EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 9, 1996

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[English]

The Vice-Chair (Ms Whelan): Order.

Jim Peterson will be arriving shortly, but we're going to begin with the first witness, from the Canadian Federation of Labour, Mr. McCambly.

Maybe you'd like to introduce the person you have with you.

Mr. James McCambly (President, Canadian Federation of Labour): Patricia Parlulekar, my assistant, is with me this morning.

We're appearing here for the portion of the bill dealing with unemployment insurance and the matter of reduction of the maximum insurable earnings from $813 to $750 per week, and the resulting benefit payment of $413.

This piece of legislation may seem like a formality going through, but there are issues that the finance committee needs to consider that are extremely important and relevant. This is the only opportunity that we know of to bring them to your attention.

First, bear in mind that the reduction in this pay-out will result in a saving to the fund 100% of which will go into consolidated revenue.

There have been other major reductions in the unemployment insurance benefits, which have resulted in approximately 50%, or even less than 50%, of those unemployed being able to collect unemployment insurance. Of course everyone is well aware of the huge change that this has made in the pay-out and the resultant accumulation of a reserve in the consolidated revenue fund, which is now being used for deficit fighting.

This change may be small by comparison to that.

It's also very small by comparison to Bill C-12, which is currently going through the legislature with clause-by-clause reading, but it is very much related. We have made a major presentation on Bill C-12 to the human resources committee. I don't intend to repeat it here, but there are some areas of it that I think are very significant. I'd like to touch on a few of them, because they are extremely important for a committee that's dealing with the general finances of the government.

First, let's be very clear that the unemployment insurance fund is not broke. It's now targeted at a $5-billion to $9-billion reserve that might be accumulated. Very likely it is the only national public-run institution that has no debt or deficit.

The fund cannot create a burden on the taxpayer. The UI fund is financed by premiums from employees and employers and by law must always stay solvent. Any deficits or surpluses are adjusted by increases or decreases in premiums. The fund can temporarily borrow from consolidated revenue, but the repayment must be made, with interest.

Making sure that we realize that, I want to touch on a few things that relate to consolidated revenue and to Bill C-12 and to changes that are being considered by the government.

One would be that as of April 1, 1996 the federal government will no longer provide apprentices with living or travelling allowances from the consolidated revenue fund. The two initial weeks preceding UI benefits will not be paid to apprentices. We believe that income assistance should come from the UI fund, but that has not been done. It is our opinion that the change in denying apprentices particularly the first two weeks of income assistance could well destroy the apprenticeship program for many trades in Canada.

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I am a national co-chair of the apprenticeship committee under the Labour Force Development Board. We have a meeting coming up in June, at which we're bringing together business and labour to look at what the consequences of this act might be. I must raise it to your attention, because what we're talking about here is a reduction of benefits in unemployment insurance income support that will go directly into consolidated revenue. Consolidated revenue is no longer able or willing to finance an important matter such as this, the funding of apprenticeship.

I must say we have felt for a long time that the UI fund should be trusteed by an independent board of business and labour representatives. This board should be able to determine whether any uses other than income support are appropriate or inappropriate. It's not necessarily for them to govern it, but at least to give severe guidance to government in the governance.

Our federation is very much opposed to Bill C-12, but not just because it severely penalizes those who are frequently unemployed. Bill C-12 would implement many further cuts to benefits and benefit entitlement. It also proposes to open the floodgates for misuse of the fund. It would legitimize using UI premiums for purposes other than income support, for training or the unemployed, and for purposes not requested or approved by the premium payers. That, I think, is significant when we look at further money going into the consolidated revenue fund from this bill.

If the government really wants to reduce premiums or establish reserves for unemployment income support, it must first eliminate its spending proposals disguised as employment benefits. The Canadian Federation of Labour opposes these new market-distorting programs, as we call them, and it especially objects to financing them from UI funds. The premiums of employers and employees collected for income insurance is becoming an increasingly easy source of finances for the government for what may be unwanted programs.

Currently, the amount of UI premiums is some $18 billion - roughly $2 billion more than is collected through the GST - so we're talking about one very large source of money. There is a trend that was really started by the previous government, but this government is really proposing to escalate the use of UI funds as normal taxes otherwise paid into consolidated revenue. We say they are very different from GST or personal income tax or other sources of income. They should be treated as premiums for a fund, and the use of those funds is extremely important to us in terms of their delivery.

So why are we here, or what would we ask of your committee? The amount of change by virtue of this bill in the reduction to $750 maximum weekly insurable earnings, or a $413 payment, is relatively insignificant compared to some of these other matters that I've mentioned, but it is here for you to deliver and act on. We would like this committee, to the extent that it can, to place a caveat on the moneys going into consolidated revenue so that they be used for income support for workers either when unemployed or when they are taking training. It's going into the UI account, but it's being held in reserve in consolidated revenue.

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So that really is the bottom line of what we might expect at this late date. It has been said, you see, that this reserve is for hard or difficult times in the economy. Frankly, we would not object to that, and we recognize the problems the government has in trying to get on with some kind of deficit control. But it must be earmarked and used only for income support if it is to have our blessing. Otherwise it should not be allowed to accumulate in such large quantities in consolidated revenue for purposes other than income support.

The Vice-Chair (Ms Whelan): Thank you.

Madame Lalonde.

[Translation]

Ms Lalonde (Mercier): Good morning, Mr. McCambly and good morning all.

Mr. McCambly, under the act, the government is the trustee for the workers and the employers. Now, it is behaving strangely and this can be very clearly seen in Bill C-31. As for Bill C-12, it's lost in the haze.

In Bill C-31, clauses 42 to 48 set out very clearly what is most fundamental for the government and that is decreasing maximum insurable earnings. They go from $42,400 to $39,000 which translates into a loss of $900 million for the unemployment insurance fund. In doing so, it's giving $500 million to businesses which, in most cases, are big firms who can pay those salaries. SMEs able to pay such high salaries are rare. It's also giving $400 million back to workers earning between $39,000 and $42,400 and these are usually people working overtime in big businesses.

Those $900 million actually cost $200 million; in other words, premiums bring in $900 million and benefits of $200 million are paid out. How is this $900 million shortfall to the fund being compensated for? Through the premiums of the people working from 1 to 15 hours and the businesses that hire them.

Don't you find it strange that the trustee, instead of broadening its scope to including the highest wages and the businesses which pay them out, to allow everyone to enjoy a real unemployment insurance plan, decides instead to decrease the maximum insurable earnings thus depriving itself of $1 billion this year. There will be $1 billion less in the unemployment insurance fund.

At the end of 1996, the forecast is for $5.5 billion if there's no reform. With the reform, it will be $4.5 billion. Those figures come from the Department of Human Resources Development and are available to the public at large.

So the government's intent is to slash while making sure that the job of economic stabilization and artificial decrease of our deficit fall to those men and women earning $39,000 or less and those businesses that employ them.

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The government forces the small- and medium-sized business to pay premiums on the payroll of those working from 0 to 15 hours and I'd agree with that if those people were to receive benefits, but we know that's not the case.

So we're witnessing a dramatic change in Canada's unemployment insurance plan that's not going in the right direction because it encourages people to work overtime and hold down two jobs. Do you find that the federal government is properly discharging its duties as trustee for the men and women in our labour force?

[English]

Mr. McCambly: That is a small question after a large comment, but I appreciate what you're saying. The matter of increasing the charge on earnings to higher levels really deserves special consideration in terms of funding.

I couldn't begin to go through all of the issues that we have raised relative to Bill C-12, and even to things that happened before that, with cuts that came into effect, to the point that we now have membership in many parts of Canada where not only is the unemployment level very high - I'm talking in excess of 50% - but those who have lost the entitlement to benefit are ever-increasing, and the new changes are making it enormously difficult, particularly to requalify. If you are out of the fund, it now requires 910 hours to requalify. That's 26 weeks.

In a low period of employment, we have statistics to show that in construction, in particular, normal hours are down to 500 or 600 hours. In a good year in construction people get 1,300 or 1,400 hours or sometimes more, maybe up to 2,000. That is normal in many industries in very good years, but these are not good times; these are bad times. The fact is that both skilled people and apprentices.... The effects of the changes on people are disastrous.

So I have no trouble saying that the UI changes are very damaging to a lot of people.

I have rather a personal observation. As far as the reduction of something like the amount that everyone could get in maximum weekly insurable earnings, if that were accompanied by more people being able to qualify and being able to spread the use of the unemployment insurance fund to use it for what it is.... It's the most important major adjustment fund in Canada. There's nothing to compare to it. I think we would quite willingly support a reduction overall, if it meant that more people could be involved and if we could get support to those in a transition period so they would be able to keep their heads high in getting through these difficult times.

I guess that answers your question.

The Vice-Chair (Ms Whelan): Mr. Grubel.

Mr. Grubel (Capilano - Howe Sound): Thank you, Madam Chair.

Mr. McCambly, I think for the first time you'll have a friend sitting over here. I agree with much of what you say.

I call your attention to a 40-minute talk I gave upon the opening of the debate on Bill C-31, which I dedicated entirely to the subject you have just raised. In there you will find a couple of other things that are very powerful arguments against the present government policy. Number one is the idea that the UI premium structure is extremely regressive. People with moderate incomes pay a much higher percentage of their income in UI when they are fully employed than do rich people, people with high incomes, obviously.

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By lowering the maximum insurable earnings to $750, it in fact has been made more regressive. There's a maximum amount collected by UI from your cheque. That number of dollars for $50,000 a year is a higher percentage than it is for an income of $100,000 a year, and for $30,000 it is an even higher percentage. It's very regressive.

The second thing that I find is also missing...an argument against using those premiums for general consolidated revenue is that it's a job-killing tax. A large proportion of the revenue raised is from government-imposed increases in the cost of labour for employers. If the employers are faced with such legislative, non-contractually determined increases in costs, they will substitute machines for workers. That is the way a free society works.

So this is another reason why this is not a tax that serves the general interest when it's used for the financing of equalization or of welfare, or for whatever serves the population as a whole. It's collected from one group of people for a specific purpose.

I have three questions, if you will permit me. They're all very brief, so maybe we can take them in sequence.

The first one is whether or not your research staff has done any work on what might be an optimum amount of reserves that the fund should be allowed to accumulate. I think it was bad in the past that whenever there was a reserve building up, the premiums were lowered. That was pro-cyclical, right? When they were running into a surplus the premiums were lowered, which gave more disposable income. When they had a shortfall during bad times they raised the premiums, so it was making the business cycle worse.

I believe it is a good idea for this fund to operate symmetrically. The amounts accumulated during prosperity should, on average, be good enough to finance the fall-off of revenues during bad times so that you don't have to vary the premium pro-cyclically.

But there is a question about what the size of that reserve in good times should be, relative to the annual premiums. I have calculated that by the end of this budget cycle the accumulated premiums will rise to nearly 100% of the annual expenditure of the fund. That seems to me considerably too high, but I don't have any good economic criteria. All I know is that in the past the maximum cumulative shortfall was about 50% of total revenue.

Have you given any thought to helping the government determine what might be a formula for establishing when the reserve is big enough?

Mr. McCambly: Could I touch on something you hit before that? You brought up a couple of things with regard to the UI premiums and the payroll tax issue. First of all, you said that it's a job-killing tax. That's obviously true to a degree, but I think it's to a relatively minor degree in most occupations. If it is a very low-paying job maybe it has a greater effect, but I don't think that is so terribly significant.

One thing that I think is fairly significant is that considering that premiums to UI are nearly
$1 billion to $2 billion more than the GST, you hear a lot more complaints about the GST than you do about UI premiums. So obviously there is not the public knowledge or concern about contributions from payroll tax that there is about the implementation of the GST.

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On the optimum reserve, I don't know what that is. I can tell you that we really did not have an objection to it being in the vicinity of $5 billion. Even if it went to $6 billion, maybe that's still quite.... I think time will tell how high that should be, but I believe it would be wise to consult the premium payers, to get some actuarial studies done - not to make a fly-by-night guess but rather something that had a weighted view.

There is a difference too. It's clear that these reserves are used for deficit fighting and to balance a deficit matter in the books.

Would we be looking at an optimum reserve with no deficit? If you have a huge deficit and then you hit bad times, it's also going to be hard on the deficit fighting.

Mr. Grubel: Exactly.

Mr. McCambly: So I don't know the specific answer to your problem, but I think it would be wise to have the premium payers take a look at what they would....

Mr. Grubel: I would think your federation can make a contribution to this. I've been wrestling with it myself as a policy position for the Reform Party. Any kind of objective input we can get from you would be appreciated.

Secondly, I wonder what are the other activities, other than the pure insurance activities undertaken now, that you are unhappy with. Do you like the idea that it should be available for job training only while people take the training, or is it also to finance the training itself?

Also, what do you think about using the UI revenues for financing some social welfare programs like, for example, maternity benefits? What's your federation's position on that?

Mr. McCambly: To start from the back end first, there was a piece of work done by the Canadian Manufacturers' Association, the Canadian Labour Congress, and the Canadian Federation of Labour, and there may be others as well. One of the things they looked at was maternity benefits. I was very happy when that was concluded to find that business as well as labour agreed that maternity benefits were an integral part of labour force adjustment and it was not something that should be considered to be taken out of UI.

Mr. Grubel: What are the grounds for that? What does it have to do with unemployment?

Mr. McCambly: It's an integral part of dealing with the person being off the job -

Mr. Grubel: That's not an answer.

Mr. McCambly: I'm not going to argue why. I'm telling you that we agreed to it, and I think it was a very wise decision. We'll give you a copy of that if you wish.

That was the last thing. What was the...?

Mr. Grubel: There are two things on training. One of them is to keep paying UI while a person is being trained, but the training is financed out of general revenue because -

Mr. McCambly: Essentially one of the things we dislike more than anything is saying that there's a bunch of notions to be funded that might come up between the federal and provincial governments, such as wage subsidies and even some of the open financing of entrepreneurs who maybe did or did not pay contributions. But I think that is paying out in ways that were not contemplated under the fund.

In terms of income support while the person is taking training, we have no problem whatsoever. As a matter of fact, that probably should be expanded. The more we can ready people for employment, the better. The most difficult thing to achieve that way is income support while you're taking training.

There are different ways of getting the training done. Sometimes it can be done in industry. Sometimes it can be done jointly with business and labour, or by federal and provincial governments. But the income support is really important.

With regard to financing the training itself, we traditionally have opposed that, but the fact is that it has been done. If it is agreeable that a payroll tax be used to finance training, and it's thought of and understood that way, then we'll go with the premium payers in using it for that purpose, because if there's no other source maybe it is appropriate.

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Mr. Grubel: Would the chair allow me one quick comment?

The people who oppose maternity benefits are saying this is an insurance program. Insurance is against you being afflicted by a hazard, by trouble, that you couldn't do anything about. Unemployment is one of those things. So I'm happy to pay into a fund to protect myself, my friends, my neighbours, everyone in Canada, against the hardships that come from becoming unemployed. There's nothing they can do about being unemployed. But to me, subsidizing someone who makes a deliberate choice to become pregnant and saying here is a program that was designed to protect against a hazard that you can't do anything about...suddenly that money is taken away to pay people who have engaged in a costly activity, which I appreciate, for I've gone through it and all that. But why should we be subsidizing people who are making a deliberate choice? Can you tell me what the answer is?

Mr. McCambly: I'm not just sure what school you went to, but I can tell you that even in recent decades women are becoming a much more integral and important part of the labour force.

Mr. Grubel: That's irrelevant to this question.

Mr. McCambly: It isn't irrelevant. It's quite relevant. I'll just repeat that I'm happy to say both business and labour agreed that it was relevant.

Mr. Grubel: Thank you.

The Vice-Chair (Ms Whelan): Mr. St. Denis.

Mr. St. Denis (Algoma): Thank you, Madam Chair. I trust that my question is not out of order, but if you so rule I will be glad to take your advice.

I'd like to ask Mr. McCambly a question vis-à-vis the labour-sponsored venture plans, because we won't have a chance to see him again before the fall.

This is within the ambit of the budget. You'll be well aware, as my colleagues are, that the minister announced some changes to the incentive rate at the federal level for investment in labour-sponsored venture funds down to 15% instead of 20% and a three-year window versus five. I believe the reason he did this was partly to signal to the labour-sponsored venture funds in Canada - not so much the Quebec fund, which I think has its investments up, but to most of the funds in Canada that have not, in my view, and with great respect to the work you're doing. Mr. McCambly is chairman of the board of the Ontario working ventures fund, the second largest fund in Canada, and I can see that you're trying to do a really good job with that -

Mr. McCambly: It's Canadian, not just Ontario.

Mr. St. Denis: I'm sorry, it's based in Ontario - the office is in Toronto - but it's Canadian.

It's the Canadian working ventures fund, which is the second largest fund in the country. I'm not picking on your fund; you just happen to be here. I think the message he was trying to send was that the funds have not invested in small and medium-sized businesses the proportion of their total funds that maybe they should have.

I will tell you from personal experience that there seems to be - and I checked another fund to find out how many people they had on staff to do investments versus how many people they had on staff to acquire money. The proportion is way out of whack. There were a lot more people gathering money for the fund than were there providing it and making it available to small and medium-sized businesses.

In your view, are we going to see the light at the end of the tunnel on this? Will we soon be at the point where the labour-sponsored venture funds in Canada will have invested in small and medium-sized businesses 60%, say, of their funds instead of the 20% that we're often seeing in too many cases right now? Will we see the improvements that I know you want to see, and certainly the minister wants to see, so that we can get on with the investments in small and medium-sized businesses and get the jobs that will come from that?

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Mr. McCambly: I'll try to be brief. I'll say this is one of my favourite subjects, but I don't think there's any doubt that you will see that.

Our fund now has 100% of the first four years of shareholder money invested.

Mr. St. Denis: That would be in small....

Mr. McCambly: Yes, and we are investing faster than anyone has ever done in Canada before and in regions where it's never happened. By the way, it's not just in Ontario, not just in Toronto. We now have an office in Saskatchewan. We have opened offices in New Brunswick and Nova Scotia. We will be opening an office in London and one in Ottawa. We are moving aggressively to -

Mr. St. Denis: What about somewhere in northern Ontario?

Mr. McCambly: London.

You talked about investment managers. We are now up to 26 or 28 investment managers, which is huge.

Mr. St. Denis: Up from how many, Jim?

Mr. McCambly: From none, from zero. We started with none.

Mr. St. Denis: How many were there last year?

Mr. McCambly: We have basically been expanding as rapidly as good people are available. It's a very hard field in which to find good people. By that, I mean people who have an understanding, a training, but there hasn't been much of that in Canada. I think we do have good people, and we are now trying to target to increase from $8 million to $10 million a month to$15 million a month invested. I'm telling you, that's a big target when it comes to being sure that we're doing it prudently.

Mr. St. Denis: Thank you. I'm pleased to hear there's progress.

To conclude my remarks, Madam Chair, I will say I have had a chance to contact bothMr. McCambly and his president on behalf of others, and the door was always open. They were willing to listen, so I thank him for that.

Mr. McCambly: By the way, I should just say, too, that I don't think the changes to the Income Tax Act, which has generally been followed by provinces - we have matching credits for our funds in five provinces, and it has generally been followed, except for the recent budget in Ontario, which had a little variance - are unreasonable. I think that, under the circumstances.... I was the one who made the presentation to the federal cabinet to start this outside of Quebec. I think it has been extremely successful. In fact, I think it's a commitment to the continuance of Canadians investing in Canadian businesses.

Mr. St. Denis: Thank you very much.

The Vice-Chair (Ms Whelan): Thank you, Mr. St. Denis.

Madam Brushett has one short question.

Mrs. Brushett (Cumberland - Colchester): Thank you, Madam Chair. Good morning.

I want to come back to what my honourable colleague from the Reform Party was touching on a little earlier, and that is the thinking or the reasoning behind the Unemployment Insurance Act - or the Employment Insurance Act, as it's now called - and social policy, and where the distinction or the overlapping starts to see one encroach on the other, and the dialogue between them.

So often when people refer to eastern Canada, the Atlantic region, they say the whole EI program is really more of a social policy program than it is an insurance program for employment. As such, it's built into the social thinking, into the attitudes of people. Be it in employment or income or the future direction of however they focus and build their lives, it's part of social policy and understanding.

We've even debated this some as we've reviewed the act and made the adjustments, and it's before the House at this time, but I'm not sure that we've actually done enough.

I don't know that it's only eastern Canada that can be accused of using the act more along the lines of social policy than an insurance policy. I'm wondering if your organization is going to look at this in more depth. Should we as parliamentarians or should the economy of Canada as a whole - small business, large business - evaluate the whole concept of this plan, where it begins, where it ends, and how it does fit into attitudes and acceptance of social policy?

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Mr. McCambly: Initially we had suggested that the unemployment insurance fund should be independent of general revenue - kept track of separately, budgeted separately and to some degree trusteed by the premium payers. That, I think, is falling on totally deaf ears at this point, because it is a major component of federal funding.

A very grave concern of ours is that the fund does not start to be used - and there are different interpretations of what's social - for purposes beyond which it should be used as an income support system. Bear in mind I'm not trying to have a closed book on this, because it has to be tied in some ways to other social measures. It's getting close to other measures that are of importance to people, particularly in difficult times. But I think that both the level of premiums and the benefits or the uses of the fund should be tested with trustees of the premium payers.

That gets into the question of governance. I'm not suggesting that the government give up governance of the fund, but I do believe there is a role that I might say is even being avoided by government, because they don't necessarily want to hear what the premium payers have to say.

Mrs. Brushett: Are you suggesting perhaps a crown agency or an arm's length agency? How would this board work?

Mr. McCambly: It wouldn't be that difficult to have a trustee advisory board established, say, in place of the commission that's there or adjacent to it, but it has to be taken seriously and it has to seek counsel from a trusteeship of premium payers.

Mrs. Brushett: How about the job training component? Often labour has said they could do that better.

Mr. McCambly: But who does it is not so important. Who can do it best is important, because we have training facilities with some of our unions, in conjunction with the players, that are second to none. They can do fabulous training. Often they can do better training than public institutions.

So that's not the point. There are different people who can do training. I think you would get agreement from business and labour that financing or backing of training to some degree is appropriate.

Mrs. Brushett: Thank you, Madam Chair. I won't take any more time.

The Vice-Chair (Ms Whelan): Ms Chamberlain has one brief question.

Mrs. Chamberlain (Guelph - Wellington): I want to say to you that I also share some of your concerns around the apprenticeship area. I really am not 100% sure where all that's going.

I would also share the opinion you just gave, that some of the organizations engaged in training now are excellent. The unions have provided some excellent training programs.

We know that in the past there have been misuses and abuses of the UIC. I know this will come as a shock to my colleagues, but I want to know in particular what your organization has done to discourage the underground economy. What have you done?

Mr. McCambly: That's a very tough issue.

Mrs. Chamberlain: I know it is.

Mr. McCambly: It's not something we condone. As a matter of fact, not directly with our federation, but the construction department, AFL-CIO, is doing some particular work in that area. That's not to say the underground is only in construction. It's in a lot of different areas.

Mrs. Chamberlain: That's right.

Mr. McCambly: It's every place you turn.

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We're quite willing to work with government or agencies or do studies or whatever to find ways to deal with it. That's a very difficult question, but you can count on us to be there and try to deal with that issue.

It's not just a matter of work; it's a matter of funding social programs and a matter of the whole tax base of the country. If you look at the total underground economy, you're looking at an undeveloped country. It's not unimportant.

Mrs. Chamberlain: I agree with you. I think it's everybody's business, particularly the unions', because it affects every one of us and all of our programs.

Thank you.

The Vice-Chair (Ms Whelan): I would like to thank Mr. McCambly and everyone. We've gone over our time limit.

Our second witnesses were travelling from Gaspé last night, and we don't seem to be able to locate them at this time. We'll take a ten-minute recess and reconvene at 10 o'clock.

I want to thank Mr. McCambly.

Mr. McCambly: Thank you very much. I thought we'd only be a few minutes, and here we ran over time.

A voice: It was a good discussion.

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[Translation]

The Chairman: Order, please. We will begin our deliberations.

The committee welcomes Mr. Martial Henry, who has organized the unemployed, from the Ralliement gaspésien et madelinot, and Mr. Albert Robinson, President of Action Travail Denis-Riverin. I know it was rather difficult for you to meet with us this morning, and I would like to welcome you. We will first listen to your presentations and then move on to questions. All right?

Mr. Albert Robinson (President, Action Travail Denis-Riverin): Before beginning my presentation, I would like to give you a brief overview and history of the Gaspé region.

For the last few decades, young people have left our area in droves. This has largely contributed to a decrease in new ventures and consequently in the opportunities for development. Current social programs, for their part, are contributing to the exploitation of workers in basic sectors instead of retraining them with an eye to basic production. The latest political fashion is to blame the unemployed and those on welfare. Governments believe they own the services they manage. Given that situation, we should ask ourselves why the people of Gaspé are in a state of inertia and passive affectation.

For over 300 years, governments have tried to improve the situation, but this has only created the state of inertia. We must begin immediately to channel the mounting anger to bring about positive, economic and attitudinal a change. We must begin today.

We must concentrate our efforts in several areas, including entrepreneurship, targeted training and experiments. As for consulting with the region, please forget that idea, unless you intend to consult with small groups of individuals. Indeed, it is only possible to achieve that within the Canadian Armed Forces, since soldiers are not allowed to speak their minds. It is solely through common financial interests that you can bring people together.

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Concrete action to consolidate what has already been achieved, as well as new methods to process our basic products, are a better solution than all the rethoric going on right now. It's a fact that seven out of ten people living in Gaspé today work in seasonal jobs: who will solve this problem?

Every organization in our area should try to create real on-site development. Paper should only be used to plan for concrete measures, even small ones, instead of bemoaning our unfortunate situation for another 300 years. The war effort should focus on the low level of productivity in our area and on restructuring the natural resources sector with the support of a high calibre sectorial sales promotion campaign.

Given the current situation, it is imperative to hire high-level firms or valid university services. We must create a veritable tidal wave, otherwise, by the year 2296, the media will still be reporting that the County Regional Municipality of Denis-Riverin and several other counties in Gaspé, if they still exist, need government assistance and a special status.

As at the beginning of colonization, we live in a low-density region compared to the rest of the province. Our numbers increased in the first centuries, but they increased elsewhere as well. Remarkable development was achieved through modern communication and various inventions and discoveries, but more so elsewhere. We don't want to come across as being defeatist, but let's face facts: we will never receive the assistance we've been waiting for for so long.

Let me briefly tell you about a poll which was made public in 1991. The population of the County Regional Municipality of Bonaventure, which stood at 20,616 in 1991, has fallen to 19,848; that of the CRM of the îles-de-la-Madeleine went from 14,532 to 13,991; that of the CRM of Denis-Riverin fell from 15,241 to 14,000; the population of the Gaspé Coast went, from 22,800 to 20,900, and that of Pabos, from 23,758 to 21,712. These figures show the impact economic problems are having on our area, which is forcing our young people to leave.

Regarding the impact of Bill C-12, the unemployment insurance bill, at first glance it is obvious that it will harshly affect the men and women of the Gaspé region and the people who live in the eastern provinces; it will affect that most fundamental of values, their human dignity.

The Conseil du patronat says that it is a good piece of legislation, and that business should pay lower premiums. But in our area, where there is a lot of seasonal and part-time work for forestry and fishery workers, for workers in the tourist industry and for nurses, it is unacceptable that this reform should be implemented without taking the nature of our problems into account.

The unemployment rate in the county regional municipality of Denis-Riverin is 33%. In Pabos, it is 30% and in Gaspé, 22%, to name but three places. The federal government, which is main chef, has cooked up a dish without first asking what we want or what we like.

We were not consulted before the reform was developed. Must we therefore conclude that this consultation will be taken seriously or that it is simply a strategy for the government's conscience to rest easy?

Ladies and gentlemen, in our area the standard of living has never been lower and the parts of the reform which will affect us most are, first, eligibility based on hours worked. This will lead to unprecedented level of fraud. Don't forget that people's instinct for survival will prevail.

It used to be that a forestry worker working a 70 hour/week earned between $700 and $750. He sometimes had to work between 70 and 80 hours a week to qualify for a decent insurable salary. But now, that figure will fall to 35 hours. This means that he will only receive $375 a week, and that doesn't even include all the other changes which will be factored in.

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This rule will reduce the salary eligible for unemployment insurance and penalize part-time workers who used to qualify after working only 15 hours a week.

And, ladies and gentlemen, what about new intrants, who will have to work 910 hours to qualify? Do you want all our young people to leave? That goal has basically already been met.

I also believe the bill will implement the 14 consecutive weeks work rule, to take effect June 30, 1996. I also know forestry workers who, in addition to falling under the 35 hours per week rule during the forestry season, will be temporarily laid off if there are forest fires, as happened in 1995. This means their income will fall drastically. The same goes for fisheries, which largely depends on the weather, and other sectors as well. Part-time nurses will also be affected and cyclical small businesses, too.

The reform is deceiving, and also includes subsidizing salaries to encourage employers to hire people. Ladies and gentlemen, this measure is the perfect copy of the income security hiring policy which we have always denounced and which has always led to abuse on the part of employers and to cynicism and dismay on the part of workers.

You often find employers who hire people whose salaries are subsidized. The employees work for a certain period of time during which they receive training. But as soon as the training is over, the employer says that he can't afford to pay the employee and that he is not needed anymore. The employee becomes discouraged and tries to find work elsewhere. But 15 days later, the employer has already hired another person for the same job.

The most cynical aspect of the bill is the national placement service. What a discovery! Let's replace people with computers; this will hit the most disadvantages hardest. Employment centres will stop providing services, yet the government says that service will be improved. For whom! For the educated.

Several provisions of this reform will only serve to weaken smaller communities. The negative repercussions of the reform in the Gaspé region will be disastrous for our communities.

Money is the sinews of war. In addition to huge demographic problems, we will become markedly poor. The youth suicide rate will jump, families will crumble, homes will be lost, and so on. This reform will simply swell the welfare roles and make us look like an underdeveloped country.

The reforms will destroy our heritage. We will be locked into a ghetto, and those living in isolated communities will become a submissive people.

We do not object to reasonable, measured and structured change. We need change, but that which will create new jobs for seasonal workers. But to achieve this goal, our elected leaders will have to acknowledge our existence and realize that we can stand on our own two feet when given the tools and the opportunities to do so.

Last year, in Quebec, workers paid a surplus of $195 million into the unemployment insurance fund. In the past, people said that Quebec leeched off the other provinces, but I think the situation has vastly improved. In 1995, we paid in $195 million.

We have to develop secondary and tertiary industries in our area. The government must help business invest in these sectors through temporary tax credits, but only on the condition that the money be spent in those sectors.

Employers should be given subsidies for training, but only on the condition that the employer and employee sign a contract. This will be done to prevent abuse on the part of certain employers and employees, too.

Furthermore, local officials should supervise the system and establish a probation period to prevent waste, as has happened in the past.

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The government should make banks approve more venture loans, not only for people they like, but also for starting small businesses. We should eliminate the red tape, which would also save a lot of money.

The government will have to implement a bi-annual evaluation system of employment strategies and funding mechanisms in small communities. Furthermore, these mechanisms should also carry a power of recommendation.

In summary, these suggestions only represent part of a plan which we can develop for isolated regions. To achieve this goal, the government must map out its reform so that the employment policies we have proposed can take effect. If people have jobs, the federal government will be in better financial health and will not have to use the surplus in the unemployment insurance fund to reduce its deficit.

The Chairman: What is the current unemployment rate in the Gaspé area?

Mr. Robinson: In the CRM Denis-Riverin, it is 33 p. 100

The Chairman: Twenty three percent?

Mr. Robinson: Thirty three percent, which does not include people on welfare, Mr. Chairman.

The Chairman: That's huge!

Mr. Robinson: I repeat, this does not include people on welfare.

The Chairman: That's huge!

We have the pleasure of having Ms Francine Lalonde with us today. She represents the Bloc québécois and will ask the first question.

Ms Lalonde: Perhaps Mr. Henry can finish his statement before we move on to questioning for both witnesses.

The Chairman: Would you like to add anything, Mr. Henry?

Mr. Martial Henry (Ralliement gaspésien et madelinot): Yes.

The Chairman: Oh, I apologize!

Ms Lalonde: They represent two different organizations.

The Chairman: I thought... I apologize! Mr. Henry.

Mr. Henry: I was chosen at the last minute this morning to replace someone who is very familiar with this issue, but I will nevertheless do my best to answer your questions from the point of view of a seasonal worker. But to begin, I will read you the brief prepared by the Ralliement gaspésien et madelinot.

The Ralliement gaspésien et madelinot would like to evaluate the main points of the Guide to the Legislative Provisions of Employment Insurance. If nothing is done, these provisions will make the people of the Gaspé area and the îles-de-la-Madeleine even poorer.

Our opinion is based on the premise that we must create an environment where quality of life is a priority.

First, to address the purpose of the bill, which is on page 1 of the guide: to help Canadians find work again. In our view, that is a worthy objective, and we can only hope that everyone of working age will find employment.

However, we feel that the document that we analyzed indicates that the government is reacting to a situation once more, instead of really planning for job growth. Its latent, short term objective is deficit reduction, which prevents it from developing a genuine employment policy that would surely do more good in the medium and long terms.

Before implementing an employment insurance system, we should assure all Canadians that they will find work. We are currently grappling with a major social problem. We have created an exclusionary system: part of the labour force is excluded from the job market.

Only half of Quebec's workers work full-time, and in Gaspé, it is one third. The very nature of the Gaspé region's job market is seasonal. I'll show you a chart which is appended to the brief.

It is therefore utopian to believe that under the current system it will be possible to find full-time work for all working age Canadians, Quebeckers and more specifically for the people of the Gaspé area and the îles-de-la-Madeleine.

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We have the feeling that the purpose of the future employment insurance system is to move away from unemployment insurance and towards income security. The dividing line between the future employment system and income security is very clear. The grey zone populated by seasonal workers is not covered by any measure.

In the absence of a real employment policy, and given the tightening of unemployment insurance rules, many people will have to turn to income security. But this program is perceived as being the gateway to poverty, since you aren't allowed to own certain things or to live with a person of the opposite sex, or to live in a blended family, or to be a single mother living in a common-law relationship.

We live in a system which punishes those who make an effort, and those affected can't have dreams because they don't receive the support they need to improve their lot. The government should realize that people can only become fulfilled if they have a job.

It says that many people will find work solely through the national placement system. But we are afraid that this measure will force more people to leave the Gaspé area and the îles-de-la-Madeleine.

We have shown, and we all know, that there are too few full-time jobs in the Gaspé region and the îles-de-la-Madeleine for the number of able-bodied workers. Since this situation will probably not change, the national placement service will not be able to find work for everyone, especially young people. We fear that this national service will only scare off more people to larger urban areas and consequently do more damage to our region.

You hear that the Department of Human Resources Development will provide up-to-date information on employment opportunities throughout Canada. Are we going to go back to the time when people moved across the country to where the jobs were, much like natives followed herds of animals?

The Ralliement gaspésien et madelinot is asking Human Resources Development Canada to find provisional solutions to promote the massive development of new jobs by, for instance, developing secondary and tertiary industries in our region. We will have to use every means at our disposal to help people who are unemployed and wishing to start their own businesses, get access to capital.

How will the federal government create the conditions to attract employment and investment in every community? The issue is still unclear and we don't know what the answer is.

A transitional fund for job creation is a very interesting idea. However, it is not enough to spent $300 million over three years throughout the country. A simple breakdown of that figure reveals that the provinces would have to share $100 million each year. Once the money has been distributed, how much will the Gaspé region and the îles-de-la-Madeleine receive?

The withdrawal will take place over three years to give the provinces and institutions enough time to take the appropriate measures.

The respect of provincial responsibility in education and training is also an interesting measure. Not only do we agree with it, but we also believe that any and all income security programs should be managed jointly with the provinces to ensure greater harmonization.

There is talk about the responsible management of an insurance system whose purpose is to pay benefits to people who have lost their jobs. The employment benefit system would only make sense if it was applied in tandem with an income security system. In our opinion, it is important that every citizen feel confident about the future, especially if the system does not create enough jobs for everyone.

We feel that under the new system, the income supplement will force people to take lower paying jobs. These supplements will temporarily top up the income of people who would otherwise find it hard to take a less well paying job. Isn't a seasonal job the equivalent of a less well paying full-time job? Seasonal income should therefore also be eligible under the income supplement system.

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Part III, which concerns provincial responsibilities, is a step in the right direction. But we will have to go much further.

Provinces should have sole jurisdiction when it comes to employment. That way, we could rest assured that the federal government is not only trying to disqualify people form the federal insurance system to reduce its expenses, but also that they will be involved in a true labour market reorganization policy.

Employment benefits, such as pay subsidies and support for self-employed workers, will encourage employers to create new jobs. At least that's what we are being told. It has been shown many times that giving employers money to subsidize salaries does not create jobs, but just shuffles people around. It's like giving with the right hand and taking with the left.

We also question subsidies to encourage people to re-enter the job market. You may remember the Canada at work programs which existed in the 1970s. Most of the jobs only lasted until the subsidies ran out.

We think supporting the self-employed is a good idea, but it is very hard for a person without a job to gain access to capital. The proposed programs don't go far enough.

Furthermore, we believe that start-up ventures should be monitored for at least two years, with financial help from the government, to make sure they will survive.

The rate of regular income benefits will fall modestly depending on the number of weeks during which a person receives benefits over a five year period.

It goes without saying that our organization categorically rejects this. It doesn't take long to figure out, when 55% of seasonal workers benefits are lost, that this measure will make our region even poorer unless our job market, which is seasonal, changes.

However, we agree that eligibility should be based on the number of hours, rather than the number of weeks, worked. Eligibility based on the number of hours worked is fair.

This is a very positive measure which should encourage people to accumulate hours worked, especially if the number of hours worked counts towards employment insurance.

To eliminate the underground economy, we will have to create a system where each hour worked should be declared and rewarded. Under such a system, points could be accumulated leading to a reward. The private sector has often promoted this idea to encourage customers to buy a product.

It would be based on the following principle: the more you work the more money you have, the more the government benefits. Instead of counting unemployment insurance towards income, the new system would reverse the situation and count work towards the government's income supplement.

The expense would be largely offset buy the surplus revenues the government would receive by collecting more taxes from individuals under the new system. People would therefore have the right to declare their earned income without being penalized.

For example, anyone working under the table for themselves would benefit from declaring the number of hours worked because they would be counted towards employment insurance.

As it stands, the employment insurance bill lets you earn $50 or 25% of your benefits. This means that the bill does not allow you to earn 75% of your benefits. Again, this measure should be subject to a wage threshold, which would be what a person needs to survive. People earning less should be allowed to work until they reach the threshold without being penalized.

It says that the family income supplement represents a basic protection for low income families. The Ralliement gaspésien et madelinot supports this measure, which helps low income families. We also believe the amount should be increased to support people staying at home to raise children.

The intensity rule should be scrapped, especially in the case I just mentioned.

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We support keeping premiums low. The creation of a reserve fund for tough times is also an interesting idea. It goes without saying that this fund should only be used for employment insurance.

The 910 hour rule, that is, working 35 hours a week for 26 weeks, is discouraging for young people or new entrants.

At this point, I would like to make an aside. A student or a person working part-time, say15 hours a week, will never qualify for unemployment insurance. If you divide 910 hours by52 weeks - let's say you work for 52 weeks - that comes to 17.5 hours per week. This means that if you are a new entrant on the job market, whether you temporarily work in a restaurant or whether you are a student fresh out of school, you will never qualify for UI benefits.

We are convinced that these people have to be encouraged to work right from the beginning of their careers. The government should provide them with opportunities to do social work for two years for a guaranteed income. This would allow claimants to look for a stable job. But these people would still receive benefits during those two years, since they will need that support to find a regular job.

In conclusion, we deplore the interpretation of the figures in the guide. We believe that it is a lack of jobs that causes unemployment and not the fact that employers and employees are used to one kind of system.

The Ralliement gaspésien et madelinot does not have as many resources as the government does to develop specific amendments to the new provisions of the Employment Insurance Bill. The most we can do is provide you with points to think about that have been raised by working men and women who deal with a lack of jobs on a daily basis.

For these people, having to use social assistance is a threat because it brings them one big step closer to poverty, which is synonymous with losing their ability to succeed on a social level and with the terrifying inability to feed themselves three times a day. That is the problem the government has to solve.

The government must be convinced that the majority of people want to work, because it is a condition to their wellbeing. There is no one in the Gaspé area and in the îles-de-la-Madeleine who does not want a better quality of life. That is what a job brings.

If employment insurance is truly an insurance designed to provide benefits to people who have lost their jobs, to provide income security or social wellbeing, if it is a measure whose purpose is to ensure an income to people who are unable to work, then a solid and recurring intermediate measure is missing. This measure would provide assistance to that part of the labour force that cannot find anything on the job market because of a lack of jobs.

The government must assume its responsibility, must coordinate endeavours and must provide all necessary assistance to people who are looking for solutions. Fighting against poverty is fighting for collective prosperity. We hope that the government will adopt a view that will help it to see and understand those out there who are least privileged, because half the solution is understanding.

Ladies and gentlemen, thank you for having listened to me.

The Chairman: Thank you very much. Mr. Lavigne.

Mr. Lavigne (Verdun - Saint-Paul): May I ask that the Clerk or someone photocopy these briefs, please?

The Chairman: Yes.

Mr. Lavigne: Thank you, Mr. Chairman.

The Chairman: That is a good idea. Ms Lalonde.

Ms Lalonde: Thank you very much for your briefs. Unfortunately I will have to leave. I have a meeting at 10:30 and I thought that we would have finished by then.

Good morning, Mr. Henry, Mr. Robinson, and thank you for coming to tell us how you feel and how Bills C-32 and C-12 will affect you.

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I would like you to explain that in Gaspé and in the îles-de-la-Madeleine, seasonal workers are not at all people who earn big wages and who on top of that receive unemployment insurance.

The main measure that the government is proposing is to decrease maximum insurable earnings and maximum benefits. Currently, the maximum benefit is $445. When the bill is passed, this will be reduced to $413 for five years. Then, the Minister of Finance and the Minister of Human Resources Development will decide what this benefit will be. That is a big change because before this, a series of economic rules were used and there was a regular increase in this maximum benefit.

I have been sitting on the Standing Committee on Human Resources Development for two years and a half. I travelled throughout Canada. I know that there was a committee on seasonal work that did not make recommendations to obtain special treatment for seasonal workers. Consequently, a reform has been drafted that does not, in my humble opinion, apply to everyone. It has been developed to deal with problems that, it is felt, exist in seasonal work. That is why there has been a reduction in the maximum insurable earnings and the fixed time period, a measure which you succeeded in amending because of your demonstrations.

One of the amendment slightly reduces the serious impact of this measure. But there is still a penalty for those who are repeat users. There's also been a reduction in the number of insurable weeks. All these measures seem to have been developed because of the people who are open by "abusing" the system. It is felt that there are people who only work 12 weeks, figure out how to get the maximum through their companies and then live the good life on the backs of everyone else. That is often the general feeling.

I would like you to describe the life of seasonal working men and women. I know your area and therefore I know that life isn't like that. Perhaps you could fill us in from your perspective. I think it would be useful for the committee.

Mr. Robinson: When one is talking about seasonal work in the Gaspé area, one is not talking about seasonal work that lasts six, seven, eight or ten months. Many jobs are seasonal, especially in the forestry sector. Lumberjacks have difficulty in working 10 or 12 weeks, because the mills close down their forestry operations in the forest when the snow becomes too high. Lumberjacks then have to stop working.

Another important point is this. People here and there say that people from Gaspé are lazy, that they do not want to take responsibility for themselves. Just consider the famous ATI program with the CDIC, etc. We know that there are many business people who want to start a business, but they aren't even 5% of them who can do so. That's the reality. This is a study that was carried by CDIC. It is a fact. It means that there is a problem somewhere. So don't say that people don't want to work. They do.

The county regional municipality, Denis-Riverin, published a repertory of products and services to assist people in starting up a business with basic products. Things that weren't complicated. It is the Action Travail Denis-Riverin that set up the program. It worked well and it was very well known.

It is true that there is an unemployment insurance problem and we do not deny that, but to solve the problem one needs solutions. Without a solution one cannot solve the problem. That is for sure. My father always told me that when I was young.

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We need to make people more aware and provide them with the necessary tools. They know what they need. I'm convinced that if the government tried it would obtain good results. I am convinced of this.

Earlier on I was talking about a 33% level of unemployment in the Denis-Riverin MRC, county regional municipality, and 30% in Pabos. When the government sets its levels, it sets them using an unemployment insurance level of 12% and more. When that level is 10 to 12%, you need 16 weeks of work and when it is more than 12% you need 14 weeks. So there is a difference of two weeks. There's a big difference between 12 and 33%.

Ms Lalonde: That is very relevant.

Mr. Robinson: For 45 to 50 hours, we have $413, but if the week is reduced to 35 hours, do you think that an employer is going to pay $413 for someone who would only have worked 35 hours? That is what you need to think about.

Mr. Henry: Ms Lalonde, you mentioned those who abused the system.

Ms Lalonde: I said that there are people who think that...

Mr. Henry: I would just like to clarify that. Because I needed to, I had to work in many different places, even in Canada. In some areas, for example in Montreal, there may be people who would only work 12 or 20 weeks, depending, and then to an unemployment insurance.

I don't know anyone in Gaspé or the îles-de-la-Madeleine who only works 12 weeks and then tries to live on that for the rest of the year. It should be pointed out first that jobs in Gaspé are seasonal.

Let me come back to my case. I am a construction worker. I experience this problem year after year. I supervise electrical work on heavy industry building sites. In Gaspésie, there aren't any. In 1966, I worked on the construction of the mill in New Richmond. In 1972, I worked on a mill building site in Murdochville.

I had to go and beg for my other jobs in other regions. As you know, a worker from one region is not welcome in another when people able to do the same job live in that area. Last year, I worked the equivalent of 15 weeks. I'm 57 years old. I have three children. My wife and my neighbours are the ones who raised my children because I was never home. I had to go into exile.

I can tell you that living on 15 weeks of work is no piece of cake. If I could have, I would have worked 60 weeks a year, but I did not have the choice. I was outside my own area and as soon as there was extra people, the contract was terminated. I was let go and I would go back home.

In Gaspé, we deal with this problem on a regular basis. Even though we want jobs, there aren't any. I worked in Manitoba and it was the same situation. I brought my family with me. Then I brought them to Alberta for seven years and it was the same situation. I've always worked in another area even though I consider myself to be qualified in my field. I was never laid off. I always did my work.

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As far as those jobs that remain in the Gaspé area, lumberjacks, fishery jobs - if they are still available - and hotel jobs they are all seasonal. I can assure you that there is no one in there who does not want to improve their wellbeing.

I just wanted to complete my answer to your question, Ms Lalonde.

Ms Lalonde: Fine.

I will have to leave.

The Chairman: Thank you very much for your questions, Ms Lalonde.

[English]

Mr. Solberg.

Mr. Solberg (Medicine Hat): Thank you very much, Mr. Chairman.

Welcome. The issue of seasonal unemployment is a difficult issue. As you point out, it's a problem everywhere, but I expect it's certainly more pronounced in the Gaspé region. It occurs to me that one of the problems is that it's a bit of a chicken-and-egg situation. On the one hand, you have seasonal work, and to help people get through the year you provide unemployment benefits. But because you have that, you sort of provide an environment in which more people can survive in that region, but at a bare minimum wage. Therefore, you have more people who are there competing for a small amount of jobs. This actually exacerbates the problem, makes the problem worse. I'm wondering if you would care to comment on that and maybe comment on the possibility of moving away, to some degree, from the idea of seasonal benefits.

Certainly, although I understand why they're there - they're there to ameliorate the problem, to make the problem less painful - in some ways they do contribute to the problem. Perhaps if you didn't have the seasonal benefits as they are, there would be a natural migration of workers away from some areas where you have high levels of unemployment. This would mean there would be more full-time work, albeit in several different seasonal industries, over the course of the year. I wonder if you could comment on that.

Mr. Henry: If I understand you correctly, you're trying to say that we should move out of the Gaspé Peninsula.

Mr. Solberg: I'm saying -

Mr. Henry: The overpopulation, or whatever, is there for seasonal work.

Mr. Solberg: I'm saying there are clearly not enough jobs for people there, and you have mentioned that there are barriers to even being based in Gaspé and moving around. I'm asking if it would be a solution for people to move away from regions where there are high levels of unemployment.

Mr. Henry: Right now, there are a lot of people moving out. Look at the figure we gave a while ago. It's going down all the time. But to get people to move out of their place of birth is another question, and we could probably debate it for months.

Probably I should ask this question. Should the state do something about those people living there, or close the area altogether?

Mr. Solberg: You made a statement - or perhaps it was your colleague, I've forgotten -

Mr. Henry: Okay, let me just extend it. Should we close the north? Should we close la basse Côte-Nord because there are no people...? What should we do? Should we bring all the people to Montreal?

Mr. Solberg: No, I don't think you close it, but I think in other areas there has been a natural migration away from certain areas. I come from Alberta. The rural areas have been naturally depopulated over a period of years and, relatively, we don't have a high unemployment rate in our areas. People have migrated toward the cities, and there has been a natural migration towards where the work existed. It's unclear to me that this has happened in other areas. That's the point I'm making. But you're right, we could probably debate this.

Mr. Henry: I cannot debate any longer than that. I couldn't see getting people to move out of the area in which they were born or anything like that going through anywhere. People will do it. I've done it because I had to do it at a certain time, but right now I wouldn't do it any more. As I said, the neighbour and my wife raised the kids.

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Mr. Solberg: I appreciate that and I understand why people are attached to these areas. That makes perfect sense. But at some point the question becomes, if people in other parts of the country are willing to move, should they be therefore responsible for providing you with benefits so you can stay?

Mr. Henry: I'll give you an example right now. I talked about it a while ago.

I did move to Alberta with my family. I was there for seven years. But I was always a second-class worker because I was not born in Alberta. I was always the second one getting the job. How many years would I have had to do before I would have worked twelve months of the year?

Mr. Solberg: Well, that's a good question. In the construction trade I think there's a problem.

I'd like to carry the debate forward a little bit. You or your colleague mentioned that one of the solutions would possibly be to provide tax breaks for companies to come to the Gaspé region. I'm interested in that. Would it be your opinion that the government should provide an environment where there are lower taxes overall so that businesses can prosper and of course people can have more money in their pockets? Do you believe that would go a long way or part of the way or a little way to solving the problems in the Gaspé?

Mr. Henry: Right now, wherever you live in Quebec, you pay a lot of tax. What is more expensive in our area is gasoline and transportation on certain items. If we want to get some service we have to get out of the peninsula. It costs us money.

We've always been drained of our resources in the Gaspé Peninsula, be it copper, wood, fish or anything. The resource is taken right out from the Gaspé Peninsula to somewhere else, and we're left with nothing.

I will give you an example. I have nothing against New Brunswick - I don't know if there are people here from New Brunswick - but for over 100 years we have supplied New Brunswick with wood. Three big cities - Dalhousie, Campbellton and Bathurst - are built with our wood. It's only been in the last twenty years that we've had a paper mill in New Richmond. When they built the paper mill in New Richmond there were about 1,200 people working in the bush. Now there's nobody. We're getting the chips from New Brunswick to run our mill.

That's how we've been treated in the Gaspé Peninsula for over 100 years.

Mr. Solberg: I have no further questions, Mr. Chairman.

The Chairman: Thank you very much, Mr. Solberg.

[Translation]

Mr. Lavigne.

Mr. Lavigne: I'm the member who is quoted in Le Soleil as saying that there were workers who were getting a tan by the seaside. I would like to clarify that. As you know there are journalists who do not always report things the way they should be reported in the newspapers. When there is good news, they do not report it, and when there is bad news, they are in a hurry to report it. Often, they misquote us.

I did not say that the people in Gaspé were getting a tan, no more than anyone else in Canada. It wasn't that at all.

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I wanted to say that in Canada - Ms Lalonde was saying it earlier - some people abuse the system and can receive up to $50,000 or $100,000 for four months of work.

I did not say that was your case. I never said it was the case of workers in Gaspé or anyone else. I said that some people, in four or six months, were earning $50,000 and $100,000. I should also point out that a large part of my own riding in Montreal-West is very underprivileged and includes many people from the îles-de-la-Madeleine.

Sometimes I get bitter when I seen people in one home receiving up to five welfare cheques. I am somewhat bitter when some people earn up to $60,000 or $70,000 in six months and then receive unemployment insurance for the other six months. By doing that, they deprive other people in my riding, who may be laid off by their employer because there is no work. These people need money before they find another job. That is what I answered to the three main unions that were there. It is not true that I said that people were getting a tan by the seaside.

I just wanted to clarify that so that some people wouldn't be able to use it to play their petty politics.

You say that you should receive more assistance in your sector. As someone said earlier, many other provinces have perhaps over-benefitted from your natural resources and today you no longer have those resources.

You also say that banks do not take many risks. That is true and I am constantly raising that within the Quebec caucus. Banks do not take many risks with small businesses. They tell them that they will "consider it". But it takes a lot of time. I agree with you that banks significantly profit by and do not invest much in small businesses. We should all deplore that. You are right in saying that banks should invest more because they have venture capital that is guaranteed by the government of Canada for small and medium-sized businesses.

I congratulate you on your brief and I agree with you on two or three points, particularly that banks do not invest enough and they should. Thank you.

[English]

The Chairman: Mrs. Brushett.

Mrs. Brushett: Thank you, Mr. Chair.

Bienvenue. I'm from Nova Scotia, so I understand many of the issues you raise today. They are exactly the same as in Nova Scotia. Whether it's in Matane, the Gaspésie, Matapédia, Îles-de-la-Madeleine or in my riding, it is the same thing.

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I want to tell you that the Employment Insurance Act is before the House now, and there are three amendments to that act that have to pass through committee. Perhaps you are knowledgeable about them. They deal with seasonal workers. This is very much a problem in the Gaspé. That's the gap in employment, the weeks, the hours. It's the intensity rule and things that involve the history of your work employment.

You start with a new slate in July 1996 as you come into this bill when it is passed. We have made amendments to help seasonal workers and I expect they will be passed by the House. It's been the strength of the Atlantic caucus members...we have promoted this very strongly. I think you'll be very pleased when you understand those amendments and how they do help seasonal workers on the east coast.

I want to come back to another point, about the traditional industries, the fishing, the woods, and the lack of secondary employment or manufacturing or value-added in business, as we all know. There has been a lack of that for the whole region. My home was New Brunswick, so I know your area very well. Also, in the last few years of government, and before this government, we established some labour-sponsored venture capital funds.

There is one in Quebec, Fonds de solidarité du Québec, and they have indicated to us that they will put more money into the rural regions of Quebec for secondary industry and for development.

Have you heard of this fund in the Gaspé and has there been any activity that small business can work with through this fund? We have given tax credits to people to invest, so it takes away from the revenue of Canada. It is intended to promote economic activity. They have previously said to this committee that they would do something in the rural parts of Quebec to support small business.

[Translation]

Mr. Robinson: You mentioned existing programs. It was well put earlier on. Currently, banks require very high initial capital compared to the risks associated with setting up a new business. Imagine all the administrators of existing programs asking us: "Have you been to your bank? What did they answer? Are they willing to assist you?".

No, my bank does not want to invest because it does not want to take risks. Whether it is the Fonds de solidarité or other programs, banks are not interested in participating. Banks have all the power. Take for example the National Bank of Canada. Under the GSEP, it should ask 10% from businesses. I had a GSEP three years ago, and they asked for 25%.

The government did not take that rate into account in its reform. They did not take 12% into account. They did not take into account the differences between regions. They did not think about those regions that will be the most penalized by a high level of unemployment.

[English]

Mr. Henry: I would like to add something. The Fonds de solidarité is new; it's something that just came out.

Mrs. Brushett: Yes, it is, but in rural Quebec.

Mr. Henry: No. They only opened the office two weeks ago in Gaspé and I think about a month ago in Sainte-Anne-des-Monts.

Mrs. Brushett: You're right.

Mr. Henry: It's something new. It will probably take a while before we get used to it, but anyway....

Right now you're talking about new changes, ``amendments to the reform'', which we don't know.... That's why we're talking about such-and-such a percentage, and we're probably off-track, because you people already have an amendment for these percentages. We're not aware of those proposed changes.

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Maybe if we know what the proposed changes are and what is coming, we can look at it, study it and find out. Then we could comment.

Mrs. Brushett: They have not been passed through the House to the final vote at this time. However, they are directed specifically at those people who maybe have three weeks here or so many hours there, then a gap, and then two more weeks. It enables you to put all those hours or weeks together so you are eligible. It's for those people who can only find short-term, small employment jobs in very rural areas.

Mr. Henry: We have pamphlets explaining the new reform, but we didn't get any feedback on the amendments on those reforms. We don't know what the amendments are, so we can't comment on it. You are saying that they are going to lecture or whatever, but maybe we should have a look at them before they are stamped.

We have information on the new reforms, but we don't have it on the amendments.

Mrs. Brushett: They deal specifically with the issues you raised. That's why I think they will be beneficial to your area.

Mr. Henry: I hope so.

[Translation]

Mr. Robinson: But, Mrs. Brushett, the amendment sets you back. Tell me if I'm wrong, but you're set back by 16 weeks.

[English]

Mrs. Brushett: I cannot answer technically today because I don't have them in front of me and because they have not been passed by the House. They are not in the bill. The previous reform left a gap in the number of weeks, the weeks that would now represent hours, as we talk of hours, and that gap has been covered for people in very seasonal, high unemployment areas. The amendments have originated mainly from long hours of discussion with seasonal workers in the Atlantic region. That is the benefit.

If you wish, before you leave, I'll have my office give you copies of these proposed amendments so you can study them. Is your member Patrick Gagnon?

Mr. Robinson: Yes.

[Translation]

Yes, it's Patrick Gagnon.

Mrs. Brushett: It's Patrick?

Mr. Robinson: From what I understand, if a person has worked 14 weeks, whether they are consecutive or not, they are set back by 16 weeks.

Mr. Lavigne: You could go back two or three years.

Mr. Henry: Our seasonal jobs are already precarious enough. Making a change would be very harmful. We have already been punished enough. In other words, it should be enhanced rather than being decreased.

As far as hours go, this is very good for some people, but for others, the status quo would be much better.

The Chairman: Thank you, Mrs. Brushett.

[English]

Mr. Dhaliwal, please.

Mr. Dhaliwal (Vancouver South): I just want to ask both our witnesses about their economic situation and about the effect of the referendum on investment in your area. Has the political uncertainty had a negative effect on your economy in the Gaspé area?

[Translation]

Mr. Henry: I will answer, Mr. Chairman. I will be very brief.

The Chairman: Fine.

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[English]

Mr. Henry: In our area it didn't change anything because there's no investment, referendum or no referendum. It didn't change anything in our area - maybe in Montreal, but not in Gaspé.

As I said, I built the paper mill in 1965, and I built the Murdochville in 1972. There was nothing else. There was no referendum in 1972. It didn't change anything for the -

Mr. Dhaliwal: Are you saying that the economic situation has been like this for a long time?

Mr. Henry: Well, it's getting worse now.

Mr. Dhaliwal: You're saying it's worse now.

Mr. Henry: It's worse now because there are no more cod in the water. That was almost 75% of our revenue in the Gaspé Peninsula - fish.

Mr. Dhaliwal: Thank you.

[Translation]

Mr. Robinson: Five years ago, in 1991, I set up a forestry cooperative that provided 60 jobs every year, but these jobs would only last 12, 13 or 14 weeks. We do not have many contracts and we do our best. Sixty jobs helps our area, but one must not forget that these are seasonal jobs. We are working in this area. It is not easy.

[English]

The Chairman: Thank you, Mr. Dhaliwal.

Mr. Pillitteri.

Mr. Pillitteri (Niagara Falls): Thank you, Mr. Chairman. In the opening remarks, I think it was Mr. Robinson who made a comment -

The Chairman: Don't ask me. I screwed it up really badly.

Mr. Pillitteri: He made a comment at the start that we've had 300 years of colonization in Quebec; that was one remark.

But let me say something to you. I live here in Ontario. I was born in another country, and certainly coming to Canada was no easy task. I recall myself as a young man at the age of ten. At that time, someone in the country where I was born thought it was a better idea if we separated from the mainland, and I recall, as a child, carrying a separatist flag. Of course, I didn't know what a separatist flag meant at the time. I only knew that it was a flag. Maybe having the flair of politics in my life or the flair for the nation really excited me to carry flags.

That was fifty years ago. After fifty years, that area hasn't changed much. The only thing it actually did was concentrate in order to better itself through education, not to be trying to support the natural resources of the area in order to create more jobs - I mean, as much as it did, it really wasn't producing that much. But what it did within its own country was to educate itself more, especially from that area. Now, through education, there are more civil servants, more police, more of everything from that area throughout the country.

But let me also say that when I came to Canada...and living in Canada today or sitting at this table I don't see myself as a second-class citizen; I see myself as a part of what made this great country, Canada - the diversity we've made, including French Canada or part of English Canada. I feel much more enriched.

Sir, when you went to live in Alberta for six or seven years and felt like a second-class citizen, would that mean also that if I came into Quebec, into your area, to invest in whatever there is there - resources - trying to create an innovation within that area, would I be treated as a second-class citizen?

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Mr. Henry: You have to be careful with my comment. I mentioned Quebec and also Canada, everywhere I have worked where I was out of my region. I'm not saying second-class citizen as a second-class citizen; I'm saying second-class as in finding a job. I was in Alberta. I didn't say I was classified as a second-class citizen; it was at the level of finding a job.

Mr. Pillitteri: It's the same thing.

Mr. Henry: No. I went to work last year in Lebel-sur-Quévillon, which is in Abitibi; it's in Quebec. After my job was finished I was sent home, because there are people there who are unemployed and need my job.

A voice: You're second-class in northern Quebec?

Mr. Henry: It's the same thing if I'm home tomorrow morning and they're building a big building next to my property and there's a guy from Timbuktu and I'm sitting at home unemployed. I'll say, hey, you're taking my job away; I'm home here. That's how it works.

Mr. Pillitteri: That's how we think it works.

Mr. Henry: That's the jungle of construction anyway. I don't think there's much you can do about that.

The Chairman: Thank you, Mr. Pillitteri.

Monsieur Lavigne.

[Translation]

Mr. Lavigne: I would like to put a question to both of you.

You are from Gaspé Peninsula. Do you have a regional development organization in your region?

Mr. Robinson: We have one at the Denis-Riverin MRC. We have the SAPC, which was merged with the CAE.There is also the CRCD in Gaspé.

Mr. Lavigne: You have not established a non profit organization through which you could obtain funding from one of the programs offered by Human Resources Development Canada?

For example, in my riding, which is a disadvantaged area, we have Info-PME, which provides information to SMEs. Through this office, which is funded by Human Resources Development Canada, you can obtain all the information you need on a particular program, and it is free of charge.

Another organization called Cible was set up to help people return to work. If you lose your job tomorrow morning, you haven't prepared a CV in 30 years, or you don't know how to approach a business owner, Cible will help you to improve your skills in these areas.

We are currently trying to add an organization called ATI, which helps self-employed workers, to the other two organizations I mentioned.

If you want to set up a business by yourself, ATI will help you to prepare your business plan and to get you started. You are eligible to receive unemployment insurance benefits for one year, provided that your plan is accepted.

Do you have this type of organization in your region, in addition to the one to which you already referred?

We have it in our region. I set up three others to help me establish new SMEs. This year, through Info-PME, we have created 83 new SMEs.

We interviewed 496 people at that office, and the 83 new businesses now employ 350 people.

Are there similar developments in your region?

Mr. Robinson: We used to have DEP programs. Everyone was familiar with them. A number of programs were established specifically to help train people, so they could learn how to approach a company, how to start up a business, and how to prepare a CV.

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Action Travail Denis-Riverin has developed an inventory of consumer products available in the region. I can assure you that it is not easy to obtain funding in the regions. We are given $500 or $600. Therefore this is usually done on a voluntary basis.

Action Travail Denis-Riverin has been working voluntarily for two years. During that period, we have received $1,800 from the federal and provincial governments. It is not easy. We have been doing this on a voluntary basis for two years. We are trying to promote job creation, we provide people with information and help them to develop their business plan. Everyone involved is working voluntarily.

Nevertheless, work is being done at the grassroots level. If you come to our region, you will see what has been done.

Mr. Lavigne: I will be going there this summer and I will come to see you. They may perhaps give me a very rough time when I get there.

The Chairman: Thank you Mr. Lavigne.

[English]

Mrs. Brushett, is this the last question?

Mrs. Brushett: Mr. Chairman, it's not a question.

I telephoned my staff to ask for copies of the amendments so that you might take them with you. Just for the record, so that you know we are concerned with the area, this government is very cognizant of the high unemployment and the needs of that area. We are bringing these amendments forward as part of the Liberal government's policy, as part of the bill of the Government of Canada. We know that if we can pass it through the House it will benefit the rural areas of Quebec, the Gaspé and Îles-de-la-Madeleine. So I will have those down in a few minutes before you go.

[Translation]

The Chairman: Thank you, Ms Brushett. I believe that the Gaspé Peninsula is one of the most beautiful and interesting places in the world. Would it be possible to promote tourism into that region, so as to help you create more jobs?

Mr. Henry: Yes. There has been considerable focus on salmon-fishing rivers, on the tourist attractions of fishing. Some plans began three or four years ago, and others last year.

[English]

In the last five years, let's say, there has been a lot of improvement.

[Translation]

Mr. Robinson: Sometimes, program management leaves very much to be desired. The purpose of some programs is just to cut the branches on the side of the road. Those programs are completely pointless.

We have posted some beautiful signs around all the villages, indicating the location of the lakes. We have prepared a directory for tourists, explaining what flies to use when fishing, and giving other useful hints of this type. I think that has had some impact. We are trying to attract tourists to our region, to keep them as long as possible and, as a result, to create jobs.

[English]

The Chairman: Thank you, Mrs. Brushett

[Translation]

On behalf of all the members, I would like to thank you for appearing. I was told that you drove all night to come here. How long did it take you?

Mr. Robinson: Fourteen hours.

[English]

It takes fourteen hours of driving, non-stop.

Mr. Henry: Three more for me.

The Chairman: So it's seventeen hours of driving.

[Translation]

You must be absolutely exhausted. Thank you very much for appearing before the committee...

Mr. Robinson: And we are also going back this evening.

The Chairman: ...and explaining the problems in your region. Once again, on behalf of all the members I would like to thank you.

Mr. Robinson: Thank you very much.

The Chairman: The meeting is adjourned.

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