Supreme Court sides with federal government on EI surplus

But country's highest court rules in favour of labour groups on how EI rates were set from 2002 and 2005

Ottawa (11 Dec. 08) - The Supreme Court of Canada ruled on Thursday that the federal government acted within its constitutional authority when it spent tens of billions in an employment insurance (EI) surpluses to balance its books rather than benefit workers.

The ruling found that it does fall within the federal government's purview to use the EI funds as it wishes, whether to pay down the debt or on social programs relating to jobless workers.

However, labour groups who lodged the case scored one victory in the ruling. The top court found that the government acted unlawfully in the way it collected EI premiums over a three-year period.

In 2002, 2003 and 2005, a new rate-setting criteria was used for setting EI premiums that the court declared illegal. During that period the Governor General in Council (the cabinet) was responsible for setting the premium rate.

The Supreme Court did not make any recommendations on how to address the problem, and gave the federal government a year to respond to the decision.

The Confédération des syndicats nationaux (CSN) brought the case to the highest court in hopes of having the money returned to the EI program for future use or to employees and employers who contributed to the fund.

The CSN had demanded that a staggering $54 billion in diverted premiums be returned to the EI system and used to fund future benefits to jobless workers. The fund began ballooning after the Liberals brought in new rules in 1996 tightening eligibility rules for benefits.

Auditor General Sheila Fraser repeatedly criticized the government for the way it has handled EI since 1999, with a surplus triple the amount that's necessary and a move away from the intent of the program.

In the 2008 budget, Stephen Harper's Conservative government vowed to set up an independent Crown corporation to manage the employment insurance surplus and ensure it was spent on unemployed workers.

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE