Ottawa needs to put EI surplus into training right away, Ontario’s Sousa says

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Ontario Finance Minister Charles Sousa says Ottawa needs to put the growing Employment Insurance surplus into training programs as soon as possible rather than using it to help the federal bottom line.

In an interview with The Globe and Mail, Mr. Sousa defended his government's position as it takes a leading role for the provinces in negotiating a reform of a $2-billion annual transfer from Ottawa paid for by EI funds.

Federal figures show the surplus in the EI operating account is on pace to grow from $2.5-billion in 2015-16 to $7-billion the following year.

"I'm saying we've got room. You've got surpluses within this program. Let's make sure we use them for the purposes of the program," said Mr. Sousa, noting that any surplus in the EI account helps Ottawa's finances overall as it is not managed independently.

"We have a need today to enable that training to exist," said Mr. Sousa. "The feds basically can fund effective and comprehensive training programs without raising premiums."

Though the EI program has gone through many reforms in recent years, the cost of benefits and training are designed to be paid for entirely by EI premiums, which are collected through payroll deductions.

Premiums are currently set at $1.88 per $100 of insurable earnings. The federal Conservatives have promised to launch a new system in 2017 that would drop premiums to $1.45, putting all of the accumulated surplus toward lowering premiums over a seven year period.

Last month provincial premiers named Ontario, British Columbia and New Brunswick to negotiate on their behalf for a renewal of the transfers, which are called Labour Market Development Agreements.

Ottawa has strongly criticized the provinces for their calls for enhanced benefits, arguing it would lead to higher EI premiums that would hurt the economy.

In his first statement on the topic since being named as the new federal employment minister Monday, Pierre Poilievre said Ottawa will not raise premiums.

‎"Let me be clear, we will continue to work with the provinces and territories to provide job training money but we will not make it more expensive to hire and retain workers by raising job-killing payroll taxes," he said in a statement provided by his office.

Industry groups like the Canadian Federation of Independent Business have accused Ontario in particular of hypocrisy, because the Ontario budget said lower EI premiums in 2017 would allow it to introduce new payroll premiums for a new provincially-run pension plan.

While he would not say what should happen to EI premiums, the minister said he preferred a "mixed approach," a comment that suggests EI premiums could be reduced by a lesser degree to allow for some of the surplus to go toward increased benefits.

Mr. Sousa noted Ottawa has taken different approaches to the issue in the past, including the 2008 decision to eliminate the notional surplus in the EI account that had grown to around $57-billion.

"Frankly it's up to the federal government as to how they meet their obligation," he said. "Whether it's raising EI premiums, or finding the money, or retraining elsewhere, within their budget, there's room... They have a number of other things that they have at their disposal. What we will do though is to continue to fight for the interests of the unemployed."