EI Account shorted $13 billion

  Niagara Falls, Ontario,
hursday, June 18, 2009
by: Joe Hueglin

The Employment Insurance Account ended the 2007-2008 fiscal year with a $56,952,606.000.00 surplus. (1)

$2 billion was established "as a contingency fund that will support relative premium rate stability." (2) when a new system became law, rather than "a contingency reserve of $10-$15 billion." called for by the Canadian Institute of Actuaries. (3).

Minister of Human Resources and Skills Development, Diane Finley, says Leader Michael Ignatieff's plan for employment insurance is "irresponsible" because it would only result in huge increases in payroll taxes." that "they have worked hard to get EI benefits to this point and will continue to do whatever they can." (4) and "That payroll tax increase would kill jobs and small business," (5)


There will be an increase in EI spending this year. (6) (7) Had the Flaherty and Finley followed advice given them "by the former Chief Actuary of the EI program, by the Auditor-General of Canada and by the Canadian Institute of Actuaries." (8) there would have been an adequate contingency fund set aside for recession rather than threats of job threatening tax increases .

The Supreme Court of Canada ruled the Government could do what it willed with the E.I. payroll taxes paid by both employees and employers. It is unfortunate, now that recession has struck, they were, for whatever reasons they had, $8-13 billion short in planning for the inevitable.


Joe Hueglin


1. Public Accounts of Canada 2008 Summary Report and Financial Statements Canada Prepared by the Receiver General for Canada  http://www.tpsgc-pwgsc.gc.ca/recgen/pdf/49-eng.pdf

Accumulated surplus at the beginning of the year . . . . . . . . . . . . . . . 54,120,095 50,817,763
Accumulated surplus at the end of the year. . . . . . . . . . . . . . . . . . . . . 56,952,606 54,120,095


2. Appendix VII - Review of Main Legislative and Regulatory Modifications to the Employment / Unemployment Program from 1930 to 2007 http://www.hrsdc.gc.ca/eng/employment/ei/premium_rate/2009/appendix_7.shtml


  • Budget 2008 announced the creation of the Canada Employment Insurance Financing Board to improve the governance and management of the EI Account. The creation of this new Board will enhance the independence of premium rate setting, and ensure that EI premiums are used exclusively for the EI program.
  • maintaining a $2 billion cash reserve as a contingency fund that will support relative premium rate stability.

3. No need to refund EI surplus: Top court http://www.canada.com/topics/news/national/story.html?id=1061964

The Canadian Institute of Actuaries called on the Harper government Thursday to make good on the budget announcement. But president Michael Hale said that the government needs to keep a contingency reserve of $10-$15 billion.

?In the midst of a recession, the institute believes that the federal government should improve the rules adopted in its 2008 budget, by establishing a system such that EI premium rates will not have to be increased to deal with rising unemployment costs,? he said in a statement.


4. Finley Defends Tory EI Program


5. Understudies and a grab-bag of issues http://www.theglobeandmail.com/blogs/bureau-blog/understudies-and-a-grab-bag-of-issues/article1144953/


6. Canada spending on jobless up $5.5-billion: Flaherty

OTTAWA -- Canada will spend an extra $5.5-billion (US$5.1-billion) this year on benefits for the unemployed under the country's existing Employment Insurance (EI) program, Finance Minister Jim Flaherty said Tuesday.

"The amount of EI benefits that are being paid out is higher because of the increased unemployment in certain regions of the country. As you know, it's an automatic stabilizer," Mr. Flaherty said.


7. Improvements to Employment Insurance benefit Canadian businesses and workers http://news.gc.ca/web/article-eng.do?nid=455539

The cost of EI benefits is expected to rise by about $5.5 billion in 2009-10 over last year. EI benefits for 2009-10 are expected to be $2.5 billion higher than at the time of the 2009 Budget.


8. What Happened to the $54 Billion EI Surplus? http://www.progressive-economics.ca/2008/04/09/what-happened-to-the-54-billion-ei-surplus/

The accumulation of an EI surplus far in excess of the $10 - $15 Billion estimated amount to balance program revenues and expenditures over a business cycle has also been strongly criticized by the former Chief Actuary of the EI program, by the Auditor-General of Canada and by the Canadian Institute of Actuaries.

Bill C-50 does not eliminate the EI Account and the accumulated EI surplus. But, in creating a new separate EI reserve account, it is clearly intended to relegate the accumulated EI Account surplus to history. Section 127 of the Bill explicitly prohibits the CEIFB from taking into account in premium-setting the balance in the Employment Insurance Account.


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