[Recorded by Electronic Apparatus]
Tuesday, April 16, 1996
.0913 
[English]
The Chairman: I'd like to call the meeting to order.
Good morning, everyone. We are going to begin our day through video-teleconferencing from Montreal, Quebec. The first presentation will be made by Madame Lucie Lemieux-Brassard of the Confédération des organismes de personnes handicapées du Québec.
.0915
Welcome. As you know, this committee's mandate is to improve Bill C-12, An Act respecting employment insurance in Canada. We certainly look forward to your comments, as we have to all the comments we've heard so far. It has really helped us shape our mind around issues that are challenging in this bill.
I'd like you to begin. You have approximately 10 to 15 minutes for your presentation, followed by a 10- to 15-minute question and answer session.
Ms Lucie Lemieux-Brassard (Chairperson, Confédération des organismes provinciaux de personnes handicapées du Québec (COPHAN)): Thank you. I'll do my presentation in French. If there is any problem, I can always translate it or answer the question in whatever language you need.
The Chairman: That will be no problem. Go ahead.
[Translation]
Ms Lemieux-Brassard: First, I would like to introduce COPHAN which is the Confederation of Provincial Organizations representing disabled people in Quebec. COPHAN comprises over 40 provincial organizations. However, our consultations included everyone working in this field, that is 98 groups.
As regards the issue before us today, those people who read the brief we submitted onMr. Axworthy's social policy reform in the fall of 1994, will see that our position has not changed. However, we do deal here with points related specifically to the proposals you are considering.
Before giving the floor to Mr. André Desjardins, who is in charge of the COPHAN task force, I would like to point out again that in each of these areas our concern is to improve the qualify of life of disabled people and to ensure that there is parity between the provinces, the regions within each province, and the sectors within each region.
All disabled people, regardless of where they live, must be provided with services of equal quality and must have equal access to the mechanisms needed to provide them with an equitable quality of life.
Attention must also be given to parity between client groups. Whether the people concerned are women, aboriginals, visible minorities or disabled persons, quality of life and access must be the same for every individual, as would be the case for every other full-fledged Canadian citizen. This is of particular significance in the issue before us today.
I would now give the floor to Mr. Desjardins who will explain to you the major principles underlying our position and the measures which we recommend. I would then like to take a few minutes to speak more specifically about certain points in the bill of particular concern to us.
Mr. André Desjardins (Chair of the task force, Confédération des organismes provinciaux de personnes handicapées du Québec): Good morning, ladies and gentlemen.
Following a great many consultations, COPHAN had developed a comprehensive policy on integration into the workforce. This policy is based on seven major principles, which I will list for you.
The first principle is the establishment of a guaranteed income and the development of employment and skills for disabled people.
The second principle is universal access to job training programs and employability in view of sources of income.
.0920
The third principle is the demand for regular jobs on the regular labour market.
The fourth major principle is an equitable combination of incentives and coercive measures as regards labour market integration.
The fifth major principle focuses on the need to assert the role of job training. This does not concern the federal government as much as sheltered job centres.
The sixth major principle is the development of a partnership for labour market integration. We believe that such a partnership is very important between all levels of government and all stakeholders.
The seventh major principle is preferential hiring for people with equivalent skills.
On the basis of these seven major principles, we recommend certain measures to promote the integration of disabled people into the labour force. There are 11 such measures.
First, the introduction of corrective measures through real job training. As well as support and assessment measures to promote full integration into the labour market.
Second, the establishment of equal access programs for disabled people. This has already been done in principle at the federal level.
In addition to these incentives, financial and coercive measures, there is also a contextual requirement... [Inaudible - Editor]...employers to hire people with disabilities.
Third, there is a requirement on the part of the government and employers in all public and para-public organizations to establish mechanisms to integrate and redeploy employees who become disabled.
Fourth, in all employment development and job training measures the necessary number of places must be reserved for disabled people. That is very important.
Fifth, the population in general needs access to pay one-stop service for labour market integration. This must include services specifically adapted to the needs of disabled people and specialized placement services. These services must be funded on a stable and ongoing basis. We could come back to this single-window concept.
Sixth, compensation for all additional costs - and this is important - inherent in impairments, inabilities and disabilities, regardless of the income of the disabled people concerned and the households in which they live.
The seventh measure concerns an adjustment of equipment and programs or the offer of compensation for adjustments which individuals must make so as to enter and stay in employment.
.0925
The eighth measure is the need to adapt all development and employability measures in the federal and provincial departments and agencies concerned.
The ninth measure is the maximization of participation and representation on decision-making bodies involved in labour market integration. This is a result of the principle of partnership.
The tenth measure is... [Inaudible - Editor].
In conclusion, appropriate technical and financial support are needed to encourage disabled people to start up businesses.
These are the measures we recommend.
Ms Lemieux-Brassard: Given what has been said and the impact of the measures proposed, it is important that you realize that COPHAN, working together with other associations participated very actively together with the Council of Canadians with Disabilities in social policy reform in the fall of 1994 and is involved in the current reform. We support the recommendations made by the association in question in its brief since we are part of the movement and members of the task force.
I would like to highlight certain more specific situations which we experience and state very clearly that we are not advocating the position of any political party. COPHAN is in favour of general political involvement but not of any particular party. We wish to develop positions which will be fair and equitable for all people with disabilities.
When we look at the bill, we are concerned by the fact it may seem helpful to allow people to work part-time and be covered by unemployment insurance. The problem is that once you add up the number of hours from the time the person has started working, the employer must also pay his share.
I am not sure that that will be an incentive. In fact we even fear that it may be a further disincentive to the hiring of people with disabilities since a number of employers continue to propagate the myth that adapting a work station or the work place is expensive and entails extra costs.
The other problem concerns the intensity rule. Whenever an individual claims unemployment insurance, his or her benefits will be reduced by 1%. If you look at the figures from Statistics Canada or even the White Paper published in the fall of 1994 by DHRD on people with disabilities, you will see that despite the equity programs of the federal government, very few people with disabilities actually work. And when they do work, it is on contract. Therefore, the people we represent must make regular claims every year or every 18 months.
That constitutes another problem. All equity programs or programs to hire people with disabilities provide only contractual work. There are never any permanent positions. We have often asked this question but never received an answer. I hope that one of you will be able to answer. Over the last few years, with all the cuts made in the Public Service, how many people with disabilities participating in equity programs have seen their contract ended early or not renewed. Those in unstable or temporary positions were the first to be cut, as was the case in the Department of Transport and other departments.
.0930
This reflects the real situation, namely that the 1% reduction is a further example of discrimination against the people we represent. As other witnesses have mentioned, the effect of any changes to the number of hours now required for new claimants or people entering the system will be to exclude some of the people we represent, who are already in a minority position.
We will conclude on the issue of job training. As a person with disabilities representing our community in Quebec, I would point out to you that there is a significant problem in terms of job training. The various levels of government will have to reach an agreement and resolve this problem as quickly as possible. At the present time, in the whole province there are only 17 disabled people registered in job training programs. The school boards give priority to people receiving unemployment insurance because the federal government allocates an amount for each of these individuals. What are the rest of the people whom we represent supposed to do?
With the amendments proposed in Bill C-12, the number of people able to access these services will be reduced further. What will be done to provide access to job training, which should however be basic to any program aimed at providing training for an individual and developing his or her employability, as would be done for any other member of the public?
In conclusion, we very much regret that nothing more structured has been provided in the form of an action plan for job creation. They use the term employment insurance. We want some insurance that that will not mean the exclusion of the people we represent from the labour market. However, such assurance will not be given. From our reading of the bill, it will create additional disincentives that will further exclude us.
We are therefore asking you to present an action plan aimed at developing job training or employment which could meet the needs of our clientele and thus provide genuine employment insurance rather than just a welfare system intended simply to ``shelve'' them. Thank you.
[English]
The Chairman: Thank you very much. We'll now move to the question and answer session, starting with Madame Lalonde.
[Translation]
Mrs. Lalonde (Mercier): Thank you for your presentation, Ms Lemieux-Brassard andMr. Desjardins.
The explanation by Mr. Desjardins of the enormous needs of people with disabilities led clearly to your conclusion, that is that the unemployment insurance reform, which is now to be called employment insurance, may make it even harder for people with disabilities to integrate. That is clearly what you are telling us.
Have you thought of any solutions? I am asking you this question simply because we are coming to the stage where we have to convince the government and explain to it that there is still a willingness to examine this reform so as to make it better able to help rather than hinder the integration of these people. I am not saying that was the intention, but that is what will happen.
Ms Lemieux-Brassard: With that in mind, we are ready to support the recommendation of the CCD since it is also what we supported in our brief on the Axworthy reform. If we represent 15% of the population, at least 15% of government programs should be set aside for us, and with all the administrative upheavals taking place, 20% of money allocated should be earmarked for job training, job creation and access to the labour market.
.0935
Mrs. Lalonde: The requirement of 910 hours to enter the system is almost an obstacle for you, isn't it?
Mr. Desjardins: It is an obstacle, given that most of the jobs of people with disabilities are in contract positions. That means approximately 14 weeks. Clearly, that does not make any sense for the people we represent.
Mrs. Lalonde: The evidence of these witnesses is very important.
[English]
The Chairman: Thank you, Madame Lalonde.
Mr. Allmand.
Mr. Allmand (Notre-Dame-de-Grâce): Madame, you have pointed out that the employment measures in part II of this bill - the measures dealing with training and with employment assistance - are only available to people who have an attachment to the unemployment insurance system. You have also said that a great majority of your members don't have that attachment. So this bill will basically help those who have been working and who have had some kind of qualification for unemployment insurance.
On the other hand, you are probably aware that the federal government has proposed that all other training programs be transferred to the provinces, that Quebec would have jurisdiction over formation, l'emploi - it's a recognition of that - that they would deal with those measures. I would like to have your reaction to that proposal, because if that proposal were to move ahead - and there's an intention to do that - then the programs you would seek would be totally under the provincial government in Quebec and in the other provinces. It would be their responsibility to provide the kind of training you are seeking. For those who qualify for unemployment insurance, of course there would still be the programs in part II under this bill.
You asked for a one-stop office. You don't like the idea by which you have to go to two or three places, and I agree with you. So what is your reaction to transferring all these types of employment and training measures to the provincial government, which would deal with people in your situation?
[Translation]
Ms Lemieux-Brassard: I do not think that you have fully understood our position. I would like to come back to the seventh point we made concerning measures and guiding principles. Whatever the origin of the programs, there must be a standard to ensure that, from region to region or province to province, the quality and quantity of services provided are the same. There must be equality between people with disabilities, regardless of where they live.
Here, I would refer you to the brief we submitted to the Standing Committee on Human Rights and the Status of People with Disabilities on October 26 last, when we asked the federal government to ensure that all transfers to the provinces should be made equitably to the groups concerned and that there also be national standards. I would also refer you to what we called the principle of social monitoring.
Federal money for specific services to be provided to people with disabilities must be used solely for that purpose. Our position in that regard remains unchanged. We asked the federal government to establish basic standards in order to safeguard the quality, uniformity and equity of services.
It's all well and good to talk about job training programs, but you must also be able to provide all the money necessary to correct and improve the situation facing people with disabilities.
.0940
The fact is that very few job training programs are geared to the people we represent. This situation has to be corrected, and to do so money will be needed.
The same thing applies when we talk about one-stop shopping. There is nothing new in this. In the fall of 1994, our community supported the concept of what is referred to as a window within a window. In so doing, we say yes to one-stop shopping, but with specialized manpower services so as to meet the specific needs of our clientele within each of these centres.
It would be illusory and utopian to think that a person with disabilities could go to an employment centre, look at the little cards and be able to manage. We know that that is not the case. Moreover, the computerization of services within employment centres poses a serious problem for us and creates further obstacles.
Therefore, the provincial and federal governments must sit down together and decide once and for all who should be doing what. Meanwhile, we are held hostage because we don't have access to manpower or to employment services. This type of legislation marginalizes us even further, and at the same time the federal and provincial governments continue to accept provisions regarding ``administrative dismissal for reasons of disability''. Don't come and talk to us about full employment and access to employment in the Public Service and elsewhere.
You have a role to play and you must take substantive action quickly.
Mr. Allmand: If I understand you correctly, you are in favour of transferring these responsibilities to the provinces, but you also want standards to be established to protect the members of your associations. Is that the case?
Mr. Lemieux-Brassard: That is correct. We want criteria to be established. We are sure that the provincial and federal representatives are able to establish basic criteria to ensure minimum standards of quality and quantity in the services provided.
[English]
The Chairman: Thank you, Mr. Allmand.
Ms Lemieux-Brassard and Mr. Desjardins, I would certainly like to thank you very much for your input. You have provided us with an interesting perspective on Bill C-12 as it applies to your organization and to its membership. We are very grateful for that, and all of the points have of course been duly noted by all members of this committee. Thank you very much for your contribution.
The Chambre de commerce du Québec will be the next presenters. In the meantime, I have a housekeeping item that we can perhaps deal with. The clerk will be distributing a budget submission that needs to be approved. It's necessary to get the job done, and I just need a motion to adopt it. Would anybody move it?
Mr. Nault (Kenora - Rainy River): I so move.
[Translation]
Mrs. Lalonde: What is that? Can we wait for a regular meeting to do that, Mr. Chairman?
.0945
[English]
The Chairman: Would you like to do it later?
Mrs. Lalonde: Please.
The Chairman: Okay.
Madame Lalonde needs more time to reflect upon the numbers, so we'll do it later. It is a quite straightforward budget if we want to keep working on this bill. We need these funds in order to proceed.
Mr. Allmand: [Inaudible - Editor]...sort of people we have around the table. These are people who aren't from the committees branch, aren't from the parliamentary library.
The Clerk of the Committee: Pardon me?
Mr. Allmand: Who would the temporary help for $11,480 be, for example? People who are not with the committees branch? People who are not -
The Clerk: From outside.
Mr. Allmand: Are there some here today, for example?
The Clerk: No. They're all near my office.
Mr. Allmand: They're all in your office?
The Clerk: Yes.
The Chairman: Anyway, we're not dealing with this item now. So hold your comments until the end.
We're going to take a two-minute break until the members of the chamber of commerce from Quebec appear.
.0947
.0952
The Chairman: I'd like to call the meeting to order once again. We are still in Montreal, Quebec, and for the second video-teleconference the participants are from the Chambre de commerce du Québec, where Michel Audet is president.
Mr. Audet, could you kindly introduce the person with you for the benefit of the committee members?
[Translation]
Mr. Michel Audet (President, Chambre de commerce du Québec): Thank you. I am accompanied by Mr. Daniel Sheehy, who as secretary of our committee on human resources, helped to prepare our brief.
[English]
The Chairman: Thank you very much. Mr. Audet and Mr. Sheehy, welcome. As you know, we're working on improving Bill C-12, An Act respecting employment insurance in Canada. We look forward to your comments. What we'll do with you is what we've been doing with other presentations. Basically, we'd like to hear from you for approximately ten to fifteen minutes, and then we'll move to a question and answer session. You may begin.
[Translation]
Mr. Audet: I would like to thank your committee for giving me the opportunity to express the views of the Chambre de commerce du Québec on the important question of unemployment insurance reform.
First, I would like to speak briefly about the Chambre de commerce du Québec. Who are we and whom do we represent? The Chambre de commerce du Québec is a federation of 220 local and regional chambers of commerce comprising 54,000 members. We are also a business association representing 4,500 companies directly affiliated to the Chamber. Through our businesses, we therefore have sectoral concerns, while at the same time seeking to see the region as a whole since our chambers represent all parts of Quebec.
In December 1994, we appeared before the Standing Committee on Human Resources Development to express our views on unemployment insurance reform. We focused on four major objectives: emphasize active measures to encourage people to return to work; decentralize the delivery of services, locating them as close to the client as possible. Make a distinction between temporary protection and income security unemployment; and review the rules blocking access to the job market and, of course, premium rates, regulations and training.
We carefully studied the proposals tabled last December by the federal government.
.0955
We see that the measures proposed will greatly help to attain the first two objectives, but we consider that there is still a lot of work to be done to achieve the two others.
First, the measures proposed will certainly help to combat structural unemployment. The reform seems to be aimed at doing something about growing structural unemployment, since a study by Statistics Canada indicates that 80% of beneficiaries have already received benefits in the past. The Chamber therefore applauds the abolition of the variety of existing programs in favour of the more systematic and more limited active measures focusing on the five major programs.
Reinvestment of funds in areas such as assistance to independent workers or job training will certainly be more profitable than the usual passive redistribution. It is important to mention that the application of these measures must represent an honest attempt to get former beneficiaries back to work and must above all avoid the appearance of inflexible and redundant subprograms.
Very often, a reform starts off by being simple then becomes more complicated. We therefore hope that the definition of programs will remain as simple as possible. However, there is an important corollary to these programs which was announced last December concerning the withdrawal of the federal government from the area of manpower training.
The Chamber shares Quebec's very broad consensus, which has been the case for a number of years, that the federal government should withdraw and Quebec should assume responsibility for the management of active training measures. It therefore agrees with the announcement of the withdrawal of the federal government from the management of activities and from all manpower training policies. In our view, in order to put an end to the present mess and facilitate training in cooperation with the private sector, the presence of a single interlocutor is essential.
This will have the effect of increasing client service, improving the overall effectiveness of programs and eliminating overlap through sound rationalization. We therefore consider it essential that both parties, the government of Quebec and the federal government, speed up negotiations. At present, we are concerned about the slowness of these negotiations and we hope that they will speed up and lead to an agreement as quickly as possible.
Quebec workers must not become the victims of another long federal-provincial squabble on this subject. The federal government announced its position last December, it must now deliver.
As regards other provisions, in addition to active measures, the determination of the eligibility period in terms of the number of hours is, in our view, a positive measure. However, there is one worrying aspect to this, namely its impact on seasonal unemployment. There are many regional chambers which are afraid that their region might be penalized because ``regular'' work in the regions concerned is by its very nature seasonal.
We therefore consider it important that the federal government revisit this question and make amendments to the measures proposed so as to take into account seasonal conditions. For example, there might be special provisions to change the divider used to calculate the number of hours needed to qualify. It could be based on the average of recent years of work in a seasonal industry, such as tourism, forestry or fishing.
I know this may be quite complex, but we would like the areas in which we work to be taken into account. At present, regional unemployment rates are taken into account. We would probably have to consider the possibility of making allowance for the seasonal aspect of activities covered by unemployment insurance in these regions. Some local chambers have even gone so far as to suggest the possibility of establishing different premium rates for workers in the seasonal industries.
.1000
We are not making this a recommendation. We know that it is complex issue, but this shows the importance of seasonal unemployment for the regions, particularly those who depend on tourism and forestry.
With respect to job creation, the Chamber regrets that employers' and employees' premiums have not been reduced more than they have. We agree that this is a reserve to be used in more difficult years, but we consider that more social measures are being and will continue to be funded through the Unemployment Insurance System which, as it's been pointed out, should be essentially an employment insurance system and not an income support system.
We recognize that income support measures are necessary, but we do not believe that employers' and employees' premiums should be used to fund such measures.
We consider that it is essential to reduce payroll taxes. This applies both to unemployment insurance and to all other payroll taxes.
A recent CROP poll conducted among our members shows that two-thirds consider that premium rates are too high and currently causing them to reduce their investments. What is even worse is that as a result they are cutting back on hiring, using more overtime and even, occasionally, resorting to the underground economy.
We therefore believe that it is essential to further reduce payroll taxes, particularly unemployment insurance premiums.
In this regard, we are concerned that the federal government has added to social benefits which were already covered by the system: benefits, sick leave, parental leave, maternity leave. As a result of this provision, further income supplements will be given to low paid workers.
I think we all agree on the objective of the measure, but the fact that this is an income support measure which goes far beyond the objectives of an employment insurance program.
The bill provides for a review of the current program in 1998. We think it is desirable to do so regularly, for example in 1998, but the legislation should also contain a clause providing for systematic reassessment every three years thereafter. Why? Because as the federal documents themselves state, for several years now, but particularly at present, there has been a rapid and profound change in the labour market, and we are convinced that the current provisions will probably no longer apply or will have to be amended in three or five years. We know how difficult it is to begin a process for which no provision has been made.
Therefore, the system will have to be reviewed regularly and systematically, every three years for example, so as to ensure that the programs attain their objectives.
Therefore, in conclusion, we agree with the basic amendments proposed which encourage workers to return more quickly to the workforce, and particularly the use of hours rather than weeks for example, we commend you for these proposals which we support.
However, we would like to make certain recommendations to improve the present system. There are at least three or four proposals.
First, the special provisions affecting seasonal industries should be incorporated. The Chamber proposes that the calculation of eligibility be based on the average of available weeks of work in economic activity sectors by region.
.1005
In winter, for example, we know how long the skiing season lasts, it would therefore be easy to incorporate specific provisions governing people working in that industry, even if they do not fully meet general criteria.
The second proposal is to remove from the proposed bill the funding of social measure such as income supplements, parental leave, sick leave, etc.
The third proposal is to regularly reassess the effects of the system, every three years. We also mention, of course, that premium rates must be reduced in order to promote employment.
Lastly, and this is not the least of our proposals, priority must be given to bringing about a federal-provincial agreement giving the government of Quebec exclusive authority for manpower training, as soon as possible, as was announced last December by the minister at the time,Mr. Axworthy. Thank you.
[English]
The Chairman: Thank you very much, Mr. Sheehy, Mr. Audet. We're going to move to the question-and-answer session now, starting with the Bloc Québécois and Madame Lalonde.
[Translation]
Mrs. Lalonde: Mr. Audet, thank you for your presentation. I congratulate you for your statement to the effect that you are part of Quebec's broad consensus on the issue of labour force training.
However, you say that you are pleased to see that the government is moving from passive to active measures. I would like to point out that in reality, the unemployment insurance fund will be paying for these active measures through change in programs, without more money being spent. You just have to look at the figures provided by the government to realize that the federal government is disengaging the general fund from these active measures. So in reality, it's just a re-vamping, if you will, of active measures which in the future, will be paid for through the Unemployment Insurance Fund to the tune of $800 million.
This brings me to my first question. Do you agree that it should be the unemployment insurance fund that pays for these active measures rather than the general fund? That's part of the proposal.
My second question is about the reduction and the maximum insurable earnings. You've undoubtedly noticed that in its bill, the government has reduced the maximum insurable earnings from approximately $42,400 to $39,000. Other witnesses pointed out that this favoured large corporations that will recover $500 million this year, as well as workers who are in between $39,000 and $42,400.
Instead of sharing this cost among all workers and people who do overtime, the government has decided to reduce the fund, which means that small and medium-sized businesses in particular have complained about the fact that in the future, in the context of this bill, they will have to pay as of the first hour worked. However, they did not officially complain before the committee about the fact that large corporations were benefiting from a considerable reduction in premiums compared to smaller ones.
I imagine that the Chamber of Commerce has many small and medium-sized businesses among its members. I would therefore like to hear your views on the subject, because as you know, instead of reducing the maximum insurable earnings, the government could have decided to reduced premiums on the entire payroll.
Mr. Audet: You're asking me whether we agree that active measures should be funded by the UI fund. Yes, we do agree. I say this because I would it to be understood that we feel that the unemployment insurance system must be overhauled if we want it to be more effective.
But I do agree with you when you say that you're concerned about the fact that we are transferring part of the burden, which would have been funded out of general public revenues, to the unemployment insurance fund, and I did refer to that in my presentation. I completely share your concern in this regard.
.1010
For example, we think that the income supplement that's being proposed in the new system is not a measure that should be supported by the unemployment insurance program. This is a perfectly valid income supplement measure, but it is quite different in nature from unemployment insurance. We do have concerns about that.
Your questions deal with the very definition of active measures. I think that we will have to take a serious look at this issue, not just the aspect that you've referred to, but also in the framework of the federal-provincial negotiations.
I also think that one of the problems of federal-provincial negotiations is that the consensus is exactly on that, on active measures. In so far as we are establishing income support measures and not training, retraining and employability measures, the negotiations that will follow will certainly be quite complete.
We will certainly have to reflect on what we mean by active measures, for the various reasons I've mentioned, but we also have to agree on negotiations between Quebec and Ottawa as well as between Ottawa and the other provinces that will lead to results as soon as possible.
In your second question, you referred to insurable earnings. There is no doubt that some of the small and medium-sized businesses that are not currently targeted, notably because part-time work is not covered, will be further affected in the future. We have to realize that broadening the base is part of this reform. There's no doubt that some of these companies will have additional expenses about which they have expressed some reservations.
However, we did not make this an item of discussion because we are aware of the need to broaden the base of premium payers as much as possible so that the system is as large as possible and covers as many people as possible. In that context, the reduction in the maximum insurable earnings to $39,000 that you referred to does reduce premiums.
The Chamber has not assessed the impact of that reduction. You referred to $500 million, and that's a significant amount. But we are not in a position to comment because we received no complaint from small and medium-sized business nor from large corporations on this subject. I'm therefore unable to give you a more detailed analysis.
Mrs. Lalonde: I have noted that your general principle is the broadening of the base. If you can't draw any conclusions, I can do so in your place. Thank you very much.
[English]
Mr. Johnston (Wetaskiwin): Thank you, Mr. Audet, for your presentation this morning.
I notice that you support some level of reserve in the UI fund. At the same time, you support a reduction in premiums. Although you don't exactly say so in so many words, you seem to imply that the level of contribution on behalf of the employers amounts to a tax on jobs and would continue to depress the job market.
I am wondering what level you would like to see the premiums reduced to. And what do you think the optimum level of surplus would be?
[Translation]
Mr. Audet: I pointed out earlier that we had CROP conduct a poll: 70% of the businesses told us, almost unanimously, that premiums are too high right now. Of course, we could also say that everyone thinks they pay too much income tax.
.1015
But we wanted to go further and we asked them the following question: as a counterpart to a reduction in payroll taxes - and we weren't talking only about unemployment insurance premiums, but also Quebec taxes for healthcare funding which are very high - would you be prepared to pay more income tax on profits? The answer was yes. Two-thirds of the firms questioned agreed to pay more tax on profits if that was the only way to obtain a reduction on payroll taxes. Why? Because payroll taxes and unemployment insurance premiums are calculated without taking the financial situation of a company into account.
Right now, the amount of profit is satisfactory, but there is no doubt that in a few months, and certainly in a few years, we will once again see a substantial decrease in the cash flow of businesses, and that will be a problem because premiums are calculated on the whole payroll without taking into account the financial situation of the company involved.
That's equivalent to paying taxes on losses. If a company has losses, it is those losses that are taxed. That's why companies told us that they would agree to a tax increase on profits in order to obtain a reduction in payroll taxes.
We didn't ask this question specifically about unemployment insurance premiums, but it is quite obvious to us that social benefits should be funded not through premiums, which are a payroll tax, but through other sources of revenue, such as the government's general revenues.
[English]
The Chairman: Mr. McCormick.
Mr. McCormick (Hastings - Frontenac - Lennox and Addington): Good morning and thank you for your presentation.
I'm certainly glad to see you do support the shift from the passive to the active measures. You mention that the reinvestment of funds into areas such as assistance to independent workers or job training will be of much benefit, more than the usual passive redistribution. We've heard from a number of witnesses who specifically supported the self-employment assistance programs. I wonder if you want to comment on this.
Also, this legislation does focus on five active measures rather the hodge-podge you mentioned before that was not effective. It includes the wage subsidies, the earning supplements, the creative partnerships and the skills and loans. I want to get your opinion on these programs that will now focus on getting people back to work, not just create a paper trail.
[Translation]
Mr. Audet: That's right. We examined the new programs announced by the federal government and we think that within the five major programs there were announced, there's a lot of space to find measures that will encourage workers to return to the labour market.
But there is a fundamental provision that we must always bear in mind. We think that the best incentive to encourage workers to go back into the labour force is to show them that there is a financial advantage to this. It has to pay them more to go to work than to stay home through the entire period where they could collect unemployment insurance.
From that standpoint, we feel that the current system is a passive one that encourage people to wait a long time before returning to the labour market and that the new system will encourage the unemployed to go back to work. We agree with this completely and we are in favour of the proposals being made.
The difficulty will certainly be to implement the measures, those five programs that are announced. Of course, when there's a change in the program, many workers find the situation confusing for a certain period of time. It's therefore necessary to provide for a transition period, but on the whole, we are in favour of the measures being proposed.
.1020
I would nevertheless like to reiterate once again that there is a corollary to these active measures, which is to find some common ground in order to reach an agreement with the provinces, which will have to administer these programs.
We musn't forget that we're addressing the same workers. Whether its a provincial or a federal program, workers will shop around, in a matter of speaking, at all available windows.
If there is not a good interpenetration of federal and provincial programs, we are convinced that, once again, the result will be ineffective.
That's why the corollary to the application of these measures is to ensure that there is better integration of measures and an agreement between the federal government and the workers in order to ensure that these measures are administered efficiently in an integrated manner, and that workers don't have multiple windows where they can go shopping for measures according to whichever is most advantageous to them.
[English]
Mr. McCormick: In your brief you mentioned that you are concerned about how successful the different aspects of this will be. I wanted to let you know that the legislation mandates that the program will be monitored continually and reviewed as to its effectiveness in both small towns and large cities.
[Translation]
Mr. Audet: I think that's a very important proposal, and the Chamber de commerce du Québec is prepared to cooperate with all communities in which this evaluation will be conducted in order to express its views and those of its member businesses.
[English]
The Chairman: On behalf of the committee, I thank you very much for your presentation. As always happens, your points and perspective have been duly noted by all members, and we will of course be using your material to improve Bill C-12.
[Translation]
Mr. Audet: Thank you.
[English]
The Chairman: We are going to stay in Montreal, Quebec, and the next presentation will be from the Coalition pour la survie des programmes sociaux.
.1023
.1025
The Chairman: Can we have a motion from someone to accept the budget submission?
Mr. Nault: I so move.
Mr. McCormick: I second the motion.
The Chairman: Is there any discussion?
Mr. Johnston: Is there no debate on this budget?
The Chairman: Do you want to have a debate on it?
Mr. Johnston: Well, I have some questions.
The Chairman: Okay, Mr. Johnston, we can debate it. Go ahead.
Mr. Johnston: For instance, I'm quite surprised that we have to come up with $11,480 to have temporary people in the clerk's office. Surely it's been anticipated that the clerk's office will have to deal with committee meetings and hearings. Could you explain to me what these people do?
The Chairman: If we look at the budget breakdown on temporary help, section 5, additional administrative support is required to maintain the committee's extensive records and database, and it explains to you why the funding is necessary. Is that okay?
Mr. Johnston: I don't have that.
The Chairman: It's page 3.
Mr. Johnston: All I have is what is here. I would like to have some explanation of item 7. What is that?
The Chairman: Hospitality.
Mr. McCormick: Is it coffee?
Mr. Johnston: No, it's not coffee. Coffee is listed in item 8, Mr. McCormick.
Mr. McCormick: Oh, my mistake.
The Chairman: Hospitality is if they're serving lunch or something along those lines.
It's allocated, but it hasn't been used - right? It's a standard procedure that basically all committees have.
Mr. Proud (Hillsborough): It goes back. We don't use it.
The Chairman: Mr. Johnston, the bottom line is that, in order to proceed as a committee, in the real world people need to get paid for the work they do. We need to pay these individuals, and this is why the budget is here.
Mr. Johnston: Are you implying, Mr. Chairman, that this is the real world?
The Chairman: This is the real world.
Mr. Johnston: How very enlightening.
The Chairman: It's been real for me for a long time.
Motion agreed to
The Chairman: Now we'll go back to Montreal and we'll listen to the Coalition pour la survie des programmes sociaux.
[Translation]
Mrs. Lalonde: Mr. Chairman, would it be possible to obtain the list of witnesses? There were 30 witnesses to whom we could give $850. That's a little bank you have there. We're going to watch you.
[English]
Mr. Nault: He's a good unionist. He's okay.
Mrs. Lalonde: Not enough for me, Mr. Nault.
[Translation]
Do we have a brief for this group?
An honourable member: No, no brief.
[English]
The Chairman: In Montreal, can you hear me?
A witness: Yes, we can.
The Chairman: As you know, we're analysing Bill C-12, an act respecting employment insurance in Canada. We'd certainly like to welcome you. We look forward to your input. I have three names here: Garry Saxe, Denise Lacelle, and Jean-Pierre Wilsey. Is that correct?
Ms Denise Lacelle (Community Organizer, Coalition pour la survie des programmes sociaux): It is not. I'm Denise Lacelle, but, as you can see, Garry Saxe is not here, nor is Jean-Pierre Wilsey. Let me introduce you to Alice Herscowitch, who is the director of Project Genesis.
The Chairman: Wonderful, thank you very much.
As you know, we operate in this fashion: you have approximately 10 to 15 minutes for your presentation, followed by a question-and-answer session. You may begin.
[Translation]
Ms Lacelle: Thank you. Our presentation will be done in both languages, French and English.
First of all, I would like to introduce the Coalition pour la survie des programmes sociaux, which has been in existence now for two years and is an umbrella organization of about 40 grassroots, community and union association in the Montreal area.
This coalition was born out of the 1992 federal budget, when Minister Axworthy announced the upcoming publication of its green paper.
The coalition is concerned with the fact that many of our social programs are being challenged, both by the federal government and the government of Quebec. The Projet Genèse is one of the member organizations of this coalition and has taken the initiative of drafting the brief that follows on behalf of the coalition.
.1030
Projet Genèse is a community organization that has been working in the Côte-des-Neiges district for 20 years now. We work with residents of this neighbourhood to help them protect their social rights and solve collective problems relating to housing, poverty, healthcare and social services, discrimination or racism, and we help them build a united community spirit regarding living conditions.
I would like to describe some of our efforts. We had local authorities recognize the right of the homeless to social assistance in our neighbourhood. We established various neighbourhood resources: a community cafeteria, a community council, and community and economic development corporation, etc. In the past year, our individual services responded to 23,000 underprivileged people in our neighbourhood, that is the poor, the aged, new immigrants, etc., who needed help with various problems, such as welfare, access to different public services or housing problems.
Thus, in many different ways, we work toward improving living conditions for residents of our neighbourhood. It should be pointed out that in Côte-des-Neiges, there are more than 13,243 families with at least one member on unemployment insurance or income support.
The official unemployment rate in 1994 was 14.9% in our neighbourhood. Forty percent of families and 55% of single people live under the poverty line. Despite these figures, 28% of our population have at least an undergraduate degree.
The other members of the Coalition pour la survie des programmes sociaux are carrying out similar work on various issues in the neighbourhood for a given group of people, welfare recipients or unemployed persons: defending those who have been injured in the workplace, literacy groups, a centre for women who are former psychiatric patients, etc.
Our coalition also includes unions because we are convinced that the future of workers, with or without jobs, is closely intertwined. Unfortunately, the situation will worsen because of the bill before us now.
[English]
Ms Alice Herscowitch (Director, Project Genesis, Coalition pour la survie des programmes sociaux): Just to talk briefly about the present unemployment insurance reform, since the adoption of the 1994 and 1995 federal budgets, the community with which we work has felt the impact of severe cutbacks. People who seek our help are drawing unemployment benefits for lower amounts and for shorter periods of time, if they are at all eligible. As a result, many are forced to turn to the Quebec welfare system, where they are further impoverished and further from the job market.
Canada Employment Centre offices are overflowing with people who are victims of an economic situation that has not improved and inadequate government programs that yield no employment. Programs offered through the federal system, such as job training or job search counselling, fall short of meeting the real needs of the unemployed - in short, jobs.
In a situation in which, as the federal government has so clearly admitted, unemployment is structural, ``measurettes'' just don't measure up.
To give you a brief example, in July 1995 there were in Montreal 185,100 people who were beneficiaries of welfare and 82,900 people who were on unemployment insurance, for a total of 268,000 people unemployed. This obviously does not count all the people who are not beneficiaries of either of these government programs but who are unemployed and looking for work. We don't believe that the situation has been improved at all since then.
In La Presse, just this weekend actually, we counted the number of job offers, excluding of course short-term job offers like article 25s for the federal government and escort services, because we don't consider those to be jobs. There were 485 job offers. In fact, what this means is 552 officially unemployed persons for each job.
Through a series of systematic cuts to the unemployment insurance program and other social programs, the lives of the unemployed have deteriorated. Major changes introduced through Bill C-113 eliminated entire groups of workers for resigning or being fired. These people fell through the welfare system and in Quebec experience a double penalty by being subjected to a $150 cut and a year-long exclusion from participation in welfare work measures.
The recent cuts in the unemployment insurance program reduced benefits and increased eligibility requirements. In fact, we can now speak of annual cuts or reforms to the system.
In our own storefront we have noticed a marked increase in the number of individuals seeking assistance with income-security problems due to the cuts and bureaucratization of both the unemployment and welfare systems. Local food banks see a monthly increase in demand as hope is extinguished. This has also provoked an increase in the volume of advocacy that we are doing as clients wait for appeals, wait for their cheques, or are simply no longer eligible - often without any resources and requiring emergency assistance from welfare. All this is to say that the community organizations see on a daily basis how cuts and irrational policies impact on the lives of the unemployed and the poor.
.1035
We are extremely concerned about the latest proposed changes to the EI program. The following brief offers comments on proposed changes, but our principle argument focuses on the government's present policy towards debt reduction. We have chosen to discuss this issue in greater depth primarily because we believe the federal government is allowing fiscal policy to determine its social policy. Reforms to the UI system have focused entirely on budget cutting and punitive measures as opposed to addressing the needs of the unemployed or dealing with an ongoing problem of unemployment.
The alternatives proposed in the second section offer insights into the cost of social programs while considering the potential revenues that our government could have at its disposal. It is our belief that serious thought should be given to finding ways to generate other revenues rather than subjecting the population to further hardships.
Unemployment insurance is in fact no longer a social program. Through employee and employer contributions, it is a fully self-financed insurance program with some social elements. It is surprising to note that when in opposition, the current governing party opposed the diversion of funds from unemployment insurance to employment training programs. The government is now ready to divert funds from these contributions to entirely separate functions, including deficit reduction.
I'd just like to briefly review some of the employment and unemployment trends, which I think you are probably all familiar with and which seemed somehow to escape the formulation of this bill that is being studied right now.
We have an unemployment rate in Quebec that has been over 10% since 1981 despite an alleged economic boom in the mid-eighties and an alleged recovery after the recession of the nineties.
We have had technological change that allows workers to produce twice as much their counterparts of the 1950s. Production per worker has increased, but the need for labour has decreased.
We have corporations that are making enormous profits but have very little need for labour, therefore there is no reinvestment in jobs.
We have a globalization of markets, in which cheap labour is available elsewhere and in which there is no loyalty from Canadian business to Canadian jobs in Canada.
We have increased part-time work: 30% of new jobs are part-time; 45% of women work part-time, almost half of whom are unwillingly working part-time.
We have longer hours for those who do work - not necessarily paid overtime, but overtime.
We have an exclusion of young people from the labour market. A much higher percentage of young people is unemployed.
We have a decline in real wages. Family income has been falling since 1980.
We have a decline in the percentage of the labour force that is unionized. Therefore there are poorer working conditions but we are forced to remain workers.
We have small businesses creating employment while large, profitable businesses indulge in massive lay-offs. A third of small-business owners are themselves living below the poverty line.
We have a false hope that increasing consumption is going to increase jobs, because we've actually saturated many markets for which consumption existed in the past. If we don't find ways to give greater income to people, we're certainly going to have less consumption, not more.
The proposed employment insurance program does not address any of these major issues. The new emphasis on employment is an emphasis actually in name only. We feel the Standing Committee on Human Resources Development has a responsibility to review not only the details of Bill C-12, but the fiscal and monetary policies that could create the opportunity to address the real needs of the unemployed. It has the responsibility to address the structural nature of unemployment.
[Translation]
Ms Lacelle: We also want to comment on some aspects of Bill C-12. Allow us to point out that the new name proposed for the program, employment insurance,is quite surprising to us. Later, we will discuss employment related concerns, but allow us to note that this bill has more to do with a long list of cuts to unemployment insurance than with some sort of strategy to create jobs.
It's also surprising that we're being consulted on the original bill when Minister Young tells anyone who cares to listen that he wants to amend it. These amendments have been announced, but we don't know what they will be. We think it would have been more logical to present them first and then consult people.
Having said that, let us point out that Bill C-12 contains the same logic as all the other bills that preceded it. Restrictions to eligibility, reductions in benefits, reduction in the length of benefits and accrued penalties. The only change is in the discourse surrounding this bill.
.1040
We don't intend to comment on all the changes. We are convinced that hundreds if not thousands of other briefs will do so in detail. But we would like to formulate the following comments.
First of all the bill proposes to calculate work time in hours rather than weeks. According to the unemployment rate, these hours will vary between 420 and 700. For people who work 35 hours a week, that doesn't make much difference. For people working between 15 hours, the current minimum, and 35 hours, this provision represents a substantial increase, almost double in some cases, in the number of weeks necessary to qualify.
For people working less than 15 hours, those the government pretends to help with this bill, the required number of weeks will vary from a minimum of roughly 30 to over 70 hours per year for newcomers to the work force.
A voice: Seventy hours per year?
Ms Lacelle: Seventy weeks per year. Can you believe that. For people entering the work force, the number of hours required will be a lot higher; they are looking at 910 hours.
The same is true for re-entrants. These newcomers who are being penalized are more often than not young people, women, and immigrants who will be penalized twice. Those who are last to be hired and first to be fired, will have to face higher requirements. Once again, eligibility is being limited.
In Quebec, the new rules would enable 18,000 new people to qualify, but would exclude 38,000. That is quite a balance and quite an improvement?
As for benefits, the level would be set at 55% of the average earnings over a fixed period varying from 14 to 20 weeks. The period will be set at 20 weeks within the next few years. This fixed period means that benefits are calculated based on a number of weeks which is not necessarily the same used for calculating eligibility.
What is the point of having each hour count, as the government is suggesting, if these hours no longer count when the times comes to calculate benefits? Clearly, this fixed period will result in a reduction in the level of benefits. At present, benefits are calculated based on the last 20 weeks during which a person has worked at least 15 hours. Under the new system, the calculation can include a varying number of weeks with no earnings, which will reduce the average, and consequently, the cheque.
Frequent users, will see a 1% reduction in their rate for each of the 20 week periods during which they have received benefits over the last five years, for a maximum penalty of 5%. That means that it is the victims of an increasingly fragmented labour market who will be penalized and not the employers who hire and fire workers as they please. I'm thinking about employers like Revenue Quebec, who are more than happy to rehire for the tax season the same workers they laid off the previous year.
Will the day come when the employers who are responsible for unemployment are penalized and not workers? Finally, as someone pointed out in the fall, if people want to eat lobster in Ottawa, someone has to go fishing for it and it's not that person's fault if there is no fishing in winter.
Low income families who receive child tax benefits will see an increase in their benefits. It is of course interesting to see the evolution of the previous Minister of Human Resources Development. Last year, his green paper dealt exclusively with child poverty. They seem to have understood that child poverty has something to do with parents' income. Congratulations!
Having said that, it is quite worrisome to see the reemergence of the idea of family income which is already present in other types of assistance programs, whether it be social assistance, the guaranteed income supplement for retired people or tax benefits for children, and so on.
As far as we can see, premiums paid by employees into the UI fund are individual and not family based. The introduction of this aspect, which is also part of the new proposal for senior's benefits, may, in the long run, deprive women of their right to an independent income because of their spouse's earnings. This aspect worries us immensely. Having said that, once again, benefits are being reduced in various ways.
The bill talks about employment benefits and job creation. In order to help employment insurance claimants find work, various benefits are available: wage subsidies or income supplements, the Self-Employment Assistance Program, and training subsidies. To help people find jobs, a national placement service will be set up. In order to help create jobs, a Transitional Jobs Fund with a budget of several million dollars over three years will be set up. Unemployment insurance premiums will be reduced and the intention there is to create jobs. Finally, some employment benefits will also contribute to creating jobs - I'm referring here to wage subsidies and the SEA program.
.1045
Let us begin by noting that no amounts are specified in terms of the budgets allocated to these various programs. Let us also note that this section hardly contains new ideas nor a broad comprehensive plan. Programs which have never proven that they will have any impact are being recycled. There is not even a serious assessment of the various pilot projects set up as a result of the green paper.
Against a backdrop where we have clearly identified the impact on jobs due to increased computerization, the globalization of markets, and so on, we can only note that the remedy hardly measures up to the illness.
Various elements of the solution are, however, known. For instance a reduction in the amount of time worked, job sharing, and the development of real jobs within social infrastructures. We are still waiting for the national childcare program and true accountability for employers with respect to their employees.
Finally, still in the area of so-called job creation, bear in mind that to use the savings realized because of the drop in premiums, an employer will have to be a big employer. The table that the Department of Human Resources Development was kind enough to provide shows in fact that for a net weekly salary of $570, an employer will realize annual savings of $20,80 on his premiums. However, the table omits to mention that to create one new job from these savings, the said employer will have to have at least 1425 employees.
The government was elected first on the promise not to tamper with social programs, and then, because of its stated priority which could be summed up in three words: jobs, jobs, jobs. The least we can say is that we've really been had.
What we are facing is a reform which is designed strictly to generate savings. All of these changes should, over the period from 1998 to 1999, make it possible to save $1.2 billion per year, of which $600 million would be reinvested into the various programs. Over the following period, from the year 2000 to the year 2002, there will be $2 billion in annual savings and $800 million will be reinvested.
Bear in mind that while it is true that the unemployment insurance fund ran a deficit in 1991-92 and 1993, since 1994, surpluses have been accumulating. In 1996, forecasts are for a cumulative surplus of $5 billion. Under the present reform, an additional $4.8 billion would be added over five years, coming entirely from employees' and employers' premiums, which means that $10 billion in total could be directly diverted into the public purse.
For several years, the government has not put a penny in this fund. Unemployment insurance doesn't cost the government anything. With this bill, it is the government which will be very costly for contributors. That's a curious reversal!
In the meantime, in our area like everywhere else in Canada, hundreds of thousands of people will not have enough to eat, will have to chose between paying their rent or for groceries, and we'll see their talents and abilities go by the wayside. If adopted, this bill will simply lengthen the lineups at soup kitchens. In short, bill C-12 is a poverty creation bill. Moreover, we're still waiting for real job creation policies.
[English]
Ms Herscowitch: We'd like to talk very briefly about some alternatives we think the federal government should be considering. In a fragile economy such as ours, government cutbacks in a self-financed program like unemployment insurance can only harm chances of a recovery.
This reform plans a $2 billion reduction in direct benefits to individuals who have lost their jobs. This is on top of more than $10 billion that has been cut over the last few years through both Conservative and Liberal government changes.
Those individuals who have families will be forced to live in greater poverty. They will also spend less in the local economy. As a result, small businesses will profit less, causing some to go bankrupt. The owners and workers of these businesses end up paying less tax, and they need unemployment insurance and welfare. The result of such social program reforms is that the government collects less revenue and has higher expenses, which causes the deficit to rise.
There are much more effective debt and deficit reduction strategies than the removal of money from poor people. Just as an example, 70% of UI recipients actually earn less than $25,000 a year. We're really talking about cutting from the poor.
In order to develop a fair and workable economic policy with a goal of reducing the deficit, we must understand the causes of the growth in the debt. An unpublished but very thorough study by Statistics Canada in 1990, ``The Federal Government Deficit, 1975-76 to 1988-89'', demonstrated that only 6% of the growth in the deficit between 1975 and 1988 was caused by increases in government program expenses.
Other sources, such as the annual debt operations report by the federal government's Department of Finance and Paul Martin's economic and fiscal update of December 1995, show that we have an operating surplus of more than $25 billion since 1988. The finance minister plans on increasing the operating surplus by another $45 billion by 1997.
.1050
Deficits are incurred when government expenses exceed government revenue. Government expenses can be broken down into two types: program expenses and debt payments. Since 1988, we have been taking in more revenue than we have spent. Therefore, it is not these program costs that cause the growth of the debt. The debt operations report of 1994 clearly admits this fact.
The total size of the debt of the Government of Canada is increasing. In essence, this is affected by two key trends: the operating balance of the government and the effect of compounding interest. Program expenditures and revenues, the operating balance, have been in a small surplus over the past five years. This influence has had little net effect upon the size of the debt. On the other hand, the effect of compounding interest has been very significant.
These statistics confirm the analysis of the Statistics Canada study from 1990. Aside from stating that only 6% of the growth of the debt was cased by program expenses, this study shows that 44% of the growth was cased by increased interest payments.
While there are many factors that affect interest rates, some of them admittedly being global and beyond the control of any one national government, the Bank of Canada, along with the federal government, has pursued a policy of high interest rates in the hope of keeping inflation down. The cost of this high interest policy is astronomical.
Aside from causing hundreds of billions of dollars of growth in the debt, high interest rates stifle economic growth. Businesses are less likely to borrow money to expand and hire people. Furthermore, individuals have less available money, because they have to pay more for mortgages, credit card charges, etc. As a result, they buy less, causing businesses to earn less profit. Increased unemployment, increased debt charges, increased poverty and decreased tax revenue, are all costs of a high interest rate policy.
Since September 1995, Japan, Germany and other European countries have lowered their interest rates. Over the last year, interest rates have been decreasing. In January 1996, the Bank of Canada made a small step in the right direction by lowering its overnight rate.
More recently, however, interest rates have started to climb slightly. We strongly encourage the government and the Bank of Canada to do more to lower interest rates.
According to the Department of Finance's debt operations report of December 1995, 25% of the debt is foreign owned. The report also explains that foreign ownership of the debt has steadily risen since the mid-1970s. In 1978, only 8.5% of the debt was foreign owned.
With a larger proportion of the debt owned by non-Canadians, we are more susceptible to international pressure on economic policy. We all remember how Moody's, the international bond rating agency, threatened to downgrade the Canadian government debt if we didn't cut the deficit. As an independent country, we should not be vulnerable to such pressure. We should also remember that interest payments on the foreign-owned part of the debt are not taxed and tend to leave the country. If a Canadian, or a Canadian institution, owes the debt, the interest payments are taxable.
One of the reasons for the increase in foreign ownership of the debt is the reduction of the Bank of Canada's ownership of the debt. In 1978, when the debt was 91.5% Canadian owned, the Bank of Canada owned 21.4% of it. In 1994, the Bank of Canada owned only 7.7% of the domestically owned debt.
When the Bank of Canada owns the debt, the interest payments on the loan return to the bank's owner, which is the Government of Canada. Profit from such investments by the Bank of Canada are a source of revenue for the government. Some economists would claim that we can't increase borrowing from the Bank of Canada because it is the same as having the bank print more money.
Now that the Bank of Canada owns less of the debt, Canada's private banks have increased their ownership. Private banks now own 21.4% of the domestically owed debt. When these banks lend money to the government for the deficit, they are not required to put up the capital. There is no difference to the economy between the Bank of Canada creating money and the Royal Bank of Canada creating money. We strongly recommend that the government increase borrowing from the Bank of Canada.
.1055
The 1990 Statistics Canada report that was mentioned earlier exposed on other very interesting fact: 50% of the growth of the debt between 1975 and 1988 was caused by a drop in government revenue relative to the size of the economy. If you look at where government revenues have decreased, we see that since 1980 corporations have been allowed to reduce their share of the tax burden by 40%, largely through use of tax loopholes and shelters. Over the same period individuals have had their share of the tax burden increased by 15%.
Our governments have created tax shelters that allow large corporations to avoid paying tax. Billions of dollars of tax revenue are lost through the creation of offshore subsidiaries. The phenomenon was the subject of a recent issue of Maclean's in October 1995. And more billions of dollars are lost through tax deferrals. Bell Canada alone owes a total of $2 billion in deferred income tax. This same corporation, which posted profits of $1.4 billion in 1994 and recently recorded increased profits of 40% for 1995, is laying off 20% of its workforce, or over 10,000 people.
As an example, the Royal Bank of Canada earned a record pre-tax profit of $2.04 billion in 1995. If they actually paid their income tax at the combined federal and provincial statutory income rate of 42.2%, they would have paid $871 million. After deductions for offshore subsidiaries, tax deferrals, etc., they only paid $386 million in income tax, an effective income tax rate of only 18.9%. Our tax system has allowed the Royal Bank to legally avoid $485 million in income tax.
The five largest private banks in Canada - the Royal Bank of Canada, the Canadian Imperial Bank of Commerce, the Toronto Dominion Bank, the Bank of Montreal and the Bank of Nova Scotia - have collectively been able to legally avoid $890 million on their pre-tax profit of $7.871 billion. Yet all of these banks are reducing their employee numbers due to automation and decreased customer service. At the same time, they have charged a total of $2.2 billion in service fees and have paid their chief executive officers $10.98 million dollars in salaries and bonuses.
In conclusion, we make the following recommendations:
First, we must recognize that social programs have not caused the growth of the debt, and therefore deficit reduction strategies must concentrate on other means aside from cutting these programs.
Second, the government must develop policies that will have the effect of repatriating the debt and lowering interest rates.
Third, the government must develop a fair tax policy. To this end, we refer the committee to the alternative budget of the Canadian Centre on Policy Alternatives, as well as the work of Léo-Paul Lauzon of the Université du Québec à Montréal.
Fourth, we must concentrate on reducing our most serious economic problem: unemployment. Our government must develop an effective job creation strategy. Included in this strategy should be policies such as the encouragement of early retirement through the enhancement, and not the cutback, of government pensions, as well as a lowering of age of eligibility; the placing of limits on overtime work and reducing the hours worked each week - as unemployment has risen so has the average number of hours worked by those left in the job market; encouraging employers to develop policies of job sharing; developing corporate social responsibilities for the unemployment crisis; penalizing profitable corporations that decrease their numbers of employees; and developing a real job creation program that will ensure stable and decently remunerated work.
In conclusion, what we have before us is a reform that doesn't touch the problem of unemployment. If we really want to cut the deficit and eventually the debt, there are certainly better ways to do it and we have suggested some to you this morning.
Since unemployment insurance is a fully self-financed program, there must be a limit to how much government can use this money - our money, our contributions - to effectively penalize workers.
Lastly, we think it's time to start real government planning. We are seeing each of our social programs cut, with one a month on the chopping block - pensions, health care, unemployment insurance, welfare, CAP, transfer payments, education - and without any real vision of where we as Canadians want to be in 5, 10, 15 or 20 years. As we continue to cut for short-term gain we see long-term pain at the level of community organizations and the people who work with people in need in our communities across Canada.
.1100
Thank you.
The Chairman: Thank you very much for a very comprehensive presentation. You've used a macro approach towards Bill C-12. You have brought in many other elements, which I'm sure you feel are connected to the bill.
I only have maybe five minutes for a questions and answers. Your presentation was very thorough, so I'm sure we'll find the answers to most of our questions in your presentation. I want to give Madame Lalonde and Mr. Allmand just a few brief minutes for some questions.
[Translation]
Mrs. Lalonde: Thank you very much for your presentation. I would like to add an element to the very striking picture you have painted which will, I hope, help the committee not give into this bill which will be devastating, as you so clearly said.
There is one element that I would like to emphasize because you did not do so: it is the fact that the government, by reducing the maximum insurable earnings from $42,400 to $39,000, deprive the fund of $900 million per year. Perhaps you did not have this information.
Instead of decreasing revenues which come from large corporations, since SMEs do not pay salaries at that level, where workers with high salaries who do overtime and should contribute to this collective effort, instead of involving high-income workers and capital intensive corporations, which would be normal, the government is going to collect revenue from workers as of the first hour they work, even if they reimburse $2000. There are a lot of people who earn $3000 who will never get benefits but who will pay. SMEs will also pay although they are the ones that create the most jobs.
All I ask is that you continue such extraordinary work and that you help us convince the government not to go in that direction.
[English]
The Chairman: Was that a comment or a question?
[Translation]
Mrs. Lalonde: I would like to know if you have any comments to make on this.
Ms Lacelle: I will comment, if I may. Yes, that is something that we know, as we know of a number of others elsewhere. As we said in our introduction, we did not plan to comment on all of the details in the bill. That would have resulted in a much longer brief.
Having said that, we wanted to emphasize the fact that the program does not cost the government a cent. It is time the government stopped dipping into it. Moreover, if the objective is to create jobs, that problem is not being dealt with. If the objective is to deal with the deficit and the debt, there are other ways of going about it. We chose not to examine all of the changes to the unemployment insurance program in detail so that we could focus on these three fundamental aspects.
Thank you for your comment.
Mrs. Lalonde: Thank you very much.
[English]
The Chairman: Mr. Allmand.
Mr. Allmand: First of all, I want to confirm what an excellent job Project Genesis does in the Côte-des-Neiges area. If you weren't there things would be much worse.
.1105
In your brief you point how this bill, as is, will leave more people without unemployment insurance and with lower unemployment insurance. I say as is because we're expecting some amendments that will improve the bill. Hopefully we'll get that, but let's look at it as it is.
You deal with unemployed people on the street. If these people aren't covered by unemployment insurance or by less unemployment insurance and if they have less welfare, what are they doing? Could you give us some figures on the trends in the soup kitchens that you're operating in your area?
What's happening to people with respect to their homes? Do they have to leave their premises and go into cheaper rooms? Are there more homeless people?
Could you give us some of the figures of your area of Montreal, which I know very well? You have the figures. What's happening to people when they're not covered by an adequate UI and welfare system?
Ms Herscowitch: I think we could go on for hours about that topic, but briefly if we look at the question about food banks, the community cafeteria and food bank in our neighbourhood is now serving 125 meals every lunch hour, and that's only because the capacity of the hall is 100. It's giving out 700 food baskets a month, and that's again because that's the limit of the capacity of the organization to provide food. There would be thousands of people from Côte-des-Neiges alone who would need that service. As an indication, a few years ago they were giving out 30 food baskets a month.
The welfare reforms in Quebec, which are somewhat impacted by the federal budget, which has cut moneys to the provincial governments, continue to decrease the amount that people who have no other means to live on are living on. We had reductions in Quebec on April 1 of $50 for those people who are waiting for a government measure, who'd like to participate in the program but have no measure, and $30 for those people who are actually participating in the retraining programs. So we anticipate the retraining aspects of the Unemployment Insurance Act with some concern.
If we look at the figures for Montreal, last June 7% of those people who were available for government measures on welfare programs were participating. That means that the government at the Quebec level has not been able to provide training opportunities for people, and unfortunately we don't expect much more at the federal level. The real problem, which is the lack of jobs, has not been addressed.
Every day at Project Genesis we have homeless people coming in, people who are literally living on the streets. These people are not only what we would consider a traditional homeless clientele of people with drug problems or of people who want to live on the streets because it's an independent lifestyle that they appreciate, but very much families who have nowhere to go, who are evicted from their apartments. We are dealing with evictions every single day. People cannot pay the rent and eat at the same time. Children are going to school hungry every single day.
Mr. Allmand: Thank you.
The Chairman: Once again, thank you very much for what I thought was a very comprehensive presentation and also for bringing to the committee some real-life examples of how people have been impacted by some of the changes that have occurred both provincially and federally.
You can rest assured that the membership of this committee is determined to improve the bill and members of Parliament have already forwarded some amendments that will in fact have a positive impact on people's lives. We thank you very much for your very thankful presentation and contribution.
We will stay in Montreal, Quebec; we will hear from Mr. Ghislain Dufour, chairperson, and Jacques Garon, research director, from the Conseil du patronat du Québec. After that we will be moving to Charlottetown, Prince Edward Island, where we'll hear from the Tourism Industry Association of Prince Edward Island, followed by a presentation from the Government of Prince Edward Island Executive Council.
.1109
.1113
The Chairman: As I said earlier, we're still in Montreal, Quebec. We'll be listening to the presentation from the Conseil du patronat du Québec. Mr. Ghislain Dufour is the chairperson and Jacques Garon is the research director.
Welcome, gentlemen. We look forward to your presentation and your thoughts and ideas about Bill C-12. Our mandate is basically to improve this piece of legislation. Tradition here is that we have a half hour, so you'll have approximately 10 to 15 minutes for your presentation, followed by a 10- to 15-minute question and answer session.
[Translation]
Mr. Ghislain Dufour (President, Conseil du patronat du Québec): Thank you,Mr. Chairman.
The proposed reform generally meets Quebec employers' expectations. The government plans to allocate more funding to active programming and less to passive programming.
There is no question that unemployment insurance has played an important role in the Canadian economy over the past 50 years. Nevertheless, as unemployment insurance came to include social measures, and as the labour market continually had to adjust more and more rapidly to the industrial restructuring that affected Canada and all industrialized countries, the mission of Canada's unemployment insurance program was mainly to provide income support for the unemployed, especially the chronically unemployed. The program thus became less and less effective in promoting the employability of people whose skills required upgrading.
.1115
In 1995, for example, it is estimated that about $15.2 billion were paid in benefits. Administrative costs totalled about $1.3 billion, spending to enhance active labour market programming came only to $1.9 billion, or less than 10%.
What does Bill C-12 propose? To ensure that this 10% proportion increases. In fact, it is estimated that it will increase to about 14% in 2001-2002, when the reform is expected to yield its true results.
By increasing unemployment assistance spending the government intends to attach more and more importance to returning to the labour force, rather than simply encouraging the unemployed to become regular users of the program. Of course, we can only support this objective.
We also agree with the proposal designed to ensure that eligibility for benefits will henceforth be based on hours and not weeks worked. This will entitle many part-time workers to insurance benefits while rewarding their work effort.
Under the employment insurance program, people who work more hours will be entitled to higher benefits. This measure will also prevent moonlighting by encouraging workers to declare all of their work to be entitled to higher benefits.
I would also like to point out, Mr. Chairman, that it may be appropriate to exclude students from this system, as requested by a number of employers' associations.
We also agree with the whole series of measures - and I won't repeat them all here - whose objective is to make the system less generous while encouraging return to work. We feel that these changes are justified in view of the fact that the current system is considered, according to the OECD, as the most generous in the world. They will make the program far more consistent with the new realities of the labour market, while encouraging people to go back to work and reducing the risk that workers will get caught up in a cycle of dependence on the program.
What strikes us most in terms of employability programs, especially in part II of the legislation, is the shift that the federal government has made. Not only does it propose to reform some 39 existing programs and above all to pare them down to five more flexible and more effective types of benefits, it also proposes to sign administrative agreements with provinces that wish to manage all the human resources programs funded by the employment insurance account.
CPQ regards this as the federal government's first real openness in human resources training. The government thus recognizes the provinces' responsibilities and education and human resources training.
CPQ has always felt that signing such administrative agreements with the provinces will improve service to the clientele, increase administrative effectiveness, make the private sector more accountable and eliminate barriers to worker mobility, while reducing the cost of the program.
You'll perhaps allow us a certain number of other comments, the first one being that employment insurance remains more than just a temporary earnings replacement plan. The proposed new program still includes social programs. The CPQ has never questioned nor does it question the merits of these social programs. However, it feels that they have nothing to do with the mandate of employment insurance which is to provide people with an income while seeking employment and these measures should thus be funded by the government through its general budget.
.1120
As for fishing benefits, we still feel that employment insurance benefits should gradually be eliminated for this type of worker and, as suggested in the government's discussion paper, programs that better meet their needs should be adopted.
The same goes for regionally extended benefits. They have been in effect for nearly 15 years. However, these benefits no longer have anything to do with an economic adjustment plan, which is the reason they were introduced at the time. Thus, we feel that regionally extended benefits could be phased out as part of the draft reform and be replaced by economic measures promoting job creation in those areas.
The national employment service is a major problem; it's under debate in Quebec. Of course, the proposal in Bill C-12 emphasizing labour market information and placement in Canada will pose problems especially in Quebec, a province wishing to repatriate all of the employability programs. As far as we're concerned, Mr. Chairman, we suggest the establishment of a single window to be jointly managed by representatives of the federal, provincial and local governments as well as the business community under the umbrella of the provincial government.
It's impossible to avoid saying something about employment insurance administration and funding. We know that the contribution rate decreased slightly as of January 1st last, but just as our colleagues of the Quebec Chamber of Commerce who presented their brief before us, we think this decrease is insufficient in view, on the one hand, of the surplus in the fund and, on the other, the fact that payroll taxes have become a major obstacle to job creation and the unemployment rate, in Quebec in any case, still remains very high.
As for establishing a reserve in the employment insurance account we agree that it is useful to stabilize the program, but nothing in the documents sets out how big it should be. In our opinion, it should not be exceedingly large so that any surplus could be allocated to reduce program contribution rates.
Of course, in Quebec, many, and especially key political figures, wonder about the financial impact of this reform in Quebec. We'll get back to that. However, it's not enough to accuse the reform of penalizing the unemployed by referring to only one of its aspects. As far as the passive measures, like issuing cheques on Fridays, it's true. However, it is not in the area of those active measures where we are winners and where, therefore, Quebec as a whole remains a winner.
Before concluding this, I'd like to say a word about the management of the fund. Since employment insurance is contributory in nature, contributors to the program should be involved in designing and managing it. In its existing form, the Canada Employment and Insurance Commission does not include any employer and employee representatives and the draft reform does not call for any change in the present structure. Moreover, employers and employees are regarded as special interest groups not as owners even though we all know that for some years now employers and employees have been insuring the program's sustainability on their own.
We suggest that, at the very least, employer and employee representatives should have an important advisory role to play in designing employment insurance policies, determining benefits, setting contribution rates and generally managing the program.
.1125
In conclusion, this unemployment insurance reform has the merit of allocating more funding to active programming and less to passive programming. In our opinion, that's the most positive characteristic of Bill C-12.
The bill attaches increasing importance to getting people back to work, rather than encouraging the unemployed to become regular users of unemployment insurance.
In this respect, our employers' federation made up, as you know, of some 126 associations, welcomes the reform and is satisfied with its provisions that are designed to harmonize federal and provincial programs and, in the specific instance of development grant and loan programs relating to training, these provisions aim at allowing a province to sign an administrative agreement with the federal government. According to the agreement, the province could fully manage these programs under certain conditions.
In wrapping up, by tightening eligibility requirements, reducing the amount of benefits and paying particular attention to the less well off, the bill encourages people to work while making the program more equitable for all. Of course, Quebec employers support those orientations. Thank you.
[English]
The Chairman: Thank you very much for giving us your perspective on this particular bill. We'd like to move to a question-and-answer session now. We'll start with Madame Lalonde and then move to the Liberals.
[Translation]
Mrs. Lalonde: Good morning, Mr. Dufour.
Thank you for your comments on training and the management of the fund because we did suggest that this fund should be managed jointly with the federal government's participation, but I still do have some questions for you.
You're favourable to going from passive to active measures. If that were the case, I would tell you that I would agree with you. However, here's my problem: the so-called active measures amounted to $4 billion in the federal budget. In 2001, they will amount to $4.2 billion and there will thus be a very slight difference in terms of impact. The fundamental difference, however, is that there's going to be a transfer from the unemployment insurance fund to the Consolidated Revenue Fund.
The unemployment insurance fund, instead of contributing $1.9 billion will actually be contributing $2.7 billion or $800 million more. However, the Revenue Fund, instead of contributing $2.1 billion will only be contributing $1.5 billion. So really, we're not looking at an increase in active measures but only at passing the hat to the unemployment insurance fund. So it's hard for me to be in favour of this passage from passive to active measures as, at this point in time, there actually are active measures in existence.
A lot of the existing programs are to be replaced by others, five in all, with the hope they'll be more efficient. In Quebec, those five programs have already been evaluated and it is hoped that the parties in Quebec, through the Société québécoise de développement de la main-d'oeuvre (Quebec Society for Labour Development) will really be in a position to manage the agreement.
That was my comment. I'd like to know if it will lead you to changing yours. Actually, what we have here isn't redirection but simply a transfer to the Consolidated Revenue Fund from the unemployment insurance fund.
There's another aspect I'd like you comment on. The significant decrease in benefits and the economic fall-out from that. I find it quite a concern.
.1130
As you know, I've been working for years on this employment question and I know how very important the money supply available in an area for the purchase of goods and services can be. Quebec, as a result of the two successive reforms since 1994, is losing $735 million to which will be added another $640 million. That means approximately $1.3 billion less available in areas with high unemployment rates. It seems to me that cannot help but having some effect on the economy.
I don't know if the Conseil du patronat has thought about that aspect of the question. That can only have a recessionary effect which could be quite a concern besides overloading Quebec's social welfare budgets. That's why I'd like to get your opinion on that.
Mr. Dufour: We've understood your two questions quite clearly, Mrs. Lalonde. I'll askMr. Garon to answer your first one as he is our head economist and you've thrown out a lot of figures. However, I would like to say that we're not changing our basic position or our principle. The figures will show you why. However, what remains is that beyond a possible withdrawing of the state from professional training and a possible reference to the unemployment insurance fund, the amounts in the fund going to active measures are more generous than in the past which, in our opinion, is promising.
What will we do with them? That is a matter for another debate, but there is more money in the fund for active measures. That can be demonstrated.
M. Jacques Garon (Research Director, Conseil du patronat du Québec): Mrs. Lalonde, you are right when you say that the figure goes from $1.9 billion to $2.7 billion. As well, the contribution from the Consolidated Revenue Fund goes down from $2.1 to $1.5 billion.
However, even if the federal government withdraws its direct contribution to the employability program, it still remains that active measures represent some 10 to 14 per cent more of the total expenditures incurred by the unemployment insurance fund over the transition period of six years.
We cannot disagree with that because it is the main ingredient that, according to all analysis and studies that have been made, including that of the OECD, will contribute to the re-entry on the job market of many unemployed rather than create a state of dependency as is presently the case in Canada.
Moreover, we believe that the present system has probably contributed since 1971 to an increase in unemployment of 1 to 2 per cent nationally.
Mr. Dufour: On the second issue, you are certainly right; in the course of various reforms, reductions have been considerable. There have been several of them, starting with Mr. Mackasey's. Indeed, the benefits received by the unemployed have decreased.
Here are three quick reactions. First, we are in agreement, about a certain aspect, regarding some regions. If you read our brief attentively, you will see that we are saying that there are real problems in some regions, problems of chronic unemployment. But should the solution to that situation come from the unemployment insurance system? That problem should rather be tackled with job creation policies, economic development policies, etc. In any case, the fishermen's problem is a clear example of this.
You have noticed that the opposition to these proposals, particularly in Quebec or certainly in Eastern Canada, came precisely from seasonal industries, from more depressed areas. Should we use the unemployment insurance system to tackle these problems? We don't think so.
Secondly, we should all recognize that the Canadian unemployment insurance system is the most generous... I see that you are saying no. According to the OECD that program is among the most generous in the world and I will not dispute that statement here this morning. So I imagine that the legislator has made a number of comparisons. It is not a question of penalizing Canadians, but rather to put into place a system that our society can afford.
.1135
In the end, some regions might be more penalized than others. We are told that in some regions, people will quickly get off the system because of the waiting periods that are now longer and so on. But the new method of calculating the number of hours worked will enable an approximately equal number of persons to be added to the system. In our view, they will balance each other out.
Mrs. Lalonde: Without any assessment.
Thank you very much. We will come back later.
[English]
The Chairman: Thank you, Madame Lalonde. We move now to Mr. Regan.
[Translation]
Mr. Regan (Halifax West): I would like to ask you whether you have looked at the amendments proposed by some members of this committee. I have myself proposed an amendment where the period used as a divisor to determine the income of a person, would be the qualifying period plus two. Thus, it would be the same in regions where you must have 14 weeks or those where you need 19 weeks.
[English]
In other words, what I want to say is that the original bill proposed that in areas of highest unemployment - where it is most difficult to get additional work - people would be required to work an additional four weeks in order to get the full benefit of 55%, whereas in the areas of lowest unemployment they would be required to work no additional weeks...and that's in the areas where it's easiest to get additional work. Does it not seem to you to make sense that there should be a need, an equal incentive in all areas of the country?
[Translation]
Mr. Dufour: We have not examined your proposal, Mr. Regan. Hence, it is difficult for us to comment.
Furthermore, if we appear before parliamentary committees, in this Parliament or elsewhere, it is always with a view to improve legislation. We expect members of Parliament to improve the proposed legislation through a number of amendments. Therefore I have no objection to considering your proposal.
The changes proposed in this legislation are major ones and are all interrelated. In what way does your proposal impact on other provisions? I would not be able to tell you this morning. However, at first sight, I for one do not reject it.
[English]
Mr. Regan: Another question that I have relates to the size of the surplus. Like you, some business groups have come before us and have suggested that we should not have too large a surplus and that the surplus should be maintained at about $5 billion. It seems to me that the experience we had in the last recession - we had a $2 billion surplus to start with and then went to a deficit of $4.2 billion - with the fund should tell us that we should err on the side of caution. We should go toward the larger rather the smaller sum in terms of the surplus. What's your view on that?
[Translation]
Mr. Garon: We have no firm position on what should be the unemployment insurance reserve fund. The only thing we know is that, in his last federal budget, Mr. Martin proposed in the estimates an amount of some $5 billion.
That is what is anticipated, perhaps for the end of this year, in the federal budget. That may be as well the amount of the accumulated surplus in the unemployment insurance fund. Is it enough or not enough? In our opinion, given previous experiences, that amount could be justified. Now, could it be somewhat less or somewhat more? That is arguable. One thing is sure however: in our opinion, that surplus could not be much higher than $5 billion.
.1140
We believe it would be more beneficial, if that surplus was exceeded, to redistribute that money by decreasing employers' and employees' premiums because, as was said earlier, we think that payroll taxes, in particular UI premiums, are very bad for jobs, mainly in Quebec and probably in other provinces also.
In this context, we believe that $5 billion would be an adequate amount but we have no specific view on this matter.
Mr. Dufour: In our brief we said that the amount of that surplus should be determined. Let us assume that we reach $6 or $7 billion, that there is an economic recovery and less unemployment. We have always said, Mr. Regan, that we do not agree that the unemployment insurance fund surplus be used to reduce our deficit for a very simple reason: every cent of that money comes from employees and employers.
If there is a surplus, it should be used to reduce premiums and not for deficit reduction. Therefore it is important to determine a specific amount. Either benefits will be increased or premiums will be reduced but, as I just said, the surplus should not be applied to deficit reduction.
[English]
The Chairman: Mr. Dufour and Mr. Garon, thank you for your presentation. I gather that you view this bill as an improvement from the status quo.
Mr. Dufour: Yes.
The Chairman: Did you want to expand on that?
[Translation]
Mr. Dufour: Yes, and thank you very much. It is indeed a real improvement compared to the present situation, in particular in terms of the money presently spent on passive measures that will from now on be spent on active measures so that we can stop sending cheques to unemployed people and provide them with training which will allow them to find a job.
[English]
The Chairman: Thank you very much.
We are now going to move to Charlottetown, P.E.I., to listen to the Tourism Industry Association of Prince Edward Island. We will then remain in Prince Edward Island to listen to the Government of Prince Edward Island Executive Council.
.1143
.1147
The Chairman: I call the meeting to order. We're in Prince Edward Island and we'd like to welcome the Tourism Industry Association of Prince Edward Island, with Mr. Don Cudmore and Gerry Gallant.
As you know, we are here to try to improve Bill C-12. We look forward to your input. We have approximately half an hour, with hopefully 10 to 15 minutes for your presentation followed by a question and answer session.
Mr. Gerry Gallant (Vice-President, Tourism Industry Association of Prince Edward Island): Good afternoon. First of all, I'd like to welcome you to Prince Edward Island. When you're in the tourism and hospitality business on Prince Edward Island, you always want to have people come here. We're coming through the technology of this system, but we would have preferred to have seen you here personally so we could extend our hospitality. Having said that, welcome to our presentation.
We are the Tourism Industry Association of Prince Edward Island. My name is Gerry Gallant. I'm the vice-president and Don Cudmore is our executive director.
We're aware that there were other employee groups and associations from Prince Edward Island also requesting time to present their views. The fact that they weren't permitted to do so puts more responsibility on our association to ensure that the concerns of business and employees from P.E.I. are heard. We appreciate the fact that you've given us this opportunity, but we want to express our concerns that other groups may want to present evidence to the committee as well.
Tourism is one of the fastest growing industries in the world. This industry has played and will continue to play an important role in the contribution to our national economy. Tourism potential for revenue generation and job creation is vast. In 1995 tourism contributed $178 million to our economy from expenditures of pleasure visitors alone.
.1150
In 1995 our industry in P.E.I. employed 18,000 people on a full-time, part-time, and seasonal basis. This represents 30% of our labour force on Prince Edward Island. In 1994 the value of tourism for the Canadian economy represented $27.4 billion in total receipts and $10.2 billion in foreign exchange earnings. It's an export industry, in essence. That represents 4% of our national GDP. It accounted for more than 586,000 jobs, 10% of the Canadian labour force and $12.4 billion in government revenues. It is apparent with these numbers just how important the tourism industry and its workforce are to the economy of the country and this region.
The matters we wish to address from the perspective of the tourism industry relate to two basic issues surrounding this new act. First, we feel that there has been a lack of good detailed research analysis with respect to the impacts on seasonal industries. Our industry is a seasonal one. The second issue we would like to raise with the committee is that there is a generally erroneous perception about seasonal industries and their workers.
Let me first address the lack of detailed research and analysis with respect to the impact on seasonal industries.
We commend your efforts to consult with industries regarding the changes in the act. Our concern surrounds the fact that the consultations, although politically useful, have not provided the level of analysis required for such significant change in the UIC. This became obvious during a recent P.E.I. consultation in which specific workers in the fishery and tourism sectors detailed, at significant personal cost, what the changes, even with proposed amendments, were doing to their personal gross annual income. The members of Parliament who were present were somewhat confused, or at least surprised. That's because I don't think they had the detailed analysis of the impacts some of these changes were making on a particular member of a particular seasonal industry.
I'll give you an example to show that this issue is not only just one for Atlantic Canada. Seasonal industries operate all over Canada, as you're aware. Statistics Canada in 1994 revealed that Canada-wide, 41% of the 825,000 people who work in the hospitality sector are either part-time or seasonal workers. This sector, which contributes 10% of Canada's workforce, is expected to grow another 50% to create another almost 500,000 jobs by 2005. So this is not just an Atlantic Canada concern; it's a national concern with respect to the seasonal industries we have all across this country.
Another example you should be aware of is that in February 1996 there were 145,000 UI claimants in Atlantic Canada, which has a population of 2.3 million; however, Montreal, with half that population, a little over one million, had 190,000 claimants.
The fact is, ladies and gentlemen, that throughout Canada, not just in Atlantic Canada, many industries are seasonal. The only evidence we see addressing this situation under the new act is through some of the amendments, but we're not too sure the amendments will really work. This reflects the fact that the act, as it was rewritten, is somewhat flawed and lacks the definitive analysis on this important element of our economy, which are seasonal and part-time industries.
The second issue we have is the generally incorrect or erroneous perception that a lot of policy-makers and politicians have about seasonable industries and their workers. You know the obvious. In Atlantic Canada and throughout all of Canada, as I said, we have seasonal industries. The fishery has definitive seasons regulated by resource use and environmental conditions, such as ice, tides and fish migrations. You can't change the tides. You can't melt the ice. We only have certain seasons.
The agricultural sector makes hay when the sun shines, and the tourism industry is dependent on the visitation patterns of its customer. We attempt to expand that industry or that season, but we have definitive boundaries in our seasons.
Throughout Canada, the valued employees of the tourism industry are yearly returning workers who grow with our companies and do not fit the typical image created by the policy-makers and some politicians who perceive them as repeat offenders. For example, this year our association, which is made up of 700 businesses on Prince Edward Island, recognized a 21-year front-line worker as our hospitality award recipient, which honours a valued member of our industry. This person, like all employees in our industry, contributes to our success and to the economic growth of this province. She has been a repeat offender according to those who don't understand seasonal industries, and that is just not on.
.1155
Our employees are the most significant asset in our industry because we are in the service industry and the hospitality industry. If our employees are not our most important asset, then we don't have a business. The reforms that are in place should not be targeted at these people. The industry and this award winner's employer are proud of her contributions and have a concern about whether or not she will be able to continue in the industry under the current proposed policy changes that will affect her. Employers in our industry are concerned about whether or not we will be able to attract people of this calibre under the regulations.
We are not satisfied with the way this act treats seasonal workers as second-class citizens. We have provided an example of how this new act, as it is written, will affect a worker in our industry. I don't need to do it verbally because you can see it in the presentation.
We just did this one case, but I know there are other cases being presented later that show even more significant concerns from other industries. In this case here, though, this person had total earnings of $9,472 a year, which included the appointment earnings and the UI benefits. That's about the same amount as the tax-free allowance that a member of Parliament gets, I think, or it may be even less. Under the new regulations you're reducing it by $1,672, and are reducing her weekly average from $182 in earnings to $150 in earnings. There's something just fundamentally wrong with the new act if it creates that kind of a problem. It's just targeting the wrong people.
In conclusion, the tourism industry is concerned that the policy makers and, yes, some politicians just don't understand the seasonal nature of our industry across this country, or the contribution that seasonal workers make to it. Please recognize that continuing efforts are being made to extend our tourism season and to extend the weeks of employment, but we see many of your proposed changes as being detrimental to the future growth of this important sector of our economy because the basis from which our industry garners its strength and growth is our employees. These regulations as proposed have a serious detrimental effect on our employees and, as a result, on our industry.
We encourage reform and we understand we have to change, but let's create change with some sensitivity to the needs of the lower wage earners and with a learned and analytical perspective, not a political one.
Thank you very much.
The Chairman: Thank you very much for your presentation. You can rest assured that the points you raise, and particularly the ones about seasonal workers, have been addressed somewhat by some members of the committee who have forwarded amendments.
Now we'll move to the question and answer session, starting with Mr. Dubé from the Bloc Québécois, followed by Mr. Easter and Mr. Proud from the Liberals.
[Translation]
Mr. Dubé (Lévis): I come from Quebec and have travelled often to Prince Edward Island. Without depreciating my own province, I can tell you that PEI is a beautiful province that I enjoyed visiting, particularly when I visited the area with the Committee on Human Resources Development of which I was a member in the fall of 1994. That one day spent in Charlottetown being very fresh in my memory, I understand very well what you said earlier, that you feel somewhat responsible for and supportive of other industries in Prince Edward Island even though you represent the tourism industry.
I will ask you one single question because I want to leave more time for the member for Prince Edward Island.
You give us an example about a decrease of 18%. Does that only relate to the tourism industry or does your forecast also include other seasonal industries in PEI, such as agriculture and the fishing industry?
.1200
[English]
Mr. Gallant: That 18% was just one small case that we developed. I know that in the other sectors - fishery, agriculture, forestry - those percentages are even more significant. I think if we did a good detailed analysis of our industry, which is something that we haven't been able to see, I think we would find that the impact is even greater than the 18% shown by this one case.
[Translation]
Mr. Dubé: Would you allow some time to the member for Prince Edward Island who wants to speak?
[English]
The Chairman: Thank you, Mr. Dubé and gentlemen, as always.
Mr. Easter.
Mr. Easter (Malpeque): Thank you, Mr. Chairman.
Welcome, fellows. Just in beginning, you should have a little P.E.I. propaganda behind you there to attract some of these other colleagues down to P.E.I. for the summer so that they can spend a little of their money there.
I think you've made the point that a number of us have been making in terms of the seasonal industries and the need for business in those seasonal industries to in fact have a program that ensures there are skilled workers who can stay in the region during the off-season. I'd like you to comment maybe a little further on that because the EI system is sometimes looked upon as being just there for the worker. It's an important business component as well when you train people, especially in the tourist industry. So I'd like a little expansion on that.
Secondly, in terms of your example, I believe you were both at the meeting we had in Cornwall the other day and that we talked extensively about the amendments. In your example, I think there are two points that have to be made on the third one down with the new regulations. The divisor with the amendments in place would actually be divided by 14 instead of 16, and if that was a low income family of $26,000 or less with dependants, there would also be another increase in benefit to potentially over the 55%. So I think the amendments in fact meet a lot of the needs that you're asking for there.
The last point that I want to make is that there is a problem moving from in terms of the regional allocation of 12 weeks plus a divisor of two weeks. There is a problem in terms of people being able to find hours of work in those two weeks. I want to know what the tourism industry is trying to do to extend the season so that there will be availability of work there and so that they'll be able to have hours on the job during that increased divisor period, because that would make a big difference in terms of earnings as well.
Mr. Don Cudmore (Executive Director, Tourism Industry Association of Prince Edward Island): Thank you very much, Wayne.
On the first part of your question, yes, of course there is a grave concern among the employers here on Prince Edward Island, both for their employees and for their businesses. I think the strength of tourism on Prince Edward Island is its people. We have worked very hard over the years and have spent a lot of money to upgrade the skills of those people. In fact, if these regulations - or any regulations - will cause them to want to go to another part of Canada or to another industry, or will stop us from attracting the quality of employees we need, this would be very seriously detrimental to the industry here in Prince Edward Island. I think that kind of handles the first part of your question.
On the second part, we weren't privy to the numbers you have as far as our scale goes.
Mr. Gallant: I'll respond to that a little bit, Wayne.
I understand what you're saying about the 60 weeks maybe moving back, but I guess what I'm concerned about is that we're reducing something that leaves us with a situation in which people are making less then a liveable wage as it is. I agree there may be different intensity clauses and different gap formulas, but the bottom line is that we're still reducing the benefits of people who shouldn't have benefits reduced. And I know there are changes in the act that we have to make with respect to the upper side of this thing to make some improvements. But somewhere we've lost it, and part of the reason is that we haven't done the analysis. There hasn't been good detailed work done on a case-by-case basis. That's where I think it's flawed, and it responds to that.
.1205
Mr. Cudmore: You've made one more point, on what we are doing about extending our season. The major point we're making at this point is that this year the industry, as well as government, have devoted about 25% of their marketing dollars to the off-season. I think that's an important step. Industry and government have taken a very sincere stab at this seasonal part of our industry. Now that we have shown that commitment, I think the rest of the industry - the operators, the businesses, the employers - are willing to come forward and leave their operations open a bit longer.
It's a great move to take a major part of your small marketing dollar and put it to the off-season, but it's one that we think is important, because it's our only area of growth in Prince Edward Island, and indeed in Atlantic Canada. So I think we have had a really good response.
Mr. Gallant: Our major decision-making in terms of the off-season or the shoulder season is based on marketing. It's based on people coming, and it's no different from General Motors making fewer cars if their market is down. So we are working hard to move those shoulder seasons more broadly into our season, but the bottom line is that certain parts of our businesses, certain elements of our industry, have to close their doors when the show flies.
Mr. Easter: It is important to note that point, because we have to show to other committee members and to government here that we're willing as an industry to do what we can to extend that season. But in return for that we definitely need an employment insurance program that, as you say, is going to meet in the off-season the needs of the workers whom you've certainly trained to keep there for the following season.
Mr. Cudmore: Further to your question, it is important to note that we hope to access some of the program dollars out of this fund that will be diverted probably provincially, to make it more attractive for our employees to stay within the industry for the last two weeks of the season, and maybe the first two as well. We'd like to work with the governments on that.
Mr. Proud: Welcome, Gerry and Don.
I want to clarify one particular area in your presentation, Gerry. You say that the seasonal worker does not fit the typical image created by politicians and policy-makers. Let me assure you that more people than politicians and policy-makers talk about the seasonal worker.
I am the first to admit - and you'll see this by the amendments that are coming forward - that a lot of people don't understand seasonal industries. We believe that we have on the table here three amendments that by and large will take care of the concerns raised by the majority of the seasonal workers. So it's not just the politicians; it's the business community, the workers themselves - people with permanent jobs or people who are concerned about changing the employment insurance bill. That was very definite. It's not driven by politicians, and it's certainly not driven by politicians from my part of the country or your part of the country. I just wanted to clear that up.
As you see these three amendments being proposed and put forward, do you foresee them, as we do, making this amended Bill C-12 a much more acceptable bill in Atlantic Canada, particularly in Prince Edward Island?
Mr. Gallant: The only evidence I have about whether the amendments work or not came from the result of the consultations we held a couple of weeks ago in Cornwall, which Wayne mentioned. It seems to me that the examples laid on the table by seasonal workers there demonstrate that the amendments aren't working. They're still having a negative impact.
The only other way in which I can respond to your question is that if seasonal workers could have a hearing with your committee, then maybe they would be able to describe better how the numbers work.
Having said all that, my point was more in terms of the context that corporate Canada and central Canada and large corporations seem to have engendered this image of seasonal workers as being second-class citizens. We just wanted to make the point that this is wrong. I know that there are politicians such as yourself who are trying to educate the people about that, but the bottom line is that the best way in which to do that is to do some good analysis on the impacts. We don't think that's been tabled with the building of this act.
.1210
Mr. Proud: You talk about the seasonal workers, and I want to assure you that they will be coming before the committee. There were some changes announced today. A couple of those groups will be coming before us to make their presentations.
Personally, since day one when this started, I have felt that there was a definite down side for the seasonal worker, and that's why we see these three amendments on the table today. I think they'll go a long way toward making restitution to these people who depend on a seasonal industry for their livelihood.
The Chairman: Thank you very much, Mr. Proud.
Mr. Cudmore and Mr. Gallant, thank you very much for your presentation. We have certainly noted the points you have raised and of course we'll try to address as many of them as possible as we try to improve Bill C-12. Thanks very much.
Mr. Gallant: See you in P.E.I. this summer.
The Chairman: We're going to stay in Prince Edward Island. From the Government of Prince Edward Island Executive Council, we're going to hear Mr. Robert Morrissey, Minister of Economic Development and Tourism, and Jeannie Lea, Minister of Higher Education, Training and Adult Learning.
Mr. Morrissey and Ms Lea, welcome to our hearings. Our mandate here is to improve Bill C-12, an act respecting insurance in Canada. We have had the benefit of many presentations that have really enlightened the members of this committee as to the challenges we face in addressing some of the flaws that may in fact exist in the bill in its present form. We've certainly benefited from the input of Canadians from coast to coast to coast, and I'm sure your presentation will be no different. We will begin now with your presentation, followed by a question and answer session.
Ms Jeannie Lea (Minister of Higher Education, Training and Adult Learning, Government of Prince Edward Island Executive Council): Thank you very, very much, Mr. Bevilacqua. My colleague and I are pleased to have this opportunity to present to your standing committee. It is extremely important to us that we have the opportunity to represent the position of our province and clearly outline the effects of Bill C-12.
I think you have received copies of our presentation; the members have perhaps had a chance to read it, so we will only touch on some of our major points.
It is clear that the UI system has needed reform, and we welcome the removal from the program of any disincentives to work. Our province agrees that there is need for change. Investing in people and giving them the tools to adapt to a changing labour market is a fundamental part of this new legislation.
Prince Edward Island has supported the need for reform; in fact, we were one of the first to propose an hourly based system. We have promoted the hourly system from our very first discussions with former Minister Lloyd Axworthy.
We must acknowledge that there are many good provisions in the proposed legislation, ones that will help to remove disincentives: insured earnings based on an hourly system; lowering maximum insurable earning levels; reducing the clawback threshold for high-income claimants; basing the entrance requirements on a higher number for new entrants; and determining the duration of benefits based on hours worked. We share the same objectives of providing incentives to work and reducing dependency on the program. These objectives are supported by many aspects of the bill.
We support removing disincentives and rewarding people for work, encouraging people to work, and helping to bring the underground economy above ground. There should also be incentives attached to the rate and duration of benefits. Incentives should be attached to reward efforts through higher benefits. We can certainly accept the need for a smaller program through reasonable reductions in benefits for those who do not seek out and secure employment beyond the minimum entrance requirements.
.1215
A concern that we want the committee to be aware of is regarding the number of young people who have gained access to the program relatively easily and have fallen into a cycle of repeat use. This is a perfect case of short-term gain for long-term pain. I know the new legislation attempted to deal with this by increasing the qualifying period for new entrants. You may want to consider stronger measures, and we will suggest some later in our presentation.
Our main concern today is about seasonal workers whose pattern of employment is seasonal through no fault of their own. Under the proposed legislation these individuals would see drastic reductions in their benefit levels in excess of 30%. For those who live in areas where the economy is not diverse enough to provide supplementary employment, we are concerned that such drastic reductions in benefit levels may be too much for individuals and communities over a short time.
Our concerns extend not only to the workers but to the communities they live in and the businesses they work for. The UI system stabilizes the individual income as well as the seasonal industries themselves. Impact on the businesses would be severe if the supply of skilled labour were not available when needed.
For example, seafood processors need available skilled individuals to work when fish are available. Because our management practice is to protect fishery stocks here in Canada, our seasons are short. Product to process is available on a seasonal basis. The cornerstones of our economy in this province are agriculture, fishery, and tourism, which are all highly seasonal industries. Seasonal work is inevitable in a resource-based economy.
To put Prince Edward Island in context for you, out of a total of 57,000 employees, 25,000 workers here are seasonal on a yearly basis. That is 45% of our labour force. The average UI claim on Prince Edward Island is far below the maximum weekly benefits allowed. In the province 55% of claimants are very low-income, with insured earnings of less than $20,000 on an annual basis. Some are substantially below this amount.
There is a widely held belief that P.E.I. has a high incidence of UI usage because workers take advantage of the programs. This is not true. People on Prince Edward Island want to work and there is evidence to support that fact. Statistics Canada has identified that at least 44% of people who work part-time on Prince Edward Island are doing so only because there is no full-time work available.
There are some recent examples in new businesses. Cavendish Farms's expansion saw over 1,700 people apply for 150 jobs in a two-day period. Watts Communications had hundreds of applications for jobs and will not be advertising. An aerospace company is expanding because of their satisfaction with the Island's labour force.
We are starting to diversify our economy and to stretch our seasons to provide the extra work for Islanders. The areas we are concentrating on are agrifood, seafood processing, tourism, and information technology. We want to reduce the dependency on UI. To do this we have to create jobs.
This bill is moving in the right direction, redirecting dollars from higher income to lower income earners. It will also help low-income families with children. However, one area that is very unfair on a seasonal economy and that also brings back disincentives to the system is section 14.
We will also comment on the duration problem for low-income claimants in high unemployment areas. In our brief, which my colleague will outline for you later, we suggest using the approach of positive reinforcement. Our option is very simple to administer: reward people for more work.
While the UI program should provide incentives to take all available work, it should also provide appropriate benefits when there are no other options for people. Prince Edward Island is making progress in reducing dependency by creating new jobs and expanding current jobs. We need a system that provides incentives and encourages work.
Now I will turn this over to my colleague.
Mr. Robert Morrissey (Minister of Economic Development and Tourism, Government of Prince Edward Island Executive Council): Mr. Chair and members of the committee, I want to briefly touch on a couple of areas that were not covered by my colleague, Minister Lea.
I do have a copy of our presentation to your committee. As Minister Lea pointed out, you can see that Prince Edward Island is not approaching these changes simply from a position of maintaining status quo, turning the clock back, and not wanting any change.
.1220
Unfortunately, the existing unemployment insurance system has a lot of inequities and unfair criteria regulations. So when the process began two years ago, we looked forward to a dialogue with the federal government in fundamentally addressing the unemployment insurance system in this country.
Your committee has a unique opportunity in that it will be the first time, I believe, since 1970-71 whereby you will have a fundamental redrafting of unemployment insurance in this country. There have been numerous committees and the former government has tinkered with the program, but these have not taken a look at what the needs of this country are as we finish up this century and move into a new one.
You've heard a lot in various presentations in the past couple of weeks. I'm not going to belabour those points. But as was pointed out in our presentation, we were the first to recommend an hourly system of benefits.
We also made a recommendation for how to assess a claimant's benefit period. We support the notion and agree with the concept that whichever system is designed by your government, it should be easy and simple to administer, both by the employer as well as the administrators of the fund.
I am going to briefly take you through this. We felt that when all governments approach a matter, they approach it from regional averages. In doing that, they miss what we call the human face of the problem. So I'm going to review with you briefly specific cases. These are not averages designed by statisticians; they are actual cases that come from the file of Human Resources Development. Obviously, we don't have the name of the client, but these are actual cases here in Prince Edward Island. I doubt if this would be very different from any other part of this country.
I'll give you one. The claimant worked as a clerk at the Summerside GST tax processing centre. They worked 37.5 hours per week. They earned $14.16 per hour. They worked 16 weeks. Under the old act, which you're changing, they would have received benefits of $296 per week in UI benefits. Under the proposed EI changes, taking into account the cap, this person would now receive benefits of $170 per week, or a 33% reduction in income.
A truck driver in a farm operation working 53 hours per week, on average, at $8 an hour for 15 weeks in 1995, currently receives $230 per week in UI benefits. Under the proposed changes, this person would receive $151 per week, or a 34% reduction.
A construction labourer - this would be similar across the country - working 56 hours per week, on average, for 17 weeks at a wage rate of $10.40 an hour, currently receives $267 per week in unemployment insurance. Under the proposed EI changes, that person's benefits would be reduced to $106, or a 60% reduction in benefits.
.1225
A flagger on a construction project, working 60 hours per week at $10 per hour for 15 weeks - I outline again that these are actual cases - currently receives UI benefits of $330 per week. Under the proposed EI, as it is now, they would receive $118 per week, or a 64% reduction in benefits.
A farm labourer, working 48 hours per week for 13 weeks at $7.54 an hour, currently receives $218 per week in UI. Under the proposed EI, with the changes, they would be receiving $85 per week, or a 61% reduction in benefits.
A fish plant labourer, with whom a lot of you would be familiar, working an average of 60 hours per week at $6.24 per hour for 18 weeks in 1995, currently receives $213 per week in UI benefits. Under the proposed changes, they would receive $143, for a 33% reduction in benefits.
These are real. This is not the Government of P.E.I. actually drafting or attempting to fabricate a perceived client; these are actual cases drawn from the files of Human Resources Development here in Prince Edward Island. These are case studies.
Clearly, who would support or suggest that an individual would take such a drastic reduction in a weekly salary? This is on top of the realization, which I'm sure you'll understand, that when a person goes on unemployment insurance, they take a 45% pay cut to begin with.
Combine that with the Martin budget of 1994, at which time the qualifying period was increased from 10 to 12 weeks. But the biggest factor at that time was reducing the benefit period, which is the period in which people could receive unemployment insurance benefits, from 52 weeks in P.E.I. to 26 weeks, which is currently the maximum for which one can receive benefits.
Before we even began this approach, in some regions of the country there was already a 50% reduction in the amount of benefits going to what I must say are the working poor of this country.
As my colleague pointed out, we support change in the system. Our recommendations to your committee will go a long way toward addressing some of the gaps that have occurred in the legislation as it was presented prior to, I believe, Christmas of 1995.
We'll suggest ways to your committee of amending the existing program, taking into account the financial targets you have set, but at the same time directing dollars and more money to the working poor of this country and this part of Prince Edward Island. Most of our recommendations come from the basis of channelling more dollars toward those people working at the lower end of the spectrum.
The other point I would like to raise as well is seasonality. I know you've heard about this ad nauseam. I've been an elected politician for going on 15 years. I've represented Prince Edward Island from an economic perspective for going on almost 10 years. One of the points I hope your committee spends some time on and rationalizes is this: do not stigmatize or categorize all seasonal workers as lacking incentives to work, being lazy, being untrained, or being undertrained. That's because, within that category, you will find that you have people who are extremely productive and well trained, highly motivated and looking for work.
We must always recognize that, as a government, whether it's provincial or federal, the fact that there are people who require unemployment insurance benefits is a result of the fact that we have not managed the economy to the extent that there's full employment in this country and in the regions in the country. That's a reality that confronts most democracies today; I'm not singling out Canada.
So those are a number of facts.
My colleague pointed out that we in Prince Edward Island want to leave with the committee one of the problems we hear about today, which is whether young people or young adults are happy to be trained or retrained to enter the workforce. In some parts, the unemployment insurance system has acted as a great incentive to leave school at an early age. We do hope your committee will take a look at that. We have suggested a number of options to deal with that.
.1230
You may take note that under the Canada pension system, you have to be 18 years of age before you have premiums deducted. Therefore, you do not contribute to the program until you are 18 or older. But if you're going to leave young people in the system, then we from Prince Edward Island would suggest that you move them to a different category and let their benefits be attached directly to training and retraining.
Say somebody at 16 leaves school, works for a short period of time and receives benefits. Then ten years down the road, some government will not be confronted with having to educate or train that individual.
As well, here is one final point I want to leave with you. This goes back to some changes that were brought in by the budget of 1994 that severely cut the duration period for people on UI benefits in regions.
Prince Edward Island would like to see you take a look at the reality out there. In parts of this country, people cannot acquire much more than 12, 14 or 16 weeks of work, as hard as they may try. Your system should look again at some benefit period for low-income earners that recognizes this, such that at the end of your claim there may be an extension of benefits for up to 8 to 10 weeks in those areas that have high unemployment numbers. At the same time, these people are coming out of exhausting their benefits in the middle of the winter or late spring, when there isn't anything happening in parts of Canada and in this region.
So we would ask your committee to look at that. There are a number of options on which we have worked. We'll forward them to you.
What if it was even on a sliding scale for the coming last eight weeks? It continues with the emphasis on rewarding work and more work opportunities, and putting in a disincentive to staying on benefits.
I just want to make one final comment to your committee. We in Prince Edward Island, or from the Government of Prince Edward Island, are disappointed that the committee, to this date, has not seen fit to hear from the people who are affected. All this change you're talking about and all the work that's going into overhauling the EI system, or the UI system, is for the worker. It's my understanding that, to this date, there hasn't been a seasonal worker allowed to appear before your committee.
With all due respect to Mr. Bob White, as chair of the Canadian Labour Congress - whatever group he heads - I doubt if he ever lived on unemployment insurance at any time over the past number of years. So when some of these groups speak for the working, labouring people in this country, I feel that the committee should take the opportunity to hear first-hand from a few of these people so they can relate to your committee exactly what it's like to have to go cap in hand to a government to depend on getting enough money to tide them over from job to job.
I really feel that your committee should take the opportunity to benefit from hearing from some seasonal workers as to exactly the impact the changes may have on them.
With that, I conclude my comments. I'll be happy to answer any question your committee may have or elaborate on any any points that we have raised.
The Chairman: Thank you very much for a very thorough presentation. We have the brief, and we will be reviewing it. You have some very interesting proposals, which I'm sure the members of the committee will look through.
I also want to just clarify a point. The members of Parliament who sit in this committee deal with seasonal workers on daily basis in their constituencies. They bring that experience also to the committee, not to mention the fact that we've been blessed with some very active members from Prince Edward Island who have consulted widely and extensively throughout the island to make sure that the views you have raised are also taken into consideration as we address Bill C-12.
Now we're going to move to the question and answer session. Mr. Dubé followed by Mr. Easter.
[Translation]
Mr. Dubé: I am very honoured to be able to speak with two ministers from PEI. At the beginning of your presentation, I realized how great your political experience was, Mr. Morrissey.
.1235
At the beginning of your presentation, you were very moderate and at the end, you addressed more controversial issues that indicate some disagreement with what is being proposed.
You belong to a Liberal government and I do not want to be too partisan, but I understand that reality. However, in your brief, you said that the people and the government of PEI have felt some financial impacts. I would like you to elaborate on what happened in the past.
If the bill was not amended - that is possible - what would the consequences be for your government, in two areas?
First of all, you say in your presentation that reductions have created a gap of eight weeks during which people were without an income. I am sure that a number of them had to turn to welfare, which in turn had a financial impact on your government or your budget. I would like you to elaborate on that.
But you also addressed other consequences. When one considers an additional loss of $24 million for 2001-2002, it is also taxes lost for your government. An amount of $24 million may not be that huge for Ontario, but for Prince Edward Island, it is a lot. I would like to know your position on these two issues.
Mr. Morrissey: Thank you, Mr. Dubé.
[English]
I'm glad to respond to your comments. You know my political ties are to the government that currently sits in Ottawa, and I can say they go a bit further than that. I've worked on Mr. Chrétien's two leadership campaigns - I must say the last one was more successful than the first - and I have never been known to be diplomatic in my comments.
We were never afraid, from a Prince Edward Island perspective, to change the existing system. We've gone through that a number of times. But in changing, you must ensure that the people who take the least out of the system.... We're talking about people who do not benefit from government-sponsored pension plans or some of the benefits that we enjoy as members of provincial legislatures or the House of Commons. These are working people for whom our economy unfortunately has not been strong enough to give longer periods of employment, by and large.
As far as the impact on Prince Edward Island is concerned, it would be severe because unemployment insurance dollars in Atlantic Canada - Prince Edward Island is no different, and I doubt parts of Quebec are much different as well - maintain or keep in place a lot of businesses that are employing people on a full-time basis. So when you take into account the chain effects of a loss of those kinds of dollars in our small rural communities, the impact is far greater than that because a lot of people who are currently employed on a full-time basis will find that the economy is not strong enough to maintain them any more. You'd have businesses closing down because the dollars are simply not there.
Obviously the impact for social services is very real, and it's simply not a cost only to the provincial governments. As you are well aware, social services are a fifty-fifty deal. The federal government must contribute 50¢ on the dollar as well. So I agree with you totally. Some system should be devised so that as claimants begin to exhaust their benefits, and before their work begins again....
.1240
Going along with the need for change and an incentive to go to work and do more work, we would recommend even that the committee look at a reduced benefits scale in that last eight-week or ten-week benefit period. I would assume people would find that better than what's there today.
I agree with the comments you've made. I hope I've answered your question.
[Translation]
Mr. Dubé: In terms of specific figures, I understand that you do not have them in hand, but you answered nevertheless that those changes would have major impacts on your economy and the financial situation of your government. To conclude, I would like to say that the Official Opposition, that is the Bloc Québécois, would have been very pleased if we had been able to hear more people in their own communities.
As regards the wish you stated at the end, I would like to tell you that we totally agree with you and that, were it still possible for members opposite to change their mind in this regard, we would be very pleased.
[English]
Mr. Morrissey: I hear those comments coming from the official opposition.
I do hope you have some influence over the government members who sit on the committee as well, because I think it's very important that you take the opportunity to hear from some people within the seasonal economy.
The Chairman: Mr. Easter.
Mr. Easter: Welcome, Ministers.
On that last point, I believe, Mr. Chairman, we worked out an agreement this morning where the seasonal workers will be given an opportunity to appear by teleconference. I will admit it would be better if it were in person, but I understand the Federation of Labour will be giving the seasonal workers their slots in P.E.I. As well, one of the people who was on the seasonal industry study, John Eldon Green, will also be given the opportunity to appear. That's a step forward.
I think you're aware a number of amendments to the bill are proposed, and although these amendments are certainly not written in stone as yet, we believe the amendments put forward by committee members could improve this bill substantially. Hopefully we'll know later in the week where we stand relative to the government on those amendments.
I've worked out the case studies you've proposed, and I'll give you the figures in terms of what the amendments would do. Do you have your paper there?
The amendments I'm talking about here are cleaning up the gap and the Regan amendment of a divisor of plus two. I'm not talking about the intensity rule for those in low-income brackets of less than $26,000 with dependants. They would in fact be better off than what my example is saying.
Case study number one is the clerk at the Summerside tax centre. With the amendments in place it would be $296 per week, which is the same as it is under the current system - a substantial increase over the bill as proposed.
There is still a problem with case number two in terms of the truck driver and farm operation. With the amendments in place, they would go up to $175.45, which is still $54 and some odd cents less than under the current system. I want to talk about that in a moment.
In case number three, with the amendments, the construction labourers would come up to exactly where they are now, $267 per week.
In case number four, the flagger - and that must be a government rate, I believe,Mr. Morrissey - would come up to $330 per week, the same as under the current system.
There's still a problem with example number five, the farm labourer. Where under the current system they earn $218, with the amendments they would go up to $114 from the $85 that's proposed under the current EI. That's still a problem, I admit.
.1245
In the last example, the fish plant labourer would come up to $213 if the amendments were implemented.
On the two examples that are still substantially low, the truck driver and the farm labourer, the problem there is the 26-week period on which earnings are based. Even going to 30 weeks does not solve the problem. I've asked for an analysis to see what it would do for them if they started their claim period at the front end when they have that original long break. I don't have the answer on that yet. That gives you an idea of what the amendments would do, so you can see it's a substantial improvement, but there are still a couple of problem areas.
Mr. Morrissey: I would agree, Wayne, that the so-called Scott proposed amendment goes a long way to clearing up the inequities you've gone through. We recognize that.
All I want to leave you with is that you have the opportunity now to design a new system that will carry us forward. Let's do it well. As politicians and parliamentarians, let's attempt to design a system that will target for the first time the working poor of this country and this region and that will attempt to put more dollars in their pockets. Look at those 1994 amendments that cut people off in the middle of the winter when there were no jobs out there and no opportunity to receive any money. You've left some people hanging, and these people are getting the least.
In terms of cleaning up the act, over the past four to five years the federal government has done an excellent job of taking the abuse out of the system. From where I sit as a provincial politician, I would say that about 97% of the abuse that was in the system has been removed over the past couple of years. So I don't think we have to focus a lot on that.
What's important is coming up with and designing a system that will give people the incentive to work. I feel our proposal gives maximum incentive to work and takes out a lot of the disincentives that were there in the old system. If you have a lot of these, Mr. Easter, as you point out, I may move from being a doubtful voter in the next election to being a supporter of yours.
Mr. Easter: It's too bad you weren't in my riding.
I'd like to make a last point. I think a major step forward in this bill, which alludes to your point and which I think is moving slightly towards a guaranteed annual income, is the protection of family incomes less than $26,000. The intensity rule would not apply. There is that kind of threshold there where the benefits can in fact be increased by over 55%, depending on the circumstances in some cases. I think that is a major step forward in this legislation, but I would point out that it has been almost solidly opposed by the labour movement. We can certainly use any support on that point that we can gain.
Thank you, and thanks for the presentation.
Mr. Morrissey: We in Prince Edward Island certainly support the government's move to address the situation you identified. You have the support of the Government of Prince Edward Island, and I would assume of all the political parties in Prince Edward Island.
The Chairman: Mr. Proud.
Mr. Proud: I want to welcome you here and say to you that we have studied this bill over the last number of weeks and listened to concerns from people like yourself and from seasonal workers. By the way, we did meet with the seasonal workers two weeks ago and heard their concerns first-hand.
I am convinced that if we can get these amendments accepted by the government, they will go a long way in allaying the fears that you and others have brought to us. This was the major concern as we started these consultations. In fact, this was an issue when they started two years ago. What would happen to the seasonal workers was an issue that was taken very seriously by everyone on this committee and the previous committee. I can assure you that I am confident, as a member of Parliament and a person who has been around politics for a few years, that these amendments will certainly be the things that you have addressed this morning, if we can get them by cabinet.
Thank you.
.1250
Mr. Morrissey: Thank you, George.
I realize that, as members of Parliament, you all meet with seasonal workers and you have met with different groups. I'm pleased to hear what I have heard, but I think it would go a long way if you allowed some of them to appear before you through video-conferencing and present their briefs. One thing we should always guard against is having some professional appear before a group and speak on behalf of some other individual. For the perception of it and the public relations of it, I think it would go a long way to have people who are directly affected have a chance to share their feelings with the members of your committee.
The Chairman: Thank you very much. You've certainly brought some key points to our attention, and I appreciate the fact that you have some very specific solutions to some of the challenges that you see in Bill C-12. That's always appreciated by committee members, because, after all, we need to come up with solutions. We tend to understand what the challenges are; the solutions are equally important. Thank you very much.
The meeting is adjourned until 3:30 p.m.