Human Resources and Skills Development Canada
Symbol of the Government of Canada

Human Resources and Skills Development Canada

www.hrsdc.gc.ca

Section III: Supplementary Information

3.1 List of Supplementary Information Tables

3.2 Introduction to Specified Purpose Accounts

Specified Purpose Accounts consist of special categories of revenues and expenditures. They report transactions of certain accounts where enabling legislation requires that revenues be earmarked and that related payments and expenditures be charged against such revenues. The transactions of these accounts are to be accounted for separately.

HRSDC is responsible for the stewardship of four such accounts:

  • the Employment Insurance Account;
  • the Canada Pension Plan;
  • the Government Annuities Account; and
  • the Civil Service Insurance Fund.

The Employment Insurance Account is a consolidated Specified Purpose Account and is included in the financial reporting of the Government of Canada. Consolidated Specified Purpose Accounts are used principally where the activities are similar in nature to departmental activities and the transactions do not represent liabilities to third parties but, in essence, constitute Government revenues and expenditures.

The Canadian Pension Plan is a Specified Purpose Account but is not consolidated as part of the Government of Canada financial statements. It is under joint control of the Government and participating provinces. As administrator, the Government's authority to spend is limited to the balance of the Plan.

The Government Annuities Account is a consolidated Specified Purpose Account and is included in the financial reporting of the Government of Canada. It was established by the Government Annuities Act, and modified by the Government Annuities Improvement Act, which discontinued sales of annuities in 1975. The account is valued on an actuarial basis each year, with the deficit or surplus charged or credited to the Consolidated Revenue Fund.

The Civil Service Insurance Fund is a consolidated Specified Purpose Account and is included in the financial reporting of the Government of Canada. It was established by the Civil Service Insurance Act. Pursuant to subsection 16(3) of the Civil Service Insurance Regulations, the amount of actuarial deficits is transferred from the Consolidated Revenue Fund to the Civil Service Insurance Account in order to balance the assets and liabilities of the program.

Employment Insurance Account Description

The Employment Insurance Account was established in the Accounts of Canada by the Employment Insurance Act to record all amounts received or paid out under that Act. The Employment Insurance Act provides short-term financial relief and other assistance to eligible workers. The program covers all workers in an employer-employee relationship. Self-employed fishers are also included under special regulation of the Employment Insurance Act.

Employment Insurance provides:

  • Income Benefits under Part I of the Employment Insurance Act provide temporary income support to claimants, including self-employed fishers, while they look for work. This includes work sharing agreements for temporary work shortages to allow employees to receive pro-rated Employment Insurance benefits while working for part of a week, thus avoiding layoffs. Employment Insurance also provides four types of special benefits: maternity benefits, payable to biological mothers for work missed as a result of pregnancy and childbirth; parental benefits, payable to both biological and adoptive parents for the purpose of caring for a new born or adopted child; sickness benefits, payable to claimants who are too ill to work; and compassionate care benefits, payable to claimants who provide care to a gravely ill or dying family member.
  • Employment Benefits under Part II of the Employment Insurance Act through a set of Employment Benefits and Support Measures that can be tailored to meet the needs of individuals and local circumstances. The Government of Canada has Labour Market Development Agreements with the governments of the provinces and territories. These enable provincial and territorial governments to assume direct responsibility for the design and delivery of these benefits or to take part in co-management arrangements with the federal government.

Employers and workers pay all costs associated with Employment Insurance through premiums. Benefits and administrative costs are paid out of the Consolidated Revenue Fund and charged to the Employment Insurance Account. A surplus in the Account generates notional interest at a rate established by the Minister of Finance, which is currently set at 90% of the monthly average of the three-month Treasury bill rate.

Financial Summary

Due to the freeze in the 2010 premium rate at the 2009 level of 1.73% in Budget 2009, the expected costs related to the extended regular benefits measure for long-tenured workers announced in Fall 2009, and the higher expected level of unemployment, costs are expected to exceed revenues by $4.7 billion in 2010-2011. This includes an expected $1.5 billion in additional funding for the cost of the benefit enhancement measures announced in Budget 2009.

In Budget 2008, the Government announced improvements to the management and governance of the Employment Insurance Account through the creation of an independent Crown corporation, the Canada Employment Insurance Financing Board. Beginning in 2011, the CEIFB will be responsible for implementing a new and transparent premium rate-setting mechanism that will take into account any surpluses or deficits that arise on a go-forward basis, to ensure that revenues and expenditures break even over time. The CEIFB will be mandated not to recover any deficit resulting from the enhanced benefits and training announced in Budget 2009 to ensure that future increases in the premium rate are gradual enough to support a strong economic turnaround.

The following chart summarizes trends in total costs and revenues of the Employment Insurance Account from 2001-2002 to 2010-2011.

Figure 1: A link to the description follows the figure

Text version of Figure 1 : EI Account - Costs and Revenues Trend (Excluding Interest)

The table below summarizes the Employment Insurance premiums and expenditures from 2007-2008 financial results to 2010-2011.

EI Account
Premiums and Expenditures Summary
(millions of dollars) Actual Forecast Planned Spending
2007-2008 2008-2009 2009-2010 2010-2011
Expenditures
EI Benefits
Income Benefits 12,197 14,196 19,585 19,751
EBSM 2,096 2,112 2,624 2,625
Total EI Benefits 14,293 16,308 22,209 22,376
Administrative Costs 1,689 1,801 2,033 2,005
Doubtful Accounts 81 27 38 42
Sub-Total 16,063 18,137 24,280 24,423
Revenues (exculding interest)
Premium Revenuea 16,877 17,217 17,055 18,167
Penalties 58 41 65 71
Funding for Budget 2009 Measures - 124 1,520 1,450
Sub-Total 16,935 17,382 18,640 19,688
Variance 872 (755) (5,640) (4,735)
  • Reference a from the above table The Employment Insurance premiums reported in the summary financial statements of the Government of Canada and the Federal Budget exclude the premium contributions made by the Government of Canada as an employer.
  • Note from the above table Note:Totals may not add due to rounding.

Benefit Payments

Benefits in 2010-2011 are expected to reach $22.4 billion, consisting of $19.8 billion for Income Benefits and $2.6 billion for Employment Benefits and Support Measures.

Income Benefits

Employment Insurance Income Benefits include regular, special, work-sharing and fishers' benefits. Footnote 1 Income benefits were extended in Budget 2009 to individuals participating in longer-term training under the Career Transition Assistance Initiative, providing additional time and financial support to allow long-tenured workers to gain the new skills needed to adapt to the changing economy. A long-tenured worker is defined as having contributed 30% of the maximum annual contribution or greater for at least 7 out of the last 10 years without having received more than 35 weeks of regular benefits in the last 5 years. This measure is estimated to cost $0.1 billion in 2010-2011.

Regular Benefits

  • Entrance Requirements to Qualify for Benefits
    • Most claimants require 420 to 700 hours of work during their qualifying period, from full-time or part-time work, whether with one employer or several. The exact number of hours required, called the "variable entrance requirement", is determined by the rate of unemployment in a claimant's region at the time he or she applies for benefits. In general, the higher the rate of unemployment, the fewer hours of work required to qualify.
    • People who have just entered the labour market ("new entrants") and those returning to the labour force after an absence ("re-entrants") require 910 hours of work. However, if they worked at least 490 hours in the preceding 12 months, or received at least one week of maternity or parental benefits in the four years before that, they will be eligible under normal rules the following year.
  • Determining the Benefit Rate and Entitlement
    • Claimants for regular benefits may receive benefits for 14 to 45 weeks, depending upon their hours of insurable employment and the regional unemployment rate. In Budget 2009, the Government increased regular benefit entitlements by five additional weeks to a maximum of 50 weeks for claims where the benefit period has not end before March 1, 2009 and does not begin after September 11, 2010. The estimated cost for this measure in 2010-2011 is $0.8 billion.
    • In Fall 2009, the Government announced an additional 5 to 20 weeks of regular benefits for long-tenured workers whose claims started between January 4, 2009 and September 11, 2010 to a maximum of 70 weeks. The estimated cost for this measure in 2010-2011 is $0.6 billion.
    • Claimants' weekly benefits are 55% of their average insurable earnings during the last 26 weeks, up to a maximum of $457, based on the maximum yearly insurable earnings of $43,200. The average insurable earnings are based on the actual weeks of work, subject to a minimum divisor that is tied to the regional rate of unemployment.
    • Claimants with a combined family income of less than $25,921 and who qualify for the Canada Child Tax Benefit (CCTB) receive a Family Supplement based upon:
      • the net family income;
      • the number of dependent children; and
      • the ages of those dependent children.
    • The benefit rate for claimants who receive a Family Supplement can be increased to a maximum of 80% of the claimant's average weekly insurable earnings, up to the maximum weekly benefit of $457.

Special Benefits

Claims for sickness, maternity, parental, or compassionate care benefits require 600 hours of work, and are not affected by the new entrant/re-entrant rule. All claimants may receive sickness benefits for up to 15 weeks. Parental benefits of 35 weeks are available for biological and adoptive parents in addition to the 15 weeks of maternity benefits available to biological mothers. Compassionate care benefits of up to 6 weeks are available to eligible workers who take a temporary absence from work to provide care for a gravely ill family member who has a significant risk of death within a 26 week period.

As of January 31, 2010, self-employed workers can voluntarily enter into an agreement with the Canada Employment Insurance Commission to contribute EI premiums at the employee rate and be eligible to access special benefits. Self-employed workers in Quebec who participate in this measure will pay the reduced employee rate and be eligible for only sickness and compassionate care benefits, as Quebec residents, including self-employed workers, have been covered under the Quebec Parental Insurance Plan for maternity and parental benefits as of January 2006.

Those who enter into an agreement between January 31, 2010 and April 1, 2010 will be eligible to claim special benefits as early as January 1, 2011, otherwise benefits cannot be accessed until 12 months after entering into an agreement. Following a 60-day grace period, participation in this measure will remain indefinite until an agreement is terminated, after which premium contributions will continue until the end of the calendar year in which the notice to terminate was filed. An agreement cannot be terminated once a claim for special benefits has been submitted

Work Sharing

Claimants may receive benefits while on work-sharing agreements. These agreements between HRSDC, employees and employers avoid temporary layoffs by combining partial Employment Insurance benefits with reduced workweeks. They normally last from 6 to 26 weeks, with a possible extension of 12 weeks for a maximum of 38 weeks. In Budget 2009, the Government extended work-sharing programs by 14 weeks to a maximum of 52 weeks for applications received between February 1, 2009 and April 3, 2010. Along with increased access to work-sharing agreements through greater flexibility in the qualifying criteria and streamlining processes for employers, the estimated cost for this measure is $0.1 billion in 2010-2011.

Fishers' Benefits

The benefit rate for fishing benefits depend on the earnings from fishing and the regional rate of unemployment, via the minimum divisor. All fisher claims have a 31-week maximum qualifying period and a fixed entitlement of 26 weeks of benefits. These can be claimed from October 1st to June 15th for summer fishers' benefits and April 1st to December 15th for winter fishers' benefits. Fishers can file claims for both seasons.

Benefit Repayments

When the net annual income of Employment Insurance claimants exceeds 1.25 times the maximum yearly insurable earnings ("the repayment threshold"), they have to repay the lesser of 30% ("the repayment rate") of the net excess income or 30% of the amount of total benefits other than special benefits paid. In addition, first-time claimants of regular or fishing benefits are exempt from benefit repayment.

EI Income Benefits
Expenditures
(millions of dollars) Actual Forecast Planned Spending
2007-2008 2008-2009 2009-2010 2010-2011
Income Benefits
Regular 8,381 10,102 15,171 15,330
Sickness 928 1,000 1,033 1,068
Maternity 836 883 917 949
Parental 1,914 2,057 2,147 2,221
Compassionate Care 9 10 10 10
Fishing 265 264 264 269
Work Sharing 15 55 300 180
Benefit Repayments (150) (175) (257) (276)
Total Income Benefits 12,197 14,196 19,585 19,751
  • Note from the above table Note: Totals may not add due to rounding.
Factors Affecting Income Benefits
Actual Forecast Planned Spending
2007-2008 2008-2009 2009-2010 2010-2011 % Change
Income Benefits ($ million) 12,197 14,196 19,585 19,751 0.8%
Average Monthly Beneficiaries (000's) 728 813 1,108 1,090 1.6%
Benefit Rate ($/week) 322 339 354 364 2.8%

Employment Benefits and Support Measures

The Employment Benefits include Skills Development, Job Creation Partnerships, Self Employment and Targeted Wage Subsidies.

The Support Measures include Employment Assistance Services, Labour Market Partnerships and Research and Innovation.

Part II of the Employment Insurance Act also authorizes the federal government to make payments to the governments of the provinces and territories for implementing programs similar to Employment Benefits and Support Measures. An additional $0.5 billion of funding was made available in Budget 2009 to expand the availability of training delivered by the provinces and territories, to be allocated based on the share of unemployed persons in each region.

The total planned spending for Employment Benefits and Support Measures in 2010-2011 is set at $2.6 billion.

Employment Benefits and Support Measures
(millions of dollars) Actual Forecast Planned SpendingReference a is located after the table
2007-2008 2008-2009 2009-2010 2010-2011
Job Creation Parnerships 27 26 12
Skills Development 263 238 110
Self-employment 41 35 16
Targeted Wage Subsidies 23 22 10
Employment Assistance 152 139 64
Labour Market Partnerships 158 157 72
Research & Innovation 15 14 7
Total HRSDC Programs 679 632 291 -
Transfers to Provinces and Territories 1,417 1,480 2,333 2,625
Total 2,096 2,112 2,624 2,625
  • Reference from the above table a Breakdown by component is not available, as spending will be guided by local labour market needs. Breakdown by provinces/territories is provided in the EI Part II - 2010-2011 Expenditure Plan.
  • Note from the above table Note: Totals may not add due to rounding.

Premiums

Premiums are collected from insured employees and their employers to cover the program costs over a business cycle, based on a yearly premium rate and employees' insurable earnings. The factors affecting the premiums are further explained below:

Premium Rate: In Budget 2009, the Government set the premium rate for 2010 at the 2009 level of 1.73% to provide a competitive advantage to employees and employers.

As Quebec employees are covered under the Quebec Parental Insurance Plan, the premium rate for employees in Quebec was set at 1.36% in 2010, or 1.73% less the 0.37% premium rate reduction for Maternity-Parental-Adoption benefits, as determined by the Chief Actuary in the 2010 Report to the EI Commission. The corresponding rate for employers is 1.90%.

Figure 2: A link to the description follows the figure

Text version of Figure 2 : Employee Premium Rate Trend (% of Insurable Earnings)

Maximum Yearly Insurable Earnings (MYIE): Premiums are paid on all employment earnings of insured employees up to the MYIE. The Chief Actuary has calculated the MYIE for 2010 as being $43,200, up $900 from the 2009 level.

Premium Reduction: Employers with qualified wage-loss insurance plans are entitled to premium reductions. They are required to share this reduction with their employees.

Premium Refund:

  • Workers with annual earnings of $2,000 or less can receive a refund of their Employment Insurance premiums through the income tax system.

Employment Insurance premiums are refunded to employees when their insurable earnings are in excess of the maximum yearly insurable earnings.

Interest Earned

Section 76 of the Employment Insurance Act stipulates that the Minister of Finance may authorize the payment of interest on the balance in the Employment Insurance Account in accordance with such terms and conditions and at such rates as the Minister of Finance may establish, and the interest, which is currently set at 90% of the three-month Treasury bill rate, shall be credited to the Employment Insurance Account and charged to the Consolidated Revenue Fund. Interest is calculated monthly, based on the 30-day average of the daily balance in the Account.

Interest is charged on overdue accounts receivable, caused through misrepresentation, in accordance with Treasury Board regulations. The interest rate used in this calculation is the average Bank of Canada discount rate for the previous month plus 3.0%.

Interest Earned
(millions of dollars) Actual Forecast Planned Spending
2007-2008 2008-2009 2009-2010 2010-2011
Sources
Account Balance 1,926 950 153 340
Account Receivable 34 22 22 36
Total 1,961 972 175 376
  • Note from the above table Note: Totals may not add due to rounding.

Interest earned is expected to increase to $0.4 billion due to higher expected interest rates in 2010-2011, offset slightly by a lower cumulative surplus, which totalled $57.2 billion as of March 31, 2009.

Administrative Costs

Section 77 of the Employment Insurance Act specifies that the costs of administering the Act are to be charged to the Employment Insurance Account.

The Minister of Human Resources and Skills Development is responsible for reporting on the Employment Insurance Program to Parliament. However, the Canada Revenue Agency (CRA), which collects premiums and benefit repayments and provides decisions on insurability under the Act, shares the administration of the Program. Treasury Board Secretariat and the Department of Justice all supply services that support management and delivery of programs under the Employment Insurance Act.

The administrative costs that provincial and territorial governments incur to administer Employment Benefits and Support Measures under the Labour Market Development Agreements are also charged to the Employment Insurance Account.

Administrative Costs
(millions of dollars) Actual Forecast Planned Spending
2007-2008 2008-2009 2009-2010 2010-2011
Federal 1,549 1,650 1,860 1,815
Provincial 150 164 188 205
Recovery (10) (13) (15) (15)
Total 1,689 1,801 2,033 2,005
  • Note from the above table Note: Totals may not add due to rounding.

The $2.0 billion Employment Insurance administrative costs are the initial approved resources for 2010-2011.

Canada Pension Plan

The Canada Pension Plan is a contributory, earnings-related social insurance program. It is a joint federal-provincial plan that operates throughout Canada, except in Quebec, which has its own comparable plan. The Canada Pension Plan provides for a variety of benefits based on life changes. In addition to retirement pensions, the Canada Pension Plan also provides for survivors pensions, children's benefits, disability pensions, disabled child contributors' benefits, as well as a one-time death benefit that cannot exceed $2,500.

As a contributory plan, contributors are employees or self-employed people generally between the ages of 18 and 70, who earn at least a minimum amount ($3,500) during a calendar year. Benefits are calculated based on how much and for how long a contributor has paid into the Canada Pension Plan. Benefits are not paid automatically — everyone must apply and provide proof of eligibility.

Canada Pension Plan (CPP)
Summary
(millions of dollars) Actual Forecast Planned Spending Planned Spending Planned Spending
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
Revenue
Contributionsa 35,346 36,506 34,287 35,773 37,399 39,633
Investment Income
Canada Pension Planb 11 6 1 1 1 1
CPP Investment Boardc (268) (23,576) - - - -
Total Investment Income (257) (23,570) 1 1 1 1
Total Revenue 35,089 12,936 34,288 35,774 37,400 39,634
Expenditures
Benefit paymentsd 27,537 29,005 30,502 31,925 33,507 35,402
Administrative expenses 599 694 762 741 743 745
Total Expenditures 28,136 29,699 31,264 32,666 34,250 36,147
Increase 6,953 (16,763) 3,023 3,108 3,150 3,487
Year-end balances 126,784 110,021 113,044 116,153 119,303 122,790
  • All the notes from the above tableNotes:
  • Reference from the above table a Source of Contributions Forecast 2009 through 2013 is from the 24th Actuarial Report from the Office of the Superintendent of Financial Institutions Canada (Table 15).
  • Reference from the above table b The Canada Pension Plan investment income only includes the interest earned on the daily operating balance.
  • Reference from the above table c Canada Pension Plan Investment Board actual amounts are based on their audited financial statements. The Canada Pension Plan Investment Board invests mainly in equities. The investment income is made up of the interest from the bonds as well as the change in fair values of other varied equity investments as of that date. It is difficult to forecast a future fair value on this type of income. Therefore, the forecast investment income for the years 2009-2010 and forward are not provided.
  • Reference from the above table d Source of Benefit payments Forecast 2009 through 2013 is from the Actuarial Monthly Report (December 2009) from the Office of the Superintendent of Financial Institutions Canada.

Government Annuities Account

This account was established by the Government Annuities Act, and modified by the Government Annuities Improvement Act, which discontinued sales of annuities in 1975. The account is valued on an actuarial basis each year, with the deficit charged or surplus credited to the Consolidated Revenue Fund.

The purpose of the Government Annuities Act was to assist Canadians to provide for their later years, by the purchase of Government annuities. The Government Annuities Improvement Act increased the rate of return and flexibility of Government annuity contracts.

Income consists of premiums received, funds reclaimed from the Consolidated Revenue Fund for previously untraceable annuitants, earned interest and any transfer needed to cover the actuarial deficit. Payments and other charges represent matured annuities, the commuted value of death benefits, premium refunds and withdrawals, and actuarial surpluses and unclaimed items transferred to non-tax revenues. The amounts of unclaimed annuities, related to untraceable annuitants, are transferred to non-tax revenues.

As of March 31, 2009, there were 1,356 outstanding deferred annuities, the last of which will come into payment around 2030.

Government Annuities Account
Statement of Operations and Actuarial Liabilities
(millions of dollars) Actual Forecast Planned
2007-2008 2008-2009 2009-2010 2010-2011
Actuarial Liabilities –
Balance at beginning of year 319.4 292.9 267.2 244.4
Income 21.1 19.4 18.7 17.1
Payments and other charges 45.0 42.0 39.1 36.5
Excess of Payments and other charges
over income for the year 23.9 22.6 20.4 19.4
Actuarial Surplus 2.6 3.1 2.4 2.5
Actuarial Liabilities –
Balance at year-end 292.9 267.2 244.4 222.5

Civil Service Insurance Fund

This account was established by the Civil Service Insurance Act, under which the Minister of Finance could contract with permanent employees in the public service for the payment of certain death benefits. No new contracts have been entered into since 1954 when the Supplementary Death Benefit Plan for the Public Service and Canadian Forces was introduced as part of the Public Service Superannuation Act and the Canadian Forces Superannuation Act, respectively. As of April 1997, the Department of Human Resources Development assumed the responsibility for the administration and the actuarial valuation of the Civil Service Insurance Act.

The number of policies in force as of March 31, 2009 was 1,149 and the average age of the policy holders was 89.1 years. Receipts and other credits consist of premiums and an amount (charged to expenditures) which is transferred from the Consolidated Revenue Fund in order to balance the assets and actuarial liabilities of the program. Payments and other charges consist of death benefits, settlement annuities paid to beneficiaries and premium refunds.

Pursuant to subsection 16(3) of the Civil Service Insurance Regulations, any deficit will be credited to the Account from the Consolidated Revenue Fund.

Civil Service Insurance Fund
Statement of Operations and Balance
(millions of dollars) Actual Forecast Planned
2007-2008 2008-2009 2009-2010 2010-2011
Opening Balance 6.0 5.9 5.6 5.4
Income and other credits 0.1 0.0 0.1 0.1
Payments and other charges 0.2 0.3 0.3 0.3
Excess of payments and other charges over income for the year 0.1 0.3 0.2 0.2
Closing Balance 5.9 5.6 5.4 5.2

Canadian Millennium Scholarship Foundation Excellence Awards Fund

In accordance with Budget Implementation Act 2008, the Canada Millennium Scholarship Foundation is ending after its ten-year mandate. This Specified Purpose Account was established by way of an agreement between Canada Millennium Scholarship Foundation and Human Resources and Skills Development Canada (HRSDC) in order for HRSDC to administer the remaining Excellence Awards payments to eligible students upon the dissolution of the Canada Millennium Scholarship Foundation. The transfer of funds also includes the costs of administering this program on behalf of the Canada Millennium Scholarship Foundation.

HRSDC will administer the remaining Excellence Awards disbursements from January 1, 2010 until December 31, 2013. After this date, HRSDC will transfer any funds remaining in the account to the Consolidated Revenue Fund.

Canadian Millennium Scholarship Foundation Excellence Awards Fund
Statement of Operations and Balance
Actual Forecast Planned
2007-2008 2008-2009 2009-2010 2010-2011
Opening Balance 0.0 0.0 0.0 14.4
Receipts and other credits 0.0 0.0 14.8 0.0
Payments and other charges 0.0 0.0 0.4 7.7
Excess of payments and other charges over receipts for the year 0.0 0.0 (14.4) 7.7
Closing Balance 0.0 0.0 14.4 6.7

3.3 Employment Insurance Part II

Part II of the Employment Insurance Act commits the federal government to work in concert with provinces and territories to put in place Employment Benefits and Support Measures (EBSMs) or similar programs and services to help unemployed Canadians integrate into the labour market.

Since provinces and territories are best placed to determine the mix of employment programming that is required to meet their local and regional labour market needs, EBSMs are delivered through transfer Labour Market Development Agreements (LMDAs) between Canada and the provinces and territories.

EBSMs comprise five employment benefit programs — Targeted Wage Subsidies, Self—Employment, Job Creation Partnerships, Skills Development and Targeted Earnings Supplements — and three support measures — Employment Services, Labour Market Partnerships and Research and Innovation.

More detailed information on Employment Insurance Part II is available at ( Service Canada website ).

Financial Data

For 2010 2011, the Employment Insurance Part II expenditure authority of $2.672 billion represents 0.6% of total estimated insurable earnings of $460.572 billion. This represents a lower level of expenditures than the 0.8% ceiling imposed under the Act, which is estimated at $3.685 billion in 2009-2010.

Some of the savings from Part I income benefits generated by the Employment Insurance reform are included in these funds to provide job opportunities and help Canadians get back to work more quickly. The amount of re investment reached maturity at $800 million in 2000-2001.

2010-2011 Employment Insurance Plan
(millions of dollars) Base Reference a is located after the table Re-Investment Reference a is located after the table Stimulus References a b are located after the table Total Plan Reference a is located after the table
Newfoundland and Labrador 60.0 73.1 14.7 147.7
Nova Scotia 50.6 30.3 16.8 97.8
New Brunswick 50.0 42.1 14.5 106.7
Prince Edward Island 17.3 10.0 3.7 31.0
Quebec 348.1 248.1 130.6 726.8
Ontario 360.7 184.1 210.7 755.5
Manitoba 35.1 10.2 11.6 56.9
Saskatchewan 28.3 9.9 9.3 47.4
Alberta 68.1 35.9 34.2 138.2
Northwest Territories 1.7 1.6 0.4 3.7
Nunavut 1.9 1.0 0.7 3.6
British Columbia 126.5 151.7 52.4 330.6
Yukon 1.6 2.0 0.4 4.0
  1,150.0 800.0 500.0 2,450.0
Pan-Canadian Responsibilitiesc 174.6 0.0 0.0 174.6
Funds available for Employment Benefits and Support Measures 1,324.6 800.0 500.0 2,624.6
  • Reference a from the above table Totals may not add due to rounding.
  • Reference b from the above table Stimulus funding announced in Budget 2009, and allocations listed are subject to change based on January 31, 2010 Labour Force Survey Data.
  • Reference c from the above table Funds earmarked for Pan-Canadian priorities, such as Aboriginal programming, sectoral and innovations projects.

3.4 Consolidated Report on Canada Student Loans

In August 2000, the Canada Student Loans Program (CSLP) was shifted from the risk-shared financing arrangements that had been in place with financial institutions between 1995 and July 2000 to a direct student loan financing plan. Footnote 2

This meant that the Program had to redesign the delivery mechanism in order to directly finance student loans. In the new arrangement, the Government of Canada provides the necessary funding to students and a service provider has a contract to administer the loans.

Reporting Entity

The entity detailed in this report is the Canada Student Loans Program only and does not include departmental operations related to the delivery of the Canada Student Loan Program. Expenditures figures are primarily statutory in nature, made under the authority of the Canada Student Loans Act and the Canada Student Financial Assistance Act.

Basis of Accounting

The financial figures are prepared in accordance with generally accepted accounting principles and as reflected in the Public Sector Accounting Handbook of the Canadian Institute of Chartered Accountants.

Specific Accounting Policies

Revenues

Two sources of revenue are reported: interest revenue on Direct Loans and recoveries on Guaranteed and Put Back Loans. Government accounting practices require that recoveries from both sources be credited to the Government's Consolidated Revenue Fund. They do not appear along with the expenditures in the Canada Student Loan Program accounts, but are reported separately in the financial statements of Human Resources and Skills Development Canada (HRSDC) and the government.

  • Interest Revenue on Direct Loans –Borrowers are required to pay simple interest on their student loans once they leave full-time studies. At the time they leave school, students have the option of selecting a variable (prime + 2.5 percent) or fixed (prime + 5 percent) interest rate. The figures represent the interest accrued on the outstanding balance of the government-owned Direct Loans. Borrowers continue to pay the interest accruing on the guaranteed and risk-shared loans directly to the private lender holding these loans.
  • Recoveries on Guaranteed Loans –The government reimburses the private lenders for any loans issued prior to August 1, 1995 that go into default (i.e., lenders claim any amount of principal and interest not repaid in full). The figures represent the recovery of principal and interest on these defaulted loans.
  • Recoveries on Put-back Loans –Under the risk-shared agreements, the government will purchase from the participating financial institutions any loans issued between August 1, 1995 to July 31, 2000 that are in default of payments for at least 12 months after the period of study, that in aggregate, do not exceed 3 percent of the average monthly balance of the lender's outstanding student loans in repayments. The amount paid is set at 5 percent of the value of the loans in question. The figures represent the recovery of principal and interest on these loans.

Canada Student Grants and Programs

Beginning in August 1, 2009 Canada Study Grants and Canada Access Grants have been replaced by the new consolidated Canada Student Grant Program (CSGP). The new Canada Student Grant Program provides up-front grants to students from low and middle income families. The new Canada Student Grant Program is simple, transparent, predictable and broad-based, providing certainty and predictability for Canadian families.

Implementation of the new Canada Student Grant Program coincides with the sunsetting of the Canadian Millennium Scholarship Foundation in 2010 and consolidates the patchwork of federal student grants into a comprehensive program.

The new Canada Student Grant Program provides students from low and middle-income families with a grant equal to $250 and $100 per month, respectively. Students with permanent disabilities are eligible for a grant of $2,000 per year and up to $8,000 per year for those with exceptional education-related costs associated with their disability. Full-time students from low income families with children are eligible for a grant of $200 per month for each child under the age of 12. Students receiving the Canada Millennium Scholarship Foundation general bursaries in 2008-2009 will receive transitional grants until they complete or withdraw from their current program of study. Current Canada Millennium Scholarship Foundation general bursary recipients who are eligible for the new low and middle-income grants will have the difference between the amount of the Canada Millennium Scholarship Foundation general bursary and the amount of the new grant made up with a transition grant.

Collection Costs

These amounts represent the cost of using private collection agencies to collect defaulted Canada Student Loans. The loans being collected include: risk-shared and guaranteed loans that have gone into default and for which the government has bought back from the private lender; and Direct Loans issued after July 31, 2000, that are returned to HRSDC by the third party service provider as having defaulted. As of August 1, 2005, the Canada Revenue Agency Non Tax Collections Directorate undertook the responsibility for the administration of the collection activities of the guaranteed, risk-shared and direct student loans. Starting in September 2009, Canada Revenue Agency had stopped using the services of private collection agencies and is providing the collection activities in house. This means that for 2010-11 and future years, there will no longer be collection costs.

Program Delivery Costs

Canada Student Loans Program uses a third party service provider to administer borrower authentication, loan origination, in-study loan management, post-studies repayment activities and debt management. This item represents the cost associated with these contracted services.

Risk Premium

Risk premium represents part of the remuneration offered to lending institutions participating in the risk-shared program from August 1, 1995 to July 31, 2000. The risk premium represents 5 percent of the value of loans being consolidated which is calculated and paid at the time students leave studies and go into repayment. In return, the lenders assume the risk associated with non-repayment of these loans.

Put-Back

Subject to the provisions of the contracts with lending institutions, the government will purchase from a lender the risk-shared student loans that are in default of payment for at least 12 months and that, in aggregate, do not exceed 3 percent of the average monthly balance of the lender's outstanding student loans in repayments. The amount paid is set at 5 percent of the value of the loans in question. The figures also include any refund made to participating financial institutions on the recoveries.

Administrative Fees to Provinces and Territories

Pursuant to the Canada Student Financial Assistance Act (CSFA Act), the government has entered into arrangements with nine provinces and one territory to facilitate the administration of the Canada Student Loans Program. They administer the application and needs assessment activities associated with federal student financial assistance and in return they are paid an administrative fee.

In-Study Interest Borrowing Expense

The capital needed to issue the Direct Loans is raised through the Department of Finance's general financing activities. The cost of borrowing this capital is recorded in the Department of Finance's overall financing operations. The figures represent the cost attributed to the Canada Student Loans Program in support of Direct Loans while students are considered in study status.

In-Repayment Interest Borrowing Expense

The capital needed to issue the Direct Loans is raised through the Department of Finance's general financing activities. The cost of borrowing this capital is recorded in the Department of Finance's overall financing operations. The figures represent the cost attributed to the Canada Student Loans Program in support of Direct Loans while students are in repayment of their Canada Student Loans.

In-Study Interest Subsidy

A central feature of federal student assistance is that student borrowers are not required to pay the interest on their student loans as long as they are in full-time study and, in the case of loans negotiated prior to August 1, 1993, for six months after the completion of studies. Under the guaranteed and risk-shared agreements the government pays the interest to the lending institutions on behalf of the student. Full time student Reservists who interrupt their studies for a deployment on designated operations will not be charged interest or have to start paying back their student loan while away from studies. Under the guaranteed and risk-shared programs, the government pays the interest to the lending institutions on behalf of the student.

Repayment Assistance Programs

  • Repayment Assistance Plan – provides comprehensive repayment support to qualified borrowers by assessing the borrower's ability to pay based on their income, family size, and debt load. The Repayment Assistance Plan (RAP) is comprised of two stages which provide both temporary and long term help as needed. The first stage provides for assistance with interest payments and allows for the deferral of principal; the second stage provides for the gradual write-down of the loan by supplementing both the principal and interest portions of the borrower's monthly payment as required. Borrowers with all types of federal loans are eligible to apply. The Repayment Assistance Plan is available since August 1st, 2009 and replaces the Interest Relief and Debt Reduction in Repayment benefits.
  • Repayment Assistance Plan for borrowers with a Permanent Disability – provides repayment support specifically targeted to borrowers with permanent disabilities similar to the Repayment Assistance Plan. Qualifying borrowers with permanent disabilities proceed immediately to the second stage gradual write-down of the loan. Under this plan, borrowers will not be required to make payments on their loan for more than ten years.
  • Interest Relief - assistance may be provided to cover loan interest and suspend payments on the principal of loans in repayment for up to 54 months for borrowers experiencing temporary difficulties repaying their loans. The shift from Guaranteed and Risk-Shared Loans to Direct Loans did not alter interest relief for loans in distress from the borrower's perspective; however, the method of recording associated costs changed. For loans issued prior to August 1, 2000, Canada Student Loans Program compensates lending institutions for lost interest equal to the accrued interest amount on loans under Interest Relief (IR). For loans issued after August 1, 2000, an interest relief expense is recorded to offset the accrued interest on direct loans.
  • Debt Reduction in Repayment - assists borrowers experiencing long-term difficulties repaying their loans. The Debt Reduction in Repayment is a federal repayment assistance program through which the Government of Canada reduces a qualifying borrower's outstanding Canada Student Loans principal to an affordable amount after Interest Relief has been exhausted and only after 5 years have passed since the borrower ceased to be a student. The maximum amount of Debt Reduction in Repayment assistance is $26,000, which is available to eligible borrowers in an initial deduction of up to $10,000, a second deduction of up to $10,000 and a final deduction of up to $6,000. For loans issued prior to August 1, 2000, the Canada Student Loans Program pays the lending institutions the amount of student debt principal reduced by the Government of Canada under Debt Reduction in Repayment. For loans issued after August 1, 2000, the Government of Canada ruduces a portion of the loan principal.

Claims Paid and Loans Forgiven

From the beginning of the program in 1964 until July 31, 1995, the government fully guaranteed all loans issued to students by private lenders. The government reimburses private lenders for any of these loans that go into default (i.e., subject to specific criteria, lenders may claim any amount of principal and interest not repaid in full, after which the Canada Revenue Agency's (CRA) Collection Services will attempt to recover these amounts). Footnote 3 The risk-shared arrangements also permitted loans issued from August 1, 1995 to July 31, 2000 to be guaranteed under specific circumstances. This item represents the costs associated with loan guarantees.

Pursuant to the Canada Student Loans Act and the Canada Student Financial Assistance Act, the Government incurs the full amount of the unpaid principal plus accrued interest in the event of the death of the borrower or, if the borrower becomes severely permanently disabled and will never be able to repay their student loans…

Bad Debt Expense

Under Direct Loans, the government owns the loans issued to students and must record them as assets. As a result, generally accepted accounting principles require a provision be made for potential future losses associated with these loans. The provision must be made in the year the loans are issued, even though the losses may occur many years later. The figures represent the annual adjustment to the provisions for Bad Debt and Debt Reduction in Repayment on Direct Loans. In future years, the figure will be adjusted to take into consideration the Repayment Assistance Plan that was implemented on August l 2009.

Alternative Payments to Non-participating Provinces and Territories

Provinces and territories may choose not to participate in the Canada Student Loans Program. These provinces and territories receive an alternative payment to assist in the cost of delivering a similar student financial assistance program.

Commitments

Starting March 17, 2008, the Canada Student Loan Program entered into a new agreement with one single Service Provider.

Consolidated Canada Student Loans Programs
Combined Programs
(millions of dollars) ActualReference f is located after the table Forecast Planned SpendingReference e is located after the table
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
Revenue
Interest Revenue on Direct Loans 537.1 472.8 379.4 434.6 519.1 567.7
Recoveries On guaranteed Loans 46.6 38.5 20.0 18.5 14.5 12.6
Recoveries On Put-Back Loans 13.5 13.1 10.1 7.7 6.5 5.2
Total Revenue 597.2 524.4 409.5 460.8 540.1 585.5
Expenses
Transfer Payments
Canada Student Grants Programs 161.5 143.2 512.5 557.2 557.2 567.3
Total Transfer Payments Expenses 161.5 143.2 512.5 557.2 557.2 567.3
Loan Administration
Collection CostsReference a is located after the table 14.4 8.5 1.8 0.0 0.0 0.0
Program Delivery Costs 70.8 76.0 66.8 63.4 60.8 60.0
Risk Premium 1.3 0.7 0.3 0.5 0.3 0.3
Put-Back 3.8 3.8 3.2 3.1 2.5 2.0
Administrative Fees to Provinces and Territories and SIF 13.7 14.7 19.6 25.5 25.5 25.3
Total Loan Administration Expenses 104.0 103.7 91.7 92.5 89.1 87.6
Cost of Government Support Benefits Provided to Students
In-Study Interest Borrowing Expense (Class A)Reference b is located after the table  196.4 166.9 158.4 168.0 204.0 215.2
In Repayment Interest Borrowing Expense (Class B)Reference b is located after the table  173.6 160.7 143.0 188.4 240.2 265.4
In-Study Interest Subsidy (Class A) 8.0 4.0 1.1 0.8 0.5 0.4
Repayment Assistance Programs 107.5 93.2 89.6 96.3 95.4 96.4
Claims Paid & Loans Forgiven 17.0 23.2 25.9 21.9 22.1 22.3
Bad Debt ExpenseReference c is located after the table 
Debt Reduction in Repayment Expense 12.4 53.2 19.6 20.0 19.9 19.8
Bad Debt Expense 293.5 293.6 328.1 342.4 349.6 354.1
Total Cost of Government Support Expenses 808.4 794.8 765.7 837.8 931.7 973.6
Total Expenses 1,073.9 1,041.7 1,369.9 1,487.5 1,578.0 1,628.6
Net Operating Results 476.7 517.3 960.4 1,026.7 1,037.9 1,043.1
Alternative Payments to Non-Participating Province and TerritoriesReference d is located after the table  113.9 111.0 218.8 244.0 252.6 258.2
Final Operating Results 590.6 628.3 1,179.2 1,270.7 1,290.5 1,301.3
  • Reference a) from the above table These costs are related to Canada Student Loans Program but are now reported by Canada Revenue Agency.
  • Reference b) from the above table These costs are related to Canada Student Direct Loans but reported by the Department of Finance.
  • Reference c) from the above table This represents the annual expense adjustment to the Provisions for Bad Debt and Debt Reduction in Repayment as required under Accrual Accounting. These amounts exclude adjustments for the new measures under the Repayment Assistance Program. They will be included in future reports following consultation with the Office of the Chief Actuary.
  • Reference d) from the above table The figures represent the annual expense recorded under the Accrual Accounting as opposed to the actual amount disbursed to the Non-Participating Province and Territories. The actual cash expense for Alternative Payments to Non-Participating Provinces and Territories for 2008-2009 was $ 127.2 M.
  • Reference e) from the above table 2009-2010 and ongoing planned spending years include CSLP related amounts stemming from the Budget 2008 announcement.
  • Reference f) from the above table Actuals for 2007-2008 for Interest revenue on Direct Loans, In-Study Interest Borrowing Expense (Class A), In-Repayment Interest Borrowing Expense (Class B) and Bad Debt Expense have been adjusted following a revision of financial data.

3.5 Legislative Mandate

On February 6, 2006, pursuant to an Order in Council (OIC) made under the Public Service Rearrangement and Transfer of Duties Act, the Department of Social Development and the Department of Human Resources and Skills Development were amalgamated and combined under the Minister of Human Resources and Skills Development. The OIC also transferred to the Minister of Human Resources and Skills Development all the powers, duties and functions of the Minister of Social Development under any Act of Parliament. The OIC also provided that the Minister of Human Resources and Skills Development was to be styled "Minister of Human Resources and Social Development". Under the Federal Identity Program, Treasury Board subsequently approved the name "Human Resources and Social Development Canada" as the applied title to reflect the consolidation of the two Departments.

The Minister's style and the applied title of the consolidated departments were both discontinued in 2008 and the Minister now goes by the legal title "Minister of Human Resources and Skills Development" and the amalgamated departments are referred to as "Human Resources and Skills Development Canada".

Until new legislation is passed repealing the Department of Human Resources and Skills Development Act and the Department of Social Development Act formalizing the creation of a new, consolidated department, the provisions of those two statutes continue to apply as the source of specific authorities relating to her mandate in the areas of human resources and skills development and social development as well as the source of the mandate of the Minister of Labour and the Canada Employment Insurance Commission.

The Department of Human Resources and Skills Development Act defines the powers, duties and functions of the Minister of Human Resources and Skills Development, the Minister of Labour, and of the Canada Employment Insurance Commission. The legislative mandate of Human Resources and Skills Development is to improve the standard of living and quality of life of all Canadians by promoting a highly skilled and mobile labour force and an efficient and inclusive labour market. The Minister has overall responsibility for the Employment Insurance system, while the administration of the Employment Insurance Act is the responsibility of the Canada Employment Insurance Commission. The Department of Human Resources and Skills Development Act provides for the appointment of a Minister of Labour who is responsible for the Canada Labour Code and the Employment Equity Act, as well as other legislation on wages, working conditions and worker's compensation for work related injuries. The Act also sets out the mandate of the Minister of Labour to promote safe, healthy, fair, stable, cooperative and productive workplaces. The Minister of Labour is also responsible for the Canada Industrial Relations Board, the Canadian Centre for Occupational Health and Safety, and the Canadian Artists and Producers Professional Relations Tribunal.

The Department of Social Development Act defines the powers, duties and functions of the Minister of Social Development who is now, as mentioned above, the Minister of Human Resources and Skills Development. As noted, these powers, duties and functions were transferred by the OIC to the Minister of Human Resources and Skills Development and are now exercised by that Minister as well. The mandate of the Minister as it relates to social development is to promote social well-being and security. The Minister is responsible for the administration of the Canada Pension Plan, the Old Age Security Act, and the National Council of Welfare, and the Universal Child Care Benefit Act. The Minister is also responsible for the administration of the Canada Disability Savings Act.

A Secretary of State for seniors was appointed on January 4, 2007 to ensure that senior's issues are adequately addressed.

Service Canada is an initiative that remains within Human Resources and Skills Development Canada and that operates within the legal framework of the current departmental legislation (the Department of Human Resources and Skills Development Act and the Department of Social Development Act). Its mandate is to work in collaboration with federal departments, other levels of government and community service providers to bring services and benefits together in a single service delivery network.

The Minister of Human Resources and Skills Development is also the designated Minister for purposes of the National Housing Act and the Canada Mortgage and Housing Corporation Act. These two statutes are administered by the Canada Mortgage and Housing Corporation.The complete list of acts and regulations governing Human Resources and Skills Development can be found at: Info Source website

3.6 Website References

HRSDC
HRSDC website

Labour
HRSDC Labour website

Service Canada
Service Canada website

Footer

Date Modified:
2012-04-16