Supreme Court Endorses 54 billion UIC Surplus Grab

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martin dufresne
Supreme Court Endorses 54 billion UIC Surplus Grab

Sad news.

martin dufresne

Background (from CBC story)

Labour unions appeared before the Supreme Court of Canada last Spring
to argue the federal government has been improperly spending billions
of surplus dollars in the unemployment insurance fund.

The court reserved judgment Tuesday afternoon and didn't set a date for a ruling.

Brought by the Quebec-based labour union Confédération des syndicats
nationaux (CSN), the unions' argument is that the Employment Act fund
shouldn't go into general revenue and pay for things such as debt
reduction. Doing so turns it into an indirect tax and is
unconstitutional, they argue.

"The reality is the government owes $55 billion to the insurance
system and they need to pay it back," Barbara Byers, vice-president of
the Canadian Labour Congress, told CBC News before the hearing began.

Intervening in the case are the Canadian Labour Congress as well as
the attorneys general of Manitoba, New Brunswick, Newfoundland and
Labrador, Ontario and Quebec.

They argue that the government has misused EI funds dating back to
1996, when the act was amended to make it more difficult to qualify for
unemployment benefits. Since then, the employment insurance account
surplus has ballooned to $54 billion.

EI premiums are set once a year by Ottawa based on employment
expectations. Some employers complain the government has been
underestimating, resulting in an ever-increasing surplus that then goes
into general revenues.

"The surplus has been used to pay down debt, It's been used to give
tax cuts to large corporations and oil companies, it's been used for
all sorts of other purposes, but not for unemployment insurance," said

"That's money that comes from workers and employers for unemployment
insurance. It's not an extra tax, it's not to be spent on other things."

The Quebec Court of Appeal ruled against the unions after finding the EI premiums collected were within federal taxation powers.



martin dufresne

CBC news:

Canada's top court ruled on Thursday that the federal government
acted constitutionally when it spent an employment insurance surplus on
balancing the books.

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 use on social programs relating to jobless workers.

But the Quebec-based union organizations that brought the case to
the Supreme Court of Canada did score a minor victory. In Thursday's
ruling, the top court found the government acted unlawfully in the way
it collected EI premiums over three years.

In 2002, 2003 and 2005, a new rate-setting criteria was used for
setting EI premiums that the court found to be unlawful, CBC's Rosemary
Barton reported from Ottawa.

During those years, Parliament authorized the Governor General in Council to be 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. (...)


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martin dufresne

The Toronto Star's version:


EI financing ruled illegal by top court - Canada - EI financing ruled illegal by top court

December 11, 2008


OTTAWA–The Supreme Court of Canada says the federal government broke
the law in financing the employment insurance system by transforming
premiums paid by workers and employers into an unconstitutional tax.

In a 7-0 judgment, the court ruled the former Liberal governments of
Jean Chrétien and Paul Martin collected EI contributions illegally in
2002, 2003 and 2005.

In those years, EI rates were set directly
by cabinet without proper authorization from Parliament, violating the
ancient constitutional principle of no taxation without representation.

However, the court rejected claims by organized labour that the
Liberals deliberately ran up massive surpluses in the EI fund, then
diverted the money to balance the federal budget and fund other

The Confederation des Syndicats Nationaux, one of
Quebec's leading labour organizations, had demanded that $54 billion in
allegedly diverted premiums be returned to the EI system and used to
fund future benefits to jobless workers.

The confederation also
contended that federal jurisdiction is strictly limited to providing
such benefits, and that any training, placement or other social
services should be left to the provinces. The court rejected that
claim, as well.

The dispute has its roots in the
deficit-fighting efforts of Martin as finance minister under Chrétien.
Critics have long maintained the strategy amounted to balancing the
federal books on the backs of the unemployed.

The Liberals
brought in legislation in 1996 that tightened eligibility rules for EI
benefits but simultaneously opened the door to new training, education,
placement and other programs.

Critics say the government then
went on to set the premiums charged to workers and employers at higher
rates than were necessary to fund the reduced benefits and new programs.

The result was a ballooning surplus in the EI fund – a revenue windfall
critics said could be used first to balance the budget and later to
support other Liberal initiatives that had no connection to EI.

Opposition MPs, labour unions, business groups and Auditor General
Sheila Fraser all complained repeatedly about the new regime but to no

The current Conservative government promised earlier this
year to set up an independent Crown corporation to run EI on a
break-even basis. But the Tories didn't offer to restore the $54
billion diverted in the past.



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Chester Drawers

The truth always comes out.  So sad that this money will never be recovered as it was spent on non labor social programs.

 Rob Peter to pay Paul.



kropotkin1951 kropotkin1951's picture

The case did not really look to where the money was spent because it is premised on the basis there is still a government account where there is a theoretical surplus awaiting to be spent.  Imagine if we had actually put aside the real money and there was a fund available in this time of need. All the fund has now are worthless IOU's from successive neo-con governments.

duncan cameron

There is something to like in this decision. The Liberals were found to violate "no taxation without representation." Wasn't that what led to magna carta, not to mention the Boston tea party?

EI changes need to be made by the coalition. the best way to get money into the economy as stimulus is personal transfer payment increases.

This ruling helps discredit the gutting of the UI act by Mulroney first, and then by Martin and Jean C. and could help efforts to revive spending

The Supreme Court is not going to spend money for the government, even if it judges the money was misappropriated. For that we would need at least economic and social rights added to our charter of rights (as in the Universal Declaration).

martin dufresne

(Sorry, wrong thread)


interesting and these are the very same libs that the country was begging to be in power instead of that ass Harper.


once again the only leader is Jack


Lose one battle fight another

Time to make certain EI goes to those in need. I posted this link in the Labour thread, but I believe this thread is just as appropriate under the circumstances. 



Sounds like our legal supremacists are siding with thieves.