Labour groups begin $54-billion Supreme Court EI challenge

Premiums paid by workers and employers diverted to other uses by successive governments

Ottawa (14 May 2008) - The Canadian Labour Congress (CLC) began what could be a landmark Supreme Court case this week involving $54 billion in wrongly-spent Employment Insurance (EI) premiums.

Together with two Quebec labour groups, the Confederation des syndicats nationaux (CSN) and the Syndicat national des employes de l'aluminium (SNEA), the national labour body is seeking a declaration that the money was spent unconstitutionally by successive federal governments.

The money should be returned to employees and their employers, who paid the money in EI premiums, or used to defray future contributions, the three groups argue.

The money was treated as surplus by the government and diverted to general revenue for uses such as debt reduction and program funding. The groups say the practice amounted to indirect taxation and the money raised was spent improperly.

"In systematically accumulating a significant and excessive surplus and in using that surplus for non-employment insurance-related purposes, the federal government has exceeded its constitutional authority," the CLC argues in a brief filed in court.

The surplus began to swell in 1997, one year after the federal government imposed new rules that made it harder for jobless workers to collect benefits.

In an earlier decision the Quebec Court of Appeal ruled against the groups, finding that EI premiums were collected within the scope of federal taxation powers.

The CLC wants the court to force Parliament to consult with employer and labour organizations on how the surplus can be used to either improve benefits or offset future contributions.

The last federal budget, delivered in February, announced the establishment of a new Crown corporation to administer the EI system. It will restrict the use of the EI Fund to EI benefits only and limit premiums to the amount needed to cover the cost of EI, plus a $2-billion cushion. However, there is no provision to repay the $54 billion surplus at issue in this court challenge.