program expenditures, benefits, and administration. In this budget, 2004, for planning purposes we've assumed that in 2005 the rate would be $1.98 again, on the basis that this is the estimate of what program expenditures will be in 2005.

I think what Mr. Pallister was saying earlier is that when one compares what is the break-even rate, sometimes--for example, in the chief actuary's report--that number is smaller than $1.98 because of the interest charge credited on the notional EI account. If you ignore the interest, the premium rate just covers program expenditures. There's a difference between those two rates, and it's linked to the interest credited to the EI account because of the cumulative surplus. It's about 15¢ to 18¢. I don't know exactly what the number is. But if one ignores the interest, the $1.98 corresponds to program expenditures.

Mr. Brian Pallister: Based on this document, the government will be able in future rate-setting to ignore not only the interest, but the principal, in the setting of its future premiums.

The AG's report indicates that you've undertaken 68 studies on the impact of employment insurance since the 1996 changes, yet none of these studies are summative studies. They're formative studies, not summative studies.

With regard to the impact of the EI surplus, is there any particular reason or could you clarify why there has not been any summative study directed at the impact, particularly in the private sector across Canada, of excessively high EI premiums and the accumulated surplus within that? Notional though it may be, it's very real when it comes off the cheques of small businesses and working people across Canada. Why is the department not following up with more in-depth evaluation on the effects this EI surplus taken from the small-business community is having?

Mr. Charles Nixon: I should say that the department is doing a summative evaluation on the EI program.

Mr. Brian Pallister: On the surplus specifically?

Mr. Charles Nixon: The whole program. It will involve a whole series of studies. When the changes to the program were put in place in 1996 and 1997, a whole series of changes were made, and certain studies have been done through the intervening years that were reported in the monitoring and assessment report. It is now seven years on and it is deemed time to carry out a summative evaluation on those changes and to draw conclusions on how they performed, given the expectations going in.

Mr. Brian Pallister: When can we reasonably expect to see the results of such a study?

Ms. Wilma Vreeswijk (Senior Director General, Employment Program Policy and Design, Department of Human Resources and Skills Development): The monitoring assessment being an annual snapshot, we are doing a summative review. We are in the process of developing a framework that would guide that comprehensive review of the program. Preliminary results will be reported in the 2004 monitoring and assessment report. The final results will be reported in the 2005 monitoring and assessment report. It will be a comprehensive evaluation of the kind that you are referring to as a summative evaluation.

Mr. Brian Pallister: And we could be sure it would address the surplus issue?

The Chair: Mr. Pallister, even deducting my time, you're well over.

Ms. Bakopanos.

Hon. Eleni Bakopanos (Ahuntsic, Lib.): Thank you, Madam Chair, and thank you, Mr. Nixon.

I noticed in your speech that 96% seems to be the magic number in terms of satisfaction. I'm wondering what the other 4% means. It's a very good performance just the same, but what are the problems in terms of clients who are in the 4% category and are these fixable?

Mr. Charles Nixon: The number I believe you're referring to is related to the client feedback around Interdec, our new reporting tool, and certainly--

Hon. Eleni Bakopanos: Yes, and in terms of the EI appeals, it seems to be 96% also.

Mr. Charles Nixon: That's in terms of getting the appeals in on time on that one.

But certainly in terms of Interdec, the 96% is a very high number. Probably there are some people who just don't like computers, so--

¿ (0925)

Hon. Eleni Bakopanos: We will never satisfy them?

Mr. Charles Nixon: --we will never satisfy them. I would be ecstatic if we were anywhere close to that on an across-the-board basis in terms of our performance, certainly.

We are just rolling this out nationally now and we will see what the take-up will be. We expect it will improve tenfold this year, and it certainly will be able to provide a better service, we think, for people. Certainly, people who have used it love it. They can do in their own time; they don't have to listen to the sort of staging that happens in an interactive voice response system. So they're very happy with it.

Hon. Eleni Bakopanos: Have we broken down the numbers, though, in terms of groups? There's a reason why I'm asking this question, which is that a lot of the seniors in my riding specifically, although more and more of them are becoming computer literate, are still far from the number.... It's true that a lot of them are not going to benefit from some of the benefits, but some of them still continue to work. Right now, 65 years old is not necessarily retirement age. In fact, some of them do a lot of--

Mr. Charles Nixon: They wonder whether they will be allowed to retire.

Hon. Eleni Bakopanos: And the other end of it, of course, is families who are in the low-income level who don't have access to computers and who would in fact need that service.

Mr. Charles Nixon: I'll ask Liliane Binette if she has some details.

Ms. Liliane Binette (Director General, Insurance Services, Department of Human Resources and Skills Development): In terms of the details, as Mr. Nixon mentioned, we have 22 million reporting, and we have four million who are exception reporting. Because of the specificity of their claim, they don't need to report on a biweekly basis. For example, those on maternity benefits don't have to report on a biweekly basis. So in terms of family, this aspect is one that is helping them.

When it comes to the people who don't have access to a computer, that's why we keep the telephone possibility. We still receive one million cards on paper, which is a very low number out of a total of 22 million reporting.

So in terms of the senior people, they do prefer the phone, and by allowing computer access to the people who have access to a computer and who can utilize a computer, we give better access to the phone so that they can report. As you know, the phone is an automated service, so they don't need to talk to a service representative. So even the people who are in the senior category love doing their transactions using the telephone.

We believe that some of them do get used to the technology, because we help them when they apply for benefits through Appli-Web. We have people in the front end of our offices who are supporting them with the technology. If they wish to use it, we are there to support them and help them get used to that tool.

Hon. Eleni Bakopanos: Thank you.

Thank you, Madam Chair.

The Chair: Libby Davies.

Ms. Libby Davies (Vancouver East, NDP): When Canadians think of government programs, the one that's probably the most prominent, maybe along with pensions, is EI. So it's a very important program.

I certainly have a lot of questions about the overall effectiveness of the program, which I know we'll begin to address on Thursday as well. It seems pretty incredible that about $110 billion has been taken out of the system, either through premium cuts or in surpluses, and something like 66% of people who pay into EI don't qualify any longer, particularly women. To me, that says there is a serious problem with the program.

Your comments today have focused on the service provided, so I'm going to ask a couple of questions about that. You say there are about 35 million calls annually, and 65% of those go through the automated voice system. I was trying to do some math here. That's based on about three million claims. First of all, that's a huge amount of calls for three million claims. If around 30% are not going through the automated voice system, that's something like 11 million calls. I was trying to figure out what that is on a daily basis. We're talking about tens of thousands of calls.

I know from the experience in my office that the point at which people really get pissed off is when their claim is not working and they have questions and they can't get to speak to someone. If you have a perfect claim and it rolls through the Internet, great. But a lot of people do have questions about why they're not qualifying or whether they have enough weeks, because the rules are so complicated.

You say that you're improving the service through the call centres. For that 30% who are not being satisfied through the automated system because their questions are not being answered, when they get a live person, what happens? Is it in effect a one-stop shop, or are people being shuffled around? That's the feedback I get. The most serious complaints we get in our office in east Vancouver are from people who have a very high level of frustration. They don't know what's going on, they don't understand it, and they don't feel that they are getting the help they need to sort it out.

I wanted to ask you how the system addresses that in terms of a sense of accountability. I think your staff works really hard. This is not necessarily an issue of individual staff members who aren't trying to respond in the system. I think it's more about the system itself. I don't know if you can address some of that. I certainly have a level of frustration on behalf of my constituents who come to me about those issues.

¿ (0930)

Mr. Charles Nixon: We understand that frustration, and we are trying to do something about it. Calls are coming in that are not getting answered the first time, and that is frustrating. With regard to our service, when it is not very good, people call more often because they're looking for their cheque and for reassurance that things are happening. We have seen an improvement, which is reduced calls, because we have improved our performance in this past year.

Ms. Libby Davies: Is that reduction in the number of calls due to the applications being processed on the Internet, as opposed to the problem-solving end of things when things are running afoul?

Mr. Charles Nixon: I'll get to that. They're all of a piece. We had to improve on a number of fronts in order to provide better service. We're trying to do that right now. We are trying to improve how we function in call centres so that we are more efficient in answering calls and are therefore answering more calls. We try to provide one-stop service when people are on the phone. We train people to do that. If they're on the phone asking about something else and they haven't done their Teledec or sent their cards in, we ask for that information on the phone at the same time. We try to make it one experience at one time.

The problem is that when you're not functioning well, people do turn to the phone. So what we're trying to do at the same time is solve the bigger problem, which is processing claims more efficiently and effectively, getting it right the first time and processing them through. That is where the web comes in. If we can get better information upfront and process claims faster, people won't need to call. They will know the answer before they even begin to get anxious.

Ms. Libby Davies: That's assuming that people are qualifying. I think that where it really begins to break down is when you've been working and you've paid into EI for a period of time. You have an assumption that you will be able to benefit from the program, and then you find out that it's not clear or you're not clear on whether your claim is going to be approved. That's where it begins to break down. That's where you need the help early on, when that level of frustration is very high.

I don't have a sense of how that is addressed. What kinds of measures or improvements have you made to respond to those kinds of complaints?

Mr. Charles Nixon: Certainly, one of the key things is basically trying to allow people to get information. The second thing is that once they apply and there is a negative decision, we are calling them now. We are not sending them the “D/ something or other”, or whatever letter, that will hardly tell them what's going on; we are actually calling them now.

We think that's the best kind of service we can give. It allows us to make sure we have the information right, to make sure that if there are any extenuating circumstances, or other things that perhaps the person doesn't know--because it's so complex--to even tell us about, we can take that into account, adjudicate appropriately, and certainly give them an explanation if, after all is said and done, the facts say that they're not entitled at this particular juncture. Maybe there are things they could do--work a bit longer or something like that--which would allow them to benefit. It would give them that information, one way or the other, about whether they were in or not and what they could do about it.

We're trying to do that across the board. What we found was that many of these people were actually drifting into the appeal system because that's the only way they could get some kind of feedback. That's not appropriate. That's not service.

¿ (0935)

Ms. Libby Davies: Are you saying that actually their claims could be addressed before going through appeal?

Mr. Charles Nixon: Absolutely, oh yes. When we get something now, we are trying to contact people. It does not always work. When people apply and they are not being considered for benefits, we are calling them and using that opportunity.

Ms. Libby Davies: I have a couple more.

The Chair: We still have another full round, if you want.

Ms. Libby Davies: Okay.

The Chair: When I'm listening to this description of what's happening, I ask myself, is there a problem in so much as call centres are now in one department and the policy is in another? From time to time it's very difficult, even within a department, to have things flow. Are there not potential problems in having social development taking care of the call centres, not only with EI but with student loans and a number of things, when they don't have any responsibility for the actual policy?

Mr. Charles Nixon: I think it can work, and we're trying to make it work. What I think you have now, though, is expert management running call centres, not programs running call centres as a side show. Through Donna, you have someone who understands how call centres can work and will bring that best expertise to bear to make sure they work in the most effective way possible.

We obviously have to work very closely together, and we do. We have regular meetings to discuss the issues. They're an excellent feedback tool for us on how the program is working. They code all the calls, what people are calling about, and what the problem is. We feed that back into the program side, either from a service perspective or even from a policy perspective, on what's not working. I think it's something we put in place that will be very useful.

At the same time, we also run the interactive voice systems. The consequence of those not working is work for Donna. That, again, is a good feedback on whether there are things we can do to improve those kinds of tools as well.

I believe it can work and that we can do well with it.

The Chair: I'm not suggesting that the whole focus on modernization and doing that isn't an admirable one and one that should be done. I'm only wondering if it could have been done within the same department. I'm not suggesting for a minute that you can't make it work, but in a perfect world, might it not have been better to have it within the same department, the same ministry?

Mr. Charles Nixon: What it allows you to do is to leverage technology that each department would have had to invest in and develop. We can invest in one set of technologies that will run, if you like, three programs of call centres off one set of machinery. You can't do that when you're in separate departments, or it becomes much more difficult. It's easier to manage the platform singularly, and do it that way, have the program content added, and make sure people are trained and know what they're talking about when they answer questions about EI, transactions, and so forth.

The Chair: Which one of those three tracks has policy within Social Development? You said there were three tracks on that call centre. There's EI, there's--

Mr. Charles Nixon: There are the three programs that you mentioned: EI, CPP, and Canada Student Loans.

The Chair: Would CPP be the largest of the three?

Mr. Charles Nixon: No, EI is.

¿ (0940)

The Chair: I'm even more confused, then. If the largest program falls under HRSD, and if you're suggesting that we shouldn't be having these things split between two departments, I guess I'm wondering why you chose the department that has the least number. I know it's not your decision, but--

Mr. Charles Nixon: It's not the least number. ISP has slightly fewer than EI. It's not like this; it's more like this. I think in the end the thinking is that not only can you lever the technology, but the hope that in the future we can provide a better service. If people are calling about the Canada Pension Plan disability program, you could actually talk about EI sickness and make the connections across programs, so that you're providing a better service offering at the time that people call and lever it that way too.

The Chair: Thank you.

Mr. Pallister, and then Mr. Bellemare.

Mr. Brian Pallister: For your morning smile, Charles, I'm thinking about how the record is going to show “It's not like this; it's like this.”

Mr. Charles Nixon: I'm sorry, I'm not used to parliamentary procedure.

Mr. Brian Pallister: That's okay.

On the issue of your investigative--I don't know if I'm using the right word--and control activities, where you have savings in excess of $500 million, help us understand. When you say “savings” of those amounts, what kinds of categories are you talking about? What are you saving?

Mr. Charles Nixon: We're saving different kinds of things. There are actual savings where we go out and collect funds--

Mr. Brian Pallister: An overpayment, or--

Mr. Charles Nixon: --where if somebody in the past didn't declare earnings or something we find out about after the fact, we go back and collect. So those are direct savings, when we actually get that money back. Things happen on records of employment, or whatever, and we go back and collect those kinds of things.

There are also situations where we find out closer to the time that things are wrong, and we stop people. If people are in fact working somewhere, they are not available; if they're out of the country, or something like that, we actually stop their payments. We impute savings for the remainder or a proportion of the remainder of the claim, and those are counted as well.

Mr. Brian Pallister: So there's some recovery--

Mr. Charles Nixon: Yes, exactly. There are also penalties, and so forth, that we--

Mr. Brian Pallister: --and some reduced loss.

Mr. Charles Nixon: Yes, exactly. It's a conglomerate of that.

Mr. Brian Pallister: Where I'm going with this is that I'm just curious as to the process for determining the amount of investment in that exercise. There must be some taking into consideration of the amount of projected savings when you're talking about how much you invest in that aspect of the program.

Mr. Charles Nixon: Yes, we have used a rate of return kind of factor in terms of how we look at our business, and we're somewhere around a $9 return for $1 invested at this point in time, or slightly less, I think. But we do have to look at that, there's no question. I think what we're trying to do is turn around how we've been doing this to more on a risk basis. The Auditor General pointed this out, and it's something that we--

Mr. Brian Pallister: I'm sorry, more on a...?

Mr. Charles Nixon: A risk management basis. We have gone after certain areas where we know things are going on, but the question is, are we doing all the right things in all the right areas to make sure the EI program has integrity? So there are certain things, such as being outside the country, that we spend quite a lot of resources on. There are things such as, as I said, not declaring earnings, which we take some time on, and people who have gone back to work who don't report that. But are we looking at all the right things for what we have to take into account and do a bit better at, so that we measure what we spend commensurate to the risks that we think are out there for the program?

Mr. Brian Pallister: You're suggesting there's a new approach being developed right now in regard to this.

Mr. Charles Nixon: Yes.

Mr. Brian Pallister: When can we expect that it would be introduced and we would know what it is?

Mr. Charles Nixon: We have started doing it now, in terms of looking at the program a bit differently. I would say that it will probably take this year for us to reorient how we think about this. We will certainly be talking to the Treasury Board about our targets for 2005 and 2006 in that context.

In the end, the best kind of approach, of course, is not to have a bigger target, but to solve the problems upfront, allow things not to happen, prevent them, make sure people understand the rules so that they don't do certain things, that they know there are consequences, and those kinds of things. It's part of that reorientation as well.

We want to make sure we know who is coming in. We want to make sure we're getting the information from each source appropriately. We're doing that through our web application now, our record of employment on the web, and our doctors' medical certificates on the web. All of these are being designed to come in from the appropriate place, and we'll be able to put those things together into decision-making that I hope will mean that we'll be making more and better decisions upfront and actually reduce some of the need for investigational control, because we will have controlled things in a different way.

¿ (0945)

Mr. Brian Pallister: Right.

The Canada Employment Insurance Commission has a mandate to monitor and assess whether savings expected from the 1996 EI reform are actually being achieved. The Auditor General remarked that the monitoring and assessment reports produced by the commission don't provide information consistently on estimated savings, and so on and so forth. As a result, we and others of our colleagues are not informed on the extent to which these 1996 reforms are actually achieving the goals, and we're not informed on the effectiveness, really, of the EI benefits program.

What are you doing to address that? Will the 2003 MAR give us clearly an indication of the extent to which savings are being achieved?

Ms. Wilma Vreeswijk: The monitoring assessment report does report on savings. It is complicated, because you are looking at both the savings that are attributable to changes in the program as well as what is attributable to changes in the economy. So if we have more people working and fewer drawing down EI, then that could register as a savings. We have to disaggregate that.

We have been reporting the savings, but in an incremental way, so we've reported year-over-year savings. What the Auditor General's office has suggested we should be doing is providing a cumulative picture, as a whole, of what has been the saving. The department and the commission looked at that and indicated in the reply to the Auditor General that the 2003 monitoring assessment report would include a cumulative picture of the savings attributable to the 1996 reforms.

The Chair: When is the 2003 report due?

Ms. Wilma Vreeswijk: It is based on sitting days. The minister received a monitoring assessment report from the commission at the end of March, as per the legislation, and has 30 sitting days thereafter. Counting forward, which is always interesting, I think the government has until the end of April to table the commission's report in the House.

The Chair: So we should see it another week or so. Thank you.

Mr. Bellemare and then Ms. Davies.

[Translation]

Mr. Eugène Bellemare (Ottawa—Orléans, Lib.): Thank you, Madam Chair.

[English]

Going back to call centres, are your call centres operated by persons on contract, or public servants?

Mr. Charles Nixon: Public servants.

Mr. Eugène Bellemare: So you don't job out the work?

Mr. Charles Nixon: Not in EI, no.

Mr. Eugène Bellemare: That's good news.

I understand the report is a response to the Auditor General. When you refer, on page 5, to clients, in the last paragraph you say that allows clients to submit their biweekly reports online. The clients are the employers, or the former employees?

Mr. Charles Nixon: These are people who are on EI who need to advise us every two weeks that they are still available for work and whether they've had any earnings and so forth. They have to let us know their status every two weeks.

Mr. Eugène Bellemare: They can do this over the Internet?

Mr. Charles Nixon: Now they can, yes. Just in the last weeks we've been national.

Mr. Eugène Bellemare: How would you know where they're located? It could be someone from Trois-Rivières or Flin Flon and they could be elsewhere. Are they supposed to be in the region where they live or operate or work?

Mr. Charles Nixon: They're supposed to be looking for work and available. It could mean that somebody--

¿ (0950)

Mr. Eugène Bellemare: How do you monitor a person, let's say from Ottawa, who is out of a job and this person takes off and goes on holidays and works from the Internet? How do you know where this person is?

Mr. Charles Nixon: Well, we have some ways of finding out, yes.

Mr. Eugène Bellemare: Give me a couple of ways.

Mr. Charles Nixon: It's not exactly secret, but we actually went to the Supreme Court to secure the information from Canada Customs. So we have information available to us about people coming back into Canada, and we compare that to our active claims list.

Mr. Eugène Bellemare: Another good news answer.

On page 7 you say “We will undertake to explain regional differences in performance...”. Performance on whose part?

Mr. Charles Nixon: Ours. One of the--

Mr. Eugène Bellemare: Do you mean to say you could perform in one way in one region and perform in another way in another region?

Mr. Charles Nixon: Yes.

Mr. Eugène Bellemare: How is that, or why is that?

Mr. Charles Nixon: I think it's mostly historical. I think certainly some years ago regions were given, I would say, more autonomy to do their best, if you like, in delivering the program, and certainly over time that led to some divergence in actually how things were done and how well things were done.

Over the past couple of years we have been working very closely with the regions to try to bring them back into line in terms of delivering a national program in a consistent way, no matter where you are, where you apply, etc. So we hope that through the implementation of electronic tools that I mentioned--applications and ROE webs and so forth--we will be able to perform better in all regions and have a much more consistent, high-quality outcome.

Mr. Eugène Bellemare: My last question is regarding your conclusion. You say “We will continue to work closely with the Auditor General, Treasury Board and government departments to ensure that Canadians receive quality programs and services...”, and so on. How would you work closely with the Auditor General? I like the Auditor General; I know her very well, and we have chats and jokes together. But shouldn't you be operating your department according to your functions, and forget about the Auditor General and just hope she doesn't have to come and knock down your door and want to look at your books?

Mr. Charles Nixon: Because of this, we know she'll be back, and we'll be glad to see her then.

As a result of this review or anything else, we seek advice on certain things. The Auditor General's office sits on our internal board of audit and evaluation.

Mr. Eugène Bellemare: On a continuous basis?

Mr. Charles Nixon: Yes. So there are ways they play on this, and we seek their advice sometimes about how we do certain things to make sure these things work in ways that are considered appropriate and have integrity.

Mr. Eugène Bellemare: Is this normal procedure in all departments, to have the Auditor General sort of sit in, through an employee, on committees and so on?

Mr. Charles Nixon: I believe so.

Mr. Eugène Bellemare: Yes? What's the next step, having a CSIS operative in every department?

Mr. Charles Nixon: I can't comment on that.

The Chair: You can't comment on the comparison between the AG and CSIS.

Mr. Eugène Bellemare: Thank you very much, Madam Chair.

The Chair: Ms. Davies.

Ms. Libby Davies: Thank you.

Coming back to the issue of service and what's actually provided, it seems to me there are two things. There's service as the program stands, and there are a lot of issues there in terms of people who have questions or problems and how attentive the system can be to that. There's also a different kind of service issue, and that is when the nature of employment is changing and therefore the claims are changing and how responsive the system is and how quickly it changes.

Two examples come to mind. In B.C. we're now facing a very difficult situation around the avian flu. I think that 500 workers have already been laid off, and that number will probably reach 1,000 or more. So you have something that's happening in a very rapid timeframe. It's impacting local communities. People have been calling for a waiving of the two-week waiting period. How does the system respond to that? Do you just consider that to be a political thing, so somebody here has to deal with it--i.e., the minster--or is that something you actually assess within your system? That's one question.

The second one, which I raised briefly the first time around, is with regard to EI as it responds to women. I think the Auditor General pointed out that 68 studies have been done since 1996. I'd be interested to know how many of those studies have been based on a gender analysis of the program, because I think the program is failing many women workers. It's a different kind of service issue in that things have shifted in the workplace and women are no longer qualified. They don't have the hours that are necessary. What has come out of these studies, if anything, in terms of a gender analysis? What changes have taken place or do you foresee that may address what I think are some really fundamental shortcomings in responding to the needs of female workers?

¿ (0955)

Mr. Charles Nixon: I will answer your first question, and then I will ask Wilma to answer the second one.

In terms of the avian flu outbreak in the Lower Mainland of British Columbia, in any situation such as that, we have procedures that go into effect immediately in terms of trying to get out there and talk to employers and employees, either in group meetings or in union halls, wherever we can get together, if that's useful for people, to explain how the system works. We work with employers to make sure we can get the record-of-employment information we need.

I know that since the beginning of April, a series of meetings with all the farms have taken place. We are coding the claims properly so that we can track them. The three offices in the Lower Mainland have been joined together in a task force to try to manage this and to make sure we can process claims efficiently and effectively. We recognize that these are life-altering experiences, when people are suddenly put out of work, so we are trying to do our best to serve them quickly and efficiently in terms of simply getting them on claim.

In terms of waiving the waiting period, it's something that is raised all the time. Every time there is a big event, people ask whether or not this could be waived. We saw it a number of times last--

Ms. Libby Davies: We saw it with the BSE situation.

Mr. Charles Nixon: Absolutely. It is something that we consider. But in terms of regular benefits, we have never waived the waiting period.

Ms. Libby Davies: Do you have the discretion to do that?

Mr. Charles Nixon: No.

Ms. Libby Davies: It did happen with SARS. Eventually, there was a waiving of the two-week period.

Mr. Charles Nixon: It was around sickness benefits. There is an ability in the act to waive around sickness, and that is what we used.

Ms. Libby Davies: So it didn't apply to, say, the hospitality industry, where hotel or restaurant workers were laid off.

Mr. Charles Nixon: Not at all. It was just for people who were put in quarantine, effectively. It meant that people had no reason to go anywhere, which is what we wanted to secure at that time. They would not be out on the street trying to go to work or do something else. We would waive the waiting period so that they would stay home and respect the quarantine.

Ms. Libby Davies: And the two-week waiting period is not being waived for any other purpose, ever?

Mr. Charles Nixon: No, not for regular benefits.

Ms. Libby Davies: Okay.

Mr. Charles Nixon: Wilma, did you want to answer the second question?

Ms. Wilma Vreeswijk: Sure.

In terms of access to EI, the commission is closely monitoring the issue of access and coverage, and reports every year in terms of the responsiveness of EI to changing labour markets and the patterns of work of Canadians. So we do take a close look at that. There are a number of measures we take a look at, both in terms of the employed population as well as the unemployed population, to try to really assess how well the program is responding.

These studies are done in collaboration with StatsCan and are part of the background reports related to EI. I'd be happy to share that with you.

À (1000)

Ms. Libby Davies: Could you tell me how many of those 68 reports, if any, were based on a gender analysis?

Ms. Wilma Vreeswijk: We do undertake studies of women and EI. I can't tell you offhand what proportion of the 68 are focused on that particular issue. The scope of the legislation is such that we look at a wide range of issues. We do a plan every year and talk to the commission in terms of their interests. The kinds of studies we do are reflective of the scope of the legislation.

Because of the scope of the monitoring assessment report, we also look at measures that are of particular benefit to women, as well. So the small weeks provisions, the family supplement--it is in particular women who benefit from those elements. So when we study those elements and the studies that particularly look at those elements, we'll be looking also at the benefits to women.

Ms. Libby Davies: Is it fair to say, though, that the system is disproportionately negatively affecting women? For example, many new mothers don't qualify for the parental benefits because they don't have the 600 hours.

Ms. Wilma Vreeswijk: On that particular issue, due to the enhancements that were made to the legislation in 1999-2000 to extend the parental benefits, there was a real concern in terms of access to the program. The hours were reduced. Our recent studies that were done for the monitoring assessment report show that 90%, including part-timers, were able to access EI for maternity and parental benefits.

We continue to monitor it, and certainly would like to ensure that it is there for them when they need it. At this point in time, those are the results that we have. That study is also available.

Mr. Brian Pallister: To go back to this surplus thing, $45 billion has come from somewhere. So you've got a couple, and they each make $30,000. What's their contribution? I look at people and the impact that taxes have on them. This is a payroll tax, the most regressive tax there is. Over the last few years, that couple has paid in excess of $6,000 too much into EI. It has been taken from them under the pretense that it would go to EI, when in fact we know it hasn't. That has an impact on them. So this is where I come from when I ask these questions.

Mr. Bouchard alluded to the fact that it's balanced except for the interest. Correct me if I'm wrong, but if I don't pay my taxes for a few years, and you find out that I haven't paid them, your department's going to come back at me for the principal and some interest, right? Is that true or not?

Do you follow? From the perspective of a person who is taxed on the basis that the money is going into a pool of funds for them and their colleagues who work, and in fact the money isn't really going there, you can understand that people aren't very accepting of these arguments that it's pretty balanced and the finance minister's not going to take it into account anyway in the setting of future premiums, because it's all done. I can't get forgiveness if I don't pay my taxes. I can't get forgiveness on that. I can't get forgiveness on principal or interest.

You've just said that you're allocating considerable resources to collecting EI and avoiding abuse of the EI program so that working people don't abuse--God forbid they'd abuse the program, because we don't want to see that happen, and that they would take too much money out of the coffers of the government would be a horrible thing. That may be, but when the shoe's on the other foot, it's interesting to see how the government can all of a sudden give itself absolution: that it's okay for the government to take money from working people under false pretences and that somehow it doesn't have to owe any of that money back to those people.

There's my rant for today. It's interesting how perspectives change when it becomes general revenue, somehow.

In here, you talk about online service delivery. I'm interested in knowing how many HRDC employees will be affected by that online service delivery, and what do you intend to do with the displaced employees?

À (1005)

Mr. Charles Nixon: We have been looking at this issue. We have been taking a very step-by-step approach as we implement these tools. We have learned as we've gone.

There's a certain redundancy, to be honest, in building some of these things. You have to run new systems and old systems at the same time and make sure they operate. We're now finished year two of implementing these things, and thus are an important year ahead in terms of designing these things. We are beginning to see that there are efficiencies in certain parts of our operation, and those were taken into account in how we allocated funds this year to the regions for processing claims.

We are developing plans for future years, but one of the questions that have always been interesting for us is, what will the uptake be? How quickly will people take to these things, and will they work as we assumed? We're trying not to be impetuous in trying to achieve savings before we've actually seen them come out, but we're beginning to see it happen. We're in the mode now of planning for future years around what the true impact will be and what we're going to do about it. But we're not there yet.

Mr. Brian Pallister: I have two quick questions, and then I'll let others carry on.

The first is, is there any indication that the government will be looking, in its review of the EI program and the rate-setting process, at any changes in the contribution ratio—the “1.4 times” factor for employers versus employees—given that the rationale for it originally was that the employer had more control and say over when people were off work, and that now, with the introduction of new, broader benefits in a variety of categories over which the employer has no control, the rationale has changed? Is there any indication that will be looked at?

I'll hit you with the second question too, which is not related. Can you give us a more recent estimate of what the surpluses are expected to be? The most recent estimates we saw, I think, were that $2.4 billion was the cumulative surplus for 2002-03, and $45.6 billion the surplus overall. Do you have newer numbers you could share with us?

Mr. Charles Nixon: The first question did come up in the review, and it's something that is raised on a continual basis. I'll just leave it at that.

Réal, do you want to...?

Mr. Réal Bouchard: In the budget there were a couple of tables. You don't necessarily have the budget in front of you, but it's table 3.5 in the English version of the budget that shows what the expected EI benefits are over the next three years or so. In table 3.4, you have a line that shows the expected revenues from premiums. If I take 2004-05, for example, the difference in those two tables between benefits and revenues is about $1.2 billion or $1.3 billion, the revenues being higher.

Mr. Brian Pallister: For which fiscal year was that?

À (1010)

Mr. Réal Bouchard: That's for 2004-05; for example, $15.7 billion on the benefit side, and $17 billion on the revenue side. The difference is about $1.3 billion.

The difference in this particular case is that the benefits do not include administration costs. The number for administration costs in 2004-05, which are basically accounted for under the normal O and M budget of HRSD, is not in the budget. It's $1.66 billion.

When you add the benefits to the administration costs, essentially they're a wash with the revenues. That's what I was alluding to earlier, that essentially premium revenues are basically equal to expenditures when you take into account the benefits and the administration costs.

Mr. Brian Pallister: What I was alluding to was the absence in your statement of any reference to this notional interest on the previously overcharged individuals.

Mr. Réal Bouchard: Yes. When I alluded to the interest earlier, I was particularly referring to the chief actuary's annual three- or four-pager that he prepares, where he chose both the break-even rate taking into account the interest and the break-even rate without interest. The difference usually is about in the 15¢ range, which is about $1.5 billion worth.

Mr. Brian Pallister: Okay. D'accord.

The Chair: That is essentially administration costs.

Mr. Réal Bouchard: Yes.

Mr. Brian Pallister: To follow up, then, what are the administrative costs now versus what they were last year, or five years ago, as a percentage of the premiums?

A percentage of benefits would be easier.

Mr. Charles Nixon: On the percentage of premiums, I have no idea. I know that the Auditor General in her report said that expenditures have gone up roughly $100 million in a three-year period. It's in that range.

Mr. Brian Pallister: Right. To what do you attribute that increase in administrative costs?

Mr. Charles Nixon: I think there are a couple of things. One, the investments we have made in these new tools that we are using on the web are reflected in the account. Over each of the last number of years that we've been spending, if you like, the money has actually been designated through the government online expenditures to help us build the tools in order to, in the end, completely rebase how the program operates. It's an upfront investment, if you like.

Mr. Brian Pallister: Do you anticipate that there won't be a continuing escalation in administrative costs as a consequence of the front-end investment that has been made, and so on?

Mr. Charles Nixon: Yes, that's right.

I think that without it, we would have been looking at that kind of scenario, which is another reason why it makes sense to do this. It's not only for service, but it's also for sustainability.

Mr. Brian Pallister: Okay. Merci.

The Chair: One last quick round.

Mr. Bellemare, you have five minutes.

[Translation]

Mr. Eugène Bellemare: Thank you, Madam Chair.

[English]

For my colleague Monsieur Pallister, his hobbyhorse is with two words, “overcharge” and “surplus”. I'd like to ask a question along that same line, but with a twist.

[Translation]

My question is probably directed to Mr. Bouchard from the Department of Finance. If the economy were to experience a downturn, if suddenly you were to experience a revenue shortfall, where would you find the money to pay eligible EI claimants?

Mr. Réal Bouchard: Until now, when a situation like this arose, that is when we experienced a revenue shortfall, as happened a decade or so ago, governments obviously took steps to ensure that benefits were paid. However, since the EI fund has been operating with a surplus for the past seven or eight years, we haven't experienced this kind of situation recently. Nevertheless, we need to look ahead to the future. This point often came up during last year's consultations. Workers as well as employers wondered what would happen when the next recession hit. They wondered if EI premiums would increase to offset additional expenditures. That's a very important point.

One of the five principles put forward in last year's budget called for a premium rate that corresponded to program costs. Another principle called for stable premiums, if at all possible. How is it possible to set a premium rate that matches program costs and that at the same time is stable?It's important to try and strike a balance.

During the consultation round, stakeholders stated very clearly that when the next recession hit, premium rates shouldn't be increased to totally offset the cost of the recession. The government should absorb some of the costs to keep premium rates more or less constant.

À (1015)

Mr. Eugène Bellemare: Therefore, the government should absorb the loss in the event of a revenue shortfall.

Mr. Réal Bouchard: Under the current system, the EI Account can be in either a surplus or deficit position. However, in future, a major consideration will be to set a premium rate that corresponds to program costs and that remains constant. When a recession hits, rates should not be increased to offset increases in program costs. The government would cover a portion of any additional EI costs with its own revenues.

Mr. Eugène Bellemare: In that case, we shouldn't be complaining about the current surplus, as some people are doing. It's a little like an insurance company insuring a party for $100,000. If that person dies, his beneficiary receives $100,000. That's the reason for paying premiums in the first place. If the company is operating in the red, it still must pay the policy beneficiary $100,000. If it is operating at a profit, the beneficiaries are not about to ask for $100,000 plus a share of the company profits. I don't understand the arguments of certain MPs who seem to object to the idea of a surplus. They don't seem to be wondering where the government will find the money when a recession hits and the EI fund experiences a shortfall. Do they expect the government to ask employers to raise premium rates when the going gets rough? It's important to strike a balance.

Thank you, Madam Chair.

[English]

The Chair: Mr. Pallister, and then Ms. Davies.

Mr. Brian Pallister: The depth of Mr. Bellemare's lack of understanding of insurance principles is beyond comment.

The Chair: Now, Mr. Pallister.

Mr. Brian Pallister: The premium being set by agreement, if you use a life insurance analogy, sir, there are all kinds of analogies that we could use.

A voice: [Inaudible—Editor]

Mr. Brian Pallister: I didn't interrupt you, sir, when you were speaking; I would appreciate it if you would show me the same respect. Thank you.

In regard to your earlier comment that the Governor in Council will likely be setting the rate for the coming year in a manner, it says in the budget document, consistent with the new rate-setting mechanism, we know the new rate-setting mechanism is supposed to be based on these fundamental principles that it should be transparently set. I'm curious as to how the rate could be transparently set on the basis of independent expert advice, given the timeframes we'll be facing here.

In your consultations last year, a number of both labour and business submissions alluded to the advisability of giving some advance notice of what the premium levels might be, so that in terms of the planning exercises businesses engage in, they might have a better understanding of what their costs would be and so on. That being said, it seems to me it would be very difficult to give any kind of a heads-up to these people as to what the rate would be if the government doesn't engage, really, in an open and transparent process. It seems to me that has been lacking to this point in time.

If there's going to be a premium rate set, as the finance minister has said in his document, consistent with the new rate-setting mechanism, it's going to have to be done on the basis of independent expert advice. What independent expert advice is going to be sought in order for the government to establish its new rate-setting mechanism prior to the end of the year, one would hope, in advance of the following fiscal year?

Mr. Réal Bouchard: That remains to be determined. It's a very good question, and in the consultations of course that issue has come up. Many stakeholders and many people intervening essentially were talking about how there should be a role for the chief actuary, there should be a role for the commission.

One has to keep in mind as well, as I think our budget text mentions, that the planning assumption for next year--which was the rate as well for 2004, the $1.98--is based on economic assumptions that essentially reflect private sector forecasts that always form the basis of all the budget projections, including employment insurance. In a way that too is independent advice from those private forecasters.

As to the exact form it will take once the proposal has been put on the table, that remains to be determined. But clearly there has to be a role for some of those main stakeholders.

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Mr. Brian Pallister: Okay. There has to be a role, but we're not sure there will be a role for them in the setting of this premium for the coming year.

Mr. Réal Bouchard: Yes. No decision has been made to that effect yet.

Mr. Brian Pallister: A number of the submissions also suggested the reinstatement of some type of arm's-length rate-setting entity similar to the commission itself and the role it performed in the past. You can't share with us any possible such mechanism that's under discussion at this point in time, I assume.

Mr. Réal Bouchard: Not really, although if I may I'll just remind the member that the Auditor General herself, of course—and it goes back to 1986 when the two were integrated—is saying the program should stay integrated with the government books, given that the control over the employment insurance program remains with the government.

As I understand, many stakeholders—you're right—both on the business side and on the worker's side proposed having a separate account. But I think the trend for the government is more integration rather than the other way around, whether we're talking about EI, or about some crown corporations, or all kinds of organizations. You cannot simply separate totally from the government.

The case of the Canada Pension Plan, which has been mentioned in the past, is different, because the provinces have a role in the policy development for the Canada Pension Plan. It's a different structure of governance that we have in the case of the Canada Pension Plan.

The Chair: Thank you, Mr. Pallister.

Ms. Davies, the final five minutes are yours.

Ms. Libby Davies: Just to follow that up, I completely fail to understand how a program where employers and employees are paying into it and there's no other contribution from the government—it's an employer-employee program—now has a surplus that's three times the upper limit of what the chief actuary says is even necessary in the worst-case scenario. That money can be diverted—as you say, integrated—and it somehow can't be separated, and those surpluses are diverted for budget programs, for budget surpluses, and so on. I do not understand that. I don't understand how it's even legal when it's employers and employees.

Anyway, that's what we're facing. I know there'll be a big debate on the process for setting the new premiums. There are various points of view on it, but on the issue of this surplus and how it's used, I can't understand why some portion of it isn't more dedicated, say, to retraining. We have an apprenticeship program.

I know the labour movement has argued very strenuously, given the labour market shifts that are taking place, that even some of this money, if it could go into retraining programs, would be of huge benefit. One could argue that's a part of the overall mandate of the program.

I wonder if you could address something about the lack of retraining and why expanding that element of the program isn't coming forward in a much stronger way, given these huge surpluses.

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Ms. Wilma Vreeswijk: Under EI, a large part of the part II benefits is to help people get back into the labour market. It includes skills development for people who are eligible for EI; they do get access to these kinds of training programs.

Ms. Libby Davies: It's very restricted, is it not?

Ms. Wilma Vreeswijk: It is within the context of EI. It is premium payers and contributors who are eligible for it, the same way as they are for income benefits. The access to our employment assistance measures is broader—that's the information that is available at our regional offices, the assistance people may require in terms of resumé-writing, job-finding clubs, etc. That has a broader access, but measures where people get income benefits while they go on training are more focused on the EI contributors and those who are eligible for EI.

Ms. Libby Davies: But if the principle's already established that there's a broader application just for these so-called job clubs and things like that for resumé building and what not, if the principle's already established that it's a wider availability, again, I fail to see why there isn't a greater application towards retraining, because who's going to lose on that? No one, no one loses on those grounds.

We have this surplus here, so some of that may be adjusted through a premium-setting process, and it's fine if that happens, but why aren't we making this program work for Canadian workers in terms of assisting them when they're unemployed so that they can qualify to get a better benefit--it should be minimum 66%--and that they can get the retraining they need?

I know you can't answer all those questions, but it just drives me crazy.

Ms. Wilma Vreeswijk: The benefits that they do...in terms of the measures, the skills development, etc., those are all administered through the labour market development agreements, and there are different arrangements with different provinces. So it is through them that we are able to do things like support for apprentices, etc., and there are other measures that are not part of EI, such as the youth employment strategy, such as the aboriginal human resources development strategy, etc., that help Canadians in different ways and that act essentially as a complement to what is provided under EI.

The Chair: Thank you. I appreciate your patience, all of you.

Before I adjourn, I would remind you that on Thursday we're hearing from officials at HRSD and Finance in reviewing issues pertaining to the development of the new EI premiums, so we will be at this again. On the following Tuesday we're having officials from PCO to discuss issues related to the prior review of order in council appointments. On the Tuesday we'll also be having an in camera session to adopt some work plans.

Thank you. This meeting is adjourned.