“In accordance with Budget Implementation Act C-45, Jobs and Growth Act 2012, which received royal assent on December 14, 2012, the Canada Employment Insurance Financing Board is being dissolved” .  This is the message that appears on the Canada Employment Insurance Financing Board (CEIFB) website.  E-Mail accounts have been disconnected and the telephone number is no longer in service. There was no official announcement by the key proponents of the CEIFB, the Minister of Human Resources and Skills Development Canada and/or the Minister of Finance, that corporation had been eliminated. But is it really gone for good? Not if you carefully read the fine print in Bill C-45.

The CEIFB was established in 2008 to “set EI premium rates for the upcoming year in a transparent fashion”.  Given that the Government retained its ultimate control over the setting of rates, and has done so since 2008, there was no need for the CEIFB. Since its inception, we have argued that the CEIFB was created solely to provide cover for the Harper Government to write-off the $57 billion surplus recorded in the Employment Insurance (EI) Account at that time. Although the surplus was notional only – there was no actual money in the EI Account – it was an ongoing embarrassment to the Government, as its existence was a major issue in the EI rate-setting process.

In the March 2012 Budget, the Government proposed further changes to the EI rate-setting process. The employee EI rate is now to be limited to a 5-cent per-year increase until the EI Operating Account is balanced.  This precludes the CEIFB from setting rates for at least another four years. The Budget also noted that once the EI Operating Account returns to balance, the CEIFB is to set a rate for each year that would generate enough premium revenue over the next seven years equal to the forecast cost of the EI program during that period.  This clearly indicates that the CEIC is not gone.

The March 2012 Budget also  indicated that  “in light of this new approach to rate setting, the Government will review the size and structure of the CEIFB to ensure that independent rate setting is done in the most cost-effective manner possible” . To most readers, this did not mean the dissolution of the CEIFB, especially when earlier on the same page, the Minister of Finance stated that “the CEIFB will continue to set the rate but the Government will limit rate increases to no more than 5 cents per year until the EI Operating Account is balanced”.

In the second Budget Omnibus Bill related to the 2012 Budget, the Government proposed to suspend the operations of the CEIFB until such time the EI Operating Account returns to balance. In tabling the second Omnibus Bill, the Minister of Finance told the Opposition that everything in the Omnibus Bill was in the Budget and that if they had spent time reading the Budget, they would have realized this. What he failed to say was that one has to read carefully between the lines of the Budget and question every sentence as to its meaning and that the Budget Omnibus Bill was the “real” budget. The Minister of Finance should have indicated in the budget that the CEIFB would be dissolved for a period of time and that the government would set the rate in the interim. 

The Budget Omnibus Bill suspended the operations of the CEICB.  However, it also allows the Government to establish a new Board and re-instate the CEIFB whenever it so desires. 

The Board of Directors and the corporation were officially dissolved on February 28, 2013.  However, the only official announcement on the termination of the CEIFB was the announcement on their website.  There has been no official announcement by the Harper Government on the CEIFB’s demise.  In our view, this is not a very transparent way to dissolve a Crown corporation, even if served little public value.  However, to do so would have meant to officially admit that the creation of this corporation was a mistake in the first place.  

According to Budget 2013, the EI Operating Account is projected to in balance by 2016-17.  Going forward, the EI premium rate would then be based on the seven-year moving-average sufficient to generate revenue to equal EI program costs over that period.  Based on the above, one might expect the Government to resurrect the CEIFB in order to recommend a premium rate for 2017. But why would it want to do so.  Legislation still allows it to override any recommendation on rates proposed by the CEIB.  By then, who will remember that there was even a CEIFB at one time? Its recommendations have never accepted.  In addition, the establishment of the CEFIB had become an embarrassment to the Government when the media began to question the validity of the corporation and its $1.5 million annual operating costs, especially in an environment where the rest of government was downsizing...

However, there is an issue with the new rate-setting proposal that will need to be addressed once the EI Operating Account is in balance.  Based on Budget 2013 and the Office of the Parliamentary Officer’s economic and fiscal update, the seven-year moving-average rate for 2017 is projected to be significantly lower than that for 2016, representing a drop in EI revenues of between $4-$6 billion.  Depending on the economic environment at the time, the Government could well be facing a budgetary deficit, if it allowed a drop in EI rates of that magnitude.  It may want to wake up the CEIFB to help it justify why the rate should not drop by that much.

We applaud the suspension of the CEIFB’s activities, even if it is for just  the next few years.  However, the manner in which it was done again demonstrates the lack of transparency of the Harper Government. In addition, there is a lack of clarity as to what the Government proposes to do once the EI Operating Account is in balance.  Right now, it is keeping all options open.  If the CEIFB is to be re-established, one suspects that its second life will receive much more publicity than its dissolution.

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1.Canada Employment Insurance Finnacing Board: Home page on website

2. Economic Action Plan 2012 - Jobs Growth and Long-Term Prosperity - page 146, Department of Finance