EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 18, 1996

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[English]

The Chairman: Order, please. We are going to go to Halifax, Nova Scotia, to hear from the Atlantic Provinces Economic Council, and I believe we have Elizabeth Beale, chief economist, with us. Is that correct?

Ms Elizabeth Beale (Chief Economist, Atlantic Provinces Economic Council): That's right.

The Chairman: Ms Beale, first of all, thank you very much for participating in the hearings. We look to Canadians from coast to coast to coast to give us ideas on how to improve Bill C-12.

We operate in this fashion: we usually have a half hour, with ten to fifteen minutes for your comments, followed by a question-and-answer session.

Welcome, and you may begin.

Ms Beale: Thank you very much, Mr. Chairman. I want to just say on behalf of the Atlantic Provinces Economic Council that we're very pleased to be able to make this presentation to the committee today.

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APEC was founded in 1954. It is a public policy and research organization that focuses on the economic development of the Atlantic provinces. We have about 700-plus members and supporters within the region. Primarily our support is private, but we also have the four provincial governments as contributors. We offer a series of regular publications, research reports, consultation and advocacy on a wide range of topics related to economic and social policy.

The whole issue of labour markets in the Atlantic region and unemployment insurance and how labour markets have been affected by the UI program has long been a concern of APEC's. I might point to one of our regular publications, Report Card, which in November looked at seasonal employment patterns in the Atlantic provinces and the increase in seasonality over a number of years, tied that to the unemployment insurance program, and questioned whether the UI program had been a factor in increasing seasonality.

I believe, Mr. Chairman, all the committee members have received a copy of my presentation. Perhaps, then, I'll just take you briefly through it. Then I'd be very happy to take some questions from members.

We've studied the proposed legislation. Overall, we're very supportive of the changes to the legislation and the proposal to bring in an employment insurance program. We have long been concerned about the build-up of dependency on UI in the region, in particular how it has influenced and has been a factor in labour market participation decisions.

So we very much like many aspects of what is in the proposed legislation: the move to recognize hours worked rather than weeks worked and the flexibility that comes with that; the element of experience rating that has been put into the legislation in terms of the intensity rule; the supplement for low-income families and dependant children; and the move generally to reduce pay-outs rather than cut eligibility. Of that, the clawback for higher-income earners is an important criterion there. In many ways we're very supportive of the government's effort to change a program that we have seen as problematic for our labour force in this region.

What we are concerned about, and what I would like to primarily focus on today, is the use of the fixed consecutive weeks' calculation and how this may affect particularly the seasonal worker's decision to participate in the labour force. So I'd like to make that point and will elaborate on that further.

We are also concerned that with respect to experience rating, the measures have not gone far enough, in our view. In other words, there is no reflection of experience rating for employers in terms of premium contributions. The only way experience rating has been put into the legislation is in terms of any kind of effect on the benefit rate for employees. So we would have liked to have seen the experience rating component strengthened and applied to both employer and employee contributions.

I'd like to focus now on the fixed week calculation. What we see in this is that perhaps it is inconsistent with many of the other aspects of what the legislation is trying to do in terms of trying to strengthen labour force participation and commitment to the labour force. The fixed week calculation, in our interpretation, can penalize unemployed workers who are faced with the opportunity for short-term work, and it may cause them to turn down, or be less willing to take, shorter-season work at lower rates. It may favour or disfavour workers with erratic work schedules, particularly seasonal workers, and it creates, in our interpretation, an incentive to work more intensively for a short period of time and then get out of the labour force, get laid off.

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Here, we've given committee members a couple of examples to highlight the kind of work patterns that we see happening. Rather than going through them in detail, I'd like to give you a sense of what they are trying to show.

In example number one, the worker can indeed work over a twelve-week period to gain enough hours of employment to qualify. He may then face a lay-off and be able to claim unemployment insurance. Depending on whether this is a new claim or a previous claim, he may be reluctant to then take a short-term, four-week job that offers only part-time employment over the week, because it may affect and reduce the UI benefits he could get in the future. In other words, there is a disincentive to go back into the labour force and work for a short period of time, because it may actually reduce the claim the worker is eligible for.

I think it's worth noting that this is a particular issue for many seasonal industries, particularly in rural parts of the Atlantic provinces, where you tend to see more intermittent work periods. You might think of the tourism industry that may have an intense period of activity and then more marginal periods of employment at either end of the season. The same is true for resource industries in fishery and forestry. There are many examples of this kind of pattern occurring.

The second example illustrates the problem with what we have termed peak and shoulder week employment, in terms of how it can influence the claim that a worker is eligible to receive.

To elaborate on where we see the problems with the fixed consecutive week calculations, we believe it causes a significant disincentive to accept short-term work after a worker has already gathered a reasonable claim, which is contradictory to the intent of this program as we see it. It may create a disincentive to work in shoulder seasons. After the peak it may discriminate against workers with intermittent work weeks, and it may discriminate against workers based on the pattern of work. I think that second example shows how, depending on which side the shoulder season is on, it could affect their access to claims.

I think another point in terms of the administration of the program is that we see this as an administrative headache for HRDC in trying to identify claims, as well as for workers themselves, who may face very little certainty about what their access to benefits may be.

I think the last point on this page also shows that this may cause severe problems for employers in trying to rehire workers for short periods of time.

What we are suggesting to the committee and to those who are looking at the legislation is that the fixed consecutive week calculation be abandoned or significantly altered and that the intensity rule be strengthened. This is fair, and by strengthening the intensity rule, we'd be strengthening the experience rating, which would increase the incentive to work. We think is an appropriate direction for this legislation to take.

We have made some suggestions on how the intensity rule could be strengthened. We've introduced the concept of an EI ratio, which would relate the benefits paid in the past 36 months to the premiums paid. I think there are a number ways in which the intensity rule can be strengthened. We have put one forward here, but I'd also recognize that there are many ways in which the intensity rule can be strengthened.

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We also make the suggestion to the committee that rather than having the fixed consecutive weeks of work, you move to calculating incomes and benefits payable on the basis of average earnings over the year. Any effort to tie benefits to earnings over any set period of time in the year is going to cause distortions in terms of labour force participation. Therefore, we suggest that it may be appropriate to move to some kind of yearly income figure to calculate benefits payable.

We make one suggestion of going on the basis of the most recent tax claim. That may not be appropriate, but there are other ways of moving forward on that general concept. I think you may have received other advice on this with respect to even going so far as to tie it to a guaranteed annual income.

I'd like to close here and open it up to questions by saying that the direction of our comments is definitely in terms of strengthening the insurance component of the scheme. We have been aware for far too long how distortions in the UI program have increased dependence and distorted labour force participation in the region. We would therefore support the general direction of the legislation, which is to strengthen the insurance component of the scheme. Nevertheless, it must be recognized that for many years there has been a steady build-up in terms of the UI program being used as a form of regular income support within the Atlantic provinces and particularly within many rural parts of the Atlantic provinces.

If you move this program increasingly towards an insurance scheme, you nevertheless have other issues related to income support to consider. Therefore, we would also look closely at the federal government in terms of offering other programs that would be targeted at alleviating rural poverty, structural unemployment and marginal workers in the province, and seasonality. I'd just like to close my comments by noting that very important point.

The Chairman: Thank you very much for a very thoughtful presentation. We're going to move to Mr. Regan from the Liberals.

Mr. Regan (Halifax West): Thank you very much, Mr. Chairman.

Welcome, Ms Beale. It's nice to see you here today and it's nice to be talking to Halifax.

My question has to do with the whole question of what you call the fixed period, or what I call the divisor. I guess you use that term also. I put forward a proposal to amend this provision. Instead of having fixed periods of 16, 18, and 20 weeks, we would actually have a more flexible system. This would essentially mean that in an area where you had to attain the equivalent of 15 weeks of work - in other words, 35 hours times 15 - you would have to get 2 more weeks to get the full 5%. That would be the same in an area of the highest or lowest unemployment rate.

The bill currently suggests that if you're in an area where you have to get 12 weeks of work, you'll have to have a 16-week divisor period. In an area where you have to get 20 weeks of work, it is also 20 weeks for the divisor. This suggests to me that in the areas of highest unemployment, where it's hardest to get additional work, there is a need for a great incentive to get more work but that in the areas of lowest unemployment, where it's easiest to get work, no incentive is needed. It makes more sense to me to have a flexible divisor, a plus 2, which will change with the level of unemployment.

This means that when a person is working and is at the end of the work period, whether or not that person is going to have enough weeks will depend upon the level of unemployment in that month in the area. Because of that uncertainty, of not being sure, there's going to be an incentive to look for the maximum number of weeks of work. They may not be sure whether the rate in their area is going up or down. If in fact it's going down that month, if it has dropped, it's going to be harder for them. They are going to need another week or so in order to get the full rate.

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I have some concerns about the idea, although I haven't fully explored it, of moving to a system of calculating the benefits based on annual income. I'd like to hear more about that concept, whichI haven't heard much about before, but it seems to me that through these changes we're already asking people to stretch, to try to get a couple of more weeks of work.

The question is, how far do we go? I think it's a stretch already. Let's see how this works, and if it works we can go on, but I think that's the route we should follow.

What's your view of that idea in relation to the more flexible divisor?

Ms Beale: I guess I'd have to think a little bit more about how useful it would be. If you're willing to accept plus 2 consistently across regions, would you also suggest that you don't have any difference between the divisor and the number of weeks or hours of work - in other words, you take out the plus 2 entirely?

Mr. Regan: The problem I see with that, and from what we've heard from people across the country, is that when someone gets eligibility, we don't want them to suddenly say they can stop working. There's a need to have an incentive to work some more, so the incentive to get the full benefit means you have to work two more weeks. That's an important incentive, in my view.

Ms Beale: That's a good point.

The Chairman: On that positive note, we'll move to Mr. Dubé.

[Translation]

Mr. Dubé (Lévis): I think your suggestion to use a different unit is a good one - I don't meanI accept it, I mean it is a good one to consider. You mentioned average income. Some people suggested completely changing that and using an hour-based system, given that we now use hours rather than weeks worked to determine eligibility. Have you also considered using the number of hours worked to determine benefits?

[English]

Ms Beale: I'm sorry, Mr. Dubé, I didn't hear a translation. We have no audio for the translation.

The Chairman: There's no interpretation for Mr. Dubé's question.

Mr. Dubé, can you repeat it?

[Translation]

Mr. Dubé: Regarding average annual income, you suggested a different way of determining benefits. I think it is interesting because were trying to find the best way to determine benefits. The government has suggested one method and Mr. Regan has suggested a compromise - two weeks instead of four.

Have you also considered using average hourly wage to determine the amount of benefits? If you have not considered it, it does not matter; we'll move on to something else.

[English]

Ms Beale: Thank you for leaving me that out. We haven't looked at that specific proposal.

Although I haven't followed in depth what the committee has been doing, I'm sure this is a key issue for the committee. We recognize from what we have looked at that any establishment of any qualifying period is going to distort behaviour to some extent and what you want is the measure that will distort it the least.

The problem we've identified with the fixed consecutive weeks is that it's a disincentive for seasonal workers. That's where we see a particular problem emerging. Whether the average wage per hour would help to alleviate some of that is I think a very interesting idea. I'd like to go back and have a look at that, but I couldn't really comment on that at this time.

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[Translation]

Mr. Dubé: I missed the beginning of your presentation, when you perhaps spoke about your organization. If I understood correctly, you are the Atlantic Provinces' Economic Council. Therefore you work on behalf of the four Atlantic provinces. Do you have any idea what the economic impact of this bill could be? Have you studied that issue?

[English]

Ms Beale: Our council is private and largely supported by private membership, but we do have participation from all the four Atlantic provinces and our mandate is for the four Atlantic provinces.

We have a larger review of the impact of the proposed changes on the region that will be coming out within the next two or three weeks in one of our regular publications, our quarterly report. We have not at present developed a full research study on this because many aspects of the legislation are at this point more difficult to interpret.

As I am working on this study, one of the things I have, as you will be well aware, is a pile of clippings this thick in terms of the protests and responses to the proposed legislation from rural areas around the region. People are well aware of how the proposed changes could affect their incomes and the support they currently receive from UI.

So I would only speak very generally. Our per capita usage of the UI program within this region has greatly exceeded that of most other parts of the country on a consistent basis over many years.Of course, any proposal to change that is going to have a very considerable impact on the region.

The Chairman: Thank you.

Mr. Dubé, very briefly.

[Translation]

Mr. Dubé: You mentioned documents that you received. Are you able to establish what percentage of these various groups are in favour of the bill and against, throughout the Atlantic provinces? Can you find out what that ratio is?

[English]

Ms Beale: No. Just in terms of the press reports, it's running solidly. The criticism greatly outweighs the support. But I think I made it very clear when I started my remarks that we are very supportive of the general intent of this legislation. The Atlantic Provinces Economic Council has for a long time been very concerned about the negative impact of the UI program on labour force participation and on the economy as a region.

In other words, if you get support for workers to stay in resource-based or seasonal industries that have very limited potential for growth in the long run, it limits our ability to diversify into other sectors. We have long been concerned about the UI program as a dampening effect on the growth prospects of the Atlantic economy.

So we offer ourselves as a voice of trying to take a more objective view on the impact of the program, both the pros and cons, and how we'd like to see it changed.

The Chairman: Thank you, Ms Beale, for a very thoughtful presentation and for your brief. Obviously, we'll be looking through it and taking into consideration your point of view as we try to improve Bill C-12, an act respecting employment insurance in Canada. Thank you very much for your contribution.

Ms Beale: Thank you.

The Chairman: We will stay in Halifax, Nova Scotia. The next group we'll hear from will be the Nova Scotia Federation of Labour. It is my understanding that Mr. Rick Clark, the president, will be appearing.

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Mr. Proud (Hillsborough): Mr. Chairman, on a point of order, my office was informed the meeting was at 9:30 a.m. and others the same. That's why we were late. I was wondering why it was at 9:30 a.m., but that's what the message that came to the office said. It had been changed, so that's why I wasn't here.

The Chairman: I was here at 9 a.m., but we'll look into that. In that case, I'm happy everybody was early and came in 9:10 a.m.

We'll take a break until the witnesses appear.

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The Chairman: Can you hear us in Halifax?

Mr. Rick Clark (President, Nova Scotia Federation of Labour): Yes, quite well.

The Chairman: Thank you very much. As you know, we are the committee looking at improving Bill C-12, an act respecting employment insurance in Canada. We look forward to your presentation. The members of the committee have been told that we are listening to and hearing from the Nova Scotia Federation of Labour.

Mr. Clark, if you would kindly also introduce the persons with you, we'd certainly appreciate it.

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Mr. Clark: Mr. Chairman, with me are support staff of the federation, Joan Vickery and Ashley Baker.

The Chairman: Thank you very much. As you know, we have half an hour. You have approximately 10 to 15 minutes for your presentation, followed by 10 to 15 minutes for question and answers from the members of Parliament here. You may begin.

Mr. Clark: Thank you very much. I probably won't take the time to go through the brief itself, because we forwarded it to your office for distribution.

The Chairman: We have it here.

Mr. Clark: I won't take the time to go through some of the text of the brief, but I would like to make a couple of basic comments, touch on some of the areas we have major concerns with, and then perhaps we could open up for questions from the committee.

Having said that, I would first of all like to say the Nova Scotia Federation of Labour, as are all federations of labour, is a direct affiliate of the Canadian Labour Congress. We are aware of the presentation given and the brief submitted by the congress earlier this week. We stand in full support and endorsement of the brief that was made to you as it applies to workers across this country.

We would like to add a footnote. We are extremely disappointed and upset with the comments from the minister responsible for this legislation when he absolutely denied to meet with the head of the Canadian Labour Congress, which represents workers across the country who are going to be impacted negatively by this legislation. We think it's an irresponsible and probably an irrational response coming from a minister of the Crown.

We are very pleased to have the opportunity to appear before you to voice some of the concerns and views we're hearing across the province. At the same time, we have to voice our disappointment again that the committee is having these sessions and is hearing the concerns by video rather than going out and listening to the people.

We've been travelling the province to open public meetings, which have been organized by communities and municipalities and not by the labour movement, and hearing the concerns and the impact these changes are going to have. I have to tell you, Mr. Chair, and members of the committee, there's a lot of dissatisfaction with the fact that people aren't having the opportunity to have their say.

We also have some concern when we see the appearance of the structure of who's given the opportunity to appear. It's very biased in the sense that it appears that other than a battle for three days, there was absolutely no labour group from Newfoundland, and three business people who had been accepted, and the nature of the presentations is partisan.

Two major political parties, who represent thousands of workers and people across this country, have been denied access to appear. I talk about the New Democrats and the Progressive Conservatives, being denied both federally and provincially the opportunity to speak. They also represent thousands and thousands of people and their concerns should be heard.

The impact we talk about and the concern we have is that we see this is going to have a major impact on the people of this province and this region. I just want to restate that we feel we would like to see this committee go back with a recommendation to travel.

[Technical Difficulty - Editor] ...some of the more significant areas we see that are going to have a major impact on Nova Scotians - and I'm not going to talk in specific areas or articles of the document that had been put out, but rather I want to talk about the common terms that are used.

When you look at some of the areas we see, the new qualifying period that is going from weeks to hours, the make-up of the employment in this region, the high levels of part-time workers we have in this region, we totally support the concept of first hour insured. The labour movement has long done that. Our concern is that we've now gone to more than double the required number of qualifying hours for an unemployed worker to apply for UI. Going to a 35-hour week other than the current 15-hour week will disqualify literally tens of thousands of people in this region.

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Contrary to what's being said, the growth we're seeing - and this statistic is from our own Department of Finance - in the last 12 months we've lost 3,000 full-time jobs and the only growth we've seen has been in part-time employment. Part-time employment now represents approximately 25% of the workforce in Nova Scotia, and growing. These workers are lucky if they're able to work 20 hours a week. By our minister's own account, the majority of those workers are women, so the new qualifying provision is going to be equally hard on women and on young people.

When you look at the qualifying by going to the 420 to 700 hours, it's based on 12 to 20 weeksat 35 hours per week, but if you look at it at 20 hours a week that we see, then that's going to 21 to 35 weeks for someone to qualify for UI and it's going to be particularly difficult on these people.

Before leaving the area of qualifying, I want to take a moment to talk about the new entry/re-entry with the 910 hours of qualifying. I think it's absolutely a sham, when I look at the briefing notes that Human Resources Development are using on this, that there are some studies that may indicate - and it's not very concrete; it's the way the language is written in the briefing document - that young people leave school early so they are able to draw UI. I can think of nothing farther from the truth.

I think when you look at the 910 hours new qualifying, again, being touted as 26 weeks, 6 weeks beyond what's required today, it is not very consistent across this country when you look at the official unemployment level in Cape Breton being approximately 19% and other rural regions of this province equalling that. Those people who are new entrants have to have the same qualifying as someone who's in a 7% area. It's very difficult for these people to be able to get enough work in to qualify under the 420 to 700 hours, let alone to be able to qualify under the 910 hours. Again, it's going to be very difficult for the person who may have left the workforce for a short period of time to become a homemaker, and perhaps the children are on the way or financial situations demand that the homemaker go back out to work and they have to try to qualify or try to get 910 hours before they're entitled to UI.

The member for Halifax has sent me a copy of her press release indicating that we're trying to get some changes in the divisor rule. Our view to this is that we ought not to have this divisor rule, period. This is the first time in the history of our system that we're going to have zero weeks of earnings. It's totally used to down run the wage levels in the region and it's going to force people into taking a lot of low-paying jobs.

I'm probably running close to my 10 minutes, so I really want to make one thing abundantly clear: the premise of this legislation is all wrong.

The current UI Act is intended to lessen the impact on a worker who loses their job. It's to lessen the impact on that worker; it's to lessen the impact on their family and their communities, as well as their economy. The last cuts the current government made have taken between $189 million and $200 million out of the province of Nova Scotia, both out of the UIC recipients' pockets and out of our economy. It's doing nothing but hurt to our small businesses and our communities. We're receiving a lot of letters from municipalities across this province who are voicing concern because their economies could potentially collapse because of this and other government cutbacks.

No one, including us and others in the labour movement, say that the current legislation and the current act are perfect. What we're saying is hoist this bill, sit down with the stakeholders who fund the UI fund, the employers and employees, and talk about how we can do some real reform.

In a quick conclusion, back in September when the other three presidents of the Atlantic federations of labour and I met with the executive of the Atlantic Liberal caucus, we sat down and put our concerns and our hearts on the table. We said we were fearful that if these cuts went ahead there was going to be a lot of injury and a lot of hurt across this region and that we anticipated there would be a lot of reaction from the people. That has come to be.

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Although the minister responsible tends to try to say that it's professional educators, I can tell you from being from one end of the province to the other and talking to people and accepting invitations, it's rank-and-file people, people not even in the trade union movement. It's municipally elected people out there who are concerned and organizing these.

When we advised of our fears on that, it was suggested that we were threatening action. I'll say to you what I said to the executive council: this is a legitimate fear. I'm going to reiterate that fear. If these cuts go ahead, then we're going to see even more of that. Anyone who is around the area this weekend may have the opportunity to hear some people having a chance to vent their frustration around the Liberal convention here in Sydney this weekend.

The Chairman: Thank you very much for a very thoughtful presentation. As always, we believe that the people in a democratic country like ours have the freedom to express themselves in manners they see fit. I certainly appreciate your expressing yourself in such an eloquent fashion by providing us with a thoughtful brief, which I'm sure we will look through and analyse and take the best parts of so that we can improve Bill C-12.

We will move now to the question-and-answer session. Mr. Dubé.

[Translation]

Mr. Dubé: Thank you, Mr. Clark. I have been a member of this committee for two and a half years and if my memory serves me well, this is the third time that we have heard you. At the end of 1994, we came to visit you in your province.

Your point of view is very clear. You are not very happy with the bill, even though you seem to be open to determining eligibility by using hours rather than weeks. I also noted that you are against an increase in the number of hours. On that point the Official Opposition agrees with you.

We have not yet been able to hear everyone, which we would have liked to do and, unfortunately, we are doing this through video conferencing. You mentioned other people's opinions in Nova Scotia. Have you compiled positions of organizations other than your own, using petitions or other means? If so, are their positions different from your own with respect to the points that you raised?

We will not be able to meet everyone. Therefore, given that you are here and that you are in contact with everyone in Nova Scotia, I am putting this question to you. If you do not have those figures, I would like you to give us an idea of what people you are in contact with in Nova Scotia think. I am from Quebec and I would like to hear what you have to say about that.

[English]

Mr. Clark: Thank you very much. I have personally travelled from Yarmouth to Halifax, Amherst to Sydney, New Glasgow to Port Hawkesbury, dealing and meeting with people on this. We know, for example, that approximately twenty municipalities support our concern on this legislation. Nine labour councils support our concern on this legislation. The building trades, the nurses' union and the provincial teachers' union support these views and concerns.

There are also some within the small business community, and I have to say ``some''.I wouldn't sit here and say that the Canadian Federation of Independent Business supports our views, but there are independent small business people who are very concerned. When they see the cut-and-slash approach that we're seeing in all our social programs, the loss of federal sector jobs that is going to have a major impact, the base closures - it's just adding to the unemployment rate. We're seeing record numbers of bankruptcies. Home construction, for example, is down to a 35-year low in the province of Nova Scotia. It's because people are losing spending capacity, and we're starting to hear more and more on a regular basis from small business. People equally support our view that something has to be done to look at this, but that it should be done in concert with the people who are going to be involved and who pay the price for this program.

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[Translation]

Mr. Dubé: You said that the impact will be felt especially by women and young people because of the increase in eligibility requirements but especially because of the requirements for first-time claimants. I'm referring to the requirement of 910 hours.

In Quebec, it is difficult to get an opinion from people who are not yet unemployed or do not yet know if they will be unemployed next year. It is always difficult to measure the impact of a change when those who are affected are not aware of the change.

We saw this happened after the cuts following Bill C-17 occurred. Some people did not realize what the effects would be until nine months later. That is normal because nobody can predict the future.

There is another phenomenon occurring amongst young people and women who want to return to the job market and there is not necessarily an association or group involved with that. Have you noticed anything happening amongst those who have been concerned with that specific aspect?

[English]

Mr. Clark: There are a couple of women's organizations in the province that are very involved. We have a social action coalition in the metro area that has spoken out on the impact on women. Some of our student unions within our university sector are part of the coalition and are speaking out on the impact on young people.

But the point you raise about the general public not really knowing how this is going to impact is one of the concerns we have. We've been trying to get our MPs to come out and have public forums to explain the impact and the aspects of Bill C-12 - well, then it was Bill C-112 - and the specifics on the impact. Some have been saying that our figures are wrong. We're saying if we're wrong, come out to the public and talk to us about it. If we're wrong, we're willing to sit down and look at the figures. But for somebody to throw something out without showing the documentation on it...we believe our figures are right. We believe that the impact we're going to see on young people and women in particular, because of the part-time nature of their work, is going to be very drastic.

The Chairman: Thank you, Mr. Dubé.

Mrs. Brown, do you have a question?

Mrs. Brown (Calgary Southeast): Yes, I do.

I appreciated very much hearing what you had to say, especially as someone who is a westerner and who, having visited your part of the world only on several occasions, sees that there are differences here in point of view and much that we have to do together.

I found that your brief in broad terms complained on a number of fronts, and I would like to highlight those again for you. You suggested that the consultation process was somewhat limiting.I must say that I certainly did endorse the wish of the committee to put together a process that we felt, by using technology, was going to be quite efficient indeed and would certainly cut down our costs. That's another plank on which all of us ran - that as MPs we were going to be mindful of taxpayers' dollars as we reached out to Canadians across the country.

I also would like to say, Mr. Clark, that the war on the deficit as you have described it in your brief is quite frankly something that all levels of government in Canada have indicated they are most interested in when it comes to issues of fiscal conservatism. It doesn't matter whether you're an NDP government in Saskatchewan or a Progressive Conservative government in Alberta or a Conservative government in Ontario, or even Mr. McKenna in New Brunswick. Everyone is moving towards fiscal conservatism. So what we have now is a problem whereby we have a spending pie that has really shrivelled. It's quite shrunken.

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I want to ask you specifically just one thing. I don't want generalities, but I would like you to be very specific about those elements of change you could see within this process that would bring the employment insurance process back to insurance principles, and about how to take out those elements, such as training, welfare and social program support, that you have identified throughout your presentation to make that process a more equitable one, especially for those people you are representing in your region.

Mr. Clark: First of all, the minister indicated that there are abusers of the system. I want to make it very clear that we do not condone abuse of the system. But if I get picked up for speeding, everyone in Nova Scotia or Canada does not pay the fine. You go after the individual who's abusing.

So I have some concern when we talk about this as being an insurance plan, because the way this plan was originally structured, it's a wage insurance plan. I hear comments coming from the minister, not necessarily from the committee, that talk about using it one, two or three times and then starting to receive less and less and less. I happen to know if you're comparing it to a car insurance plan, when somebody has a couple of claims the plan is cancelled. We don't want that.

I know you want me to be specific on that one question, but you talk about it with deficit reduction. This has absolutely nothing to do with deficit reduction. We believe it's going to contribute to the deficit because less money is going to be spent out there. This fund is funded by employers and employees and it's in a surplus status right now. Cutting it at a time like this is going to contribute to the deficit, because we don't look at what the impact is going to be in the communities.

I use the example of the last cuts in 1993 that saw $189 million to $200 million taken out of our economy in this province alone. That's money that's not spent in small stores and small businesses. Those people end up losing or cutting back on staff and less revenue comes into the provincial and federal governments. I think what we should do is flip back to what the demand was. The crisis in this country today is not the unemployed, it's unemployment. Somehow, if we don't want people drawing on the system, we have to get them to work.

Mr. Regan: Thank you, Rick, for appearing before us.

First of all, I want to let you know we've had no shortage of labour groups appearing before us. It seems to me the majority of the groups that have been before us have in fact been labour groups from all parts of the country.

It seems to me the government has made substantial changes to this bill as it has gone along. Particularly the proposed amendments Mr. Scott, Ms Augustine and I have put forward would take the vast majority of the sting out of some of these changes for Atlantic Canadians, in particular seasonal workers, because we're dealing with the issue of the zero weeks - Mr. Scott's amendment.

On the issue of the divisor, it's being changed and made more flexible. It wouldn't create the hardships that it would if it was four weeks as opposed to two.

On the intensity rule, exempting people who are in a low-income group, low-income families, I think that takes out the sting for the vast majority of low- and modest-income people in Atlantic Canada.

My view is that people who have low and modest income in the end are going to be fine with this system, and in fact many will be better off. But those who are higher-end users - many of whomI know are your members, or some of whom certainly are - will not be so happy because in fact we have the high-income clawback. I'd like to know if you support this notion.

People have said to me in my riding over and over that there shouldn't be a situation where a person who earns $50,000 or $60,000 a year can, year after year after year after year, also collect $10,000 more in UI after putting in perhaps $500 that year in premiums. You can't keep supporting a system that works like that. So it seems to me we have to deal with the issue of a person on a high income.

Do you support dealing with that issue of people who use it every year at the high level or not?

Secondly, you're agreeing reform is needed to the system. What are the three main changes you would make to the UI system to reform it?

Mr. Clark: First of all, when you talk about the lessening of the hurt, I suppose - and I don't necessarily agree. In fact, I disagree. There should be no zero earnings calculated in the program, but if you're going to tell me that you're only going to cut off two fingers instead of four, I guess that lessens the hurt.

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I look at the clawback and at what you don't deal with, and I know there's been a presentation made to you on this by the workers in the construction industry. You don't talk about the cyclical types of industries like shipbuilding, ship repair, and construction.

We have one local, which has made a presentation to you, that has 70% or 75% of their members laid off right now. They sometimes go for a year or two years without work, and in some cases even three and four years. By the way, these workers are not the ones who are sitting home and who this bill portrays as just waiting to draw UI. They travel the country. They're trying to get workers relocated right now in Japan, for example. It's not as if people don't want to work.

These people could be on UI for a length of time, and this is what I feel the clawback does not address. These people could be out of work for two, three, or four years, get on a job where they make more than the ceiling, and when it comes to the end of the year or to income tax time, they may have to pay back all those benefits they've received, or 30% of them, with all the divisive factors and everything. They may be laid off again in February when they're doing their income tax and have to pay back all the previous benefits.

It doesn't take into consideration the full cycle of people's work. Also, we're freezing the ceiling on earnings. If you look at the inflation factor now, it's at $39,000, and if it remains constant we're going to be at $36,000 by the year 2000.

I have some grave concerns about that and I have grave concerns about the fact that we set out segments of society without consultation and we sit down and start targeting. That's one of the biggest concerns I have with this bill. It's pitting individual against individual, province against province, and region against region. If there's ever a major divisive factor in this country, this is what the government's doing with our programs.

The Chairman: Thank you very much, Mr. Clark, for a very extensive presentation. As I said earlier, we'll be taking into consideration all the points you've raised as we attempt to improve the bill. Thank you very much.

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The Chairman: I'd like to call the meeting to order. As I stated earlier, we're still in Halifax, Nova Scotia, and we'll be hearing from the Nova Scotia Advisory Council on the Status of Women. The representative will be Catherine McDonald, president.

Ms Stella Lord (Researcher, Nova Scotia Advisory Council on the Status of Women): I'd just like to clarify that. My name is Stella Lord. I'm the researcher, and instead of Catherine McDonald, I'm presenting on behalf of the Nova Scotia Advisory Council.

The Chairman: Thank you very much for that clarification. As you know, we like to hear presentations between 10 to 15 minutes long followed by a question-and-answer session. You may begin.

Ms Lord: Thank you. On behalf of the Nova Scotia Advisory Council on the Status of Women, I welcome this opportunity to present to you some of our concerns about Bill C-12.

Before I begin, I would like to introduce Mary DesRoches of Nova Scotia Women's FishNet. She will expand a little on the potential impact of this legislation on women and their families in fishing communities in Nova Scotia.

I want to talk first about the hours-based system in relation to part-time workers and the qualifying period. Then I want to address some overall concerns about the reduction in benefits, especially for those in casual or seasonal employment and the implications of these changes for women and their families in Nova Scotia.

Including more part-time workers in the insurance system is in itself not a bad idea. There are three reasons for this. One, as in other parts of Canada, Nova Scotia has experienced a dramatic increase in part-time employment over the past two decades. Approximately 70% of all part-time workers, as I'm sure you know, are women.

Secondly, many people, including women, are working in part-time jobs involuntarily: 34% of women in Canada were in this situation in 1993. This was up from 20% in 1989. This demonstrates the extent of underemployment that is not being calculated in the unemployment statistics at this present time.

Thirdly, it is also important to recognize that many women choose part-time employment because of family and other responsibilities. For example, in the 1995 labour force survey, over one-third of women, but only 15% of men, indicated they were working part-time out of choice or because of family responsibilities.

Women have too long suffered the consequences of being penalized in the labour market because they have tried to accommodate this work with family work and responsibilities. For example, the benefits, job security and labour standards for part-time and other non-standard employment, such as part-year or casual employment, is often second class.

In this context, and because of the current political and economic climate of restructuring and downsizing, part-time workers clearly need better access to income security through unemployment insurance. The inclusion of more part-time workers in the insurance system, therefore, is potentially a step in the right direction. However, we have serious concerns about moving to an hours-based system for qualifying standards and about increasing the qualifying period for new entrants to the labour force. We believe this will negate some of the beneficial effects of including all part-time workers in the system, because it will mean some workers will have to work longer to qualify for benefits. We have some specific examples of that issue in our brief.

In the interests of time, I think I'll just go through our recommendations in that context. Our recommendations are that the hours-based entry and qualifying system not be adopted in its present form and that government find other ways to ensure the earnings of part-time workers who work under 15 hours a week.

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We recommend that the government reinstate the 20-week qualifying period for maternity, parental and sick benefits. We are particularly concerned that in the present proposal there appears to be an erosion of the maternity leave in terms of the qualifying period.

We recommend that the government cease to give differential treatment for new entrants to the labour market, since these are the ones who are most vulnerable to high unemployment.

Now I just want to discuss the effects of averaging and the intensity clause on casual or seasonal workers. As you know, Atlantic Canada is a region with a high degree of seasonal employment because of the nature of a large part of our economy, which is based on fishing, forestry and tourism. Since the government's rationale for the changes appears to be that workers should change their employment behaviour, it assumes: that they themselves can control whether and when they are laid off; the tourist or the fishing season dates; whether there are fish to catch and process; and the number of hours they are employed.

The idea that only men work in so-called seasonal jobs or are subject to frequent lay-offs is inaccurate. I see this idea coming out in some of the research that is being produced by Human Resources. In Nova Scotia, women commonly work in fish plants and dominate service jobs in tourism. As you must be aware, the new averaging system based on consecutive weeks of work is likely to seriously affect women in such jobs, especially those who work in fish plants, because lay-offs or interrupted work are common in such jobs.

People who are already vulnerable to lay-offs, therefore, will be further penalized within the new EI system. This system of calculating benefits will seriously impact on both individual women in part-time seasonal and unstable jobs and on women with families who rely on seasonal employment in Nova Scotia.

Secondly, I want to look at the maximum insurable income provision and the clawback provision. These provisions will obviously affect full-time workers more than part-time or low-wage workers. Women as individuals are less likely to be directly affected by these provisions than men, because fewer women than men earn above-average wages. However, the impact of the proposed changes on women and their families must be considered. The Nova Scotia Advisory Council on the Status of Women believes women's increased labour force participation can benefit women and contribute to their independence. But we also recognize that because of family responsibilities and their disadvantaged position in the labour market, many women live in families where the male partner is the main or only breadwinner. This is especially the case in rural areas, because unemployment is high there.

We are also concerned that in recent years, much of the increased labour force participation of women with children has often been driven by economic necessity rather than choice. Faced with a reduced family income and a reduction in income security, women who are not employed full time already are likely to try to seek employment to increase their working time, whether they want to or not. In the context of a lack of child care, unequal domestic division of labour, work in low-wage employment and financial problems, women in this situation will likely experience increased personal stress.

Financial stress in families may also contribute to family violence and increase women's vulnerability. Indeed, anecdotal evidence suggests that this is already happening in Nova Scotia, especially in rural communities affected by the crisis in the fishery. The crisis in the fishery is already having severe consequences in Nova Scotia, causing stress to women and their families in several fishing communities in this province. The impact of these proposals on women and their families in seasonal employment in Nova Scotia will simply compound the problem.

We recommend that the government withdraw the proposals relating to averaging and the intensity clause. These will have an undue impact on women in low-wage, unstable jobs.

We also recommend that the government rethink the reduction in maximum benefits and the clawback.

We recommend that the top-up in insurance benefits be available for individuals with dependants rather than based on family incomes. We have specific concerns about the direction of that, the emphasis on family income and social policy in general.

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We also recommend - and this is not in the brief we faxed to you last night; we will amend the brief and send you an updated one - that separate hearings be held on the impact of the UI changes on people who work in the fisheries.

I would like now to turn it over to Mary DesRoches, who has some specific concerns around that.

Ms Mary DesRoches (Community Organiser and Committee Member, Nova Scotia Women's FishNet): As you know, we have a fishing crisis here in Atlantic Canada. Under the present management system, which uses quotas, the groundfish fishery is closed down periodically as the landings are calculated. So there are gaps in the weeks of earnings for both fishermen and plant workers. Because of that, the way you have the new EI system set up, where you're averagingx number of weeks prior to your claim, it really would be devastating to these people.

I know there are provisions in EI for separate regulations for the fishing industry. But all indications to date that I have seen are that only those who qualify as a core fish harvester will qualify for the fishermen's UI. So that means the crew would be under these new regulations of EI. I was wondering if you could clarify that.

The Chairman: It is my understanding that it's going to be dealt with separately from this particular bill.

Ms DesRoches: It is clear that they are going to deal with it separately, but the indications show it's going to be core fishermen only who qualify for fishermen's UI. If that's the case, then this new policy for EI is going to have a devastating effect on the crew members, yet they're not aware of that. They won't be aware of it until the new rules and regulations come down. If that's the way it looks as though it's heading, there should be more input and more consultation on what's happening so that people are aware of it.

The Chairman: I will bring that to the attention of the committee members and the department and the minister. You raise a good point.

Ms Lord: We've now finished our presentation.

The Chairman: Great. We can now move to questions and answers.

Mr. Dubé.

[Translation]

Mr. Dubé: Thank you for your presentation. I read your brief and it is very well done and very clear. Could you tell me about the consultations you carried out with people that lead you to this point of view and these recommendations? Did you have time to consult people? I will have other questions later.

[English]

Ms Lord: We had some time to consult people. We run an extremely busy office. We are responsible for looking at all kinds of policies in Nova Scotia. We have one researcher on staff, so we did have limited time for consultations. But we have consulted with the women in the Nova Scotia Women's FishNet group. We have consulted with women in unions, and we have consulted with our council, of course, which has very good connections with the community in rural Nova Scotia.So, yes, we have consulted.

[Translation]

Mr. Dubé: That is interesting and it supports your brief. I now have a comment. Your group's presentation is very important because as you said - and the same thing is happening in Quebec - part-time jobs are filled mainly by women and young people. You said that 70% of part-time jobs are filled by women.

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I would like to thank you for having presented your point of view. I think that this has an impact especially on women and young people and I think that your presentation is very important and I would like to say, on behalf of the official opposition, that we support all your recommendations. Keep up the good work.

[English]

The Chairman: Thank you very much, Mr. Dubé. We'll move to Mr. Regan now.

Mr. Regan: Welcome, Ms Lord and Ms DesRoches. It's always nice to be speaking to Halifax.

I want to make a couple of points and then ask you a question. I don't know if you're aware that this is one of the first bills on which the government has done a full gender analysis of the impact, and in fact the impact ends up being better for women than for men. I think that would be of interest to you.

I've long been concerned about the issue of involuntary part-time work, people who wanted to get full-time jobs but couldn't because of things in the system that were really poverty traps in a sense, forcing people to work part-time. An example is the system that said you had to get 15 hours a week in order to qualify for UI benefits, which meant that some employers would hire people only part-time. It seems to me that one of the benefits in moving to the hours-based system is that it removes the incentive for employers to do that, at places like The Bay and other department stores and so forth. I think that is an important thing for women, particularly those who are single parents.

I really want to get into the question of the amendments proposed by members of this committee. I don't know if you're familiar with the three amendments we have proposed. Andy Scott has proposed an amendment to deal with the issue of the gaps, which Mary DesRoches brought up, to provide that you would not count the zero weeks within a 26-week reference period. For the vast majority of seasonal workers in Atlantic Canada that would take care of the problem of the gap.

The other thing is that because we're going to hours, in many of those communities where there are seasonal workers, 87% of them work more than 35 hours a week. They end up benefiting because if, for instance, they have a 70-hour week, it counts as two weeks and it counts in terms of the level as well as the duration of their benefits.

The second change, which I proposed, relates to the divisor. You may be aware that the present bill suggests that in the highest unemployment areas, the divisor should be four more weeks beyond the eligibility period, and in the lowest unemployment areas it would be no more weeks. That seems to me to suggest that you don't need an incentive in those areas. I'm saying that you should have a flexible system that says that whatever the eligibility period, you just add two to it wherever you are. As the unemployment rate changes, people have an incentive; it's either easier or harder to get unemployment insurance, but it's not unduly hard and doesn't create the hardships that maybe four weeks would.

The last thing is the intensity rule. Ms Augustine on our committee suggested that we exempt people in low-income families from the application of that intensity rule. I think that is very important for women....

[Technical Difficulty - Editor]

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The Chairman: I would like to call the meeting to order. We are now in St. John's, Newfoundland.

Can you hear us?

Mr. Gregory Anthony (Chairperson, Newfoundland and Labrador Employers' Council): Yes, we can.

The Chairman: We are hearing from the Newfoundland and Labrador Employers' Council, and we have Mr. Gregory Anthony, chairperson; and Marilyn Pike, president. Is that correct?

Mr. Anthony: Yes, that's correct.

The Chairman: As you know, we are a committee responsible for improving Bill C-12, an act respecting employment insurance in Canada. We have benefited a great deal from input given to us from Canadians from coast to coast, and we obviously look forward to your presentation in order to help us improve this bill.

We have a half hour, as you know. You make take 10 to 15 minutes for your presentation, followed by a 10 to 15 minute question-and-answer session. Thank you very much and welcome. You may begin.

Mr. Anthony: Thank you very much. We appreciate being provided with the opportunity to appear before the standing committee today to present our oral views, and we look forward to an exchange of questions and answers at the end.

By way of background, the Newfoundland and Labrador Employers' Council is a non-profit employers group that was established in 1982 to present the business and economic interests of employers throughout the province of Newfoundland and Labrador.

The businesses, organizations and associations who are members of the NLEC can be found in virtually every industry and sector of the province and employ in excess of 60% of all workers in the province. In 1994 the employers' council conducted a survey of its members on issues related to unemployment insurance as it stood at that time. Our members and employers throughout the province generally have expressed concern that the system has strayed far from the use for which it was originally intended.

Our members are deeply concerned over the rate at which employees or workers in the province rely upon the present system as a regular income supplement. Clearly, this is not the intended role of the program and our members would like to see changes that would ensure that it is returned to a program that provides temporary assistance to people experiencing a disruption of earnings due to job loss.

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It's the position of council that the whole notion of income supplementation does not belong in an employment insurance program and that the program should concern itself with assistance to employees for temporary earnings loss and assistance designed to get employees back to the workforce as quickly as possible.

Some of the specific concerns that were identified as a result of the 1994 survey that was conducted by the employers' council were most notably the following issues.

The first was that the present system contains disincentives to work. Essentially, many employers pointed to the fact that high benefit rates would deter people from accepting jobs at lower rates of pay or part-time work. A great many of our employers in the province were indicating it was difficult to find part-time workers to fill roles.

High benefits were often being paid to claimants whose annual income was already quite high.

A third problem was seeing that the qualifying periods were too short, that it was too easy to qualify for benefits after quitting a job. Essentially there employers were speaking of situations in which employees were able to appeal initial decisions to deny benefits and were being granted it under circumstances that employers felt were inappropriate.

I guess the most far-reaching, the most broad-based concern was that the system was prone to abuse.

The employers' council is very pleased to see that many of these concerns have been addressed, and with the implementation of the new employment insurance system the council feels that there will be a continued viability of the program without placing additional financial burden on those who pay premiums, and that the program will begin to resemble a model of insurance scheme that provides interim support for people who find themselves temporarily displaced.

The federation of labour in the province has indicated or charged that the federal government is robbing the system. The employers' council is of the opinion that this is not actually the case and that without these changes what we're actually doing is robbing ourselves of jobs, and that these changes are needed to ensure that there's continued job creation and job growth in the country.

The savings that are provided as a result of this new program would be twofold. First of all, funds can be channelled into training, which will benefit employers by providing a more highly skilled workforce in the province as well as employees who are multi-skilled, enabling them to move between jobs more quickly and cutting down on the period of time they would have to rely on unemployment insurance, should the situation arise.

The other benefit is that hopefully it will put back into employers' hands dollars that can be used to expand the business, thereby creating more jobs, and it's the private sector that we have to look to to create jobs in this country, not the public sector.

Although Bill C-12 will result in an increased cost to employers, at least in the short term, directly as a result of paying premiums where the requirement previously did not exist, as in the case of part-time workers and indirectly in the form of additional administrative costs, we believe the longer-term benefits of lower contribution rates and a more highly skilled and flexible workforce will compensate for these concerns.

There are a number of concerns that the employers' council in the province has with respect to the present income benefits and employment benefits portions of the proposed Bill C-12. Under the income benefits program, the first problem we see is the increased cost to employers, about which I've already spoken.

The second one is that for some employers there may be an increased administrative cost initially. It's hoped that this will be somewhat addressed as a result of the premium refund for small business, although we understand this really a short-term stopgap, and we'd like this particular program to be investigated and to be monitored on an ongoing basis to determine what the actual impact is on small business, particularly with respect to the use of part-time workers because, at least in the province of Newfoundland, small businesses tend to be relying on part-time workers more heavily.

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Under the employment benefits portion, there are a number of concerns that have been expressed to our council. The first was the concern over the actual implementation and provision of training. I think in the past many employers saw training taking place merely for the sake of training. There was no direction or view to making sure that the supply of skills that people were being trained for was going to meet the demand.

The Labour Force Development Board in the province was taking steps towards that and attempting to identify skill sets that would be required in the future, to put in place mechanisms to ensure that there was an adequate supply of those skills in the province when the demand arose. However, unfortunately, the Labour Force Development Board in the province has had its funding drastically cut through HRD and as a result is, for all intents and purposes, inactive. We see that as a real deficiency, and that needs to be addressed in the system, to ensure that the training dollars are spent appropriately, that the areas where there is a demand and an increasing demand are identified, and that steps are taken to ensure that the supply is adequate.

There is also a concern that the federal government would not directly or indirectly fund employers to send employees on training courses. We see this as an important means of preventing unemployment. When employers hire people, they hire skill sets to perform certain jobs. If as a result of changes in the industry or technological changes the skill set they employ no longer meets their needs, then there has to be an adjustment. If the employer does not have the funds to be able to provide that training in-house, the end result is that the employees are ultimately laid off, end up on the employment insurance rolls, and are going through either retraining or receiving benefits through the program.

We think if there is a component of the program that will provide for in-house training by employers or for employers in situations like this, it will prevent many people from ending up on unemployment insurance or employment insurance and will allow employers to continue to employ and maintain that commitment to existing employees.

The third concern is that more attention needs to be identified or put towards the present skill sets inventory in the province and across the country. Unfortunately, right now there is a real lack of information with respect to what the existing skill set is in our province. I think that's probably common across the country. We would like to see as part of the training and education components of the employment insurance program some funding provided either through the Labour Force Development Board, or through the employment insurance system directly, to identify existing skill sets where there is a shortage in supply and where there is a surplus so that the appropriate adjustments can be made at the training level to ensure that the supply of skills we need meets the demand.

That needs to take place right now because we don't know what the existing situation is, and it needs to continue into the future so we can identify ahead of time what skill sets are going to be required to make the adjustments to ensure they are there when the time arises.

The employers' council is pleased to see that the Department of Human Resources Development is making provisions to have the pressures of premium increases eased for small business. The increasing and decreasing of premiums has a detrimental impact on employers. If a surplus can be created so that during recessionary periods you would not have increases and then subsequently decreases in premiums, I think it would allow employers to operate on a more even keel.

It's widely recognized that small businesses are providing the growth in our economy, particularly in the province of Newfoundland. Therefore we must ensure that payroll taxes do not act as a deterrent in their future growth. I think, as I mentioned earlier, the premium refund for small business and the decrease in premiums overall will provide money that could be reinvested in the private sector to create more jobs.

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As for addressing the problems of abuse in the system, I think it's fair to say that no system is without abuse of some kind, and this one is likely to be no exception. However, by removing some of the disincentives to work, the inclination to abuse the system may not be so strong.

I think there needs to be an identification of ``abusers'' of the system as opposed to ``misusers'' of the system. We would categorize abusers as those who endeavour to get enough work each year simply to file an unemployment insurance claim and then receive benefits without actively seeking work until the claim is about to run out. Granted, that may be a minority, but I think it is present in the system. As well, there are those who receive additional undeclared earnings while receiving UI benefits - the so-called underground economy. I think the encouragement under the income benefits portion of the program to report all earnings is going to help address both of those issues. So we're pleased to see that.

As unpopular as it may be to say so, there are indeed individuals who seek to leave their jobs once they have qualified for unemployment insurance benefits. Indeed, our members have indicated to us that this has happened on more than one occasion. This was borne out in the survey we did in 1994.

Those people who we would consider to be misusing the system do so through no fault of their own. These are largely seasonal workers who, as a result of the industry in which they work, have been relying upon the system as an income supplement more so than a preventative measure against a temporary earnings loss. They've become accustomed to a system that provides them with an extra cushion against regular periods of unemployment. If there are individuals and families whose annual income does not provide them with enough money to secure the necessities of life, it should be the taxation system or some other income support program that deals with these needs, and not an employment insurance program. I think employers want to see the employment insurance system get back to where it was initially intended to be, a system designed to help displaced workers financially when they're between jobs and to reduce that period of time in which they're out of work.

I think as long as unemployment insurance benefits, or employment insurance benefits, are being used as regular income support, the cost of the program is going to continue to be a burden on employers as well as employees and the people who are trying to create wealth and jobs in the province and across the country.

With respect to the employment benefits and the training component itself, as with many of the other measures being introduced on the proposed EI system I think there is a refreshing common sense approach being taken to the assistance being provided for training under employment insurance. Again, I think it's fair to say that training assistance provided to UI claimants in recent years has been misused to some extent. Although strengthening the skills possessed by a labour force is a necessary and positive thing, the training must be relevant and must be considered in the context of an individual's career path. Training for the sake of training is not an acceptable use of public funds, and we must ensure that in the future, the supply of skill sets in the province meets the demand as it arises.

We've noted that the proposed employment insurance program would forego the past practice of acquiring seats within a post-secondary institution and then filling them up with claimants. Obviously, this is no longer an appropriate means of helping unemployed people find their way along a career path. Again, I think this is a benefit that employers are happy to see.

The Department of Human Resources Development must work closely with the community, the employer community in particular, to determine where training priorities should lie and to get a full sense of what skills and aptitudes will be required in the future. I think it's very important that additional support be put behind the Labour Force Development Board, because I think that is the mechanism by which we can most efficiently determine what are the required skill sets, what are the existing skill sets, what are the required skill sets in the future, ensuring that the necessary programs, whether through private colleges or public educational institutions, are put in place to ensure that when the demand arises, those skill sets are there.

The Federation of Labour has said that employment benefits do nothing to create employment.I think they're talking specifically about the wage subsidies, the earning supplements, the self-employment assistance, and the job creation partnerships that are referenced under the employment benefits part of the program.

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This is not the purpose of unemployment insurance, and I don't think that's what is proposed under the employment insurance system. The federal government is not there to create jobs. It's not the purpose of the federal government to create jobs. The purpose of the federal government and the purpose of the employment benefits portion of the program is to provide employees with the necessary skills and training to be able to access existing jobs and to provide them with the flexibility so that, should they become displaced, they have a multitude of skill sets and the length of time for which they're displaced is reduced.

I think the future is going to require multi-skilled, multi-task employees, and I think we're going to get away from this idea of one person, one job. I think, as a result of that, the training component is going to be very important.

The employers' council does not see the employment benefits program under the EI system as a means of creating jobs. We see it as a means to an end. The private sector will create the jobs.The public sector will provide the necessary training and skill sets so that we have workers who can access and fill those positions when they arise.

I think we've about used up our 15 minutes. Those are all the general comments we have with respect to the employment insurance scheme as it's contained in Bill C-12. I think it's safe to say that employers in the province see this as a positive step towards improving and modifying the system.

We would like to see included each and every one of the components proposed.

I notice there has been some discussion in the past about the intensity rule being dropped because of concerns with respect to seasonal workers. I think the intensity rule is an important component of modifying the whole system. I think the concerns of seasonal workers and others with respect to the intensity rule can be addressed in other forums, but I think we need to get away from trying to have an unemployment insurance system that is everything to everybody and get back to what it was initially intended to be.

Thank you very much.

The Chairman: Thank you very much for your presentation.

Now we'll move to the question-and-answer session. We'll have Mr. Dubé, followed byMr. McCormick.

[Translation]

Mr. Dubé: Thank you to our witnesses. Mr. Anthony, as your members are mainly employers,I understand your position.

When you studied the bill, did you pay any special attention to the new eligibility rule for new claimants, those who will be using unemployment insurance for the first time?

From now on one will need to have worked 910 hours in order to be eligible for unemployment insurance. You are aware that some of the most vulnerable people under these rules will be women who want to go back to the job market and also young people.

Why do I mention young people? As you know, in Newfoundland there is a very high unemployment rate. When I went there one and half year ago, many witnesses talked about the exodus of young people from your province seeking work elsewhere.

There is a risk that this phenomenon will intensify if we cannot, in some areas of the country, keep these young people during times when there is no work.

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This will have significant economic consequences. In the long run, even your own members may some day have no more young people in your workforce. Have you considered that?

[English]

Mr. Anthony: Yes, we've examined it. I don't think we see the change from 20 to 26 weeks or the equivalent hours as having a detrimental impact on that. I don't think you can look to any one portion of the proposal; I think you need to look at the whole system and how it's going to work.I don't think we can take a short-term view of it.

I think too often in the past we've dealt with legislation with a band-aid approach, trying to make small changes here or small changes there to satisfy particular interest groups. I think this is a refreshing approach, because it takes a long-term view of what we need in an employment insurance system in this country in the future.

Granted, Newfoundlanders are probably some of the greatest users of this system. With respect to the issue of first-time users of the system and the fact that there will be an increase as of, I think, July 1, 1996, from 20 to 26 weeks, in looking at that, I think you have to consider the fact that we are also going to an hourly based system.

That's going to bring into the system, first of all, a whole number of people who would have had weeks but didn't qualify because they had less than 15 hours in a week or earned less than $163. As well, as I understand the program, it allows employees to combine hours of work from various employers to bring them up to the required number of hours in order to qualify. That again is going to count in hours that were otherwise not counted before.

I don't think the increase from 20 to 26 hours is going to have a great impact on the ability of people to qualify for unemployment insurance. I think the other measures being taken, particularly with respect to going to an hourly based system and the inclusion of all hours worked, are going to offset that increase in the number of working weeks in order to qualify.

This needs to be an insurance program for displaced workers. There has always been a concern by employers, and I think very much so in this province, that it was an income supplement. I think by creating a higher initial threshold, you are preserving the integrity of the system overall, as opposed to creating a lower threshold that allows someone to come in and maybe access benefits under the system earlier than they would have otherwise. That I think encourages the use of the system more so as an income supplement than as a benefit for transitional workers.

[Translation]

Mr. Dubé: You say that it's only a difference of six weeks but you must realize that in some areas - I think that this is the case in Newfoundland - all one needed was to have the equivalent of 300 hours in order to obtain unemployment insurance. Under the new system one would need910 hours, that is three times as many hours as before. Therefore, this is not simply a minor change. In the case of young people, it is an important change. Three times as many hours will be required.

I do not have the figures with me this morning, but I know that this means significant overall cuts for the people of Newfoundland. We often look at this from an individual point of view, but if you look at the global picture, you'll see that millions of dollars will no longer be injected into Newfoundland's economy. Have you considered that?

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[English]

Mr. Anthony: When you initially look at what the dollar loss is going to be, granted that is going to have a dramatic impact. I think generally employers in the province, particularly those in the retail sector, want to see some interim measures to help to absorb that effect. But again, I don't think you can look at this as a short-term view of what's going to happen. The types of changes being suggested in the proposal are taking a long-term view of what needs to happen with respect to the unemployment insurance system in this country. Identifying a short-term problem and saying we can't make these long-term changes because there's a short-term problem created is not the proper approach to take.

I think what you have to do is incorporate measures that will help to soften the impact of those short-term disadvantages, because any time you make changes there are often short-term detrimental impacts upon people. But that is not a reason to scrap what we think is a good, intelligent move with respect to making changes to unemployment insurance. I think the long-term benefits that are going to be realized here will be for both employers and employees.

For employers, in the long run there's going to be lower contribution rates, we would hope. That's what it seems from the proposal. As well, hopefully employers are going to benefit from a higher-skilled, more multi-tasked workforce. That is going to be of great benefit to employers. It's going to help them, particularly in Newfoundland, to attract investments into the province and to create those jobs we don't have right now, which is resulting in an outflow of our young people.

But I don't think we should say we can't do it because it's going to create a short-term dollar loss. You have to look at this more in the long term and incorporate some short-term measures to help soften the impact.

The Chairman: Thank you very much. Now we'll move to Mr. McCormick.

Mr. McCormick (Hastings - Frontenac - Lennox and Addington): Thank you very much for your presentation. I enjoyed it.

I am sure many of your concerns regarding the use of UI in the past are being met by this legislation. As you realize, the bill is moving from passive support to active support. I'm glad to see you support many of those changes.

The EI, with the five tools provided in part II of this bill, will help strengthen the communities. Many of the members of your association are large and medium and a few small businesses, but it takes all these to make strong communities.

Another aspect of this bill that you may or may not be aware of is the fact that people who have fallen through the cracks, who are on social assistance and who have had any attachment to the workforce in the last three years, can now apply. We think up to 45% of these people could qualify to assess any one of these five tools in part II of the legislation.

About small business, you mentioned how there may be some increased cost with filingthe forms and paperwork for part-time workers. But I think this will be more than offset by the savings in regard to their record of employment. The ROEs are a real burden hanging around the necks of many of these businesses. I think it is going to be a great relief. The hour system is making a huge difference here, and it won't be such a complicated form. You're going to hear a lot of good comments about this.

You raised the issue of the need to identify the needed skill sets of workers who are unemployed. This has and will be addressed. The labour market information system and the electronic labour exchange, and so on, will help the unemployed workers identify their needed skill sets. In many of the offices, the HRDs will have resource centres that will provide clients with the tools to identify jobs and skill sets and their training needs.

So I wonder if you wanted to make some comments on some of those good points.

Mr. Anthony: First of all, with respect to the issue of increased costs to small employers,I don't want to place too much emphasis on that. We see it more as a short-term problem than anything else. I think where you're going to see it is probably with small employers who are utilizing a lot of part-time workers right now and who were previously not having to pay the employer portion and now will have to. But again, I think those concerns are outweighed and are addressed in other areas of the proposal and in the long-term benefits generally.

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I'd like to take a couple of minutes to reference the statements you made about the skill sets and identifying skill sets. I agree that some of the proposals in the plan seem to address the concerns we have, but I don't think we can stress enough how much this is of concern. I've met with various labour groups over the last number of years, and this is of real heightened concern to them as well.

We are still a little bit concerned that the proposal as it's contained be able to identify not only what skill sets are out there, so that employers know what's available and know when they need to try to get programs or lobby to have programs put in place to ensure that skill sets are available, but how much effort is going to be placed in coordinating that information and ensuring that it's easily accessible, not only to employees so they can identify what their skill sets are, but to employers so that they know what's available and to educators both in the private and the public sector who are identifying what programs they're going to be offering in the future.

There are areas of the private sector education industry right now where I think training is taking place, and there's not an adequate demand for the supply that's being turned out. I see that as a problem, because we're training people for jobs that do not exist, whereas in other areas....For instance, in Newfoundland right now obviously there's a huge demand for diamond drillers, there's an undersupply, and I don't know of any programs that are being actively provided right now to address that concern.

I think it's more a matter of the left hand not knowing what the right is doing. We'd like to see the coordination built into the system. Maybe that can be done through the federal-provincial HRD agreements, but I think the coordination has to be there and the system has to be in place to ensure that this information is retrieved and is put in a form where it's easily accessible to employees, employers, labour groups, community organizations, and educators so that they can all take whatever steps they see as necessary to ensure that the adjustments are made.

The Chairman: Thank you very much for your presentation. We have, of course, duly noted all your points and we will use as many as possible to improve this piece of legislation. Thanks again.

Mr. Anthony: Thank you.

The Chairman: The next presentation will be from the Atlantic Institute for Market Studies: Mr. Brian Crowley, president; and Mr. Doug May, member of the board and research adviser.

Mr. Crowley, you'll be here, and I think Mr. May is in Newfoundland. Is that correct?

Mr. Brian Crowley (President, Atlantic Institute for Market Studies): Yes.

The Chairman: Welcome. I guess Mr. May is not there yet.

Mr. Crowley: Yes, I think he is probably going to be coming into the room in a moment. Can we wait until he arrives?

The Chairman: Absolutely. Sure.

Mr. Crowley: In the meantime, Mr. Chairman, could I make sure that every member of the committee has received a copy both of our brief that was sent in advance by mail and also the paperI handed to the clerk, entitled Towards Sustainable Development in Atlantic Canada.

The Chairman: Yes, I'm sure they were distributed.

Mr. Crowley: Great.

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The Chairman: Welcome, Mr. May. Mr. Crowley is here in Ottawa. We are looking forward to hearing your presentation on ways to improve Bill C-12, An Act respecting employment insurance in Canada.

As you know, we have approximately half an hour. You can take 10 to 15 minutes for a presentation followed by a question-and-answer session.

Mr. Crowley: Thank you for your invitation to appear today. I am president of the Atlantic Institute for Market Studies. Doug May, whom you see on the screen, is a member of the institute's board of research advisers.

For those of you who might not be familiar with the Atlantic Institute for Market Studies, I'm just going to take a moment to explain that we are a non-political, non-partisan social and economic think-tank whose members and supporters include prominent members of the business, professional and university communities, both regionally within Atlantic Canada and nationally.

All of us in the institute share one major preoccupation, that is, ensuring that the full range of realistic options for the development of the Atlantic economy is examined thoroughly and comprehensively. Given our region's well-documented reliance on government spending, and the public sector's fiscal crisis, we feel this work is particularly urgent at the current time. That, of course, naturally brings us to the matter at hand today, the reform of unemployment insurance.

You have before you our brief. In addition, you now have received a detailed paper analysing the unemployment insurance reforms, prepared for our institute by Doug May and Professor Morley Gunderson, director of the Centre for Industrial Relations at the University of Toronto.

Since we have such little time, ladies and gentlemen, I'm going to dive straight into a very brief outline of what we want to say. I'm going to try to keep that to seven or eight minutes. Then I'll ask Doug if he has comments to add.

There is, I believe it's fair to say, general agreement in Canada that there is something very wrong with the current unemployment insurance system. Polling shows this to be just as true in Atlantic Canada as elsewhere. People in Atlantic Canada strongly favour reform of unemployment insurance.

The authors of the paper before you believe the three key problems of unemployment insurance are the following.

First, the incentives within unemployment insurance are perverse from both an economic and social point of view. Incentives are important. Employers and governments and workers in our region react to those incentives in ways that are harmful to the economy and particularly devastating to older populations in rural areas, that is to say, some of the most vulnerable people in Atlantic Canada. Yet those same incentives create enticements for the rising generation within Atlantic Canada to get on the treadmill of unemployment insurance dependency. Once on, the obstacles to getting off that treadmill can seem extremely daunting and insurmountable.

The second key problem of unemployment insurance is that it tries to integrate two very different beasts within a single program. It is both an employment insurance program and a social welfare program, yet the objectives of such programs are quite different. It is a conflict between those objectives that is ripping the unemployment insurance system apart.

The insurance program contains few insurance principles and therefore distributes its benefits in ways that are both capricious and economically devastating, such as - just to give you one example - when unemployment insurance subsidizes low-tech, low-skill, seasonal work at the expense of well-paid, full-time, full-year work.

This economic mischief is financed by a payroll tax, which is a proven job killer. The burden of that tax falls 80% on workers. Don't pay any attention to the formal division set out in the legislation. Studies have shown conclusively that the real burden of unemployment insurance premiums falls 80% on employees. For a program that is chiefly a thinly disguised social welfare scheme, a payroll tax is a singularly perverse and regressive method of financing.

The third key problem of UI is that it is profoundly unfair. This of course is linked to its dual nature as both an insurance program and a social welfare scheme. But let's be very clear about unemployment insurance. There are no grounds - and I'm going to repeat that - there are no grounds on which unemployment insurance can be defended as promoting social equity.

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In Nova Scotia unemployment insurance channelled $100 million into households with incomes over $60,000. I think that bears repeating. Unemployment insurance, in the last year for which we have figures, channelled $100 million into households with incomes over $60,000, but only $30 million into households with incomes below $10,000. I think that's scandalous.

In Newfoundland 40% of the households with incomes over $70,000 - over $70,000 a year, ladies and gentlemen - drew unemployment insurance benefits while only a quarter of households earning less than $10,000 drew benefits.

Ladies and gentlemen of the committee, the question now before us is the following. Do the government's proposed employment insurance changes meet the challenge of reform?

Now, the answer, in view of the authors of the papers before you, is no. That is not to say, ladies and gentlemen, there are not improvements to what has been proposed by the government. We have indicated and indeed praised those improvements in both the brief and the research paper. But - and it's a big but - nothing fundamental has changed. The proposed reforms are merely tinkering on the margins of a system that is both vicious and regressive. It is a system that is crying out for fundamental reform.

Employment insurance, according to our analysis, slightly reduces some of the more perverse distortions and incentives in the unemployment insurance system, but it is really quite marginal.I draw this to your attention: the employment system proposals actually increase the inequitable distribution of benefits, which already disproportionately favour the well-off. Employment insurance will continue to subsidize seasonal low-skill industries and will even place regionally extended benefits for high-unemployment areas.

That, ladies and gentlemen, will continue to suppress reallocation of resources and employment from declining low-skill industries to growth industries and areas and it will continue to discourage skill-building.

Finally, while the reform reduces benefits for high-income families in most cases - and I know you are aware of that - what you may not be aware of is that low-income families will face an even greater reduction. We have to back this up, ladies and gentlemen. Run the employment insurance proposals of the government through HRDC's own SPSM model. No one has done this before. As far as I am aware, this is the first time this has been made public.

Most unemployment insurance households under the SPSM model, most UI households with incomes over $50,000, will suffer a loss of less than 1% in disposable income, while most households with income under $20,000 will face reductions in disposable income of 3% to 5%. This is using the government's own SPSM model. These figures are the product of a simulation of Doug May, who is in St. John's. He will be able to tell you more about them.

To conclude my part of the presentation, I want to recognize that many of the people who accept that UI is a bad system will nevertheless say this is not the right time for reform. But they are wrong, ladies and gentlemen, not because unemployment insurance reform will not be painful. It will be painful. They are wrong precisely because there will never be a right time from that point of view, a time when it won't be painful. The longer we delay, the costlier the reform will be, not just in economic terms but in human terms - in terms of dislocation, in terms of loss of income, in terms of increased uncertainty.

We ask you, ladies and gentlemen of the committee, we urge you, indeed we implore you, not to abandon Atlantic Canada once again to the clutches of a well-intentioned but deeply distorting and damaging system, whether it be called unemployment insurance or employment insurance. Grasp the nettle of reform now.

The authors of the papers before you believe that with proper management and the willingness to take political risks we can make the transition to long-term sustainable economic and employment growth in Atlantic Canada. We believe the main beneficiaries of that change will be a group that has never had a UI cheque, ladies and gentlemen: our sons and daughters and the generations that will follow them.

Doug, do you have anything to add to that?

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Mr. Doug May (Member of the Board and Research Adviser, Atlantic Institute for Market Studies): Thank you, Brian. I have a couple of points. First of all - a technical point - the SPSM model is not HRDC's model but Statistic Canada's model. We probably used a later version than HRDC used.

Let me add a few points. It's clear to everybody we're in a bit of a mess down here. It's certainly not a desirable situation. Nowhere is that mess better seen than when we look at some of the TAGS workers, those people who have run out of options in the fisheries.

So how can we deal with this problem? How can we deal with this tragedy that has occurred? First of all, we can't sweep the problems under the carpet, as it were. We have to deal with them honestly. For people who find themselves caught up in this, particularly in the rural areas, particularly some of the younger people and even people in their forties, somehow we have to try to get out of this problem but leave these people with their dignity. Quite frankly, Mr. Chairman, some people can adjust and some can't adjust.

So when we began to look at the solutions to the problem, I would ask members of your committee to say how we can adjust and how we can adjust so as to minimize the cost. Ask who's the most likely in fact to be able to adjust. We've come up with solutions, which we have put in our brief.

First of all, the young people - I'm particularly coming at you here as a university professor. So many qualified students have not appeared in my classroom because of the fact that many of their colleagues have decided in previous years to leave school, maybe after grade 9 or grade 10, and head out into the fish plant or into logging or whatever. Those people, many of whom are now on TAGS, have few options.

The other thing I would ask the members of the committee to consider is who we should take money away from. Who needs the money the least? Who needs the money the most? Economists are always thinking about opportunities, about alternatives. What are the opportunities here?

We've seen the cut through the CHST. We've seen that. We seem to be denying the money to some of those who are the neediest in the society. Yet year after year those who have part-year jobs, who may be fairly well off, have annual supplementations. I'd ask the members of the committee whether in their own principles they think that's fair.

I'll just leave it at that, except for one last point. When you're changing the system, there are very few options. So you have to be very careful. I would ask HRDC officials to be very careful in terms of trying to estimate what the behavioural impacts and the long-term impacts are on certain regions in Atlantic Canada. Having looked at the data, Mr. Chair, I think at the lower end of the income spectrum it may be somewhat more drastic than they have estimated. Thank you.

The Chairman: Thank you very much.

Now we'll move to the question-and-answer session. Mr. Dubé, followed by Mr. Easter.

[Translation]

Mr. Dubé: I read your brief quite quickly because I only received it this morning. It's interesting because it gives a very different point of view from the ones we usually hear.

Your assessments are based on family income. That is one way of seeing things, even though the figures that you provide, around $60,000, seem at first blush to be high. You are surely aware that this a rather unique approach to a problem that is a social problem but also an individual problem. You talk about an insurance system. You regret that the current system mixes social security and insurance. However you use family income as an indicator in your own reasoning.

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Perhaps I did not understand your brief, but it seems to me you are being contradictory. Could you explain your approach to me?

Mr. Crowley: It is fairly simple to explain. We wondered about it as well. If Canada really is in the middle of a financial crisis, we should look at each social program and see whether we are indeed providing benefits to those who really need them. Our analysis as a family income clearly shows that unemployment benefits are not necessarily going to those who need them, but to those who already have very high incomes.

This system is partly an insurance scheme and it can be expected that when someone earns a very high income he would be entitled to more money when he loses that income. That is a point we make in our brief: if we want a system to help those in need, you have to separate that system from the unemployment insurance program. In our brief, we suggest merging it with the tax system and to create a guaranteed annual income system, so that only low income earners get benefits. Obviously family income should be taken into account. Most unemployment insurance plan and income supplement systems in other countries do take family income into account.

As for public opinion, I think most Canadians would agree that only those in need of an income supplement should get one.

The current system guarantees an income supplement to some people who do not need it, if you compare their income with the average industrial income, for instance. That is our view on that.

[English]

The Chairman: Thank you very much.

Mr. Easter.

Mr. Easter (Malpeque): Thank you, Mr. Chairman.

I'm baffled by the statistics put before me. First, I want to point out one thing on the premium as a job killer, Dr. Crowley. I am an employer. The HRD committee, in terms of its hearings on social security review, heard thousands of people across Canada and, out of all the witnesses, only heard,I think, two presentations concerned about premiums.

As an employer, I do not see the premium as a job killer. In fact, I see the unemployment insurance system for me, as an Atlantic Canadian business person, important from the point of view that it sustains highly skilled workers during the off-season so there's availability of those workers there when they come back.

But I would like to know what assumptions you worked from. In my mind - I have to say it - you seem to operate from an assumption that UI is the problem rather than...and it may be there are some difficulties; we all agree with that and that's why we're changing it. But what about the possibility of the nature of the seasonal industries, the lack of jobs in many of the outlying regions as also part of the problem? What's your comment on that?

Secondly, in terms of your figures, on the bottom of page 5 - and I will go through your study - you use the $60,000 and the $10,000 figures. Do you have any figures at more realistic levels, in the range of $25,000 to $40,000? What's the impact in that area? As part of those figures, have you examined the clawback that would bring down the high income levels as proposed under this bill and have you examined it with amendments?

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Mr. Crowley: Mr. Chairman, that's quite a bundle of questions. Let me try to run through at least some of them quickly. If Mr. Easter will keep track of me, if I miss one he'll no doubt recall it.

First of all, you raised a very interesting point at the beginning of your comments with respect to you as an employer understanding that unemployment insurance helps keep in place a skilled workforce. That's a very interesting point because it drives home something that I feel quite strongly, which is that unemployment insurance is in many ways a subsidy to employers. It is a subsidy to very particular kinds of employers. It is a subsidy to seasonal employers, and it is paid primarily by workers in industries that are not seasonal.

In other words, you have to look at where the money is coming from. You're taking money out of the pockets of workers who work full-time, full-year, perhaps somebody who is working at minimum wage in a restaurant in Toronto or a cleaner in a hospital in Calgary. You're taking that money and transferring it to an employer in Atlantic Canada so that he or she can make sure their workers stay around during the off season, which they wouldn't do if that subsidy were not available. Either the subsidy must continue or the employer will be forced to pay employees more wages to make them stay put.

Mr. Chairman, we might want to think very carefully about whether we want to continue paying that kind of subsidy. What it does is penalize the kinds of jobs we want to create and gives a subsidy to the kinds of jobs that have, as Mr. Easter quite rightly says, become predominant in Atlantic Canada.

That brings me to my next point. Why are those jobs predominant in Atlantic Canada? I think there's a case to be made. We can argue the chicken-and-egg side of this, but I would certainly want to make the argument, Mr. Chairman, that there is quite a lot of evidence that unemployment insurance has encouraged the emergence or the expansion of an economy based on short-term seasonal work because that kind of work is subsidized. It is one of the golden rules of economics, ladies and gentlemen, that if you subsidize something you'll get more of it. If what the unemployment insurance system does is tax full-time, full-year jobs and transfer that money to seasonal employment, you will get more seasonal employment and less full-time employment. It's as simple as that.

I'm sure Doug will have some comments to make about the distribution of UI benefits across other income groups. You're quite right that in my comments I touched only on high-income and low-income groups because I think it's the most striking. Doug, of course, in his study for the C.D. Howe Institute last year, Between a Rock and a Hard Place, has very extensive tables dealing with all income groups. I'm sure Doug also has some comments about the impact of UI premiums on job creation.

The Chairman: Thank you very much, Mr. Crowley. Mr. May.

Mr. May: Thank you very much.

It's an interesting issue. I mean, what did come first, the chicken or the egg? I think what has happened is that the UI system has been there and as Brian has said, it has developed subsidized industries. This is what has developed. So when we go back and look, we say those are the only jobs available. It's true those are the only jobs available, because as we see so often here in Atlantic Canada, the people who have the skills and the formal education are leaving in droves. Those other industries could have been there, but they certainly aren't there now.

With respect to the numbers and other figures, Dr. Crowley has also mentioned Between a Rock and a Hard Place. There are a number of appendices and tables in the back that refer to Atlantic Canada province by province. Also, in the paper we handed out today by Professor Gunderson and me, you'll see a fairly detailed breakdown by income class. I refer you to the appendix there, tables 8a and 8b, both under the current UI system and under the proposed EI system.

The Chairman: Thank you very much for your presentation. You've brought up some interesting statistics that we'll review as we attempt to improve the bill. Thank you very much.

Mr. Crowley: Thank you for your time.

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The Chairman: We're still going to be in St. John's, Newfoundland. The next intervention will be from the St. John's Board of Trade.

Mr. Easter: While we're waiting for the other witness, there is one thing I would like to point out. What we have seen with the seasonal industry study that was done is basically an accusation that the seasonal industries are subsidized by the unemployment insurance program. There may be some truth to that, but I think it should be put in the record that what the seasonal industry study pointed out was that those seasonal industries create economy downstream. They may work just a certain period of the year, but they work very intensely, create a lot of wealth, create jobs and create year-round employment in other industries beyond their industry. In other words, some other people have full-time jobs as a result of the seasonal industries. I want that on the record.

The Chairman: I think you make an excellent point and it's duly noted.

We're going to take a one- or two-minute break as we await Ann Rose, president of theSt. John's Board of Trade.

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The Chairman: I call the meeting to order and welcome Ann Rose, president of the St. John's Board of Trade. As you know, we're reviewing Bill C-12, an act respecting employment insurance in Canada, and we would like to hear your point of view as we attempt to improve the bill.

Ms Ann Rose (President, St. John's Board of Trade): Thank you for the opportunity to appear before your committee today. As I'm sure you are aware, issues related to unemployment insurance are very sensitive to the people of Newfoundland. As president of the largest business organization in the province, representing 550 businesses employing over 20,000 individuals, I'm keenly interested in the impact that proposed changes to UI will have on the business community.

The St. John's Board of Trade recognizes that a working nation and a healthy economy go hand in hand. Ensuring that Newfoundlanders and Canadians who have lost their jobs are provided with temporary income relief as well as the tools to find other employment opportunities...

[Technical Difficulty - Editor]

The existing process has been abused by employees and employers alike. It has become a social assistance program and we think it has drifted from its original intent. The St. John's Board of Trade is pleased that the government is taking action on the need for change and is taking the necessary steps to modernize the unemployment insurance program.

Although the legislation is not perfect, the Board of Trade generally is in favour of the package of reforms to the unemployment insurance program proposed in Bill C-12 and recognizes the importance of fulfilling important economic goals.

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As representatives of a region with high unemployment, however, we have some other concerns and suggestions on how the program can be customized for this region. ``One size fits all'' programming in this country, with its diverse regions, has hopefully become a system of the past.

The unemployment insurance program has tried for too long to be a solution to too many of our social ills. Unemployment insurance should have one focus, and one focus only: to serve as a measure for those who are temporarily out of work. The program should have no other purpose. Other social problems and structural unemployment, I think, should be addressed by other programs.

In December 1993 the Government of Newfoundland proposed an income supplementation program. This program is based on an analysis of the particular economic problems in our province that have contributed to underdevelopment, including impacts of a relatively undereducated and highly dependent labour force on income security programs.

Many of the components suggested in the income supplementation program have been introduced in your proposed changes to UI, with incentives for education and entrepreneurship as well as enhanced benefits for low-income earners. But there is a key component that we feel has not been included in the changes to the UI, which were included in the income supplementation program, and they are a basic income supplement and a work supplement.

St. John's Board of Trade fears that if these offsetting initiatives are not introduced, Newfoundlanders will witness a dramatic decline in income and an increase in those needing welfare or severe out-migration from our province.

Earlier attempts at comprehensive income security reform have floundered because they've failed to ensure basic income support for low-income families. The ISP proposal deals with this issue by starting from the income needs of families with low earnings. The goal of the basic income supplement is to provide basic income supplementation to all citizens with little or no earnings. It would ensure the security of a basic level of income for all families and individuals regardless of their circumstances and would allow each family to continue to receive this income until earned income has replaced the BIS at a level of income that would reduce dependency on income security.

The goal of work supplementation is to provide incentives to work by supplementing the work effort for low-income earners. Work supplementation would encourage people to participate in the labour force by supplementing low earnings. It would also encourage people to work longer by continuing to reward effort, regardless of the number of weeks worked. The income supplementation program would raise the incomes of individuals with low earnings and increase the prosperity of their families.

It is proposed that funding for this program could come through a redirecting of funds from the UI account, from social assistance, and from the child tax benefit.

There are many other components to the income supplementation program, and we attach, for your information, an appendix of this 1993 proposal to our submission.

There are still many issues that have to be resolved, but the intent to deal with the unique problems that face Newfoundland and which the UI system has tried to address for so many years is admirable.

The St. John's Board of Trade is pleased that Bill C-12 includes provisions for tightening eligibility requirements for unemployment insurance benefits. The six-week increase in the number of weeks needed for first-time claimants to qualify for benefits will minimize the attraction of part-time and seasonal work of many of our industries, which, in conjunction with employee unemployment insurance benefits, often pay more than full-time, entry-level jobs.

Similarly, we support the government's move to shorten the maximum period for which recipients can receive benefits from 50 weeks to 45 weeks.

We also support the change in the insurance system from one based on weeks of work, with a weekly minimum and maximum insurance coverage, to a system based on total earnings and total hours worked, starting from the first dollar and the first hour. This creates a system that better accommodates the variety of work arrangements in today's labour market.

The change will permit the simplification of the reporting requirements for employers and premium collection. It will also discourage abuses in the system and help counter disincentives to seek longer-term attachments to the employed labour force.

Bill C-12 provides an intensity rule, which gradually reduces the benefits received according to the number of weeks an individual has collected insurance benefits in the previous five-year period.

While we are encouraged by the government's introduction of this new element to the system of unemployment insurance, we believe the restrictions on benefits for individuals who use the system repeatedly are too moderate. The maximum reduction is only 5% of benefits, with a 1% reduction for every additional 20 weeks of benefits received over the previous five years. Moreover, the floor of 5% for total benefit reduction means that only individuals who are earning the maximum salary rate of $750 a week would see any significant reduction in the benefits in dollar terms.

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St. John's Board of Trade therefore proposes that an accelerated payback system be phased in to deal with individuals who use the system repeatedly. This would greatly reduce the elements of dependency and negative distortion associated with the current system. Alternatively, the problems could be addressed by increasing the premiums paid by those individuals who frequently use the system.

Our proposals would bring the program closer to a proper insurance plan where premiums paid and coverage received varies according to risk.

The St. John's Board of Trade supports a strengthened payback for high-income earners who use the system frequently, as proposed in Bill C-12. Under the new system, claimants who have a higher income and have received benefits in the past five years will have to repay a portion of their benefits through the tax system.

Similarly, we are pleased that Bill C-12 provides supplementary benefits for low-income earners. This will direct additional resources to those people who need it most in order to get back into the employed labour force.

The improving economy, along with the earlier changes to the program reducing overall benefit payments, has resulted in recent surpluses in the unemployment insurance program. The surplus is expected to reach $5 billion by the end of 1996 and could reach $9 billion to $10 billion by the end of 1997.

The St. John's Board of Trade position on the unemployment insurance account is that the surplus should never be allowed to exceed $5 billion. This is a more than sufficient cushion for a downturn in the business cycle. Any surplus above this amount is unnecessary and cuts into the ability of employers to hire additional people. We recognize the account should build up a surplus to ensure that there are sufficient premiums during an economic downturn so that premiums to employers and employees alike are not increased. However, we believe a $5 billion surplus is a reasonable cushion and any surplus in excess of this amount is a clear indication of payroll taxes that are too high. A surplus in excess of $5 billion should be remitted back to those who have contributed to it, employers and employees, in the form of lower premiums.

St. John's Board of Trade has long argued that there is an indisputable connection between changes in payroll taxes and job creation. We believe a reduction in payroll taxes at this time would result in entrepreneurs deciding to hire additional people. This will increase the number of taxpayers, increasing the revenue to government. It will also allow more people to come off the unemployment insurance and welfare systems, thus reducing government costs.

St. John's Board of Trade recognizes that training that is well geared to assisting workers to obtain occupational skills in demand somewhere in Canada can produce results. Bill C-12 provides that some claimants will be able to receive employment loans and/or grants that will give them resources to attend provincial or other accredited institutions to develop needed job skills.

The government's priority in expending any new funds in connection with the unemployment insurance program should be in an area where the benefits are proven and where the results are immediate - that is, premium reductions for employers and employees.

Given the questionable benefit of many of the training programs, the St. John's Board of Trade proposes that government consult with industry with respect to the focus of training initiatives and ensure that the existing funds are wisely spent.

In conclusion, the St. John's Board of Trade would like to reiterate that the best way for the government to create jobs is to foster an environment in which Canadian businesses and employees can prosper. The government has wisely designated unemployment insurance reform as a pillar of its policy of economic renewal and job creation. In many respects, Bill C-12 brings significant improvement to the existing unemployment insurance program and has our support.

A number of the provisions of the legislation will increase the efficiency and effectiveness of the program, simplifying the administration for employers, while making work more attractive by reducing the size and duration of benefits. In other areas, however, such as the lack of movement in premium reduction and the slow pace of some income benefit reforms, the bill does not go far enough and should be amended accordingly. Government must separate unemployment insurance from income support programs and introduce initiatives to deal with unique circumstances in different regions of the country.

Thank you very much, and now I will entertain your questions.

The Chairman: Do you have any questions, Mr. Byrne?

Mr. Byrne (Humber - St. Barbe - Baie Verte): Thank you, Mr. Chairman. I appreciate the opportunity to speak at the Standing Committee on Human Resources Development for the first time. I'll quickly ask Ms Rose a question.

You mentioned a suggestion that you would advocate, that premiums would be raised for those who frequently use the system. I assume that would include seasonal workers. They would be considered frequent users.

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I would ask if you would also advocate that the premiums paid by employers within seasonal industries should be raised for the employers as an incentive for them to extend their working season. Do you think that would be an adequate incentive for employers as well?

Ms Rose: There are two areas I'd like to point to in responding to you. First, in our submission we are suggesting that there be alternate measures to deal with seasonal workers, such as the workers in Newfoundland in the fishing industry, in the construction industry, and that an insurance program is not the appropriate program to deal with either seasonal workers or structural unemployment. In terms of raising premiums, I think employers and employees need to share that equally.

The Chairman: Thank you, Ms Rose, for your presentation. We are certainly going to take note of all your points and use those that are appropriate to improve Bill C-12. Thank you very much.

Ms Rose: Thank you very much.

The Chairman: We will stay in St. John's, Newfoundland. The next presentation will be from the Newfoundland and Labrador Federation of Labour. We'll take a short break so that the witnesses can get settled in.

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The Chairman: I now welcome the Newfoundland and Labrador Federation of Labour. As you know, this committee is hearing from Canadians from coast to coast to coast, looking for some advice as to how we can improve Bill C-12, an act respecting employment insurance in Canada. We're looking forward to your input.

Ms Elaine Price (President, Newfoundland and Labrador Federation of Labour): Thank you. We do have a number of points we want to make. We understand there are time restraints and will do what we can to comply.

The unemployment insurance program is a vital component of the income security network to protect income and living standards during periods of unemployment and harsh economic times. Due to the last round of substantial cuts, less than one half of unemployed workers in Canada now receive unemployment insurance. The current proposal contain more cuts, which will once again drastically reduce both access and level of benefits. Only about one third of unemployed people will be eligible for UI.

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The Newfoundland and Labrador Federation of Labour believes the passage of Bill C-12 will destroy the UI program and its insurance principles. The proposed changes will have a devastating effect on unemployed workers, their families and communities.

There is no financial justification for these massive cuts. The UI fund will have a healthy surplus of over $5 billion by the end of this year. Federal government estimates are that this surplus will increase to a level of $20 billion by the year 1998.

Changing the name of the legislation signifies a fundamental shift away from income security and towards employment services, which in our view should be financed by general revenue and not the UI fund. The channelling of money to anything other than unemployment insurance is completely unacceptable. The funds belong to workers and employers. The government does not pay into the fund and is only an administrator of the program.

The government has no right to unilaterally change the original concept and purpose of the unemployment insurance program. The whole thrust of the proposed legislation is premised on the availability of jobs, assuming that people who are unemployed have a choice, that there are jobs if only they were willing to work. This kind of thinking ignores the existence of structural unemployment in Canada.

The official rate of unemployment is now 10.4%, although the real rate of unemployment is much higher when you count people who have given up looking for work and those in part-time jobs who want to work full-time.

In the province of Newfoundland and Labrador, unemployment has always been much higher than the national average. It now officially stands at 20%. The real rate of unemployment, however, is over 50%, and as high as 90% to 100% in parts of rural Newfoundland and Labrador.

Penalization of temporary, part-time, and seasonal workers in terms of their access and level of benefits ignores labour market structures. Increasingly, full-time permanent work is disappearing and more and more people have to search for temporary, part-time, low-wage jobs. Workers in our province will be penalized for working in seasonal industries, where climate or a product/service market makes it impossible to work off-season, and there are no other jobs available.

Currently, the federal government's economic policy focuses on large-scale cutting of government expenditure instead of building up revenue to generate economic development and jobs. In addition, the federal government and the Bank of Canada agree with what they call an acceptable or natural rate of unemployment of 8% to 10%.

Bearing in mind that there is an alternative and realistic approach to economic policy and that there is a surplus in the UI fund, the massive cuts contained in Bill C-12 amount to a completely unjustified attack on unemployed people and their communities.

The proposed changes in benefits will fall disproportionately on the very people who can least afford it. Part-time and temporary workers in low-paying jobs, especially women and young people, will be particularly hard hit.

The federal government has made much of the advantages of all hours worked for any employer being counted in the qualification formula, but this positive change is far outweighed by the doubling of the requirement of time worked from 15 to 35 hours a week, so that in order to qualify, a person has to work a minimum of 420 hours, and depending on the unemployment rate, that increases to 750 hours. New entrants will now be required to work 910 hours to qualify. This change to hours-based benefits may help some workers who are currently not eligible, but tens of thousands of others, those who work few hours in part-time jobs, will lose eligibility. Anyone who works less than 35 hours a week will have to work many more weeks than they do under the existing system.

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Those starting out in the labour force, those who received UI benefits in a previous period but whose claims have lapsed for a period of 12 months or more, and those who have taken a break for whatever reason will find themselves faced with a longer qualifying period than others. Many first-time entrants will start out working part time or in a temporary position. Not all of these people are still at home with parents or spouses. Many are working to pay for the costs of basic necessities, and many of these will be women who have taken time out to care for children or elderly relatives.

Temporary workers make up a large portion of the workforce in Newfoundland and Labrador. The nature of our geography and economic structure means many people cannot find permanent work. In the provincial labour market, this trend is increasing, not decreasing, as employers use more and more temporary workers to replace permanent employees. The federal government is alleging these workers will be better off. However, closer examination reveals the flaws in the new system. The new method of calculating benefits will have grave consequences for people whose work is seasonal, temporary or on call.

From July 1, 1996, benefits will be calculated on the basis of the previous 14 weeks' earnings immediately before the claim is filed, including down time, instead of the current averaging of the previous 12 weeks actually worked. This will mean a dramatic drop in weekly benefits, which will be even greater after January 1, 1997, when the formula will be changed again to 16 weeks immediately before the claim. We are told that this formula will eventually reach a fixed period of 20 weeks.

The new method of calculating benefits is a severe penalty imposed on those who did not work for 14 consecutive weeks immediately prior to lay-off. If a long period of lay-off is combined with a subsequent short period of work, then an individual benefit rate plummets. Temporary workers are also the group that will be hit hardest by the penalties applied to repeat claimants, and many among the higher-paid seasonal workers, such as in construction, logging and fishing, will be penalized heavily by the increased clawback of up to 100% of employment insurance benefits.

Women continue to dominate the low end of the labour market, earning less, working fewer hours, and lacking benefits. Some of these women will benefit from the rule changes, but most will not. Coverage for many women in lower-paid temporary work will be very much reduced. They will find it very difficult to qualify because of the doubling of the hours requirement, and if they do, they will suffer double jeopardy. Their benefits will be considerably lowered by the fixed-period divisor, and then again by the intensity rule. Many maternity, paternity and sickness benefit claimants will see their benefits eliminated or reduced because of the increased qualifying requirements and the limitation of maternity, sickness and injury benefits to major attachment claimants.

Contrary to the myths being spread by the Government of Canada, repeat claimants are not organizing their lives around UI. The number of repeat claimants has increased in recent years for the same reason the number of temporary and contingent workers has. The labour market has changed. Fewer and fewer workers are able to find regular full-time work. It is difficult to re-establish oneself in regular full-time work. It is also difficult to re-establish oneself in the regular workforce after a lay-off. Once displaced, workers find themselves at the bottom of the seniority list and therefore increasingly vulnerable to being laid off. They do not choose to live like this. Rather, it is the nature of our current job market.

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The new provision, which penalizes repeat claimants, makes a bad situation worse. Repeat claimants are subject to a reduced basic rate, losing 1% for every 20 weeks on prior claims in the past five years. They are also subject to an aggressive clawback at a much lower income level.

The Newfoundland and Labrador Federation of Labour supports the penalization of unemployed workers whose work patterns are the result of the labour market structure in our province. The establishing of a two-tiered system of UI is discriminatory and completely contradicts the original purpose and principles of our unemployment insurance program.

We are pleased that the definition of ``insured person'' includes people who had claims during the last three or five years, because practice has been to restrict employment services only to those on current claims. However, we do have a number of concerns about this section of the legislation, which shifts responsibility away from government and too much toward the individual, assuming once again that it is the unemployed person who in some way is not doing enough to find a job, and that the jobs are there if only they searched effectively.

The provision for the unemployed person sharing the cost of employment services once again assumes that responsibility for unemployment lies with the individual. As well, assuming the ability of that person to pay ignores the very low level of benefits that will be available under the new system to the very people who will most need training, and in effect restricts access to employment services that should be every unemployed person's right.

While we understand the need for some coordination between federal employment services and provincial government policies, the Newfoundland and Labrador Federation of Labour is extremely concerned about the intention of government in this regard. We are apprehensive that the legislation will pave the way to the implementation of an income supplementation plan. We completely disagree with the premise of dependency underlying the latter program, and would once again stress our commitment to a strong, viable unemployment insurance fund, implemented according to the original concepts and principles.

Partnership and cooperation with other agencies in the provision of employment services is unacceptable to us if it is the vehicle for privatization of public services, as previous experience suggests will be the case. We have grave concerns about the quality, standardization and accountability of any post-secondary education, training, or employment counselling offered in the private sector. Services provided in the public sector carry with them the final accountability of the government elected by the people, the taxpayers. A private institution is only accountable to its shareholders, or if not for profit, to a volunteer executive board.

Along with increasing privatization of Human Resources Development services, the federal government is closing down more than 115 Canada Employment Centres and reducing service at 200 others, replacing government counsellors with bank machine-like kiosks. This development contradicts the government's commitment:

to maintain a national employment service to provide information on employment opportunities across Canada to help workers find suitable employment and help employers find suitable workers.

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The legislation lists a number of measures to enable insured participants to obtain employment, including wages subsidies and earning supplements. Experience with these band-aid approaches has demonstrated that very few UI claimants gained by being permanently employed after the wage subsidy or earning supplement ends and that those few who are kept on tend to be in low-paid, insecure jobs. Indeed, we would argue that these measures encourage employers to hire people in low-wage jobs.

What people need are real, well-paying jobs. In order to achieve this, the federal government has to change the direction of its economic policy to ensure the availability of good jobs, with adequate and stable income for all Canadians.

The Newfoundland and Labrador Federation of Labour disagrees with the reduced premiums for employers paying into the fund. Contrary to business arguments, there is no evidence to prove that reducing employer premiums will generate economic growth or, more important, jobs. We contend the UI program should not be perceived as or operated as a tax, as the government and business are arguing. The notion of reducing costs to business to generate economic investment has even been criticized by an IMF report in 1995, which questioned the effectiveness of tax preferences to business.

In this province the supposed cuts represent a loss of about $150 million a year in unemployment insurance benefits from our economy. The savings to employers of $1 million from proposed premium reduction is in direct contrast to the massive cuts suffered by unemployed workers if these changes go through. If we add this drop in employer's premium rates to the shift of money away from workers' benefits to employers in the form of wage subsidies, it is clear that the federal government is redistributing wealth from working people to employers, especially big companies.

We know that previous pilot projects have been conducted by the federal government that test the feasibility of merging all forms of income security, including social assistance, under the control of a single window. Any confusion of unemployment insurance with social assistance or mandatory training and workfare is completely unacceptable to the Federation of Labour. We are extremely apprehensive about the provision in the bill to allow provinces to implement these pilot projects. This development will erode any national standards in income security programs and will encourage certain politically motivated provinces to introduce workfare.

The Newfoundland and Labrador Federation of Labour urges the committee to retain the original concepts and principles of the unemployment insurance program and to improve accessibility and the level of benefits. In our brief we outline a number of suggestions the committee could take in order to achieve this.

In Newfoundland and Labrador, with the proposed changes, unemployment insurance income will be reduced from a high of $1.1 billion in 1992 to just $300 million a year. The loss of about$140 million a year from our provincial economy, combined with the sweeping cuts in federal transfer payments and provincial government programs, will make it virtually impossible to generate economic growth and jobs.

The Newfoundland and Labrador Federation of Labour believes that working people are bearing the cost of a huge mismanagement of our economy. We can only conclude that these draconian reductions in UI benefits are part of a government and big business thrust towards competitiveness through a deregulated, low-wage economy characterized by unemployed people so desperate that they will accept workfare and other cheap labour ploys and by employers whose wage subsidies from the government encourage them to pay low or minimum wage.

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The human costs attached to the proposed changes will be immense. The combination of massive UI cuts with major cuts in social assistance resulting from the introduction of the Canada health and social transfer will push many more families into poverty in this province.

The family poverty rate in Newfoundland and Labrador is the highest in Canada at 18.1%, and currently 32,000 children under the age of 18 live in poverty.

In the United Nations International Year for the Eradication of Poverty, we urge the federal government to rewrite Bill C-12 to strengthen our unemployment insurance system rather than destroy it. We are convinced the proposed changes in Bill C-12 will in fact destroy the unemployment insurance plan as we know it.

The Chairman: Thank you very much for a very thoughtful, extensive and comprehensive presentation. You certainly, through your brief, have answered the questions we may have. It covers all the particulars of the legislation we will need to analyse.

I can tell you, on behalf of the members of this committee, that some amendments have already been forwarded to the committee that address some of the issues you raised, particularly as they deal with the gaps, the divisor and the intensity rule.

There are no questions from the members of the committee, with the exception ofMr. McCormick.

Mr. McCormick: Thank you very much for your presentation. I just wanted to mention that a previous witness from your province told of demand for a certain targeted training. For example, they mentioned that right now there is a shortage of diamond drillers in the province. I am very much aware of many of the small towns and areas of your vast province. I've travelled thousands of miles of road. I think we have to recognize there are a lot of opportunities. Tourism is going to grow immensely.

The number one dream of people in all of North America and in every part of Canada is to have their own business. I've wondered whether you've looked at these other tools before you turn them all down. I believe the fact that there are self-employment measures to help people set themselves up in business can be very positive, besides the job creation partnerships.

Back to Voisey Bay and these diamond drillers - this is not a short-term project. This is conceded now to be the number one mining camp ever in Canada. It may become the number one mining camp of all the world. That and the new oil discovery are going to help turn this province around. There will be the opportunities for these small business people, who will be able to make a real contribution and to receive rewards. I wonder if you want to make a comment on that.

Ms Price: Yes, I would certainly like to make a comment on that. The first comment I will make is that Newfoundland and Labrador has always been rich in natural resources. We've always had tremendous wealth in this province. The problem has been in the way the wealth has been redistributed among our people, not just in the province but throughout the country.

As Newfoundlanders and Labradorians, we are certainly optimistic that with the oil development and with Voisey Bay we will see a new approach to the development of our resources in this province, one that benefits the majority of workers living in this province and not just a few.

The other comment I will make is that I'm not sure I agree with you that the number one dream of all people is to own their own business. The number one dream of most people I know today, particularly the workers and their families we represent as a federation of labour, is to have and keep their job, to have a job that pays a decent salary, a job that allows them to provide for the basic necessities of life, a job that ensures they can educate their children and live comfortably - not rich, but comfortably.

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So we may differ somewhat in some areas, but I do agree Newfoundland is very rich and has always been. I certainly hope the exploration and the developments that are occurring in our natural resources will bring real wealth to the people of our province in future.

Mr. McCormick: I just want to say I appreciate your comments. I certainly hope those natural assets do bring good fortune and I wish you the best for the future. Thank you very much.

The Chairman: Thank you, Mr. McCormick.

Thank you, Ms Price, for you presentation. All your points have been duly noted, and you can rest assured that we will take them into consideration as we improve Bill C-12.

We're going to go to Quebec after this and we'll be hearing from Mouvement Action Chômage Pabok and Ralliement gaspésien et madelinot. We'll take a five-minute break.

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The Acting Chairman (Mr. Easter): Can we reconvene?

Welcome, gentlemen. We have from Gaspé, Quebec, the Ralliement gaspésien et madelinot, and Gaétan Cousineau, representing two groups. Go ahead, Mr. Cousineau.

[Translation]

Mr. Gaétan Cousineau (Coordinator, Mouvement Action Chômage Pabok Inc.; representative, Ralliement gaspésien et madelinot): I represent the Ralliement gaspésien et madelinot as well as the Mouvement Action Chômage.

[English]

The Acting Chairman (Mr. Easter): You will have ten to fifteen minutes to go through your presentation and then we'll turn to questions.

[Translation]

Mr. Cousineau: Mr. Robinson will speak first and will read his brief, if you don't mind,Mr. Chairman.

Mr. Albert Robinson (President, Action Travail Denis Riverin): Good morning, gentlemen. I would be tempted to say wouf, we were nearly forgotten, we, who represent some of those most affected by this reform.

I think it is important to first give you some background to familiarize members of this committee with the economic situation in the Gaspé region.

I thought of using the words "useful, yes?" in the title of my brief; "useful", because we wondered whether it was so important to present one at this stage, but you have to strike while the iron is hot.

Despite the opening of Boulevard Perron in 1929 and the daily crossing between Sainte-Anne-des-Monts and Sept-Îles in 1951, Gaspé developed very slowly in the first three decades of its history. From the time of the first settlers, Gaspé has complained of government idleness. It even went as far as demanding to be joined to New Brunswick.

At the time, social policies, which were to encourage development, were geared solely to major centres, and that attitude still exists today. Other groups had wanted Gaspé to become sovereign; if they were going to be abandoned by government, they might as well manage their own affairs. The leaders wanted to have control over the Gaspé, but without for that matter providing it with the necessary tools.

Closer to home, in 1970, a report prepared for the Bureau d'aménagement de l'est du Québec recommended to the government, which is very significant, to close 96 villages in the LowerSt. Lawrence and the Gaspé and to move 64,446 people out of the regions. The famous Higgins report will not be implemented to the letter. What is the point in doing so when you can achieve the same means more subtly by doing nothing.

You don't need to be Albert Einstein to see that nothing has really changed. Our demands have remained the same, as have the answers we get.

We haven't really progressed; we have simply consumed more goods and services. We tried to make the Gaspé like the rest of North America when we really should have tried to focus on our own territory, because sustainable development is only possible when people respect the specific and unique nature of a regional county municipality. By that I mean Denis-Riverin and other regional county municipalities around the Gaspé.

The exodus of our youth in the past few decades has had a major negative impact on entrepreneurship and therefore development opportunities. As everyone in the Gaspé knows, a lot of young people leave the region for big cities. Current social programs are partly responsible for the exploitation of local workers instead of training them for the development or production of core products.

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The trend nowadays in politics is to blame the unemployed and welfare recipients, for whom governments are responsible, governments who think they own the services they provide.

If that is the situation, why shouldn't the residents of Gaspé sit back and wait? More than 300 years of ``willingness to improve" from those in power have produced this engrained mentality.

This groundswell of anger must be channelled immediately if we are to see any major positive change. Be it an economic or a change in attitude, we must do something now. Entrepreneurship, specific training programs and experiments are just a few examples of things we could work on.

As far as a dialogue with residents of the area, forget it. Apart from a few groups of individuals, only the Canadian Armed Forces can achieve that because soldiers do not have any freedom of speech. Only common financial interests will lead people to discuss matters.

It would be better to take specific steps to consolidate what we already have and innovation in processing core products than all the rhetoric we hear nowadays.

If seven out of ten people have a seasonal job in the Gaspé area right now, who should be making the changes?

The multitude of organizations in our area should start some activities to create a real development movement. Paper should be used only to plan specific measures, be they very minimal, rather than to bemoan our lot for another 300 years. We should target the non productive areas of our region and focus on restructuring our natural wealth and there should also be a high quality advertising campaign to encourage people to buy locally.

Given the current situation, it is imperative to use the services of high-level businesses or renowned universities. We are entitled to create some form of tidal wave. Let me explain; if universities in our region do not work on developing our natural resources, basic resources where they exist, and which are currently there to sustain major centres, we will never succeed.

Otherwise, the media may tell us very quickly that in the year 2296, the regional county municipality of Denis-Riverin and others throughout Gaspé, if they still exist, will ask for government assistance and for special status.

Just like in the days of early settlers, our numbers are small compared to the rest of the province. Our population has increased, just as theirs has. Our progress has been admirable thanks to modern communication, various inventions and discoveries, but others have progressed even more than we have.

We don't want to seem defeatist, but we have to face facts: if the current trend continues, our region will never get the help it has expected for so long.

Bill C-111 on unemployment insurance, or C-12 as the government likes to call it now, will be a real blow to the residents of Gaspé and of the eastern provinces because it will affect something very fundamental, namely their dignity, even if the Conseil du patronat says the reform is good and business premium rates should be reduced even further.

In our region, where seasonal work or part-time work is common for foresters, fishermen, nurses, tourism, etc., you simply cannot enforce this reform without taking our employment problems into account.

Bear in mind that the regional county municipality of Denis-Riverin currently has an unemployment rate of 33%. The regional country municipality of Pabok has an unemployment rate of 30% and in la Côte-de-Gaspé, it is 22%.

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The head chef, the federal government, is serving us a meal without seeking first our approval or even knowing our tastes. No one asked us our opinion before going head with this reform. Are we to conclude that this current consultation will be taken into account, or is it just a strategy to put your minds at ease?

Members of the committee, in our region, we have a much lower standard of living, but not because of a dearth of natural wealth. We will, nonetheless, be affected by the reform, especially the provision to make eligibility based on the number of hours worked rather than the number of weeks. That is going to lead to unprecedented fraud; don't forget that people do have a survival instinct.

Let me give you an example. The other evening I heard someone on TV talk about a 70-hour week. Last year, foresters and fishermen got $815 a week. This year they will receive only $750, if I am not mistaken. They will have now to work more hours to earn enough money in a week to be eligible for unemployment insurance. If you drop that to 35 hours, members of the committee, and you cut the salary by half, that represents just $375. Who will bear the brunt of this measure?

Under this rule, the salary at which you become eligible for unemployment insurance will be reduced. Moreover, the rule will penalize part-time workers who in the past had been eligible by working 15 hours a week. What about the new claimants who will have to work 910 hours to qualify? Do you want our young people to leave our regions in droves, which is already happening to a great extent?

Under this machiavellian reform, as of June 30th, 1996, you will have to work 14 consecutive weeks. Take a forester for example; he would have to work 35 hours per week in the forest during the work season. Forest fires, like those in 1995, may force him to be laid off temporarily, which will translate into a significant loss of income. The same goes for fishermen, for whom weather is a determining factor, for part-time nurses, and finally for cyclical small businesses, who also will not be spared.

With this brilliant reform, there's also talk of wage subsidies to encourage employers to hire staff. That is not uncommon in our area. That facet of the reform is a carbon copy of the income security hiring policy, which always lead to abuse on the part of some employers and generated disappointment and disenchantment among workers.

Let me explain what I mean. People are hired through government subsidies for 20 weeks or so. As soon as the subsidies end, the employer says that unfortunately he doesn't have anymore money; he says the employee is a good employee, but that he has to lay him off, and then he just hires another one. Two or three weeks later, people find out the employer hired yet another person, again thanks to government subsidies. That is money down the drain.

Members of the committee, the most ridiculous part of the reform is the national placement service, especially the one in our regions. Isn't that a brilliant idea? They want to set up a new computerized information system, again on the backs of the poor. They shut down employment centres and assure us we will get better service. Who will get it? The most educated.

Members of the committee, there is no doubt that several measures contained in this reform will impoverish people living in the regions.

What will be the impact of these reforms on the Gaspé region? These reforms will be disastrous for our communities. You know, money is what fuels warfare. The population in our region is shrinking and, at the same time, we are growing poorer and poorer. I did not want to dramatize the situation, but we will witness an increase in the suicide rate amongst young people, more family unit breakdowns, property loss and so on and so forth.

Gentlemen, this reform will swell the number of welfare recipients and will put us in a situation that can be compared to that of underdeveloped countries.

This reform is destroying the legacy left to us by our ancestors. You want to put us into a ghetto where the people living in the regions will be compelled to adopt an ideology of submission.

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What suggestions should be given priority? We are not against a sensible, well-thought out and structured reform, a reform where we, the seasonal workers, could establish the parameters for job creation. In order to reach this objective, our elected officials must first of all realize that we exist and acknowledge our ability to take control of our destiny providing that we are given both the tools and the opportunities to do so.

In 1995, in Quebec City, workers contributed to the Unemployment Insurance Fund and created a surplus of $195 million. With such a performance, I feel that the Western provinces will stop accusing us of being parasites and recognize that we are entitled to our fair share.

We need to develop second and third stage processing industries in our regions. To do this, the government must encourage businesses by giving them tax breaks for a certain period of time providing that they invest in second and third stage processing sectors.

On the job training can be subsidized, providing that the employer and the employee sign a binding contract in order to avoid employer abuse. In addition, officials from the sector should supervise and set up a probation period in order to prevent the waste that has gone on in the past.

The government should encourage banks - when I refer to banks, I mean the canadian chartered banks - to make venture capital loans available for the creation of small businesses. The criteria used by the banks in approving venture capital loans must not be the same as those used for large centres where industry is very developed; greater flexibility is needed in the regions. The system must be made less bureaucratic, which will result in tremendous savings. Within these regions, the government must implement a bi-annual assessment mechanism on jobs strategies and funding mechanisms. In addition, this agency must have the authority to make recommendations.

In conclusion, I would like to say, to the members of this committee, that these suggestions are only part of a plan that can be developed for the regions. The government must take a step back from its reform in order to allow the employment policies that we are proposing, the time needed to produce results. Indeed, if people are working, there's no doubt that the government's fiscal health will improve and it will no longer have to dip into the Unemployment Insurance Fund surplus in difficult times. Thank you.

[English]

The Acting Chairman (Mr. Easter): Thank you, Mr. Robinson and Mr. Cousineau.

We are limited for time. We only have about 15 minutes left and we need to get through your presentation, Mr. Cousineau, and then get in some questions.

[Translation]

Mr. Cousineau: Mr. Chairman, I'm in complete agreement with the first part ofMr. Robinson's presentation, namely, that we citizens of Gaspé almost did not get an opportunity to appear before the committee. This is very similar to what happened to us in 1994, when the committee held hearings in Rivière-du-Loup, which is 600 kilometres away from our region. Fortunately, thanks to technology and to a technical glitch, we are able to appear before you.

I will not repeat all of the aspects of the employment problem raised by Mr. Robinson, however, on behalf of the Ralliement gaspésien and the Mouvement Action Chômage, which represents some 4,000 members throughout the Gaspé Peninsula, I would like to focus on a few specific points. You have had time to read their document.

The biggest criticism that the Ralliement gaspésien has with respect to the unemployment insurance reform concerns the absence of specific measures designed to create jobs.

We have also noted that the primary objective of the reform is to reduce the deficit. Everyone knows that $5 billion from the unemployment insurance fund will wind up in the Consolidated Revenue Fund. There's no point in telling you that employers and employees are the only ones who put money into this fund. Accordingly, this money should be used to consolidate jobs in the Gaspé and to create new ones.

The provisional fund of $300 million to be spent in Quebec over the next three years is, according to Ralliement gaspésien, completely inadequate. What percentage of this money will find its way to the Gaspé in comparison to the rest of the province? This measure is, in our opinion, totally inadequate for a region which, over the past six or seven years, has had the highest unemployment rates and which now has the lowest employment rate per capita in Canada.

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Furthermore, our organization has never seen evidence that the wage subsidy given to employers has resulted in a great deal of job creation. In many cases, those that hold the purse strings, namely the federal government, do not provide any follow-up. When the subsidy or allowance paid by the program expires, the employee is often laid off by the employer. Therefore, there is no evidence that the employer wage subsidy has in fact created jobs.

Finally, we agree with the idea that contributions could be put into a reserve fund which could be used for difficult times, to avoid fluctuations in premiums, providing that we are given assurances that employers will use this money strictly to develop jobs or to assist the unemployed, and not to reduce the deficit.

In summary, these are a few of the points made in the document submitted by the Ralliement gaspésien.

With respect to the Mouvement Action Chômage, we met with nearly 3,000 or 4,000 people from the Gaspé region over the past two months and we can confirm that three main aspects of the reform process must be changed and amended without fail. The Gaspé region cannot be assimilated into a region such as Toronto or Winnipeg, where the unemployment rate is sitting at 5, 6 or 7%.

Of course, the committee or the government could have done some consultations in order to find out how people felt about the new unemployment insurance program. We have been told that 75% of Canadians agree with the changes. However, as far as I know, the people from the Gaspé were never consulted. All of the demonstrations that were held in Eastern Quebec, over the past two months, would have been enough to convince you that 75% of the people living in the Gaspé, in Magdalene Islands, in New Brunswick are completely against this reform. If you consulted people living in the West, you must understand that their situation is completely different from the one here in Eastern Quebec.

With only 24 hours notice, it was a bit difficult for us to consult with the people in the Gaspé about what almost proved to be our absence from this committee. However, we are here today. Let us therefore forget about this consultation that was supposed to take place.

We wish to focus on three main points, Mr. Chairman. First of all, the 1% intensity rule for frequent users. In the Gaspé, there's no doubt that 70% of the recipients have become eligible for benefit periods by working at temporary jobs. They therefore find themselves on unemployment every year, given the structure of our jobs which are seasonal in nature and which last for scarcely 10, 12 or 13 weeks.

We must point out that there were approximately 15,000 unemployment insurance claimants in 1995 as compared to 18,000 in 1994. These figures can be found in the appendices. There has, therefore, been a decrease in the number of unemployment insurance claimants because of all kinds of exclusions resulting from amendments made to the Unemployment Insurance Act over the previous years. Therefore, in four years time, most of these claimants will be receiving unemployment insurance benefits at a rate of 50% of earned income. Curiously, 50% is the unemployment insurance benefit rate in the United States.

I therefore think we are trying to put our social programs into line with those in the U.S. since the second rule, which will greatly affect people living in Gaspésie, revolves around the 14 or 20 weeks to establish premiums. Many workers fall under the 10-week rule, for instance those who work in the lobster industry which creates many jobs in the plants over the same period of weeks. People working in this sector will receive drastically lower UI premiums if the income they earn over a 10- or 12-week period must be divided by 14 in July 1996 and by 16 in January 1997, which will be the case in our region. Ther is no assurance that in January 1998, the 20-week rule will not apply to match the American system.

As well, the 14- to 20-week rule determining the benefit rate will greatly affect construction workers. Sometimes they have to leave our region two, three or four times a year to find work for the required number of weeks. People who work in fish and lobster plants work at the beginning of the summer and then in autumn, during the herring fishing season. This means the two- or three-month dead period in between will be taken into account when their benefit rate is being established.

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Finally, the third criterion, which is as significant as it is punitive, deals with the eligibility threshold which will rise from 420 to 910 hours. This figure is three times higher than the current requirement, which is 300 hours. In a region with an unemployment rate of 17, 20 or 30%, it is obvious that many people will not be eligible, even if the intensity rule of 1%, as well as the 14- to 20-week rule to calculate benefits, are changed. People living in high unemployment areas will not be eligible for unemployment insurance benefits under Bill C-12. So it is clear that the men and women of Gaspé object to such a system since they will be the first to suffer its consequences.

We hope that our voices will be heard, as opposed to what happened when we presented briefs in the past, in other circumstances or concerning other amendments to legislation. We hope you will single out our presentation when you present your recommendations to the government and to Minister Young. Given the particular situation in our area and its unemployment rate, we are asking for special conditions regarding accessibility and eligibility to unemployment insurance benefits.

These are the main points contained in our brief, Mr. Chairman. I would be pleased to answer any questions you may have.

[English]

The Acting Chairman (Mr. Easter): Thank you, gentlemen.

Mr. Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): Good afternoon, Mr. Robinson andMr. Cousineau. I am pleased that you were able to make a presentation. I will be brief so others can have enough time to ask questions.

You raised two significant points. I would like you to begin by explaining what exactly seasonal work is. It's very hard for us to convince the Department or Parliament that seasonal workers aren't there by choice, and to refute the arguments of those making seasonal workers out to be... I would like you to give us some concrete examples.

The second part of my question deals with an issue which has not yet been raised, namely the management of the Transitional Fund. There have already been transitional funds in Eastern Quebec. All kinds of funds have been in existence for the last 10 or 15 years, but they have not yet lived up to their expectations. I would like you to elaborate a little about the amount in the UI fund, and who in particular should decide how the money is spent and according to what criteria.

Mr. Cousineau: It's easy to understand that the citizens of Gaspé don't like being unemployed on a permanent or recurring basis. For instance, one week ago, we got eight inches of snow. A week and a half ago, we got a foot and a half and yesterday, another six inches. So how do you expect forestry workers to start working at this point?

In the case of the fisheries, the ice on the rivers hasn't even broken yet. We have to wait for the ice to drift into Chaleur Bay before we can put the boats in the water, which will probably happen at the beginning of May, as usual. As you know, fisheries fall under federal jurisdiction. The lobster season lasts ten weeks. After that, you have to remove you gear from the water. And when the gear is gone, when no employer takes out his boat any more, how do you expect the deck crew and plant workers to continue to work? It's very easy to understand. Those who don't should take a short trip to Gaspé and listen to what people have to say.

Let's move on to tourism. The winter population of Percé is approximately 300 inhabitants. Summer starts around June 24th and ends on Labour Day weekend. Before the 24th of June and after Labour Day weekend, there are hardly any tourists. That works out to about 12 weeks in between.

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During those 12 summer weeks, jobs are plentiful in Percé. The population rises to approximately 2,500 and there are perhaps 1,500 available jobs. When the tourists leave in September, will merchants keep operating their hotels or their souvenir shops? No, they will lay off their employees and run their businesses for another week or two for the few remaining tourists.

If the community believes we easily live with this situation, it just doesn't understand the reality of the way people from Gaspé have always lived. We have always had seasonal work and politicians have never really shown the will to develop industry in Gaspé providing year long work and promoting the creation of longer term jobs.

There has been many economic summits which have never yielded any results. There have been all kinds of requests for subsidies along with criteria which were very difficult to meet.

There has recently been a lot of talk about helping the self employed. Take the case of a person on unemployment who, for the last ten years, has worked ten weeks a year on a full salary and 30 weeks at half salary, since 55% represents close to half a person's income. How do you expect this person to get a $20,000 bank loan in order to receive a $5,000 or $6,000 subsidy from a local organization? That's totally unfeasible.

That's the answer to people who wonder why the Self-Employment Assistance Program isn't used more in Gaspé. It's because people are so poor that they can't even meet the criteria.

I don't know if these examples are the answers you were looking for. But if you want any more, there are plenty.

Mr. Crête: I have a supplementary.

The other issue Canada as a whole must debate is the following. Businesses have told us that applying the 20 week rule throughout Canada would make the labour force more mobile and force people to move to where the jobs are.

Do you think this kind of solution would benefit Quebec and Canada compared to current social programs, including the unemployment insurance system? If you had to choose a solution for all of Quebec and Canada for the next 10 or 15 years, as is proposed in the current reform, would you choose a single standard for everyone whose impact would be felt once people started moving, or do you think it would be wiser for a country to maintain the course it has followed for the last 15 or 20 years?

Mr. Cousineau: Let us take the following situation: you are between 40 and 45 years old; you have worked for 25 years; you have certain assets because you have inherited the family house. This represents the situation of people living in Gaspésie, because 60% of them own their own house and their own piece of land. Given this situation, if you applied a single standard throughout Canada to encourage people to move to where the jobs are, well, I don't think people would leave. I think it would be a one way ticket to widespread social welfare.

People are not going to abandon the things they have accumulated over 25 years to move to an area which will not even guarantee them a job. Indeed, throughout Quebec, 40 or 50 year olds know very well that it's hard to find a job. There is a lack of jobs in Canada. It doesn't matter if you live in Montreal or Quebec, there are no jobs, and there are more people than ever looking for employment.

Here is an example illustrating the eagerness of people living in Gaspé to find a job. Five jobs recently opened up and there were 250 applications within four hours.

Is it enough for the citizens of Gaspé to drink beer while on the dole in winter? Doesn't that example show you that they desperately want to work?

Further evidence of this is that many people have left the Gaspé region. They are the bravest, the most adventuresome, the youngest and those with no family ties or other attachment to the area. Forget them. Since 1971, approximately 15,000 people have left Gaspé; there are as many of them in Montreal as there are in Gaspé. Did you know this?

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Mr. Robinson: Mr. Crête, I would like to add that the people of Gaspé are very proud of their origin. They belong to that region. We have our customs. You know, sometimes we go around advertising certain sectors of our region. Just think of North American natives for instance, whom I respect greatly because they are true to their values. We're also true to our values. Another important thing is that Gaspé is rich in natural resources. You can't forget that.

As Mr. Cousineau said earlier, when a small project creating ten jobs - which happened recently - attracts 95 applicants for an hourly wage of $6.35, do you believe these people to be lazy? These people are on welfare and yet they apply for a job which pays $6.35 an hour. They are not lazy.

You mentioned transitional funds which should be given to Quebec. In my opinion, the best solution would be to let Quebec manage every program, including unemployment insurance. That way, we would have better control and be closer to government. At the moment, government is far away and it doesn't want us to get closer. If we did that, we would be closer to government and things would work out much better.

[English]

The Acting Chairman (Mr. Easter): Gentlemen, we will not have time to go to the government members for a question, but Mr. Regan has a point of information he wants to table with you.

[Translation]

Mr. Regan: You said you would like Quebec to manage this program. Let me just say that, since 1985, Quebec claimants received $46.9 billion and paid $37.2 billion in contributions. I know this. So I think it's obvious that the federal program was very beneficial to Quebec.

Mr. Crête: Yes, but don't forget there are many people on unemployment, sir.

Mr. Regan: Yes.

Mr. Crête: It would have been better to use them for research and development.

Mr. Robinson: Don't forget that this year, Quebec has a $195 million surplus.

Mr. Cousineau: Also, Mr. Chairman, don't forget...

[English]

The Acting Chairman (Mr. Easter): Gentlemen, I would like to thank you for coming out and making your presentation. Many of us around this committee are certainly aware of the difficulties of seasonal industries.

I'm from Prince Edward Island, and our main industries are agriculture, fishing, forestry and tourism. So we're aware of the difficulties as well.

I do thank you for putting forward your words and your presentations. They will be considered in our final presentation. Thank you.

[Translation]

Mr. Cousineau: Thank you very much for listening to us.

[English]

The Acting Chairman (Mr. Easter): We'll take a short break before we go to Charlottetown.

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The Acting Chairman (Mr. Easter): We will reconvene. Welcome, people.

We have with us this afternoon Loanne Gallant and Jacinta Deveau from the P.E.I. Seasonal Workers Coalition; and from the P.E.I. Labour Council, Gail Ling and Gerry MacDonald.

I welcome you before the Standing Committee on Human Resources Development, looking at Bill C-12. We're very short of time, so if you could give a brief overview of both presentations, we then we would go to questions. We don't have any longer than about 33 minutes.

Ms Jacinta Deveau (Representative, P.E.I. Seasonal Workers Coalition): Mr. Chairman, fellow committee members, first I'd like to thank those responsible for giving us this opportunity to appear before your committee.

As a seasonal worker, I am very worried about the impact the changes to UIC are going to have on my family, friends and community. No other federal bill, or provincial bill, has ever scared me the way this one has.

I believe this bill was drafted on the premise that there were jobs to replace the UI cheque. Due to the seasonal nature of our economy, this is virtually impossible. We cannot grade potatoes during the growing season. We cannot fish when the strait is frozen, and our tourists generally prefer heat and scenery to freezing temperatures and frozen landscapes.

The word ``incentive'' has been thrown around a great deal. It's not incentive we need, it's the creation of more year-round jobs. I do believe that was the promise made by our present government.

Next year my EI cheque will be approximately $104 gross, down from $185. I am a mother of three children, who in the past has done whatever it has taken to survive. My cheque won't even put food on the table for my children, let alone provide the necessities of heat, clothing and shelter.

The bill has to be changed. Rural communities that depend on seasonal workers will disappear. Seasonal workers will be forced to seek work in other provinces that are not so seasonally dependent.

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Seasonal work is a valued commodity on P.E.I. Simply put, we feel the nature of seasonal workers and how communities are built on seasonal work are not understood. We are proud of what we do.

In closing, I would like to add I have never had to fight so hard against a social injustice such as this in my lifetime. I hope I never have to again. But when push comes to shove, I will.

The Acting Chairman (Mr. Easter): Thank you. Go ahead, Loanne.

Ms Loanne Gallant (Representative, P.E.I. Seasonal Workers Coalition): My name is Loanne Gallant, from Miminegash, and I work in tourism. I'm also an active member in the group Women in Support of Fishing.

I'm glad to be here today to speak on behalf of seasonal workers from western P.E.I. Seasonal workers must be allowed to speak for themselves.

There's panic rising in the people of West Prince. We don't know who to trust or where we stand. We're being pulled in all directions. These changes to UI will be affecting people in different ways. With me and a lot of other people it's the divisor. I work 12 weeks, divide that by 14 and my UI will decrease from $150 gross per week to $96 gross. I will lose $1,212 over a period of 28 weeks.I can't afford to lose this money and neither can anyone else.

The gap will be devastating to the majority of the people. As for the amendments with 26 weeks, that will not work with fish plant workers and people who work on farms in the fall and spring.

I'm using the fish plant worker as an example. This lady works so many weeks in the fall and the rest in the spring. When she files in the spring and goes back the 26 weeks, she will not be able to use the weeks she worked in the fall. She will not qualify. The weeks must be left at a 52-week stand. If amendments are going to made, they must benefit everyone, not just the percentage.

Seasonal workers live in the summer where we are working. In winter we survive on UI. If these changes go through, we won't exist. We want to live, and to live we need to work full time. We are not asking you to feel sorry for us nor do we want anyone to pity us. We are asking to be treated fairly and with respect.

Mr. Young, you keep implying the Federation of Labour is forcing us to fight against these changes. We can speak and fight for ourselves. We don't need anyone to do it for us. To my knowledge, with our MPs, excluding Wayne Easter, they have done their jobs and held information meetings on these changes and explained to the people how the changes were going to affect them. The Federation of Labour was not prepared to do their jobs for them.

Will anyone of you please answer me these questions. How can our government make these kinds of changes knowing full well they will be destroying people, communities and the very heart of this country by protecting the rich and powerful and punishing the poor? Right now I have put all my faith in God because what faith I did have in our government is gone, and that to me is very sad. Thank you.

The Acting Chairman (Mr. Easter): Thank you, Loanne. Before we go to questions, we will go to Gail or Gerry, whoever is making the presentation.

Ms Gail Ling (President, Prince Edward Island Council of Labour): The Prince Edward Island Council of Labour is pleased to have the opportunity to be here and express its views on this very important issue.

My name is Gail Ling, and I am president of our council. With me is Gerry MacDonald, our secretary-treasurer. While we are both elected officials of our council, neither of us is a paid representative. Both Gerry and I are members of our island workforce. Gerry is a journeyman plumber working in the construction field and I am a radiation technologist in our province's largest acute care hospital.

Our council represents some 1,200 working islanders in health care, construction, manufacturing, utilities, the town of Summerside and the University of Prince Edward Island. We're here today because we are deeply concerned about the proposed changes to the Unemployment Insurance Act and the tremendous impact these changes will have on our province and our community.

The first area I'd like to touch on is that of job creation. Our federal government has stated, and local business leaders have confirmed, that job creation will be stimulated through the reduction of employer premiums. The economic backbone of our country and our province in particular is made up of small and medium-sized businesses.

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A reduction in premiums of 7¢ per 100 will do absolutely nothing for job creation and anyone who suggests otherwise is dreaming in technicolour. The average working person in our province earns $454.03 per week, 1994 figures. The proposed reduction would save the employer 32¢ per week and $16.64 per year. If the employer had 20 employees, this would equate to a saving of $332.80 per year. We ask you how many jobs this employer is going to create with that amount of money.

The Atlantic Chamber of Commerce would have you believe their members will magically create all kinds of new jobs through these savings. That is simply not true and they know it. Those savings will go directly to profits. If greater profits can be earned through an increase in the workforce, then more employees will be hired. Conversely, if greater profits can be earned through a reduction in their workforce, employees will be laid off, as evidenced by what has been taking place in our country and our provinces for the past few years.

We would ask if anyone in Human Resources Development has done any analysis in terms of identifying the amount of additional work that workers in this province will need to offset the substantial reduction in benefits they will receive. We have been advised that based on our province's experience some 75,000 weeks of additional work will have to be found. This is equivalent to almost 3 million person-hours of work or in a clearer context the equivalent of 15 factories employing 100 full-time workers. Is this proposed premium reduction of 7¢ going to create that amount of work? Not without divine intervention it won't.

Our second concern is associated with dead weeks. The formula that utilizes weekly periods during which the employee receives no earnings is archaic and places undue hardship on those who can least afford it. An employee earning $10 per hour, 40 hours per week for 12 weeks will earn $4,800.

Presently, that person will receive $220 per week in benefits. Under the new proposal those benefits will drop to $188.57, a reduction of $31.43 per week. Over the course of the 32-week benefit period this same person would lose $1,005.76. Low-income earners, and women in particular, will be hit very hard by these reductions. Single-parent families will be most vulnerable. If they suffer, so will their families.

We understand there are amendments proposed that will lessen the impact of this change, but we urge this committee to appreciate the untenable situation many workers in this area face through no fault of their own. Business will not take care of them. Government has failed miserably in their efforts to create jobs, and the offloading of responsibility by federal and provincial governments will only worsen the problem.

It is time to get off this profit-driven corporate bandwagon and restore their Canadian values and beliefs. We have been a caring and understanding country and we should all be ashamed of what is now occurring within our boundaries.

Apprenticeship training is another area of grave concern. We are opposed to the offloading of training dollars to the provinces and the private sector. We fear an erosion of national standards, which we have been fighting to obtain for many years. We fear there will be an erosion in the level of skills obtained by workers in the future. We fear that once in the provincial domain, provincial patronage will encroach upon decision-making processes. This will lead to a corporation of training centres that will be more concerned with profits than skill enhancement.

With the loss of income supplement in the first two weeks of training many people will not be able to afford to leave work to take training, upgrading or retraining programs. By our research, the profile of an average apprentice is 25 years of age, married with 1.5 children. This makes it almost impossible for the apprentices to lose two weeks of income and a reduction in earnings of 45% while they train.

Apprenticeship training has always been driven by the labour market partners and usually led to real employment opportunities. Institutionally driven training is insensitive to the labour market and how it has led us to an oversupply in the skill trade.

We would ask this committee to take a long, hard look at the proposed changes affecting training. At the end of the day, you must ensure the integrity of the apprenticeship programs is maintained. We must have national standards and control. It is critical we establish a national training strategy that will protect and enhance the apprenticeship model.

The final area we will address is that related to the intensity rule. Seasonal workers are being punished because through no fault of their own they are employed in industries that cannot exist 12 months of the year. This will result in a two-tier system of employment benefits for workers in this country, and that tears the very social fabric that has held Canada together for more than 100 years.

The intensity rule must be removed from this bill. The proposed amendment does not address the two-tier system and will create a discriminatory system.

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Changes of this nature have much greater repercussions for economically depressed areas such as ours. They are nothing but band-aid treatments that do not address the real illness. It is clear that we are lacking a meaningful solution to our economic growth. We believe it is time for all the economic partners to sit down and jointly develop economic policy and job creation strategies that will work for the 21st century.

We urge this committee to commission a full and independent study on the effects of these reforms and the real costs, both human and financial, associated with them. These findings should be made public.

The formula for calculation of average wage earnings should remain unchanged. Regional disparities exist in our country and must be considered as per the present system.

The intensity rule must be removed. Seasonal-based business is an integral part of Canada's economy and will never go away.

In closing, ladies and gentlemen, we are tired of the east coast bashing associated with UI and government social programs. There are more people utilizing UI benefits in the city of Montreal than in the whole of the Atlantic provinces. Our people want to work. They have proven to be energetic and skilled employees. We have failed them in not properly developing our Canadian economy. We are a rich country with some major geographical problems. These problems are not insurmountable in our view, and if we all work together we can successfully overcome them.

Finally, our Minister of Economic Development, Robert Morrissey, has stated in the local media that the federal government is seeking a $1.8 billion cut in the UI fund that will be directed to the country's deficit. We would hate to think that our present UI system, which pays for itself, is being undermined solely for the purpose of deficit reduction when you could have achieved the same end in a fairer manner by distributing the cuts across the board and not directly on the backs of those who can least support them.

Thank you for this opportunity to present.

The Acting Chairman (Mr. Easter): Thank you all for being brief and to the point.

I will turn to the official opposition, Mr. Dubé.

[Translation]

Mr. Dubé: I'm pleased to be able to speak directly to you. You don't need a spokesperson since you express yourself very clearly. You have given us a good overview of the situation.

I have been a member of this committee for two and a half years and when I travelled with the committee on Human Resources Development, I had the opportunity to visit your part of the country and to meet people who in great part raised the same issues you did today.

Since I come from Eastern Quebec, whose situation is a lot like that of many regions in your province, I empathize with what you have said, especially the last witness who said she is tired of hearing people from Atlantic Canada saying that they live in the poorest provinces. When I visited your province, I realized you are a proud people which accomplishes a lot in the seasonal work sector.

You have had the opportunity to say this today and your message should be heard throughout the country. You represent regions which are rich in natural resources. If people like you did not do that kind of work, people living in large cities such as Montreal, would be lacking for some things, namely natural resources.

People like travelling, visiting other parts of the country, indulging in tourism. I have no questions. I will give the floor to Mr. Proud, who is from Prince Edward Island. Rest assure that the Official Opposition, the Bloc Québécois, is well aware of your demands. We might have a different opinion on national standards because we believe Quebec should be in charge of manpower training, an area which falls under provincial jurisdiction in the Constitution. We support all your other positions and proposals and encourage you to keep on fighting. We live far away from each other, but you can count on our support. Thank you.

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[English]

The Acting Chairman (Mr. Easter): That's more of a comment than a question, but is there any response?

Mr. Proud.

Mr. Proud: I want to welcome the group here. I want to apologize to you for any hold-ups and misunderstandings as to your appearance before this committee. It was a bit of an error all around,I believe, especially to you, Ms Ling; we had some problems there.

Anyway, you're all here. We have listened to your concerns today and we listened to other concerns from groups such as yours. Then on the other side of the spectrum this morning we had a group appear before us - an Atlantic Canadian group too - that told us unemployment insurance is the cause of the problem. Somewhere in between those two spectrums we must try to come forward with a policy and a solution.

To the lady who said that Wayne Easter was the only one who had public meetings, I can assure you that I hold public meetings every day when I'm in my riding in Hillsborough. I've been concerned about the changes proposed by this bill since day one.

We have wrestled with this thing since 1993 and I want to give due respect to my colleagues, the three people and the members of this committee, all the members of the committee from all parties, who have worked on this proposal to bring forward the amendments that are out there, the amendments which hopefully we will be able to convince the government need to be put in place to make this bill more palatable to Prince Edward Islanders in particular today and to Atlantic Canadians and Canadians in general.

I believe also that one of the problems is that we don't have enough full-time jobs in Prince Edward Island. We had comments Tuesday from two other groups from Prince Edward Island, the executive council of the provincial government and the tourist industry association, in which they highlighted their attempt to lengthen the seasons and expand employment opportunities. I believe it's also our government's responsibility to create more of the full-time jobs we talk about. It has to be done if we're going to get away from the situation with seasonal industries. We're always going to have seasonal industries, but if we can make more full-time jobs available, then the problems we face each time we go to review unemployment insurance will be less.

I just want to ask you, as you review these three amendments dealing with the divisor, the gaps and the intensity rule, if these amendments are accepted do you people not see them as an improvement? We had a situation the other day where people from Prince Edward Island put to us the actual impacts this reform would have on actual cases from 1995. After accounting for the proposed amendments I'm talking about, all of the negative impacts of Bill C-12 were eliminated, with the exception of two. I think this has come a long way and I would like you to respond to those comments of mine if you would.

Ms Deveau: First of all, the figures I quoted to you were $104 gross, down from $185. I put those numbers to you after I took into consideration all of the amendments.

With the gap, I feel personally that even going back to 26 weeks is going to drop a great number of people.

Yes, I do believe we've come a long way from the original bill, but I feel it's still not enough.I remind you that $104 gross is not enough to feed my children. I worked two jobs last year to get that $104. One of those two jobs is now gone. That's six weeks' work I no longer have. ThereforeI decided that I need a job, I need work, I need those six weeks, so I'd open the business myself. I'm opening the business myself within a month. It's six weeks of work, but my cheque is still going to be $104.

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With the 26 weeks, going on last year's employment record only 9 of my weeks are any good to me. I take 9 weeks and I divide by 14. Then within a year I will be clawed back 1%, because I know I most likely will have to claim for more than 20 weeks.

The Acting Chairman (Mr. Easter): Jacinta, on that point, obviously some of your weeks are falling out of the 26-week period.

Geoff was just raising a point here. Geoff, do you want to make your point?

Mr. Regan: Yes, I do. I don't know your family income level, but perhaps you are aware of the family income supplement that will provide to families relying on UI an additional amount of money, a boost in other words, compared to the past. This is based upon the fact that they're low-income people. Also, one of the amendments provides that low-income families, with income below $26,000, will be exempt from the intensity rule. I'm not sure whether that applies to you or not, but it's something worth noting.

I have some other questions. We might want to come back to them.

The Acting Chairman (Mr. Easter): Lay them now, Geoff.

Mr. Regan: One relates to apprenticeship, which one of you mentioned. An apprenticeship, as you know, falls within provincial jurisdiction. But under one of the five tools in this program in part II of the bill, under the tool of skills loans and grants, the provinces could decide that apprenticeship training would be funded out of this tool through a mix of loans and grants. Because the provinces have the right, they have to approve the implementation of the skills loans and grants. That's one of the big changes with this bill, giving more control to the provinces. That's my first question.

The other one relates to some testimony we heard this morning from the Atlantic Institute for Market Studies. I'd like your feedback on it. Unfortunately the information we got from them gave two examples related to Nova Scotia and Newfoundland, but I'm sure there can't be too much difference because the rules are the same in all those provinces. I am concerned about how this whole system operates and what we should do about this, whether you feel we should do anything or leave it as it is. But let me tell you what they said.

In Nova Scotia in 1992 over 18,000 families with incomes above $60,000 received an average of more than $6,000 each in unemployment insurance, and 9,000 families with income under $10,000 who drew UI that year drew an average of only $3,000 per family. This means that families with incomes over $60,000 that year got over $100 million out of the UI system - that's 8,000 families. About 9,000 families under $10,000 got less than $30 million out of the system. Now, let's go to Newfoundland. In Newfoundland families over $70,000 got $75 million total; that's 6,591 families. Families under $10,000, 4,000 of them, got only $14 million out of the system.

It seems to me, for one thing, that having the high income clawback that is provided in this bill is a positive step because of this. It seems to me important to check those at the lowest end, which is what we're trying to do by exempting them from the intensity rule, with the changes to the gap and the divisor, although I see you're not satisfied with them yet. We'll have to look some more at those numbers. It seems to me that the idea should be to maintain it for those people who need it the most and help them, but not maintain a system that provides that a person, year after year after year, can make a very good income and also get $6,000 or $10,000 more every year out of UI. I don't see how we can sustain that based on contributions from that individual of perhaps $500 per year.

The Acting Chairman (Mr. Easter): Go ahead, whoever wants to answer.

Mr. Gerry MacDonald (Secretary-Treasurer, Prince Edward Island Council of Labour): In a low-income family that is below the poverty line, as we have read out here, it's going to affect them on the divisor rule. If they work 12 weeks they'll earn $4,500 at $10 per hour. It's going to drop their wages by $34 a week, and they're already below the poverty line. I'd like to see how these figures are helping you with the divisor rule.

Mr. Regan: That certainly isn't my understanding of how this works. We're going to haveto analyse some more the figures you're putting forward because they don't jibe with whatI understand. I wish Mr. Scott, who put forward the proposed amendment on the gap or the dead weeks, was here because he could explain more about that. I know he has done some research showing that for the vast majority of people in Atlantic Canada, the problem in terms of the gap will be dealt with because of his amendment. Unfortunately he's not here; he can explain it far better than I can.

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The Acting Chairman (Mr. Easter): I think, though, that when the impact analysis is in, it will show that low-income families with adjustments will have a net increase of something like 13% over the current system. I would expect some of these examples to relate to low-income families. In the examples we have done there's one major problem area, which is farm labour.

Loanne, we've asked the department to do an analysis of your example, but we need the first two weeks of income. You're over a 28-week period, I believe it was. With the first two weeks of income we could work that through with amendments, with the intensity rule and the low-income family supplement, and see how it works out. I can't give it to you now, but we'll get it back to you. Do you have your first two weeks of income, roughly?

Ms Gallant: I don't, not right here.

The Acting Chairman (Mr. Easter): Can you give us a guess? If you could call my office or George's then and leave it, we'll get the department to work the numbers.

Does anybody want to make a last comment?

Ms Deveau: With regard to the questions asked by the MP from Nova Scotia, certainly we understand that there is a problem with the high end and the clawback. As a council in our province we have discussed this issue and we think there is room to move. We're not sure your clawback is at the level where it should be; we think it maybe should be a little higher. But we certainly realize that the problem is out there. I don't think anyone making $100,000 a year should be entitled to go to the UI system and have them subsidize that.

Our big concern in this whole thing has to be the low-end seasonal worker. Our tradespeople are faced with that. We can't work in the winter in most cases unless there's a major project on.

This year in our province our divisor is twelve plus two, I understand from the figures I've been given, but I wonder if anybody on that committee has looked at where we're going to be next year and what our divisor is going to be. I think our people are going to be hit hard next year. That's going to be a big problem. We may drop again when the link is finished, but for now we have some serious problems coming up with that divisor figure in terms of our people next year.

The Acting Chairman (Mr. Easter): We are out of time. I would like to thank you.

I'd like to make a couple of points. One, we are expecting an impact analysis tonight, I believe, as to how it will affect each region, income levels, regions and industries. When we have that it will be made available. We will also ask about Ms Ling's point on page two about how much additional work would be required to offset the reduction. We'll ask the department to come forward with that. We will try to deal with Loanne's case as well.

Thank you for being very short and giving us the specific examples from the seasonal industries. It will be helpful to all members on this committee. Thank you.

The meeting is adjourned until 3:30 p.m.

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