Mr. Speaker, the major problem is that the Conservatives froze employment insurance premiums at an artificially high rate in 2015. Due to the government's decision, workers and employers paid $2.7 billion, and that is more than what they should have paid. According to the Chief Actuary of Canada, the government should have lowered these rates.

The amount of $2.7 billion is important because the government estimated that the surplus for 2015 would be less than $2 billion. Therefore, it is solely because of this artificial freeze on employment insurance rates that the Conservatives were able to post a surplus. Had they done what the Chief Actuary of Canada suggested, they would have lowered the EI premium rates and Canada would definitely have had a deficit this year.

These figures were not provided by the Liberals, but by the Office of the Parliamentary Budget Officer. The Chief Actuary of Canada recommended lowering the rates. These are the statements of competent people.

Canadians need to know that this artificial surplus is the direct result of the government's political and arbitrary decision to freeze EI rates when it should have lowered them. That is the main point that I want to make.

The Liberals do not have a problem with balancing the EI account over the economic cycle. In principle, the government is saying something similar, but it is nothing more than a theory. The reality is completely different.

The government set up a body whose only role was to set the EI premium rates. However, the government then ignored the recommendations of the office that it itself set up and eliminated that role, leaving it up to politicians to make those decisions for political purposes.

The government set these EI contribution rates for purely political reasons so that it could tell Canadians in an election year that it had balanced the budget and that the Conservatives are excellent economic managers. In reality, without that arbitrary decision, the budget would not be balanced.

Many economists are saying that, even with that decision regarding the EI rates, we are still heading toward a deficit because we are currently in an economic slump. However, the Conservatives do not seem to care, since that deficit will not be announced until after the election. Once the votes have been counted, it will be too late for Canadians to find out what is really happening.

I would also say it really is amazing that the Conservatives, of all people, are maintaining artificially high employment insurance premiums, or what they would call payroll taxes. Who is it who day after day rants and raves about the job-destroying properties of payroll taxes? It is the Conservatives. In many respects, they are wrong on that. Under Paul Martin in the late 1990s, there were significant increases in premiums to reform the CPP, and employment growth chugged along at a nice pace, so I think the Conservatives are out to lunch anyway.

The point I am making now is that when a party goes berserk about payroll taxes saying that they're the most evil thing to confront a country, it is the height of hypocrisy for that same party to artificially keep those payroll taxes at a high level just to claim that they have balanced the budget. It is the height of hypocrisy for the payroll-hating party over there to itself artificially raise or keep payroll taxes high, which all of the experts tell us should be brought down. According to the Conservatives' own logic, had they reduced employment insurance premiums, as the experts all say they ought to have done, imagine all the jobs that would have been created because of the reduction of this job-destroying payroll tax, which the Conservatives are keeping artificially high.

That is the height of hypocrisy and it is unacceptable.

The other thing I would say is that the Conservatives do not even know what a tax is. They keep talking about higher premiums paid by individual Canadians for the CPP as a tax hike. They seem blissfully unaware of the fact that this is not money that goes into general revenues as does a tax increase. Each and every penny of any additional contribution to the CPP by an individual Canadian is invested on behalf of that Canadian and paid back to him or her at the time of his or her retirement in the full amount, plus interest.

Let me say also that it is high interest, because the CPP has had an excellent rate of return over the years. This last year, I think it was 16% or some huge level. In the last decade or so, the return after inflation was 6.2%, which in a period of record low interest rates is a hugely successful return on investment. I read today that they might be acquiring the private equity component of GE, which would be another vehicle for good returns.

It is not as if this money would be put into a sinkhole and wasted. The track record is that the rate of return on such funds is high, and that is a direct benefit to Canadians, because all of that money is returned to those Canadians in the form of pensions, based on their own contributions and based on the very substantial rate of return earned by the CPP.

I will conclude with this central point: the only reason we have a surplus this year is because the government artificially maintained employment insurance premiums at a level that all experts deem is far too high.

John McCallum

Transcript

Government Orders

Discussions (0)