SUPREME COURT OF CANADA

Citation: Confédération des syndicats nationaux v. Canada (Attorney General), [2008] 3 S.C.R. 511, 2008 SCC 68

Date: 20081211

Docket: 31809, 31810

Between:

Confédération des syndicats nationaux

Appellant

and

Attorney General of Canada

Respondent

‑ and ‑

Attorney General of Quebec, Attorney General of

New Brunswick and Canadian Labour Congress

Interveners

and between:

Syndicat national des employés de l’aluminium

d’Arvida Inc., Jean‑Marc Crevier and Marie Langevin

Appellants

and

Attorney General of Canada

Respondent

‑ and ‑

Attorney General of Quebec, Attorney General of

New Brunswick and Canadian Labour Congress

Interveners

Official English Translation

Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella and Rothstein JJ.

Reasons for Judgment:

(paras. 1 to 96)

LeBel J. (McLachlin C.J. and Binnie, Deschamps, Fish, Abella and Rothstein JJ. concurring)

Confédération des syndicats nationaux v. Canada (Attorney General), [2008] 3 S.C.R. 511, 2008 SCC 68

Confédération des syndicats nationaux Appellant

v.

Attorney General of Canada Respondent

and

Attorney General of Quebec, Attorney General of

New Brunswick and Canadian Labour Congress Interveners

• and -

Syndicat national des employés de l’aluminium

d’Arvida inc., Jean‑Marc Crevier and Marie Langevin Appellants

v.

Attorney General of Canada Respondent

and

Attorney General of Quebec, Attorney General of

New Brunswick and Canadian Labour Congress Interveners

Indexed as: Confédération des syndicats nationaux v. Canada (Attorney General)

Neutral citation: 2008 SCC 68.

File Nos.: 31809, 31810.

2008: May 13; 2008: December 11.

Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella and Rothstein JJ.

on appeal from the court of appeal for quebec

Constitutional law — Division of powers — Unemployment insurance — Series of active measures designed to maintain tie between insured persons and labour market — Whether provisions of federal employment insurance legislation relating to employment service, to training and work‑sharing programs and to employment benefits are valid — Constitution Act, 1867, s. 91(2A) — Employment Insurance Act, S.C. 1996, c. 23, ss. 24, 25, 56 to 65.2, 73, 75, 77, 109(c), 135(2).

Constitutional law — Taxation — Delegation of taxing authority — Principle of parliamentary control over collection of taxes — Employment insurance surpluses accumulated in Consolidated Revenue Fund — Power to set premium rates delegated without legislated criteria — Whether employment insurance premiums constitute administrative charge or tax — If they constitute tax, whether they were collected in accordance with principle of parliamentary control and pursuant to valid delegation — Constitution Act, 1867, ss. 53, 91(3) — Employment Insurance Act, S.C. 1996, c. 23, ss. 66 to 66.3, 72.

In 1996, the Employment Insurance Act established the legal framework for a significant restructuring of the unemployment insurance system. In addition to the usual active measures against unemployment, such as an employment service and training and work‑sharing programs (ss. 60, 25 and 24), five types of employment benefits were introduced in this legislation (s. 59): wage subsidies, earnings supplements, self‑employment assistance, job creation partnerships and skills loans or grants.

Two events related to the financing of the system laid the groundwork for the new legislation: in 1986, on the recommendation of the Auditor General of Canada, the Employment Insurance Account was consolidated with government revenues as a whole and, in 1990, the government stopped financing the Account out of its general revenues, relying on premiums at an annual rate based, at that time, on the cost over only a few previous years. In the 1996 legislation, Parliament revised the financing of the Account in order to balance the program’s budget over the long term. Section 66 set out guidelines for a system under which premiums were to be set high enough to cover the system’s current expenditures and ensure the gradual accumulation of a reserve so that rates could be stabilized regardless of the constraints of business cycles. In the space of six or seven years, the deficits were absorbed and surpluses totalling more than $40 billion were accumulated. In 2001, Parliament enacted s. 66.1, which, departing from s. 66, authorized the Governor General in Council to set premium rates directly for 2002 and 2003. For 2004, Parliament set the premium rate in the Act itself. For 2005, it went back, by enacting s. 66.3, to having the Governor General in Council set the rates.

The appellants brought declaratory actions to challenge the constitutional validity of the “active” measures, the premium‑setting mechanisms, the accumulation of surpluses and the allocation of those surpluses to overall federal expenditures. The Quebec Superior Court and Court of Appeal rejected their arguments.

Held: The appeals should be allowed in part. The versions of ss. 66.1 and 66.3 of the Employment Insurance Act in force in 2001, 2002 and 2005 were unconstitutional. Employers’ and employees’ premiums for those years were collected unlawfully. This declaration is suspended for a period of 12 months from the date of this judgment.

The impugned active measures are valid. The programs provided for in the Employment Insurance Act reflect changes in the economy and the labour market and are part of the “natural evolution” of the unemployment insurance power conferred on the Parliament of Canada. That power must be interpreted generously. Its objectives are not only to remedy the poverty caused by unemployment, but also to maintain the ties between unemployed persons and the labour market. Thus, regulating unemployment insurance does not mean simply taking passive responsibility for paying benefits to Canadian workers during periods when they are not working. It also means taking on a more active role designed to maintain or restore ties between persons who may become or are unemployed and the labour market. Job placement and training programs are initiatives that fell within Parliament’s legislative jurisdiction from the outset. These programs, together with work‑sharing programs, retain a close enough connection with the system’s basic objectives and form to a sufficient extent an integral part of the system. Furthermore, the labour market has changed, and the way the federal power under s. 91(2A) of the Constitution Act, 1867 is exercised can reflect this. Employment benefits programs illustrate this change, as they are designed to reinforce ties with the labour market or to prepare workers to re‑enter it. For example, job creation partnerships are designed to alleviate some of the consequences of weak labour markets in disadvantaged regions and thus reduce unemployment. Earnings supplements also directly affect ties with the labour market: they temporarily increase the income of workers who would otherwise be more hesitant to accept jobs for less pay. Self‑employment assistance fosters the establishment of businesses and helps insured participants re‑enter the labour market. Wage subsidies paid to employers specifically facilitate entry into the labour market by disadvantaged persons who wish to improve their productivity or gain work experience, and they help establish or maintain the employability of workers who might otherwise be condemned to not working. Skills loans and grants enable insured participants to acquire advanced knowledge, and their purpose is to make it easier for such people to obtain employment. [31] [39] [42‑49]

As long as s. 66 of the Act applied, the existence of criteria for the setting of employment insurance premium rates ensured the application of a principle of allocation of and stability in the amounts being levied, and this justifies characterizing those amounts, from a constitutional standpoint, as a regulatory charge despite the existence of large surpluses. Because the federal government made a firm policy decision to put an end to deficits in employment insurance, stabilize fluctuating premium rates and strengthen the system by building up an adequate reserve, the 1996 legislation made the Employment Insurance Commission responsible for setting premium rates each year in accordance with the objectives set out in s. 66: ensuring that there would be enough revenue over a business cycle to pay the amounts charged to the Account, and maintaining relatively stable rate levels throughout the business cycle. During the period in question, from 1996 to 2001, the contributions collected were paid into the Consolidated Revenue Fund, the monies were used like any other part of the revenues in the Consolidated Revenue Fund, and the appropriate accounts were kept; the amounts needed for the system to function were credited or charged to the Employment Insurance Account. The government’s use of them does not, therefore, constitute a misappropriation of employment insurance monies. [59] [66] [73‑74]

When a new rate‑setting mechanism was adopted for 2002, 2003 and 2005, the framework under s. 66 ceased to apply. The Act no longer included criteria to guide the setting of rates, which was now within the discretion of the Governor General in Council. Employment insurance premiums continued to be a part of government revenues, whereas, as a result of the disappearance of the relationship between that levy and the regulatory scheme, premiums were at the same time transformed into a payroll tax. But s. 53 of the Constitution Act, 1867 reflects the ancient, but fundamental, principle of our democratic system that there should be no taxation without representation. Only Parliament may impose a tax ab initio. The delegation of taxing authority is constitutional if the legislation provides expressly and unambiguously for the delegation. The versions of ss. 66.1 and 66.3 that applied in 2002, 2003 and 2005 did not state that Parliament was delegating taxing authority. The delegation they did provide for concerned a charge that had become a levy for general purposes, but it was not specified in the Act that Parliament intended to delegate its taxing authority as such. [60] [70] [75] [82] [87] [92‑93]

Cases Cited

Applied: Reference re Employment Insurance Act (Can.), ss. 22 and 23, [2005] 2 S.C.R. 669, 2005 SCC 56; Eurig Estate (Re), 1998 801 (SCC), [1998] 2 S.C.R. 565; referred to: Attorney‑General for Canada v. Attorney‑General for Ontario, 1937 363 (UK JCPC), [1937] A.C. 355, aff’g Reference re The Employment and Social Insurance Act, 1936 30 (SCC), [1936] S.C.R. 427; Canadian Western Bank v. Alberta, [2007] 2 S.C.R. 3, 2007 SCC 22; Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146, 2002 SCC 31; YMHA Jewish Community Centre of Winnipeg Inc. v. Brown, 1989 53 (SCC), [1989] 1 S.C.R. 1532; Westbank First Nation v. British Columbia Hydro and Power Authority, 1999 655 (SCC), [1999] 3 S.C.R. 134; 620 Connaught Ltd. v. Canada (Attorney General), [2008] 1 S.C.R. 131, 2008 SCC 7; Reference re Agricultural Products Marketing Act, 1978 10 (SCC), [1978] 2 S.C.R. 1198; Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, 1930 91 (SCC), [1931] S.C.R. 357; Ontario English Catholic Teachers’ Assn. v. Ontario (Attorney General), [2001] 1 S.C.R. 470, 2001 SCC 15.

Statutes and Regulations Cited

Act to amend the Employment Insurance Act and the Employment Insurance (Fishing) Regulations, S.C. 2001, c. 5, s. 9.

Budget Implementation Act, 1994, S.C. 1994, c. 18, s. 26.

Budget Implementation Act, 2003, S.C. 2003, c. 15, s. 21.

Budget Implementation Act, 2004, S.C. 2004, c. 22, s. 25.

Constitution Act, 1867, ss. 53, 91(2A), (3).

Employment and Immigration Reorganization Act, S.C. 1977, c. 54.

Employment and Social Insurance Act, S.C. 1935, c. 38.

Employment Insurance Act, S.C. 1996, c. 23, ss. 22(1), 23(1), 24, 25, 56 to 65.2, 66 to 66.3, 71, 72, 73, 75, 77, 109(c), 135(2), Schedule II, s. 12.

Unemployment Insurance Act, S.C. 1955, c. 50, s. 37.

Unemployment Insurance Act, 1940, S.C. 1940, c. 44, ss. 17, 31, First Schedule, Part II, Second Schedule.

Unemployment Insurance Act, 1971, S.C. 1970‑71‑72, c. 48, s. 39, 62, 63.

Authors Cited

Brun, Henri, Guy Tremblay et Eugénie Brouillet. Droit constitutionnel, 5^e éd. Cowansville, Qué.: Yvon Blais, 2008.

Canada. House of Commons. House of Commons Debates, vol. 136, 2nd Sess., 36th Parl., November 1, 1999.

Canada. House of Commons. House of Commons Debates, vol. 137, 1st Sess., 37th Parl., March 2, 2001.

Hogg, Peter W. Constitutional Law of Canada, 5th ed. Supp., vol. 1. Scarborough, Ont.: Thomson/Carswell, 2007 (updated 2007, release 2).

Issalys, Pierre, et Denis Lemieux. L’action gouvernementale: Précis de droit des institutions administratives, 2^e éd. rev. et augm. Cowansville, Qué.: Yvon Blais, 2002.

Magnet, Joseph Eliot. Constitutional Law of Canada, vol. 1, Federalism / Aboriginal Peoples, 9th ed. Edmonton: Juriliber, 2007.

APPEALS from judgments of the Quebec Court of Appeal (Robert C.J.Q. and Gendreau and Brossard JJ.A.), [2006] R.J.Q. 2672, SOQUIJ AZ-50398096, SOQUIJ AZ‑50398097, [2006] Q.J. No. 12562 (QL), [2006] Q.J. No. 12563 (QL), 2006 CarswellQue 14211, 2006 QCCA 1453, 2006 QCCA 1454, affirming a decision of Gascon J., /fr/qc/qccs/doc/2003/2003canlii841/2003canlii841.html, [2003] R.J.Q. 3188, SOQUIJ AZ‑50206024, [2003] Q.J. No. 15801, 2003 CarswellQue 2667. Appeals allowed in part.

Guy Martin and Jean‑Guy Ouellet, for the appellant Confédération des syndicats nationaux.

Gilles Grenier, Claude Leblanc and Bernard Philion, for the appellants Syndicat national des employés de l’aluminium d’Arvida inc., Jean‑Marc Crevier and Marie Langevin.

James Mabbutt, René LeBlanc, Carole Bureau and Linda Mercier, for the respondent.

Alain Gingras, for the intervener the Attorney General of Quebec.

Gaétan Migneault, for the intervener the Attorney General of New Brunswick.

Steven Barrett and Colleen Bauman, for the intervener the Canadian Labour Congress.

English version of the judgment of the Court delivered by

LeBel J. —

I. Introduction

[1] In these appeals, a set of issues related to Canada’s employment insurance system are once again before this Court. The debate, which was originally political in nature and will no doubt always be partly political, has moved into the judicial realm. The appellants Confédération des syndicats nationaux (“CSN”) and Syndicat national des employés de l’aluminium d’Arvida inc. (“Syndicat”) are contesting important aspects of the federal employment insurance system in separate declaratory actions. They are, first of all, challenging the constitutional validity of a series of “active” measures that are intended to fight unemployment and not simply to compensate unemployed persons. In the appellants’ opinion, those measures do not fall within the legislative authority over unemployment insurance conferred on the Parliament of Canada by s. 91(2A) of the Constitution Act, 1867. The appellants are also contesting the method adopted to finance employment insurance, the accumulation of large surpluses in the Employment Insurance Account and the use of those surpluses by the federal government. For the reasons that follow, I conclude that the active measures adopted by Parliament fall within its legislative authority. In addition, it is my opinion that the system adopted to finance employment insurance has remained consistent with constitutional norms, except in 2002, 2003 and 2005. But the premium‑setting mechanism used during those years was inconsistent with the constitutional principles that govern the creation of regulatory charges and the imposition of taxes by Parliament. I would therefore allow the appeals in part.

II. Origin of the Case

[2] This case arose out of efforts by the federal government to stabilize the national system of unemployment insurance or, as it is now called in the legislation, “employment insurance” and to adapt it better to the constraints inherent in changing business cycles. Various reforms were adopted over a period of several years that led to, among other things, the accumulation of large surpluses, political debates over the legitimacy and appropriateness of the surpluses and, finally, court challenges. To fully understand the nature and scope of these challenges, it will be necessary to summarize recent developments in the employment insurance system.

[3] The federal employment insurance system dates back to a constitutional amendment passed in 1940. Various changes were made to the system over time, and after 1980 it began to run a deficit. The federal government had to replenish the system’s account from time to time, which increased the federal deficit. In 1986, the government incorporated the account into the Consolidated Revenue Fund on the recommendation of the Auditor General of Canada. This account subsequently became known as the “Employment Insurance Account” (“Account”). In 1990, the government stopped covering the deficits in the Account. Successive federal governments then tried to restore financial stability to the employment insurance system and to rethink some of its methods and objectives.

[4] In 1996, the Employment Insurance Act, S.C. 1996, c. 23, established the legal framework for a significant restructuring of the system of unemployment insurance, which has been known since then as employment insurance. The legislation tightened eligibility requirements for unemployment benefits and included measures of a more interventionist nature that were designed to maintain or improve the ability of workers to enter the labour market. At the same time, the Parliament of Canada reviewed the financing of the Account. It established a system under which premiums were to be set high enough to cover the system’s current expenditures and ensure the gradual accumulation of a reserve so that raises in premiums would be unnecessary during periods of economic slowdown and higher unemployment. During the years that followed, Parliament changed the premium‑setting mechanisms frequently. These reforms led to the emergence and the sometimes rapid growth of surpluses in the Account. The surpluses apparently reached or exceeded $40 billion. Over the same period, employment insurance premiums were paid into the Consolidated Revenue Fund pursuant to the policy adopted in 1986.

[5] The emergence of surpluses in the Account has given rise to extensive political debate that falls outside the jurisdiction of the courts. We must consider the appellants’ two court challenges, which were heard and decided together. I will therefore now review the nature and purpose of the appellants’ actions.

[6] The appellants brought separate declaratory actions to challenge what they saw as an abuse of the federal unemployment insurance power; they argued that the limits of that power had been exceeded. In their opinion, s. 91(2A) of the Constitution Act, 1867 gives the Parliament of Canada the power to establish a scheme to provide compensation to employees during periods of unemployment, but that scheme cannot include active measures to promote employment and is to be financed in accordance with the principle of mutuality. The premiums collected from employees and employers for the operation of the system cannot exceed what is needed to pay current expenditures and establish a reasonable reserve for the system’s activities. Allocating premiums and the surpluses generated by the collection of premiums to other purposes, such as the elimination of the federal budget deficit, violates the Constitution. The appellants also argued that the premium‑setting mechanism is unconstitutional. If that mechanism were justified as an exercise of the federal taxation power, it was implemented in a manner that violated s. 53 of the Constitution Act, 1867. On the basis of these arguments, which for the most part were common to the two proceedings, the Syndicat requested a finding that several provisions of the Employment Insurance Act are invalid and a declaration that the surpluses in the Account belong to the system’s contributors, namely employers and employees. The CSN sought similar conclusions.

[7] In substance, the primary purpose of the actions was to quash the “active” measures established in the Employment Insurance Act, namely the employment service and employment benefits. The appellants also contested the premium‑setting mechanism, the federal government’s use of premiums and the allocation of the Account’s surpluses. The respondent, the Attorney General of Canada, argued that all the “active” measures challenged by the appellants, the allocation of surpluses in the Account and the premium‑setting mechanisms are valid. The two declaratory actions were joined for hearing. Both the Superior Court and the Quebec Court of Appeal heard them together.

III. Judicial History

A. Superior Court ([2003 841 (QC CS)](/fr/qc/qccs/doc/2003/2003canlii841/2003canlii841.html), [2003] R.J.Q. 3188)

[8] Gascon J. dismissed the appellants’ actions in their entirety. He began by finding that the employment service and the active measures, that is, employment benefits and training and work‑sharing programs, fall within the federal unemployment insurance power. Then, in the second part of his decision, he rejected the plaintiffs’ arguments about the setting of premiums and the Employment Insurance Account’s surpluses. In his opinion, the premium‑setting mechanisms are constitutional. Premiums are a regulatory charge tied to the administration and implementation of the employment insurance system. If they were to be regarded as taxes, imposing them constituted a valid exercise of Parliament’s taxation power. Moreover, according to Gascon J., the challenge to the premium rates themselves raised an administrative law issue that fell within the jurisdiction of another court. He added that the plaintiffs had at any rate abandoned this branch of their actions. Finally, the Superior Court held that the federal government had not appropriated the Account’s surpluses. The federal government’s financial statements continued to show a debt owed by the Consolidated Revenue Fund to the Account. In conclusion, Gascon J. refused to assess the political wisdom of the measures and methods that had led to the accumulation of surpluses in the Account.

B. Quebec Court of Appeal ([2006] R.J.Q. 2672, 2006 QCCA 1453, [2006 QCCA 1454](https://www.canlii.org/en/qc/qcca/doc/2006/2006qcca1454/2006qcca1454.html))

[9] The Quebec Court of Appeal unanimously dismissed the appellants’ appeals, thus confirming the constitutionality of all the measures and provisions at issue. However, its reasoning differed in some respects from that of the Superior Court. Its decision comprises two sets of reasons. Robert C.J.Q. wrote the reasons on the constitutional challenge to the “active” measures and dealt with the issue whether those measures fell within Parliament’s legislative jurisdiction. Gendreau and Brossard JJ.A. dealt in joint reasons with the setting of premiums and the issue of surplus allocation.

[10] Robert C.J.Q. carefully and thoroughly reviewed the statutory provisions and programs at issue to determine whether they are constitutional. He first concluded that the employment service, the work‑sharing program and the training measures are perfectly consistent with an approach designed to reduce the risk of unemployment. They therefore fall within the federal unemployment insurance power.

[11] According to Robert C.J.Q., employment benefits programs are more problematic. This category of benefits includes five different programs established under s. 59 of the Employment Insurance Act: wage subsidies paid to employers as a springboard to possible regular employment (s. 59(a)), earnings supplements for employees interested in low‑paid jobs (s. 59(b)), self‑employment assistance to encourage the creation of small businesses (s. 59(c)), job creation partnerships involving businesses and community organizations in areas with high unemployment rates (s. 59(d)), and skills loans or grants for workers seeking to obtain advanced skills (s. 59(e)).

[12] Robert C.J.Q. found on the basis of the principles laid down by the Supreme Court of Canada in Reference re Employment Insurance Act (Can.), ss. 22 and 23, [2005] 2 S.C.R. 669, 2005 SCC 56 (“Reference”), that some of these programs do not fall within Parliament’s jurisdiction over the public employment insurance system. He placed the programs in two categories: income replacement benefits and initiative promotion. According to Robert C.J.Q., the first category includes wage subsidies, earnings supplements and job creation partnerships. In his view, these programs are consistent with the purpose of insurance and meet the tests established in the Reference. They therefore fall within the federal unemployment insurance power.

[13] However, Robert C.J.Q. did not clearly decide whether the initiative promotion programs, namely self‑employment assistance and skills loans or grants, fall within the federal unemployment insurance power. Instead, he concluded that they had been validly adopted pursuant to the federal spending power. He also noted that these programs are not intended to regulate matters within provincial jurisdiction and that the Parliament of Canada had expressly made them subject to provincial consent.

[14] In their joint reasons, Gendreau and Brossard JJ.A. rejected the appellants’ arguments that the mechanisms for financing employment insurance and the appropriation of the Account’s surpluses are unconstitutional. With regard to the premium‑setting mechanism, they found that the distinction between regulatory charges and taxes is of little relevance in this case. Ultimately, the system for setting premiums resulted from a valid exercise of the federal taxation power. Moreover, according to Gendreau and Brossard JJ.A., the accumulation of surpluses in the Account is not problematic from a constitutional standpoint. All amounts collected by the federal government had to be paid into the Consolidated Revenue Fund. The way those amounts were recorded did not affect the claim that the Account continued to have against the Consolidated Revenue Fund.

[15] After their case was dismissed by the Quebec Court of Appeal, the appellants appealed to this Court. Their appeals raise the same issues as in the courts below.

IV. Analysis

A. General Nature of the Issues

[16] In this Court, the appellants first challenge the constitutional validity of the active measures incorporated into the Employment Insurance Act to address unemployment. This branch of the appeals concerns the interpretation of s. 91(2A) of the Constitution Act, 1867 and thus the scope of Parliament’s unemployment insurance power. A second branch focuses on the constitutionality of the system adopted to finance employment insurance, the accumulation of surpluses through the collection of premiums from employers and employees, and the allocation of those surpluses to purposes other than compensating unemployed persons.

[17] Before turning to the parties’ arguments, I note that the Chief Justice of this Court stated the following constitutional questions in an order dated October 17, 2007:

1. Do ss. 66 to 66.3 and 72 of the Employment Insurance Act, S.C. 1996, c. 23, exceed, in whole, in part or through their combined effect, the unemployment insurance power provided for in s. 91(2A) of the Constitution Act, 1867?

2. If the answer to question 1 is affirmative, do ss. 66 to 66.3 and 72 of the Employment Insurance Act, S.C. 1996, c. 23, exceed, in whole, in part or through their combined effect, the taxation power provided for in s. 91(3) of the Constitution Act, 1867?

3. If the answer to question 2 is negative, do ss. 66 to 66.3 and 72 of the Employment Insurance Act, S.C. 1996, c. 23, satisfy the requirements of s. 53 of the Constitution Act, 1867?

4. Do ss. 24, 25, 56 to 65.2, 73, 75, 77, 109(c) and 135(2) of the Employment Insurance Act, S.C. 1996, c. 23, exceed, in whole, in part or through their combined effect, the unemployment insurance power provided for in s. 91(2A) of the Constitution Act, 1867?

5. If the answer to question 4 is affirmative, are ss. 24, 25, 56 to 65.2, 73, 75, 77, 109(c) and 135(2) of the Employment Insurance Act, S.C. 1996, c. 23, validly based on the federal spending power?

[18] The principal statutory provisions mentioned in these questions are appended to these reasons. I will return to them in the course of my analysis.

B. Issues Related to Parliament’s Unemployment Insurance Power

[19] In this branch of their appeals, the appellants challenge the constitutional validity of the “active” measures to address unemployment. They argue, first of all, that an employment service (s. 60) should not even exist. They also object to the existence of work‑sharing programs (s. 24) and benefits associated with participation in training activities. The appellants also contend that the employment benefits programs and support measures established under ss. 57 and 59 are unconstitutional, and thus ultra vires Parliament. In substance, according to the appellants, the power conferred on Parliament by the Constitution is limited to paying compensation during periods of unemployment, and Parliament may not exercise it to take action to prevent or limit unemployment; nor may Parliament exercise the federal spending power to intervene in matters under provincial legislative jurisdiction. On this last point concerning the spending power, the Attorney General of Quebec supports the appellants’ position.

[20] The Attorney General of Canada disagrees with all the appellants’ arguments, submitting that they are inconsistent with the judicial decisions in which the principles for interpreting the federal legislative power in this area were defined. In those decisions, he contends, and in the Reference in particular, Parliament’s power was held to be broad and flexible, even where measures to prevent unemployment are concerned. In the respondent’s view, the spending power need not therefore be considered.

C. Issues Related to the Financing of the Employment Insurance System and to the System’s Surpluses

[21] A second branch of the appeals concerns a set of issues related to the financing of the employment insurance system and the allocation of the surpluses accumulated since 1996 through the collection of premiums from employers and employees. According to the appellants, the statutory provisions applied since 1996 to set premium rates exceed the federal unemployment insurance power, as Parliament’s authority to require the payment of premiums is limited to the amounts needed for the system to function properly and for reasonable reserves to be accumulated. In their view, the provisions in question — ss. 66, 66.1 and 66.3 — contravene this fundamental principle. Moreover, the appellants contend that the premium‑setting mechanisms no longer have any connection with the regulatory framework of the employment insurance system and that they represent an unlawful exercise of the federal taxing power because the procedure followed is not consistent with the principle of parliamentary control over taxation provided for in s. 53 of the Constitution Act, 1867. Finally, the appellants argue that the accumulation of surpluses and the allocation of those surpluses to overall federal expenditures, including public debt reduction, are contrary to the principles that determine the constitutional framework for collecting and using employment insurance premiums.

[22] According to the respondent, the setting and use of premiums have remained consistent with constitutional requirements. First, the statutory provisions in question are consistent with the principle that there must be a sufficient connection with the regulatory scheme for employment insurance. If not, the federal taxation power was validly exercised pursuant to a clear and sufficiently complete delegation of authority by Parliament. Finally, the respondent contends that the premiums were used and accounted for in accordance with the rules governing the Consolidated Revenue Fund and that the rights of contributors were not violated.

D. Parliament’s Unemployment Insurance Power

[23] In their arguments, the appellants and the Attorney General of Canada display conflicting visions of the scope of Parliament’s unemployment insurance power. The appellants take the position that this power is essentially limited to the payment of benefits during periods of unemployment and the collection of money to pay those benefits. They stress that a close relationship must be maintained between the premiums imposed on employers and employees and the system those premiums are used to finance. According to the respondent’s interpretation, the Parliament of Canada may adopt active measures to prevent unemployment or alleviate its consequences.

[24] In light of this fundamental disagreement, it will be necessary to consider the origin of the federal unemployment insurance power, its nature, how it should be interpreted and the constitutional principles governing it. These questions were recently considered by my colleague Deschamps J. in the Reference. Her analysis remains valid and must guide the application of s. 91(2A) in the appeals now before the Court.

[25] The current employment insurance system originated in the economic and social problems caused by the Depression in the 1930s. In 1937, the Privy Council affirmed a decision of the Supreme Court of Canada that a first federal unemployment insurance statute, the Employment and Social Insurance Act, S.C. 1935, c. 38, was invalid (Attorney‑General for Canada v. Attorney‑General for Ontario, 1937 363 (UK JCPC), [1937] A.C. 355 (P.C.), aff’g Reference re The Employment and Social Insurance Act, 1936 30 (SCC), [1936] S.C.R. 427). The Privy Council held that the legislation affected property and civil rights in the provinces — employer‑employee relations in particular — and was therefore ultra vires the Parliament of Canada, at pp. 365 and 367.

[26] Following that setback, the federal government entered into negotiations with the provinces. The discussions led to an agreement on a constitutional amendment that resulted in s. 91(2A). As Deschamps J. noted, that amendment conferred a new legislative power on Parliament that had been detached from the provinces’ general jurisdiction over property and civil rights:

This means that when the Constitution was amended, a portion of the jurisdiction over property and civil rights was detached so that the aspects relating to unemployment insurance could be assigned to Parliament.

(Reference, at para. 37)

[27] Deschamps J. then resolved a first issue: whether this new federal jurisdiction was immutable. One argument that had been made in the Reference was that the content of the jurisdiction corresponded to the content of the Unemployment Insurance Act, 1940, S.C. 1940, c. 44, First Schedule, Part II (“1940 Act”). According to this argument, the 1940 Act essentially restated the provisions of the 1935 legislation that the Privy Council had held to be invalid and that the government had sought to revive through the constitutional amendment. The parameters of the application of s. 91(2A) therefore had to be found in that Act. The Court rejected this argument and concluded that the 1940 Act was merely one way of exercising the new power and did not determine its content:

The question is therefore not the way in which Parliament initially exercised its jurisdiction, but the scope of its jurisdiction over unemployment insurance.

(Reference, at para. 39)

[28] To determine the content of the power transferred to Parliament, this Court considered the circumstances of the transfer and its objectives. Relying in particular on the correspondence between the federal government and the provinces that led up to the constitutional amendment, the Court noted that the purpose of the 1940 Act had been not only to remedy the destitution caused by unemployment, but also to put an end to unemployment by creating return‑to‑work mechanisms, including a national employment service (Reference, at para. 42). Deschamps J. defined the purpose of the transfer of jurisdiction as follows:

In essence, the purpose of the transfer of jurisdiction was to equip Canada with the tools it needed to mitigate the effects of anticipated unemployment by providing certain classes of unemployed persons with benefits and by setting up job search centres. The transfer of jurisdiction was to be a tool for internal organization involving both short‑term relief measures, namely benefits, and medium‑term measures, namely job placement services for the unemployed.

(Reference, at para. 43)

[29] This is the context in which s. 91(2A) became part of the Canadian Constitution. This provision must nonetheless be interpreted in the same way as other provisions relating to the division of powers between Parliament and the provincial legislatures. It is necessary to identify the essential elements of the power and determine whether the adopted measures are “consistent with the natural evolution of that power” (Reference, at para. 44).

[30] In this analysis of the content of legislative powers, changes in the way such powers are exercised and in the interplay of the powers assigned to the two levels of government often raise difficult problems. The solutions that must be applied when exercising powers change where new problems must be addressed. However, the evolution of society cannot serve as a pretext for changing the nature of the division of powers, which is a fundamental component of the Canadian federal system. The power in question must be interpreted generously, but in a manner consistent with its legal context, having regard to relevant historical elements (Reference, at paras. 45‑46; H. Brun, G. Tremblay and E. Brouillet, Droit constitutionnel (5th ed. 2008), at pp. 201‑2).

[31] Thus, according to this Court’s decision in the Reference, the federal unemployment insurance power must be interpreted generously. Its objectives are to remedy the poverty caused by unemployment and maintain the ties between unemployed persons and the labour market. On this basis, the Court identified four characteristics of unemployment insurance plans under s. 91(2A):

With these principles and objectives in mind, four characteristics that are essential to a public unemployment insurance plan can be identified:

(1) It is a public insurance program based on the concept of social risk

(2) the purpose of which is to preserve workers’ economic security and ensure their re‑entry into the labour market

(3) by paying temporary income replacement benefits

(4) in the event of an interruption of employment.

(Reference, at para. 48)

[32] To determine whether the impugned measures fall within the power, the constitutional doctrines governing the division of powers must also be applied. The interplay between legislative powers often becomes complex. A given problem may have various aspects that can relate to different powers assigned to the two levels of government (Canadian Western Bank v. Alberta, [2007] 2 S.C.R. 3, 2007 SCC 22, at paras. 23‑24; Reference, at para. 8).

[33] The first step is to identify the pith and substance of the legislation in question (Canadian Western Bank, at para. 25; Kitkatla Band v. British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146, 2002 SCC 31). To do this, two facets of the legislation must be examined: its purpose and its legal effect. This analysis requires that the true purpose of the legislation be ascertained (Canadian Western Bank, at para. 27; Reference, at para. 8).

[34] Therefore, it must now be determined whether the measures challenged by the appellants that relate to the employment service, to training and to employment are intra vires Parliament. The analysis on this point will focus on the dual purpose of the powers conferred on Parliament: to alleviate the economic consequences of unemployment and to maintain ties with the labour market.

E. Impugned Legislative Measures

[35] The legislative measures at issue in these appeals were introduced at a time when the federal unemployment insurance system was undergoing changes. Those changes related to the financing of the system, which I will discuss below, and to the nature of the programs it comprises. They are reflected in the very title of the legislation, which is now called the “Employment Insurance Act”. The new title demonstrates Parliament’s commitment to ensuring employment and employability in addition to providing compensation for the loss of income resulting from unemployment. The concept is no longer referred to as unemployment insurance, as it was in 1940 when the constitutional amendment was passed, but as employment insurance.

[36] The employment service program has, in one form or another, been part of the system since the beginning. And the appellants concede that measures involving participation in training programs date back to the origins of the employment insurance system. Thus, s. 31 of the 1940 Act provided that an unemployed person taking an approved training program was still considered available for work and therefore eligible for benefits. Section 39 of the Unemployment Insurance Act, 1971, S.C. 1970‑71‑72, c. 48, also provided for the extension of benefit periods where a claimant was enrolled in a training program. Work‑sharing and job creation programs first appeared in 1977 in the Employment and Immigration Reorganization Act, S.C. 1977, c. 54.

[37] According to the CSN, premiums were not used to finance these additional measures at the time. Rather, the measures were financed through contributions by the Government of Canada to the Account (A.F., at para. 146). The CSN notes that these programs have been financed through the employment insurance system itself since 1990.

[38] As I mentioned above, five types of employment benefits were introduced in the 1996 legislation (Employment Insurance Act, s. 59): wage subsidies, earnings supplements, self‑employment assistance, job creation partnerships and skills loans or grants. These benefits are financed through the employment insurance system and are thus paid for by contributors. They are paid under a large number of programs — 39 according to the CSN (A.F., at para. 153).

F. Constitutional Validity of the Legislative Measures

[39] Whether all the legislative measures challenged by the appellants are valid depends on the understanding one has of the federal unemployment insurance power. As I noted above, the appellants, in the position they take, overlook one of the basic reasons why the employment insurance system was created: to maintain ties with the labour market. As this Court stated in the Reference, this objective was part of the system from the very beginning. As a result, where some of the impugned measures are concerned, there is no need to invoke the federal spending power to find that they are valid. They retain a close enough connection with the system’s basic objectives and form to a sufficient extent an integral part of the system.

[40] The Superior Court and the Court of Appeal discussed the content of the benefits in question but did not need to consider in detail all the programs governing the payment of such benefits. By virtue of s. 58 of the Employment Insurance Act, the benefits are paid to “insured participant[s]”. Section 58 identifies two classes of unemployed persons who, as insured participants, are eligible for such benefits. The first consists of unemployed persons who have received unemployment benefits during the previous 36 months. The second consists of unemployed persons for whom a benefit period has been established in the previous 60 months and who have during that period received special benefits in respect of a pregnancy or of parental leave, have withdrawn from active participation in the labour force to care for their new‑born children or children placed with them for the purpose of adoption, and want to re‑enter the labour force:

58. (1) In this Part, “insured participant” means an insured person who requests assistance under employment benefits and, when requesting the assistance, is an unemployed person

(a) for whom a benefit period is established or whose benefit period has ended within the previous 36 months; or

(b) for whom a benefit period has been established in the previous 60 months and who

(i) was paid special benefits under section 22 or 23 during the benefit period,

(ii) subsequently withdrew from active participation in the labour force to care for one or more of their new‑born children or one or more children placed with them for the purpose of adoption, and

(iii) is seeking to re‑enter the labour force.

[41] Insured participants are thus eligible even if they have not been claimants. However, they must have been insured persons — that is, they must have held insurable employment — and must have been eligible to receive benefits during the prior period provided for in s. 58. They thus have a connection with the system. Robert C.J.Q. correctly noted that [translation] “[e]mployment benefits are not temporary income replacement benefits, [but] constitute a new type of employment incentive” (para. 75). The government thus seeks to directly invest greater amounts in improving the employability of unemployed workers (para. 76). Robert C.J.Q. then explained the nature of these employment benefits:

[translation] The direct investment in question involves five measures provided for in section 59 of the Employment Insurance Act.

The first of these measures is the wage subsidy. A claimant may request that a wage subsidy be granted to an employer who will provide the claimant with a job that will lead to long‑term employment or to employment with another employer. This measure is designed more specifically for people facing employment disadvantages who need time to become fully productive or who need work experience. Occasionally, this measure may enable employers to create a job that would otherwise not exist.

The second type of employment benefit is the earnings supplement. The purpose of such supplements is to increase, for temporary periods, the incomes of people who would otherwise find it difficult to accept jobs that pay less than their previous jobs. Earnings supplements offer claimants an opportunity to leave employment insurance for work before their income benefits expire.

Self‑employment assistance is the third type of employment benefit. This program helps insured participants start businesses and helps them acquire, from service providers, the skills they need to make their proposed businesses viable. This assistance takes several forms, including consulting services and help in preparing a business plan. Insured participants continue to receive benefits while establishing their businesses.

The fourth measure, the job‑creation partnership, is designed to create jobs that are sustainable in local economies where there is high unemployment and jobs are scarce. Partnerships may be entered into with the private sector, the provinces, local communities and community organizations in order to provide jobs compatible with provincial and local community plans and priorities for economic development. Such partnerships seem similar to the old job creation measures.

The fifth and final measure is a system of skills loans and grants. This type of financing enables an insured participant to attend an institution to develop needed job skills. In an explanatory document, Human Resources Development Canada stated that, since labour market training is a provincial responsibility, these benefits will be offered in any province only with the agreement of the provincial government. [paras. 77‑82]

[42] Before discussing these benefits, I should mention that job placement was one of the objectives behind the creation of employment insurance. And obtaining additional training is sometimes tied to the receipt of benefits. As well, work sharing limits the impact of unemployment and fosters entry into the labour market. These initiatives fall within Parliament’s legislative jurisdiction. Regulating unemployment insurance does not mean simply taking passive responsibility for paying benefits to Canadian workers during periods when they are not working. It also means taking on a more active role designed to maintain or restore ties between persons who may become or are unemployed and the labour market. This federal power does not, of course, authorize Parliament to create parallel education systems despite the connections between work and training and many other aspects of life in society. It may not be interpreted in the abstract without regard for the federal constitutional context. It must be exercised in a manner consistent with the general framework of the division of powers. This being said, the power may legitimately be exercised to its full extent, having regard to the context, including the problems created by changes in the labour market and the increase in structural unemployment. The labour market has changed since 1940, and the way the federal power under s. 91(2A) is exercised can reflect this. However, the exercise of the federal power does not negate the provincial powers over education and labour market training, which relate to other aspects of these problems in the labour market.

[43] Employment benefits programs illustrate this change. They are new initiatives, but they remain related to the objective of maintaining ties with the labour market. All these measures are designed to reinforce ties with the labour market or to prepare workers to re‑enter it.

[44] For example, job creation partnerships are designed to alleviate some of the consequences of weak labour markets in economically disadvantaged regions by strengthening the labour markets in those regions and thus reducing unemployment.

[45] Earnings supplements also directly affect ties with the labour market. They temporarily increase the income of workers who would otherwise be more hesitant to accept jobs for less pay. This measure helps speed up an actual return to the labour market before benefit periods expire.

[46] Self‑employment assistance is also consistent with the goal of maintaining ties with the labour market. Such benefits, which are paid under a variety of programs, enable the recipient to prepare for and consolidate a return to work. Thus, the payment of benefits fosters the establishment of businesses and in so doing helps insured participants re‑enter the labour market.

[47] Wage subsidies paid to employers have the same objective. They specifically facilitate entry into the labour market by disadvantaged persons who wish to improve their productivity or gain work experience. In this regard, YMHA Jewish Community Centre of Winnipeg Inc. v. Brown, 1989 53 (SCC), [1989] 1 S.C.R. 1532, does not provide a definitive answer to the question whether such benefits are valid. In that case, this Court did not have to explore the federal unemployment insurance power in its entirety. The general framework for the power was subsequently clarified in the Reference, in which the Court stressed the relevance and importance of the objective of maintaining ties with the labour market. From this standpoint, wage subsidies form to a sufficient extent an integral part of the employment insurance system as a whole. They help establish or maintain the employability of workers who might otherwise be condemned to not working.

[48] Skills loans and grants enable insured participants to acquire advanced knowledge, and their purpose is to make it easier for such people to obtain employment. Participation in training programs was part of the employment insurance system from the outset. This measure is quite simply targeted differently, as it applies to a pool of insured participants that includes more than just the system’s regular claimants. But this does not mean that it does not fall within federal jurisdiction. Furthermore, this jurisdiction is exercised in a way that does not encroach on the provincial jurisdiction over education, since pursuant to s. 61(2) of the Employment Insurance Act, assistance may not be provided under the programs associated with these benefits without the agreement of the provinces.

[49] The evolution of the legislation on employment insurance has reflected changes in the economy and the labour market. It is part of the “natural evolution” of the power conferred on the Parliament of Canada. The legislation thus remains consistent with the rules governing the division of powers between the two levels of government. This means that I need not consider the federal government’s spending power and its application to the measures I have already discussed. However, this conclusion is not determinative of the appeals. It will also be necessary to consider the second branch of the appeals, which relates to the financing of the system, the surpluses generated by the reforms to the system and the allocation of the surpluses.

G. Scope of the Appellants’ Constitutional Challenge

[50] The second branch of the appeals relates to the financing of the employment insurance system since the Employment Insurance Act was passed in 1996. At issue in this branch are, inter alia, the existence and use of the surpluses generated by the financing mechanism adopted in 1996 or, in the stronger terms used by the appellants, the appropriation or misappropriation of those surpluses by the federal government.

[51] The appellants’ arguments raise questions about the nature of a tax in the context of the taxation power of the Parliament of Canada, and about the distinction between a tax and a regulatory charge or levy. The constitutional challenge relates primarily to the validity of ss. 66 to 66.3 and 72 of the Employment Insurance Act as enacted by Parliament since 1996.

[52] It is therefore important to define the true purpose of the constitutional challenge. There is nothing unconstitutional about financing the system by requiring employers and employees to pay premiums. This has been the mechanism favoured by Parliament since the employment insurance system was established in 1940, as Gascon J. noted in the Superior Court (para. 202). However, there is no reason why Parliament could not have financed the system differently by means of its general taxing power under s. 91(3) of the Constitution Act, 1867. The new legislative power conferred on Parliament in 1940 fell within a constitutional framework that did not limit Parliament’s legislative jurisdiction with regard to federal government activities. Parliament could have decided to finance the new system out of the taxes collected by the federal government. Indeed, this was the source of funding used to absorb deficits in the employment insurance system for several years.

[53] In my opinion, it must be determined whether the chosen financing mechanism was valid either as a regulatory charge or as a tax imposed pursuant to the general taxing power under s. 91(3). Finally, the creation of surpluses in the system, the use of those surpluses and what will eventually happen to them must be considered.

H. Changes in the Financing Scheme

[54] The changes in the mechanisms used to finance employment insurance were part of a package of reforms to the system. Parliament had reviewed the nature of the benefits being paid and the eligibility requirements for benefits. As I mentioned above, Parliament also wanted to change the focus of the system somewhat by fostering a deeper commitment to maintaining the tie between employees and the labour market.

[55] Originally, s. 17 of the 1940 Act provided that contribution rates were to be based on the rates set out in the Second Schedule to that Act. In 1955, the Unemployment Insurance Act contained a table of fixed rates of contribution (S.C. 1955, c. 50, s. 37). A different mechanism was adopted in the 1971 legislation, as the Unemployment Insurance Commission was made responsible for setting premium rates with the agreement of the federal Cabinet (s. 62). Section 63 of that Act required that premium rates be sufficient to raise an amount equal to the adjusted basic cost of benefit. That basic cost was derived from the cost over the designated three consecutive previous years, which was adjusted as necessary to account for an accumulated surplus or deficit. This mechanism was employed until 1996, except during a few years when the premium rate was set in the Act itself (Gascon J., at para. 207).

[56] According to Gascon J., the financing mechanism used from 1971 on was unsatisfactory. Economic recessions led to increases in benefit payments, which resulted in greater unemployment insurance deficits. As a result, the Commission had to raise premium rates to replenish the Unemployment Insurance Account at times when the economic situation would instead have called for a reduction in contributions (Gascon J., at paras. 208‑9).

[57] The enactment of s. 66 of the Employment Insurance Act in 1996 was intended to correct this situation. The new Act established a system that its originators thought would be more adaptable to changes in and the constraints of business cycles. The government intended to avoid the distortions that had arisen in the former system based on a yearly assessment of results over the designated three previous years.

[58] Before the new mechanism began to be employed, Parliament set the premium rate for 1995 and 1996 at three percent of insurable earnings (Budget Implementation Act, 1994, S.C. 1994, c. 18, s. 26). That rate was maintained for 1996 pursuant to a transitional provision of the Employment Insurance Act (Schedule II, s. 12).

[59] The new premium‑setting system became applicable in 1997. At that time, the Act instructed the Employment Insurance Commission to try to maintain relatively stable premium rates throughout a business cycle while at the same time building up an adequate reserve. The Act made the Commission responsible for setting premium rates each year in accordance with these objectives, with the approval of the Governor General in Council on the recommendation of the Minister of Finance. For this purpose, s. 66 provided as follows:

The Commission shall, with the approval of the Governor in Council on the recommendation of the Minister and the Minister of Finance, set the premium rate for each year at a rate that the Commission considers will, to the extent possible,

(a) ensure that there will be enough revenue over a business cycle to pay the amounts authorized to be charged to the Employment Insurance Account; and

(b) maintain relatively stable rate levels throughout the business cycle.

[60] For 2002 and 2003, the system for setting premium rates changed once again. Because of problems caused by the growth of the employment insurance surpluses, Parliament made the Governor General in Council responsible for setting the applicable premium rate. The framework under s. 66 ceased to apply. The Act no longer included criteria to guide the setting of rates:

66.1 Notwithstanding section 66, the premium rate for each of the years 2002 and 2003 is the rate set for the year by the Governor in Council on the recommendation of the Minister and the Minister of Finance.

(An Act to amend the Employment Insurance Act and the Employment Insurance (Fishing) Regulations, S.C. 2001, c. 5, s. 9)

[61] For 2004, Parliament set the premium rate in the Act itself (Budget Implementation Act, 2003, S.C. 2003, c. 15, s. 21). For 2005, it went back to having the Governor General in Council set the rates by adding s. 66.3 to the Employment Insurance Act (Budget Implementation Act, 2004, S.C. 2004, c. 22, s. 25).

[62] Other amendments were made during the years that followed. I will not comment on them because they are not directly relevant to these proceedings.

I. Surpluses

[63] The statutory amendments relating to the premium‑setting mechanism gave rise to the problem of surpluses in the Account and also affected the speed at which that problem developed. The massive increase in those surpluses occurred over a period of just a few years. In the space of six or seven years, the deficits were absorbed and surpluses totalling more than $40 billion were accumulated. I will now look at the origin of the surpluses and the steps in their creation.

[64] To understand how the surplus problem developed, it will be helpful to revisit the origins of the system. When the system came into effect, an unemployment insurance fund was established. That fund was replaced with the Account in 1971. At that time, the government’s budget absorbed deficits in the Account that resulted from fluctuations in economic activity and in the amounts of benefits paid to unemployed persons. In 1986, on the recommendation of the Auditor General of Canada, the Account was consolidated with government revenues as a whole. In 1990, the government stopped financing the Account out of its general revenues.

[65] Throughout that period, premiums, which legally speaking were debts to the Crown, were paid into the Consolidated Revenue Fund and credited to the Account. The amounts needed to manage the system and to pay benefits and the cost of authorized programs were in turn paid out of the Consolidated Revenue Fund and charged to the Account.

[66] It is clear that around 1995, the government made a firm policy decision to put an end to deficits in employment insurance, stabilize fluctuating premium rates and strengthen the system by building up an adequate reserve. The legislative amendments summarized above gave effect to that decision. Their impact on the Account was quick, and striking. In 1996, the Account’s surpluses already totalled $5 or $6 billion. Even though premium rates were gradually reduced, the surpluses rose to approximately $20 billion in 1998. That amount corresponded to the maximum reserve recommended by Canada’s Chief Actuary (A.F. C.S.N., at p. 35, footnote 116). Starting in 2001, the growth of the surpluses, which then exceeded $40 billion, slowed down or even levelled off. When premium rates were set, the goal seemed to be to attain a relative balance between the system’s receipts and current expenditures.

J. Constitutionality of the Premium‑Setting Mechanism

[67] The appellants, supported on this point by one intervener, the Canadian Labour Congress, submit that no provision of the Constitution authorized the premium‑setting mechanisms that led to the accumulation of the surpluses in the Account and the use of those surpluses by the Government of Canada. They argue that the federal government misappropriated employment insurance monies. In short, the appellants submit that amounts collected as premiums were diverted from their intended purposes and allocated to the government’s current expenditures, to deficit reduction and to restoring a balance in public finances. According to them, these amounts were also used to finance employment and economic development programs that fell outside the federal unemployment insurance power, as opposed to paying compensation during actual periods of unemployment.

[68] I will not discuss this final argument at length, since I rejected it above. In my opinion, the disputed measures, and employment benefits in particular, fall within federal legislative jurisdiction. The expenditures associated with these measures could be financed through premiums. This being said, however, the issue of the allocation of contributions and surpluses to general government expenditures remains to be resolved.

[69] I reject from the outset a fact‑based submission made by the appellants: that the government in power during the period following the passage of the Employment Insurance Act planned to accumulate these surpluses and then to misappropriate them. There was extensive evidence on this point in the Superior Court, and the parties placed great stress on this in argument. However, neither the Superior Court nor the Court of Appeal accepted this submission, and no error in assessing the facts has been shown that would justify an intervention by this Court on this point.

[70] The problem of the surpluses in the Account appears instead to have developed in stages, but quickly. In the end, the enactment in 2001 of the transitional provisions that authorized the Governor General in Council to set premiums directly for 2002 and 2003 was a sign of a recognition that the surpluses were substantial, that they had played a role in restoring financial balance to the federal government’s activities and that a solution for the problems they created would be complex. The government considered these surpluses to be part of public revenues and did not agree with returning them to contributors. However, this is not the place to discuss the appropriateness of this policy approach. Rather, the issue is what the legal nature of premiums has been since the Employment Insurance Act came into force in 1996.

[71] The government could have financed the system through either premiums or taxes, as it had a choice between a special levy and general taxation (P. Issalys and D. Lemieux, L’action gouvernementale: Précis de droit des institutions administratives (2nd ed. 2002), at pp. 607‑9 and 617‑18). The Attorney General of Canada argues first that a premium is a regulatory charge, that is, a form of special levy connected with a government program. In the alternative, he submits that a premium can be considered a tax for the purposes of s. 91(3) of the Constitution Act, 1867 and that the premiums were imposed in accordance with the Constitution.

[72] This question of the validity of imposing regulatory charges has come before this Court on several occasions. In its decisions, the Court has accepted the use of regulatory charges to finance government programs and has developed tests for identifying such special levies. There are two steps in the identification process. First, the existence of a regulatory scheme must be established. According to the analytical approach adopted in Westbank First Nation v. British Columbia Hydro and Power Authority, 1999 655 (SCC), [1999] 3 S.C.R. 134, there must be (1) a complete and detailed code of regulation, (2) a regulatory purpose of influencing specific behaviour, (3) the existence of actual or properly estimated costs of the regulation and (4) a relationship between the regulation and the person who either benefits from it or made it necessary (para. 44). Rothstein J. recently reiterated these criteria in 620 Connaught Ltd. v. Canada (Attorney General), [2008] 1 S.C.R. 131, 2008 SCC 7, at paras. 25‑26, although he reminded us that the list is not exhaustive. Next, if the court finds that a regulatory scheme exists, it must determine whether there is a relationship between that scheme and the charge (Connaught, at para. 27). Revenue collection must be related to the regulation or must in itself have a regulatory purpose of influencing the behaviour of the persons concerned (Westbank, at para. 44). As the Court noted in Connaught, the accumulation of excessive surpluses may indicate that a levy is a tax and not a regulatory charge (para. 40). However, the test is flexible, and the characterization of a levy as a regulatory charge does not depend primarily on the absence or the amounts of surpluses (Connaught, at para. 40). It depends above all else on whether the collected amounts or a substantial part thereof are allocated to the regulated activity.

[73] Despite the existence of large surpluses, a sufficient connection was maintained between employment insurance premiums and the regulatory scheme as long as s. 66 of the Employment Insurance Act applied. Section 66 contained principles that governed the exercise of the premium‑setting power delegated to the Commission: connection with the business cycle, stabilization of premium rates and building up of reserves:

66. The Commission shall, with the approval of the Governor in Council on the recommendation of the Minister and the Minister of Finance, set the premium rate for each year at a rate that the Commission considers will, to the extent possible,

(a) ensure that there will be enough revenue over a business cycle to pay the amounts authorized to be charged to the Employment Insurance Account; and

(b) maintain relatively stable rate levels throughout the business cycle.

These principles served as the basis for a policy of allocation of and stability in the amounts being levied that justifies characterizing those amounts, from a constitutional standpoint, as a regulatory charge. I need not decide here whether the relevant tests for the exercise of the Employment Insurance Commission’s regulatory power were properly applied. That branch of the proceedings instead concerned administrative law principles. As a result, it is, as Gascon J. pointed out, highly unlikely that this was a matter for the Superior Court; Gascon J. also noted that that branch of the proceedings had been abandoned before him.

[74] During the period in question, from 1996 to 2001, the contributions collected were paid into the Consolidated Revenue Fund in accordance with the Act. The amounts needed for the system to function were credited or charged to the Account. However, it is clear that the Account does not constitute — as is the case of pension fund assets — a trust fund or patrimony by appropriation. It forms part of Canada’s government accounting, and premiums form part of the government’s revenues. The government’s use of it does not, therefore, constitute a misappropriation of employment insurance monies. Those monies were used like any other part of the revenues in the Consolidated Revenue Fund, and the appropriate accounts were kept.

[75] However, this conclusion does not resolve the issue of the legal effects of the situation resulting from the 2001 and 2004 amendments to the Employment Insurance Act, under which the power to set premium rates was delegated to the Governor General in Council but the legal framework for exercising the power was eliminated. In my opinion, those amendments had a significant effect on the validity of such levies in the circumstances in which they were adopted, that is, at a time when government representatives could not have helped but see that employment insurance revenues in fact greatly exceeded what the system required and that those revenues no longer had an actual connection with the system. This confirms that the relationship between the levy and the regulatory scheme had disappeared and that premiums had been transformed into a kind of payroll tax.

[76] In 1999, the Minister of Finance of the day firmly believed that premiums formed part of general government revenues (House of Commons Debates, vol. 136, 2nd Sess., 36th Parl., Oral Question Period, November 1, 1999). He reaffirmed this position in 2001 (vol. 137, 1st Sess., 37th Parl., Oral Question Period, March 2, 2001). In a report, the House of Commons Standing Committee on Finance recommended a mechanism for setting premium rates in the future, but it was not in favour of going back to what had been done in the past. All the evidence that can be drawn from parliamentary debates or documents confirms that the government and Parliament did not seem willing to reduce premium rates to such an extent as to establish a connection between them and benefits paid under the system. The 2001 legislation, which applied in 2002 and 2003, altered the legal status of premiums. As I mentioned above, the provision delegated a discretion to set premium rates to the Governor General in Council. That discretion does seem to have been exercised in such a way that the surpluses in the Account gradually stabilized. But this fact does not eliminate the legal issue raised by the 2001 and 2004 amendments.

[77] As a result of the approach taken by Parliament, premiums collected under this system can no longer be viewed as a regulatory charge. As I mentioned above, s. 66.1 was silent regarding the connection between premiums and benefits.

[78] Exactly the same wording was used for s. 66.3, which applied to 2005. Thus, the effect of ss. 66.1 and 66.3 was that s. 66 did not apply. As I mentioned above, s. 66 imposed rules that applied to the Commission’s exercise of its regulatory authority and to the preparation of opinions by the Minister and the Minister of Finance. It required the Commission to set a premium rate that might establish relatively stable rate levels while at the same time ensuring that enough revenue would be collected to pay all authorized expenditures of the employment insurance system. This resulted in a framework under which it was possible to maintain a connection between the employment insurance program and its expenditures and revenues. It also ensured that premiums continued to constitute a regulatory charge within the meaning of Westbank and Connaught. When Parliament departed from s. 66 by passing ss. 66.1 and 66.3 in 2001 and 2004, this legal situation was radically altered. Every legal connection between revenues and expenditures disappeared. The collection of premiums ceased to be tied to the system and to its requirements, contrary to the principle laid down in Westbank (para. 44). The legal connection between the premium‑setting system and the regulatory scheme ceased to exist.

[79] Thus, following those statutory amendments, premiums no longer constituted a regulatory charge within the meaning of Westbank and Connaught. Rather, they became a levy on payrolls and wages. They were transformed into a tax. If this is the case, the Attorney General of Canada argues, the tax was validly imposed pursuant to Parliament’s general taxation power under the Constitution Act, 1867.

[80] The scope of Parliament’s taxing power is well known. Parliament may tax by any means. However, if a levy is a tax, it must be imposed in accordance with the Constitution. Section 53 of the Constitution Act, 1867 therefore poses a problem.

K. Violation of Section 53

[81] The Constitution Act, 1867 provides that Parliament alone has the power to impose a tax and that the legislation must originate in the House of Commons:

53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

[82] This Court has confirmed that s. 53 reflects the ancient, but fundamental, principle of our democratic system that there should be no taxation without representation: Westbank, at para. 19, and Connaught, at para. 4. According to this principle, a tax can be imposed only by Parliament or a clearly authorized delegate of Parliament (J. E. Magnet, Constitutional Law of Canada (9th ed. 2007), vol. 1, Federalism / Aboriginal Peoples, at p. 626).

[83] In Reference re Agricultural Products Marketing Act, 1978 10 (SCC), [1978] 2 S.C.R. 1198, the majority of this Court held that levies to finance an agricultural products marketing scheme were not taxes, but regulatory charges. There was therefore no need to discuss the delegation of taxing authority. However, in an obiter dictum concerning the scope of s. 53, Pigeon J., writing for the majority, appeared to reduce that provision to a mere rule of internal parliamentary procedure:

It may be contended that, in authorizing a board or agency to impose and to use levies or charges, Parliament is indirectly doing what it may not do directly, namely, having a tax levied and appropriated otherwise than by means of a bill voted in the House of Commons on the recommendation of the Governor General. In my view this attack fails for two reasons. I agree with the Chief Justice that adjustment levies, as well as levies for expenses, are not taxes. Furthermore, ss. 53 and 54 are not entrenched provisions of the constitution, they are clearly within those parts which the Parliament of Canada is empowered to amend by s. 91(1). [pp. 1290‑91]

[84] This dictum has been criticized by Professor Hogg on the basis that s. 53 is a true constitutional rule. In his view, the fact that it can be amended by statute cannot justify violating it (P. W. Hogg, Constitutional Law of Canada (5th ed. Supp.), vol. 1, at p. 14‑6). In Eurig Estate (Re), 1998 801 (SCC), [1998] 2 S.C.R. 565, at para. 34, Major J. stated that “[s]ection 53 is a constitutional imperative” and that the Court is not bound by the dictum.

[85] In Eurig, following an analysis based on the principles laid down in Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, 1930 91 (SCC), [1931] S.C.R. 357, this Court held that amounts collected in respect of grants of letters probate constituted a tax rather than a regulatory fee (Eurig, at paras. 15 et seq.). Major J., writing for the majority of the Court, held as a matter of policy that, although the requirement that a tax result from the clearly expressed will of Parliament is absolute, this does not mean that Parliament may not delegate the power to establish “the details . . . of taxation” as well as its mechanism:

My interpretation of s. 53 does not prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutory delegates such as the Lieutenant Governor in Council. . . .

The basic purpose of s. 53 is to constitutionalize the principle that taxation powers cannot arise incidentally in delegated legislation. In so doing, it ensures parliamentary control over, and accountability for, taxation. [Emphasis added; paras. 30 and 32.]

[86] Finally, the most recent decision in which this Court considered the delegation of taxing authority under s. 53 is Ontario English Catholic Teachers’ Assn. v. Ontario (Attorney General), [2001] 1 S.C.R. 470, 2001 SCC 15. One of the issues in that case was whether provincial legislation authorizing the Minister of Finance to prescribe tax rates for school purposes was constitutional.

[87] Iacobucci J., writing for a unanimous Court, noted that the delegation of the imposition of a tax is constitutional if the legislation provides expressly and unambiguously for the delegation:

The delegation of the imposition of a tax is constitutional if express and unambiguous language is used in making the delegation. The animating principle is that only the legislature can impose a new tax ab initio. But if the legislature expressly and clearly authorizes the imposition of a tax by a delegated body or individual, then the requirements of the principle of “no taxation without representation” will be met. In such a situation, the delegated authority is not being used to impose a completely new tax, but only to impose a tax that has been approved by the legislature. [Emphasis added; para. 74.]

[88] According to Professor Hogg, it would be difficult to interpret Ontario English Catholic Teachers’ Assn. as relating to the delegation of control over the details and mechanism of taxation, since “that phrase was never referred to” (p. 14‑8). Yet, Iacobucci J. had quoted the relevant passage from Eurig (para. 71 of Ontario English Catholic Teachers’ Assn.). The position taken by the Court in Eurig therefore remains valid. According to it, the taxing authority of Parliament or of a legislature may not be delegated unless that body clearly and unambiguously expresses its intent to delegate the authority.

[89] In Eurig, the majority of the Court disagreed with the view of Gonthier and Bastarache JJ., dissenting, that taxing authority had been validly delegated, because the legislation did not clearly state that the Lieutenant Governor in Council had the power to “tax”:

[T]he probate levy is not enforceable as it was not authorized by s. 5 of the Administration of Justice Act. Section 5 reads:

5. The Lieutenant Governor in Council may make regulations,

(a) requiring the payment of fees for any thing required or authorized under any Act to be done by any person in the administration of justice and prescribing the amounts thereof;

(b) providing for the payment of fees and allowances by Ontario in connection with services under any Act for the administration of justice and prescribing the amounts thereof;

(c) requiring the payment of fees in respect of proceedings in any court and prescribing the amounts thereof.

While these provisions authorize the Lieutenant Governor in Council to impose fees, they do not constitute an express delegation of taxing authority. . . .

Bastarache J. [dissenting] states that the authorization extended to the Lieutenant Governor in Council in the Administration of Justice Act to prescribe fees “includes the power to implement a direct tax” (para. 60). With respect, this conclusion cannot be sustained. The distinction between these two forms of charges cannot be erased by simply interpreting the word “fees” to include taxes. This distinction is both legally and constitutionally significant to determining the validity of the enactment. . . . [T]he imposition of taxes is an act of unique political significance, subject to special rules and requirements, none of which the impugned scheme meets. Ontario Regulation 293/92 is both unconstitutional and ultra vires as it seeks to impose a tax without clear and unambiguous authorization from the legislature to do so. [Emphasis added; emphasis in original omitted; paras. 38 and 41.]

[90] In Ontario English Catholic Teachers’ Assn., the impugned provision of Ontario’s Education Act, R.S.O. 1990, c. E.2, read as follows:

257.12 (1) The Minister of Finance may make regulations,

(b) prescribing the tax rates for school purposes for the purposes of section 257.7;

[91] As well, the delegation in the statute of the setting of rates was part of a detailed statutory framework in which the “structure of the tax, the tax base, and the principles for its imposition” were set out (para. 75). Relying on the principles established in Eurig, Iacobucci J. concluded that this delegation was constitutional:

The EQIA meets this requirement, as s. 257.12(1)(b) of the new Education Act expressly authorizes the Minister of Finance to prescribe the tax rates for school purposes. When the Minister sets the applicable rates, a tax is not imposed ab initio, but is imposed pursuant to a specific legislative grant of authority. [Emphasis added; para. 75.]

[92] In short, in this case concerning employment insurance, only Parliament may impose a tax ab initio. According to this Court’s decisions, taxing authority must be delegated expressly and unambiguously. Once this requirement is met, the delegate may exercise the power to establish the details and mechanisms of taxation.

[93] The relevant provisions of the Employment Insurance Act must therefore be examined to determine whether, as in Ontario English Catholic Teachers’ Assn., they are consistent with the principles laid down in this Court’s decisions. The provisions in question, ss. 66.1 and 66.3, do not state that Parliament is delegating taxing authority to the Governor General in Council. The nature of the levy remains ambiguous. It is unclear whether Parliament still considered that it was exercising the authority to impose a regulatory charge in enacting those provisions. At the time Parliament delegated the power to collect employment insurance premiums to the Commission and the Governor General in Council, the legislation contained no statement either that its purpose was to collect a tax or that Parliament’s taxing authority was being delegated to the Governor General in Council. The delegation concerned a charge that was no longer a levy for specific purposes but had become a levy for general purposes with the meaning of Westbank, but it was not specified in the Act that Parliament intended to delegate its taxing authority as such. Parliament would have had to state that it was delegating that authority to the Governor General in Council. Owing to the ambiguous nature of the levy, whether Parliament intended to delegate its taxing authority remained uncertain.

[94] I accordingly conclude that the version of s. 66.1 of the Employment Insurance Act that applied in 2002 and 2003 is invalid. This means that employment insurance premiums were collected unlawfully, without the necessary legislative authorization. The same conclusion must be reached as regards the version of s. 66.3 that applied in 2005 and the premiums collected that year. In the circumstances of this case, which involves the improper exercise of a power conferred on Parliament, I would suspend the declaration of invalidity to allow the consequences of that invalidity to be rectified. I would dismiss the appellants’ other claims and affirm the judgments of the Court of Appeal and the Quebec Superior Court with respect to them.

V. Answers to the Constitutional Questions

[95] I therefore answer the constitutional questions as follows:

Question 1: No.

Question 2: No.

Question 3: No for the versions of ss. 66.1 and 66.3 of the Employment Insurance Act that applied in 2002, 2003 and 2005, but yes for the other provisions of the Act.

Question 4: No.

Question 5: It is not necessary to answer this question.

VI. Conclusion

[96] For these reasons, I would therefore allow the appeals in part and declare that the versions of ss. 66.1 and 66.3 of the Employment Insurance Act that applied in 2002, 2003 and 2005 are invalid and that employers’ and employees’ premiums for 2002, 2003 and 2005 were collected unlawfully. I would suspend the declaration for a period of 12 months from the date of this judgment. I would award costs to the appellants throughout.

APPENDIX

Constitution Act, 1867

53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

Employment Insurance Act, S.C. 1996, c. 23

22. (1) Notwithstanding section 18, but subject to this section, benefits are payable to a major attachment claimant who proves her pregnancy.

23. (1) Notwithstanding section 18, but subject to this section, benefits are payable to a major attachment claimant to care for one or more new‑born children of the claimant or one or more children placed with the claimant for the purpose of adoption under the laws governing adoption in the province in which the claimant resides.

24. (1) The Commission may, with the approval of the Governor in Council, make regulations providing for the payment of work‑sharing benefits to claimants who are qualified to receive benefits under this Act and are employed under a work‑sharing agreement that has been approved for the purposes of this section by special or general direction of the Commission, . . .

25. (1) For the purposes of this Part, a claimant is unemployed and capable of and available for work during a period when the claimant is

(a) attending a course or program of instruction or training at the claimant’s own expense, or under employment benefits or similar benefits that are the subject of an agreement under section 63, to which the Commission, or an authority that the Commission designates, has referred the claimant; or

(b) participating in any other employment activity

(i) for which assistance has been provided for the claimant under prescribed employment benefits or benefits that are the subject of an agreement under section 63 and are similar to the prescribed employment benefits, and

(ii) to which the Commission, or an authority that the Commission designates, has referred the claimant.

57. (1) Employment benefits and support measures under this Part shall be established in accordance with the following guidelines:

(a) harmonization with provincial employment initiatives to ensure that there is no unnecessary overlap or duplication;

(b) reduction of dependency on unemployment benefits by helping individuals obtain or keep employment;

(c) co‑operation and partnership with other governments, employers,community‑based organizations and other interested organizations;

(d) flexibility to allow significant decisions about implementation to be made at a local level;

(d.1) availability of assistance under the benefits and measures in either official language where there is significant demand for that assistance in that language;

(e) commitment by persons receiving assistance under the benefits and measures to

(i) achieving the goals of the assistance,

(ii) taking primary responsibility for identifying their employment needs and locating services necessary to allow them to meet those needs, and

(iii) if appropriate, sharing the cost of the assistance; and

(f) implementation of the benefits and measures within a framework for evaluating their success in assisting persons to obtain or keep employment.

(2) To give effect to the purpose and guidelines of this Part, the Commission shall work in concert with the government of each province in which employment benefits and support measures are to be implemented in designing the benefits and measures, determining how they are to be implemented and establishing the framework for evaluating their success.

(3) The Commission shall invite the government of each province to enter into agreements for the purposes of subsection (2) or any other agreements authorized by this Part.

58. (1) In this Part, “insured participant” means an insured person who requests assistance under employment benefits and, when requesting the assistance, is an unemployed person

(a) for whom a benefit period is established or whose benefit period has ended within the previous 36 months; or

(b) for whom a benefit period has been established in the previous 60 months and who

(i) was paid special benefits under section 22 or 23 during the benefit period,

(ii) subsequently withdrew from active participation in the labour force to care for one or more of their new‑born children or one or more children placed with them for the purpose of adoption, and

(iii) is seeking to re‑enter the labour force.

(2) For the purposes of subsection (1), “benefit period” includes a benefit period established under the Unemployment Insurance Act and “special benefits” includes benefits under sections 18 and 20 of that Act.

59. The Commission may establish employment benefits to enable insured participants to obtain employment, including benefits to

(a) encourage employers to hire them;

(b) encourage them to accept employment by offering incentives such as temporary earnings supplements;

(c) help them start businesses or become self‑employed;

(d) provide them with employment opportunities through which they can gain work experience to improve their long‑term employment prospects; and

(e) help them obtain skills for employment, ranging from basic to advanced skills.

60. (1) The Commission shall maintain a national employment service to provide information on employment opportunities across Canada to help workers find suitable employment and help employers find suitable workers.

(2) The Commission shall

(a) collect information concerning employment for workers and workers seeking employment and, to the extent the Commission considers necessary, make the information available with a view to assisting workers to obtain employment for which they are suited and assisting employers to obtain workers most suitable to their needs; and

(b) ensure that in referring a worker seeking employment there will be no discrimination on a prohibited ground of discrimination within the meaning of the Canadian Human Rights Act or because of political affiliation, but nothing in this paragraph prohibits the national employment service from giving effect to

(i) any limitation, specification or preference based on a bona fide occupational requirement, or

(ii) any special program, plan or arrangement mentioned in section 16 of the Canadian Human Rights Act.

(3) The Commission may, with the approval of the Governor in Council, make regulations for the purposes of subsections (1) and (2).

(4) In support of the national employment service, the Commission may establish support measures to support

(a) organizations that provide employment assistance services to unemployed persons;

(b) employers, employee or employer associations, community groups and communities in developing and implementing strategies for dealing with labour force adjustments and meeting human resource requirements; and

(c) research and innovative projects to identify better ways of helping persons prepare for, return to or keep employment and be productive participants in the labour force.

(5) Support measures established under paragraph (4)(b) shall not

(a) provide assistance for employed persons unless they are facing a loss of their employment; or

(b) provide direct federal government assistance for the provision of labour market training without the agreement of the government of the province in which the assistance is provided.

61. (1) For the purpose of implementing employment benefits and support measures, the Commission may, in accordance with terms and conditions approved by the Treasury Board, provide financial assistance in the form of

(a) grants or contributions;

(b) loans or loan guarantees;

(c) payments for any service provided at the request of the Commission; and

(d) vouchers to be exchanged for services and payments for the provision of the services.

(2) The Commission may not provide any financial assistance in a province in support of employment benefits mentioned in paragraph 59(e) without the agreement of the government of the province.

(3) Payments under paragraph (1)(c) include the following transitional payments, which may not be made under this section more than three years after it comes into force:

(a) payments to a public or private educational institution for providing a course or program of instruction or training at the request of the Commission under employment benefits authorized by paragraph 59(e); and

(b) payments to a province in respect of the course or program if it is provided by a public educational institution and there is an agreement between the government of the province and the Commission to remunerate the province for all or part of the cost of providing the course or program.

66. The Commission shall, with the approval of the Governor in Council on the recommendation of the Minister and the Minister of Finance, set the premium rate for each year at a rate that the Commission considers will, to the extent possible,

(a) ensure that there will be enough revenue over a business cycle to pay the amounts authorized to be charged to the Employment Insurance Account; and

(b) maintain relatively stable rate levels throughout the business cycle.

71. There shall be established in the accounts of Canada an account to be known as the Employment Insurance Account.

72. There shall be paid into the Consolidated Revenue Fund

(a) all amounts received under Parts I and III to IX, as or on account of premiums, fines, penalties, interest, repayment of overpaid benefits and benefit repayment;

(b) all amounts collected by the Commission for services rendered to other government departments or agencies or to the public; and

(c) all amounts received on account of principal or interest on loans made by the Commission under Part II or as repayment of overpayments made by the Commission under that Part.

73. There shall be credited to the Employment Insurance Account and charged to the Consolidated Revenue Fund

(a) an amount in each year equal to the amount receivable as or on account of premiums payable for that year under this Act;

(b) any other amounts provided out of the Consolidated Revenue Fund appropriated by Parliament for any purpose related to employment insurance and administered by the Commission; and

(c) an amount equal to all benefit repayments receivable under Part VII.

An Act to amend the Employment Insurance Act and the Employment Insurance (Fishing) Regulations, S.C. 2001, c. 5

9. The Act is amended by adding the following after section 66:

66.1 Notwithstanding section 66, the premium rate for each of the years 2002 and 2003 is the rate set for the year by the Governor in Council on the recommendation of the Minister and the Minister of Finance.

Budget Implementation Act, 2004, S.C. 2004, c. 22

25. The Employment Insurance Act is amended by adding the following after section 66.2:

66.3 Notwithstanding section 66, the premium rate for the year 2005 is the rate set for the year by the Governor in Council on the recommendation of the Minister and the Minister of Finance.

Appeals allowed in part with costs.

Solicitors for the appellant Confédération des syndicats nationaux: Pepin et Roy, Montréal.

Solicitors for the appellant Syndicat national des employés de l’aluminium d’Arvida inc., Jean‑Marc Crevier and Marie Langevin: Philion Leblanc Beaudry, Québec.

Solicitor for the respondent: Attorney General of Canada, Ottawa.

Solicitor for the intervener the Attorney General of Quebec: Attorney General of Quebec, Sainte‑Foy.

Solicitor for the intervener the Attorney General of New Brunswick: Attorney General of New Brunswick, Fredericton.

Solicitors for the intervener the Canadian Labour Congress: Sack Goldblatt Mitchell, Toronto.