EI Financing: We Told You So

On the first of this month, I appeared before the Senate’s Standing Committee on National Finance regarding the Employment Insurance (EI) provisions of the 2009 Budget Implementation Act. The Senate recently posted the transcript online.

A fellow panellist was Michel Bédard, former Chief Actuary of the EI Fund. Last year, he and I appeared in the same panel before the same committee regarding the 2008 Budget Implementation Act. We both argued then that, if unemployment increased, the government’s quasi-reserve of $2 billion would quickly prove insufficient to maintain (let alone improve) EI benefits without hiking premiums.

Budget 2009 implicitly acknowledges that this concern was valid. Specifically, it suggests that a further $4.5 billion will be needed to freeze premiums for two years given higher unemployment.

This year, I focussed more on the urgent need to improve EI benefits than on financing issues. The discussion later turned to other matters of interest to Senators, including training and procurement policy.

UPDATE (April 29): I have some more EI commentary in today’s Toronto Star.