Flaherty says EI funds aren’t fattening projected budget surplus
A Parliamentary Budget Office report said the Conservative government may need to depend on artificially high EI premiums
MARKHAM, Ont.—Federal finance Minister Jim Flaherty is denying a federal watchdog analysis that says he’s using high EI premiums to beef up his expected budget surplus in 2015.
“We do not take EI funds and use them to balance the budget,” Flaherty said during a media conference in Markham, Ont., where he was holding pre-budget consultations with academics, business and community leaders.
A Parliamentary Budget Office report said the Conservative government may need to depend on artificially high EI premiums, asset sales and spending restraint to balance the budget by the 2015 election.
Flaherty said that is simply not the case.
“That is a matter of some confusion by the new parliamentary officer,” Flaherty said.
The PBO estimated the EI fund will have a $1.8 billion surplus in 2015, which represents almost half the surplus the government anticipates for the 2015-16 fiscal year.
The PBO said EI premiums should normally start coming down in 2015 when the employment insurance fund flips to a surplus from a deficit.
A big chunk of the surplus hinges on extraordinary measures and keeping payroll taxes higher than they need to be, the report said.
Flaherty has said he intends to keep EI premiums frozen until 2016.
The finance minister also addressed the dominance of the Canada Mortgage and Housing Corp., saying that while he wouldn’t hesitate to implement more stringent rules on the agency again if they were needed.
“We’ve tightened the mortgage insurance rules four times in my time as finance minister, and if we had to do it again, we’d do it again,” he said.
Flaherty has been increasingly critical of the agency and recently questioned whether the federal government should be in the business of insuring higher-risk mortgages at all.
He highlighted the history of the CMHC, which was founded in 1946 to help WWII veterans buy homes during a housing shortage.
The International Monetary Fund suggested last month that the CMHC has grown into an organization that essentially encouraged activity in the housing market.
Tighter mortgage rules implemented earlier this year intended to discourage lending appear to have made a noticeable dent.
At the end of the third quarter, the total portfolio of insured mortgages dropped by $6 billion to $560 billion, which added distance from the legal maximum of $600 billion.