I find it extraordinary that, year after year, the government continues to collect the same taxes, even if it collects more and more indirect taxes. The government finds all kinds of ways to get money out of our pockets. The deficit is, of course, going down, but all of the transfer payments are going down as well, and unemployment insurance is being reduced and transformed into employment insurance, a mockery of employment insurance.
Not enough jobs are being created and, everywhere, this reform is being denounced. You heard witnesses during the course of the various hearings: there are problems facing young people, women, immigrants, first time claimants. There are enormous problems facing the regions.
You have made comments about the regions in your documents. You saw them before you.Mr. MacIntyre, who is Minister of Higher Education and Labour in New Brunswick, told you that New Brunswick was concerned about the bill before the House because it did not reflect their situation, as New Brunswick had a real problem with seasonal workers. The people of that province are concerned about the possible ramifications of two specific provisions in this bill: the method used to calculate benefits and the rule of intensity.
It is not the separatists who are saying this nor political agitators. This is the Honourable Minister MacIntyre, the Minister of Higher Education and Labour from New Brunswick.
People from New Scotia also came to tell you that this was not working. You also heard from people representing the Fédération des communautés francophones et acadienne du Canada, and still we're not talking about these infamous separatists!
Do you know what the Fédération des communautés francophones et acadienne said? I quote:
- The unemployment problem in the regions will not be resolved by penalizing the unemployed.
The bill is inadequate in this sense, as it diverts the problem by making the person who is
unemployed a potential client for welfare.
- The employment insurance system will require the people who are unemployed to actively look
for a job. Indeed, we must break the dependency cycle. However, these measures, as good as
they may be, will not resolve the fundamental problem of an economy that is seasonal in nature.
These people told me that the employees who dealt with them had stupid attitudes and made them feel as if that had the plague because they had lost their jobs. They never greeted them with a smile, showed no compassion and, in particular, had no idea how to communicate with somebody to make them comfortable.
For some people, it takes a great deal of courage to get up in the morning and to decide to go the unemployment centre in order to sign the papers that will entitle them to receive unemployment insurance benefits.
There are fathers who leave the house every morning as if they were going to work because they can't tell their children that they lost their job. I was told about all of these tragedies.
And these people have to go through yet another tragedy. When they arrive at the employment centre, they get the impression that the official who sees them has been ordered to spend as little money as possible so that the government can keep as much for itself as possible, and that the employability measures are not even being made public. They are not informed about their right to take training, a re-training program or a career shift session when such a program could in fact, enable them to face reality.
.0605
The first day, I met a young unemployed woman, an engineer, a very well trained individual, who was unable to find a job. While she waited for her turn to see me, she read all of the folders that I put out for people who come to my office and she found some information about certain employability programs that exist. She came into my office, we talked and she told me that she didn't want to keep me long because she had found the answer she was looking for and was going to the employment centre. She went straight to the employment centre, but nobody would see her because she had arrived much too late, and that she should have taken steps when she first became unemployed. Since her unemployment benefits period was about to expire, she was no longer eligible for this type of program. She came back to my office, in tears. She had three children. Her husband was self-employed, a cabinet-maker. She was a very dynamic woman, a university graduate, and the employment centre wasn't even able to give her the very minimum, namely, a folder that would have enabled her, right at the start, to be aware of the various options available to her.
I think that a great deal of noise is being made about reductions in services. We were told that cutbacks were necessary, that we had to downsize the employment centres by decreasing staff or by transferring them. Staff was transferred from Trois-Rivières to Shawinigan.
Speaking of Shawinigan, I feel like telling you what I heard. We talk about the little guy from Shawinigan, the little guy from Baie-Comeau and the little guy from Sherbrooke. Perhaps the time has come for an adult to be leading the government.
What really counts, it's not only to point out that we were able to reduce the size of a department and that by downsizing staff from 40 to 16 we were able to meet the objective of cutting government costs. I think that there are other places where the government can and should be cutting back and that there are other places where the government should not be cutting back in such an arbitrary fashion as it has. Indeed, one gets the impression that the number of unemployed should be going down because we've reduced the number of employees and the size of the employment centre offices.
We began the process by deciding how many employees we were going to keep without even knowing how many people require their services. We therefore reduced and established extremely harsh eligibility rules thinking that this was going to enable us to improve the situation in this country.
In a region such as mine, for instance, seasonal work is the only option. Consequently, we have seasonal unemployment. When you consider the number of people who will no longer be eligible for unemployment insurance benefits, it is estimated that $15 million in revenue will be lost in the Lower St. Lawrence region. Fifteen million dollars, that is an astronomical amount for a region that is as vast and as scarcely populated as this one. It should be noted that the Lower St. Lawrence has a larger population than that of Prince Edward Island, but, all the same, that means several million dollars less in a region that is already experiencing difficulties. The economy will become even more sluggish, and, moreover, we're already starting to see signs of this as business is not as brisk as it usually is. People are more worried.
I met with people who are in their forties. These are people who never thought that, one day, they may lose their jobs. However, they see people who, like them, felt very secure and who then suddenly lost their job.
.0610
We must realize that, today, there are new categories of unemployed people. The people who are now on unemployment are very different from the unemployed of yesterday. Unemployment is now hitting the middle class, people who, very often, pulled in a good income. The husband and the wife worked. Sometimes they would earn between $80,000 and $100,000 between the two of them. They have a good education. They had a bungalow, two or three children. They had two cars. Suddenly, these people lose their jobs. In suburb societies, for people who live in these bedroom communities, it is often quite tragic when this type of situation hits a family.
It is important, in my opinion, that the Liberal members do not neglect this aspect that is changing society right now. An attempt must be made to take this new reality into account and not to act on the basis of certain prejudices. We are all victims of our own prejudices. We have all, at some point in time, even if we have never said this aloud because we are ashamed to think about it, had ideas of this type:``If somebody wants to work, he can always find a job. He is unemployed because he wants to be unemployed. He is on welfare because he wants to be on welfare. From father to son, they are on welfare. This is a welfare family''.
If you've never established business relations, it is extremely difficult to think that you can find your way out. In regions where there is a major employer who has to begin laying off, there is a domino effect. It is important to realize that people want to work. Most people want to work.
If one of the objectives of the reform is to catch whoever is guilty of fraud, I'd like to know the percentage of people defrauding unemployment insurance. Maybe 3 or 4%?
If you're aiming at a goose and hitting a duck, it won't work. You have to find another way to catch the crooks. And I approve! But who could give me the figures? Were any studies done? I confess my ignorance, but I think that we'd probably be the only country in the world calculating unemployment insurance on an hourly rather than a weekly basis.
Has any kind of study or simulation been done to show us that's the solution? Have any projections been made to tell us that it will work for sure? I'm not convinced.
Paying premiums for the first hour worked will hurt some categories of employees. It will be prejudicial to some people working part-time. I saw in a document somewhere that if you have earned less than $2000, you will be reimbursed the following year. Even more of an abomination for me is the idea that people who have nothing are going to have to give the little they've got and those who have almost everything will be treated with kid gloves.
It is often said that the Official Opposition never makes proposals. The government can't say that any more. The Official Opposition has put forth a lot of proposals.
.0615
The questions we have put have forced some thought on the matter, but we have not always been given the right answers. Mr. Axworthy often had the gall to say: ``You haven't read it, you haven't understood anything or you've misread it''. I don't think the Liberal party has a monopoly on literacy. The people in the ranks of the Official Opposition have all gone to school long enough to be able to pass a reading comprehension test. That's the test you give children in the first grade before sending them on to second grade. At the end of the first grade, those who don't pass the reading comprehension test are classified as needing orthopedogic services provided by a specialist called a speech therapist in English if they're to be brought back on board before it's too late. The fundamental test in the first grade is reading comprehension.
If the government cannot give us any answer other than saying that we've just not understood what we've read, they'd be better off saying we have a different interpretation of the text which is quite normal because individuals interpret things in their own way depending on their own values and their own set of parameters. I could accept that answer, but I will certainly not accept being told that we don't know how to read.
I think it's important to point out that we made many suggestions for reform. I am very surprised and even scandalized that maximum insurable earnings were scaled down from $42,000 to $39,000. Personally, I can tell you that I would have seen to it that people paid premiums on salaries up to $100,000. I would not be ashamed at all having people earning $100,000 a year and less simply because those earning between $39,000 and $100,000 are those who, more often than not, don't lose their jobs.
According to the Liberal mindset which considers its basic values to be social justice and redistribution of wealth, you should dig into the pockets of those who have money to give some to those who have not. It's simple? All those earning up to $100,000 should put their nose to the grindstone, share and make a contribution at a time when everyone is being asked to make efforts and sacrifices. We have to come back to values of solidarity, sharing and social conscience and ask those who earn a lot to give to those who have nothing. But we can't ask those who have nothing to give everything they have to the government to make life easier for those who have a lot. We already have it easy. Personally, ever since I went to work, I've never complained about paying income taxes. If I'm paying income tax, it's because I'm earning money and I figure that, in terms of social justice, I'm doing my bit by giving money to the government so it can be shared out amongst those who don't have any. I never complained about having to pay unemployment insurance even though I was unionized with a super collective agreement and I knew that I would never lose my job. The worst that could have happened to me, was to be laid off and still be paid for doing nothing, as people usually describe it, because I could not be fired because of the collective agreement. So I always paid unemployment insurance without even knowing how much I was paying.
Maximum insurable earnings were decreased from $42,000 to $39,000. When I'm asked why the government did that, I have to explain to my constituants that it's because the government are in bed with the rich, they're totally disconnected from reality, living in their own bubble and don't care about the people that elected them.
.0620
When the person bearing the New Brunswick flag started speaking last Saturday at Rivière-du-Loup, he said we could count on them to take care of the Liberal Party at the next election: the government is going to have its day of reckoning, they won't forgive you; the Maritimes will see to that day of reckoning. One can regret those events. Moreover, it's their minister, their MP. Some wonder which minister has the power of doing anything or influencing colleagues in Cabinet. You, the members of this committee, you have the power to influence your colleagues! You must do something before it's too late. You can't just go on remaining silent because you do have a social responsibility. You can't go on like that, it's impossible. Maybe you can say nothing in front of us, but you can't say nothing to your caucus. Tell the people from the West and Ontario that things are bad for you and for your region. When you have nothing left to lose... Look at Russia, look at what happened there! They had nothing to lose.
There are all kinds of people who have nothing left to lose in Gaspé and you don't know how they are down there! You don't know the Acadians either when they have nothing left to lose. They'll be out in the street doing more than just demonstrating. You can't remain insensitive to that. You can't imagine the rich not contributing more to society's well-being. I don't understand how you can sleep at night when you think about what you're going to let happen.
The reform will have a serious impact on the pople's quality of life. It doesn't make sense. You know, some people are filling their grocery baskets with pet food because that's all they can afford and they don't have any pets at home. Maybe we find that slightly disgusting and we have problems visualizing that because we think we've done all we could.
I'm going to tell you quite frankly that I'll be extremely disappointed in the Liberal Party if this reform goes through exactly as it is worded, without any change. You just can't do it. We don't need petty amendments that will only bring about a semblance of reform. You have to go to the heart of the matter.
There's no shame in doing that for a government. On the contrary, I'd have a lot of respect for you if you were able to come up with really important amendments so that people wouldn't get the impression they paraded up and down in front of you for nothing.
I have a document here provided free of charge by Ms Lalonde's office to help us come here and talk to you. I see the name of all the groups who came as witnesses: the Public Service Union, the Fédération des étudiants universitaires du Québec, the Canada Action Committee on the Status of Women, the Fédération des femmes du Québec, the Newfoundland and Labrador Federation of Labour, the Union of Industrial and Textile Employees, the Syndicat des pêcheurs et travailleurs assimilés. All those groups, the CEQ, the CNPU and the FPQ have come before you to make known their point of view and tell you what they thought it would be useful to do. There's also the Ralliement des Gaspésiens et des Madelinots and the Regroupement des organismes communautaires. A whole lot of people who came before you to tell you about the different problems in their regions. I know very well that you can't answer each and everyone of them. That's not what we're asking.
.0625
I am asking you to make a serious effort to get to the heart of the problem and to come back with amendments which will enable you to be open with the people and to say: ``We have taken stock. We received some 800 proposals to amend this reform; 400 were minors ones and 50 were major. Given the reality of the situation, we can study 20 of the 50 proposals''.
That would be an effort. People would be convinced that you are acting transparently, that you are clearly showing that it will not be the poor or the needy, but instead the wealthy who will bear the brunt of the reform, that you have taken money from their pockets and that they will pay because they are lucky enough to have a well paid and often unionized job.
Initially, affiliated trade unions in Canada had difficulty joining the protest movement, because several of them had a very large number of members who earned more than $39,000. The change from $42,000 to $39,000 suited a lot of the members of their federations or labour unions. Suddenly, they woke up and understood, as we have, that this reform was really unfair.
This reform is regressive and it will create poverty. Poor people who get poorer often don't have proper clothing, do not always live in healthy conditions, and no longer have enough to eat. It is people in despair who may become violent.
Violence will lead to a social crisis created by your reform. You cannot leave without being aware of that, and you must acknowledge that you have to do something. If not, who knows what will happen.
It will also create serious economic problems. Yesterday, we were told that Mr. Valcourt's reform brought the number of eligible UI claimant to roughly 85%. The result of your initial reform in 1994 was that roughly 50% of people currently unemployed qualify for unemployment insurance benefits. This reform would reduce that to 35%. So 65% of the unemployed people in various provinces, but above all in Eastern Quebec and in Eastern Canada, will be forced to go directly on welfare.
So 65% of the people will not have access to your employment insurance. You are reducing benefits for those who will have access to it and you're making sure that there will no longer be unemployment insurance fraud. You are not in a position to teach anyone a lesson, because the government commits the greatest fraud of all by diverting for its own use the surplus from the unemployment insurance fund to which it has not contributed a penny. When you do not put a penny in the pot, you don't have the right to stand up and take it with you. When employers and employees have control over it, that will be sign that you've understood the people. You can create all the boards, crown corporations and groups that you want. I think that you must create an organization independent from government to manage the unemployment insurance fund.
.0630
You must absolutely do so, so that we have a reserve fund to face potential difficulties, to ultimately reduce unemployment insurance premiums so that employers have more and more money to create jobs.
You have to find ways of creating jobs. Let people from outside government manage the unemployment insurance fund, because this fund does not belong to you. It is very difficult for you to talk about putting an end to fraud, when the people believe that you could be taken to court for embezzlement.
You take funds that do not belong to you. You enact legislation to legalize your embezzlement of funds, whereas the unemployed do not have the power to enact legislation to legalize what they want to do. The government is putting itself in a dominant position, where it can crush others.
The economic impact of this reform will be substantial. Only 35% of the people will qualify for unemployment insurance. Welfare benefits are lower than unemployment insurance benefits, and a person who ends up on welfare instead of unemployment insurance will sink into deep despair. This person will have the impression that he is experiencing the greatest humiliation of his life, and many people are psychologically unable to accept that.
We talk about the economic repercussions. We must also think about the after effects of job losses. You can lose your house which was paid for. You may have had a small yard with a bit of grass. You can enjoy the outdoors in the summer. You were in a somewhat more serene context for enjoying time with your family.
You lose your job. Often, you're forced to sell off your house and your car. You often lose your friends. Difficulties in your relationship with your spouse also arise. You have to face the unexpected, a separation or perhaps a divorce. You end up alone, very humiliated.
You do like everybody else. You send out up to 250 resumes to various businesses. They go right into file 13, because almost no one has any jobs to offer.
That results in social costs, because often, these people suffer more illnesses. They go to the doctor more often. They need psychiatric or psychological care. Some even resort to stealing, which had never crossed their minds in the past, but which they've had to resign themselves to doing.
.0635
This social violence and this deterioration of the social fabric leads to costs for society. So we have to accept situations which are ultimately much more costly in the long term than if we had taken the time to stop and find jobs for the unemployed.
As I said earlier, we cannot really rely on statistics, but since all countries set the unemployment rate in the same way, we wonder why we often hear arguments such as: ``We cannot do that, businesses will go elsewhere. We cannot do that, it is very bad for something else.'' However, businesses with the highest taxes in the world are in Germany and Japan, countries where the economy is really doing well.
People have the impression that several large corporations are not contributing their share to society and that the government is in collusion with them, offering conditions that are so advantageous that they stay and continue to prosper in Canada, but don't invest a lot, preferring to send their profits and revenues abroad, through transfers via the Cayman Islands or tax havens.
When the government authorized Bell Canada to increase its phone rates, they said that Bell could consequently reduce long distance charges. Bell appealed and won. Bell stated that it had not made a profit, 6% not being enough. That represents several million dollars, but it's not enough. As Bell receives authorization to increase its rates, it is laying off 10,000 people. People are being asked to make sacrifices, to do their part. Governments are talking about the need to cut everywhere and enable multinational companies to make more and more profits and to lay off more and more people. Under a true employment reform, the government should penalize businesses which make excessive profits.
In our capitalist system, in a free market, competitive and globalized system - add all the terms that economists have invented to better convince that they have a science to defend - , we have to accept that companies make a decent minimum amount of profit if we want to see them develop and we want their shareholders to be satisfied and to continue to invest, but within reason. We're talking about excessive profits, like those of banks who will not settle for millions in profit and who want to take over all of the lucrative markets in other areas, such as the insurance market and the car leasing market.
The government should show that it is serious and that it has taken into account objections raised by the Official Opposition and the people, that it is acting consciously and that it can plan far enough ahead so that we can continue to say that Canada is the best country in the world. The day the tables turn, Canada's image will be seriously tarnished. This is already rather serious; it is a lot worse than the sovereignists, who at least have a legitimate raison d'être. Unemployment is quite unacceptable for a country which, with such poor statistics, claims to be the best in the world.
I have just spoken for an hour and 15 minutes and I've already put forth three proposals. I have repeated what my committee colleagues have been saying for two and a half years, since we arrived.
.0640
When you look at the work done by my colleagues from Lévis, Kamouraska and Mercier, as well as all of our caucus discussions, you cannot say that you have not put forward any proposals. We have submitted numerous proposals and numerous briefs have been tabled with you. We detect an unhealthy stubbornness on the part of the government which has ulterior motives for wanting this reform.
If you implement your reform, I would like you to confirm that it is because it will generate revenues in the order of $5 billion for the fund that you will use to reduce the deficit, bringing it down from $32 billion to $27 billion, or from $27 billion to $22 billion. That is your primary objective.
Your second objective is to reduce to a minimum the number of claimants drawing unemployment insurance and to increase access to welfare as much as possible, because welfare is not your responsibility, but the responsibility of the provinces. You're washing your hands of all that, are you not?
The third objective of your draft reform is to put an end to fraud. After having read your document, I still do not see how you are going to go about it. Perhaps I did not understand it well.
An hon. member: We received a draft yesterday.
Mrs. Tremblay: How will they put an end to fraud? Can they do it?
This is quite recent; it will be a pleasure for me to read this document, because I did not see how you would put an end to fraud. I will raise this issue again with you another time.
This objective is very laudable. Some cases of fraud have occurred in my riding. People have come to me asking for my help. I tell them that since they got themselves into a mess, the system has caught up with them and it's for the better. I tell them not to count on me to defend them.
They told me they wouldn't vote for me in the next election. At any rate, I prefer doing without the vote of someone guilty of fraud.
That is a very laudable part of your reform, if you can pull it off.
I fully support you in that sense, because it is important to put an end to these cases of fraud which distort the system and reflect badly on all the unemployed, whereas the system should help them.
It is important for people to know that 3% of claimants commit fraud; that means that 97% are honest citizens who unfortunately have lost their jobs or have seasonal jobs and want to work.
As I was part of a university setting, I examined a category of jobs which interest me and I looked into the way that you calculate unemployment on an hourly basis for lecturers, that is people who work in universities but who are not full-time professors.
I would like to draw your attention to this significant problem so that you take note of it and try to find a solution.
You are aware that funding to universities has been greatly reduced over the past 10 years, both at the federal and provincial levels, and that at present - this is the case in almost every province - universities are truly underfunded. Given the current state of the economy, they have to work miracles to make ends meet and they are ready to do their share.
.0645
The teaching corps is divided into two categories: regular professors and lecturers. At present, a university course runs for a certain number of hours, let's say 45. Contracts are prepared on the basis of 45 hours, over 60 weeks. The lecturer could dispense 1, 2 or 3 courses and earn more or less money, depending on the number of courses taught. I don't have the most recent statistics, but it is roughly $4,000 or $5,000 per course. So a person could earn $12,000 by working only 16 weeks and qualified for unemployment insurance benefits, because he or she had worked a sufficient number of weeks. Such people often teach either in the fall, the winter, the fall and the winter, the winter and the summer, the summer and the fall: but during one of the sessions where they were not teaching, they could go on unemployment insurance.
Under the current bill, with its hour based calculations, these people do not qualify for unemployment insurance. This category of workers will be significantly penalized by the reform if no one bothers to use a phrase or a clause or to adopt one of the Official Opposition's proposed amendment to put in place the necessary mechanisms so that they can continue to have access to unemployment insurance. If not, rest assured that you will put all Canadian universities in a terrible situation.
If you cannot do it yourselves, you should at least be humble enough to accept to amend a few lines, in accordance with the proposals from the Official Opposition. This clause is extremely important and my colleague, who has been in the field and is very conscious of the problem, could undoubtedly draw you attention to this when you address the issue so that an effort is made before you implement your reform. We agree that a reform is necessary, but you have to be responsive to the needs of the people, and show that you haven't given up on all your principles as good Liberals, that you are not more right wing than the Reform Party, that you are capable of accepting that you're not perfect, that you are capable of recognizing that the people around this table can make acceptable suggestions and that you can perhaps make some changes. Rest assured that even if we are filibustering, it is all part of the parliamentary rules we have decided to play by, undoubtedly because we have seen them used successfully in the past. We are continuing our work, but once we have moved past this stage, it will be time to get down to some serious work and we will be ready to make suggestions.
It has been a great pleasure for me to be with you over the past few hours. I will come back if necessary. Unfortunately, I will have to leave you for breakfast, since I have to go to question period this afternoon. I have a lot of confidence in many of you around this table, as I am fully aware of your work and the statements you have made in the House in addition to your excellent reputation.
.0650
I do not think that we have the monopoly on the truth, no more so than you do. We do our work as the Official Opposition. We try to cooperate. As far as improving this bill goes, you have the full cooperation of the Official Opposition, even if we're trying to get you to understand that something must be done before it is too late. I hope I am wrong and that I have been an alarmist, and that the situation in Canada will continue to improve, and that Canada will continue to be the best country in the world, because I would be very happy to live next to the best country in the world.
Thank you very much.
[English]
The Acting Chairman (Mr. McCormick): Merci beaucoup. I really appreciate the last couple of minutes of that speech. It sounds like you're speaking for everyone in the room.
The next person on the speakers' list from the official opposition is Madame Lalonde, please.
[Translation]
Mrs. Lalonde: Good morning. I guess that's an appropriate greeting, considering that it's 6:45 a.m.
The conclusion to the Bloc Québécois' minority report on the reform of Canada's social programs contained specific recommendations on unemployment insurance which are still extremely relevant today.
Let me recall some of them for you. We recommended:
- that the federal government reject the recommendation calling for additional cuts to
unemployment insurance;
We further recommended:
- that the federal government fully withdraw from areas of jurisdiction related to manpower
development;
- This should come as no surprise to anyone. Our position is the same today.
We also recommended:
- that the federal government accord Quebec, given its specific needs, full responsibility over
family policy, including income policy, assistance for children, child care and other social
services areas;
We recommended:
- that the federal government entrust those provinces that express the desire with the
administration of the unemployment insurance program. Before that would be possible, the
following modifications must be made to the plan:
- - distinguishing the unemployment insurance component from the active measures
component;
She noted that the best results were achieved when active measures were financed from a source other than the UI account and that there was a very good reason why this was so. Such measures are needed when unemployment is high. During periods of high unemployment, the money in the account is needed more than ever. Since the UI account is expected to have a surplus, it will be used to finance active measures. And while the money to finance active employment measures may be found in the UI account, it is extremely unlikely that the entire surplus would be used for this purpose.
.0655
And yet, these active employment measures would be especially useful during periods of unemployment to help the recovery process.
In conclusion, to preserve the effectiveness of active measures and for social and economic efficiency reasons, it would be best if these measures were not part of the UI account.
I think this argument is a least deserving of our consideration. It makes good sense and it stems from a study of the situation in European countries where active employment measures have long been in place.
We further recommended:
- a return to the pre-1986 accounting rules so that the financial results of the UI account no longer
affect current operations. If this is not done, then it would be necessary to oppose the build up of
any significant surplus in the UI account since such surpluses would be used by the Minister of
Finance to artificially achieve his deficit reduction targets.
We have come across this recommendation in several of the briefs submitted during this round of consultations, particularly in the submission of the Conseil du patronat du Québec. The Conseil opposed the idea of allowing a surplus of over $5 billion to build up in the UI account. Several witnesses quoted this figure. Let me repeat that there is already a $5 billion surplus in the account.
If the reforms are not implemented this year - that's the beauty of it all - , the accumulated surplus in the account will total $5.8 billion. If the reforms go ahead, the account will register a surplus of $4.8 billion this year.
During the first year, as a result of the gift the government is making to big business and workers earning between $39,000 and $42,400, there will be a loss of $1 billion. The Minister of Finance shouldn't be so eager to push ahead with the reform.
Two other important recommendations were made:
- putting into place a financing mechanism for the UI account where the employer contributions
would be levied on the overall total wages and where the employee contributions would be
levied on the basis of a higher maximum level of insurable earnings, perhaps twice the actual
level;
Admittedly, the current situation is rather ridiculous since in the case of a person earning $30,000, unemployment insurance premiums are levied on his overall salary. The premiums of someone earning $70,000 - I'm thinking here about an Alcan worker, a middle manager, an official - are based on a $39,000 salary. This is absurd.
SMEs, with the exception of capital-intensive businesses and those working in high tech sectors, currently are in a situation where their UI contributions are levied on their overall payroll.
Why are SMEs being targeted when they are the ones responsible for creating the most jobs? We're not saying that we don't need big businesses to support a network or web of subcontractors. We need large companies. However, we're saying that SMEs are the ones who create the most jobs.
As it happens, SMEs pay premiums based on their total payroll whereas this is not at all true for large companies. We could even say that they pay premiums on only half of their covered payroll.
A double standard is being applied and the effects are extremely harmful. Upper and middle income earners and the businesses that hire them are not paying their share of the unemployment insurance bill and the result is an increase in premiums.
.0700
In other words, within the system, we are running around in circles, like a dog chasing after its tail. SMEs want their premium rate to be lowered, but the only way to do this would be to increase the participation of the largest capital-intensive businesses that pay hefty salaries to their workers. This way, everyone's premium rate could be lowered.
However, that is not what the government has decided to do. It will start out in year one by giving back $500 million to big business and $400 million to workers earning between $39,000 and $42,400, for a total gift of $900 million. That's the truth.
It's a truth that has to be told, because rather than make a move toward lowering premiums, the government should have chosen to increase them. Without increasing the level to $100,000, as my honourable colleague mentioned, or to twice the average salary, which would be normal, if we set the level at $46,00 or $47,000, this would already give us a margin of $2 billion. True reform would thus be possible, without it having to come at the expense of low-income earners and the disadvantaged.
Unemployment insurance is the only security enjoyed by workers without iron-clad job security, as is more and more frequently the case today.
The system was initially developed to enable companies to lay off workers when the need arose. The workers had UI coverage. However, if fewer workers qualify for UI, one can only imagine that there will be less flexibility from an economic as well as from a productivity standpoint. There is absolutely no way around this.
Let me recount something said by a contractor whose name the chairman may remember. He recalled how visitors from abroad had marvelled at the exceptional level of productivity in Canada's construction industry. He believed the reason for this was the unemployment insurance system because, to some extent, the workers were the ones who decided how quickly to execute a particular task. If they felt they had no security, they would take more time to perform a task. That's normal. This is true not only of industry workers, but of everyone.
The type of UI system in place therefore has a direct impact on productivity. Moreover, the UI system is not a social welfare system. It helps to stabilize the economy in periods of high unemployment.
[English]
The Acting Chairman (Mr. McCormick): Could we have a little more quiet in the room, please? Thank you very much.
[Translation]
Mrs. Lalonde: Thank you, Mr. Chairman.
The UI system affords a small measure of security to people who have none. That is the purpose it serves.
.0705
A growing number of people have no security and this is no laughing matter. Why is this? Because the nature of employment is changing. There are fewer and fewer regular 35-hour-a-week jobs.
New categories of jobs are emerging. This includes temporary and contract jobs which provide very little security to workers. Unemployment insurance reform must address the lack of security felt by workers.
In my view, we mustn't base the reform proposals on the fact that in remote regions, there are people working ten weeks when perhaps they could have worked 42 weeks. We cannot base a system on this kind of reasoning. We must bear in mind the fact that employment conditions have changed and will continue to change.
Take, for example, temporary and part-time workers. Temporary workers represent a growing share of the labour force. Between 1989 and 1994, the number of temporary workers in Canada increased by 21%. According to the Canadian Council on Social Development, their ranks swelled from 799,000 to 970,000, or almost one million. We're talking about a very large number of people, considering the overall size of the workforce.
The term ``temporary worker'', according to the Council, does not include workers defined in the legislation as being self-employed but who are in fact contract workers. If these self-employed temporary workers were included in the temporary workforce figure, the overall number would increase by 170,000. Therefore, in total there are approximately 1.5 million temporary or self-employed workers in Canada. Would temporary workers prefer to have full-time employment? Two thirds say that they would.
Why are there so many temporary workers? Because more and more, businesses want to be able to adjust rapidly to change. In order to do so, they find it easier to hire people whose status is indefinite, people who do not need to be notified long in advance of a layoff, if they need to be notified at all. As their numbers increase, temporary workers need a system geared to them. They are not asking for an income security system on which to become dependent. They want to be able to rely on the UI system until they can find another job.
They are going to be claiming UI more than once in five years! Indeed they will, because permanent regular jobs are rare. If you have children and they are looking for a job, you know that this is the case. Regular jobs are rare with the exception of certain professions and a handful of jobs in big business or in the public service. But where are young people today going to find jobs like this?
.0710
These individuals must have access to unemployment insurance. The feeling I have on looking at the qualification requirements set out in the reform is that a great many of these temporary workers will be disqualified since, for the first time, the total number of hours worked will determine whether or not they qualify for benefits. And these temporary workers won't qualify.
The minister's statement to the effect that contributing from the very first hour worked will present a big advantage for workers shows that he didn't use his calculator. In fact, many of those who will be required to pay premiums, especially those earning minimum wage, will not qualify. It's mathematically impossible.
I would like to talk some more about Western Canada at this point in time. We're from Quebec and we have seen the demonstrations in Eastern Canada. I would have preferred - and this is something the Bloc suggested - to hold several hearings in each region because in the course of our travels, the picture that emerged from the testimony presented to us was one of people with numerous demands. In Victoria, a fairly wealthy city after all, there are people in need. In Vancouver, precisely because the standard of living is high and the city is in the midst of an economic boom, people who lose their job don't always find another one right away and even those with jobs are having trouble getting by.
When you talk to the people in the streets of Vancouver, you hear them say that the city isn't paradise because rents and the cost of living are extremely high. True, there are jobs to be had, but there is also unemployment, even though it is lower than elsewhere.
Unemployment is also a fact of life in Toronto where the rate currently stands at 9%. This is no picnic either. There is also unemployment in Manitoba. The outlook is the rosiest of all in Alberta where the ratio of jobs to population is the highest.
Therefore, had we toured Canada, we would have heard people saying that even when the unemployment rate is 8%, a person has to work 14 hours a week for a period of nine months in order to qualify.
What this means is that even in Western Canada, the system won't provide young people just starting out, women returning to the work force or older workers who have lost a good job in a large company with the minimal level of security afforded by the UI system.
Worst of all is the fact that UI premiums will be levied starting from the very first hour worked. This means that employees will have to wait until they receive their income tax refund to get the money they urgently need. I'm sure they would dearly love not to have to pay these premiums.
The situation would be vastly different if the government were not toughening up the UI qualification requirements. If not for this fact, the transition to a system based on hours would not have the same impact.
.0715
Furthermore, don't you find it surprising, or at least questionable, that under the existing system, a person must work 12 15-hour weeks to qualify for UI. The requirement is very clear. Why, when we move to an hour-based system, the 12 15-hour weeks become 12 35-hour weeks? Why is this?
It makes no sense to toughen the qualification requirements in the case of persons working between 15 and 35 hours a week. For the government to claim that it is doing people who worked fewer than 15 hours, not to mention companies and SMEs, a favour by allowing them to start contributing from the very first hour worked, is stretching it a little especially when, at the same time, people earning $42,400 will be paying lower premiums. Persons who fall into this category are getting a gift of $120 a year whereas those working fewer than 15 hours will be required to contribute to UI from the first moment they start working.
This will be the case everywhere, not only in the Maritimes or in Quebec. Everywhere, there will be people paying premiums without any possibility of drawing benefits.
We could understand if the government had not significantly increased the minimum benefit qualification requirements. However, as things stand now, we can't understand. Who can defend this decision?
If you talk to your fellow citizens and if they ask you for an explanation, how are you going to defend this bill? When they give you concrete examples, you won't be able to tell them that they will qualify for UI, because you'll know that this isn't so.
The only tangible effect of this reform will be to drive people to work at two part-time jobs. However, that isn't always feasible or possible. This means that someone who was working part-time and who qualified for UI will no longer be part of the workforce if he loses his job and will end up on social assistance.
One can even argue that some previously available jobs will disappear. A regrettable chain of events will unfold. For example, businesses that hired people for a maximum of 15 hours a week because they didn't have to pay UI premiums will change their hiring practices when they find themselves forced to pay these premiums. That is a given.
Has the government given any thought to that scenario? We need to spend more than five minutes discussing such an important issue. We are raising this matter, even if this is an inopportune moment, not because we don't care about reform. Quite the contrary. We don't wish to disparage the work that you have done. Like my honourable colleague, I very sincerely hope that you will convince your caucus that there is still work to be done.
No one can claim that the system is too expensive. It is financed by the workers themselves and the pool of workers is still made up of the highest paid workers and large companies which, instead of being asked to continue paying their fair share, are being given a gift.
.0720
The only person who ventured an explanation for this was Deputy Minister Noreau who said that there was less unemployment in these job categories.
When someone is part of the workforce, isn't it normal to contribute to a common fund when the unemployment rate is lower? It's normal to do one's share and help the economy because this will lead to lower premiums and result in a system which is accessible and which doesn't favour only traditional workers or those holding down two jobs.
In the departmental document that I have read very carefully, one phrase keeps coming up: the number of weeks worked by a person is not an effective measure of his work.
We are not talking about this because of salary. It is normal for the benefit rate to be linked to a person's salary. When we talk about eligibility requirements, regardless of the system, we are talking about a minimum requirement. Why then talk about work effort? We could also argue that hours are not an adequate or effective measure of a person's work.
If we look closely, we can find several cases of persons who are paid for one hour, but who in fact work much longer than that. I recall a young musician with the Orchestre de Québec who stated during a program on which I guested that the reform would be devastating for musicians. Officially, musicians can work only 16 or 17 hours because each hour of public performance involves three or four hours of personal practice and preparation.
This is true not only of musicians but also of teaching assistants and of all those who need to prepare at length for their one hour of work. In their case, the minimum requirement of 15 hours could mean that...
Here again, in my view, the question of hours raises some interesting possibilities, but as the researchers recommended to us, extreme caution should be exercised if we take this approach. It's a leap in the dark which could have extremely devastating effects on the entire workforce.
If we want the UI system to provide a minimum level of security, the qualification requirements mustn't be made any tougher than they already are. Many of the jobs created have in fact become new seasonal jobs. I'm thinking, for example, about tourism development. Many regions have turned to tourism development to ensure their growth. Tourism is a seasonal industry and during periods of inactivity, workers cannot easily find another job.
Why design a system that fails to take into account these realities and the changing workplace?
.0725
What bothered me most when I reread the document was the clear inducement to hold two jobs, even in the case of workers with a full-time job.
For example, the document refers to two persons who worked 420 hours last year, to part-time workers who worked 15 hours a week for 28 weeks and who qualify for UI benefits.
That's not the case if we're talking about the first time. This example is incomplete.
The document refers to full-time employees who work 42 hours for 10 weeks and who do not qualify for UI.
I could say that the cuts are to blame for this because in the past, these workers would have qualified.
The document claims that in a region of high unemployment, the two persons would qualify under the proposed Bill C-12.
The term ``high unemployment'' is used because if we were talking about ``average unemployment'', they would not qualify.
These examples demonstrate the complexity of the proposed system. The worst thing about it, however, is that it drives people to work incredibly long hours. It directly induces people to work more hours.
No maximum has been set as far as hours of work are concerned. Nowhere is it written that the government discourages people from working 20-hour days. What is the government going to do when workers start claiming 20 hours a total of 10 times or 20 days at 20 hours or 21 days at 20 hours to make up their minimum qualification period? Are we not introducing into the system even more distortions than the existing system has? We are opening the door to all kinds of situations when we link eligibility to the number of hours worked.
The second restriction imposed by the government is the set benefit period. This is not a problem for an employee who faces a layoff after having worked for the same company at a regular salary and regular hours. However, for many people, this is not the case.
The document refers to a person who works 14 hours a week for 50 weeks and who does not qualify for UI benefits under the current system.
It should be noted that under the proposed reform, that person doesn't qualify either. Someone who works 15 hours a week for 20 weeks currently qualifies for UI benefits, but under the new system, that will not be the case. Why arrange it so that a person who qualifies today won't qualify under the new system? On the contrary, why not arrange it so that someone who works 50 weeks at the rate of 14 hours a week qualifies? Why should the transition to a system based on hours result in fewer people qualifying?
The government claims that the system will be fairer. That has yet to be proven. I would even venture to say that the exact opposite is true.
.0730
There is no doubt that on paper, the system is more flexible, but in practice, I don't think it will be.
The government claims that reform will provide full coverage to workers who have more than one job. That is all well and good. However, simply because the government is doing something that it should have done earlier doesn't mean that it should proceed to make all kinds of cuts that it cannot prove are even necessary.
Consider this particular example which I had not read closely. When senior officials table a voluminous document, they provide explanations and you follow along. It is only after you have read the document yourself that you have questions to ask. It would then be interesting to ask them these questions. However, they never work this way. They come and present all the facts and then we never see them again, except during the clause-by-clause study phase. That's why we wanted to spend more than five minutes with them.
The particular example given is of a worker who holds down two jobs. He earns $500 a week at the first job and $100 a week at the second. It says that under the current system, only the first job is insurable. If the worker loses his job, what will his insurable earnings be? The answer is $500, 55% of which count for a total of a total of $275. While receiving benefits, his insurable earnings will be $69, bringing his total income to $344. This is under the current system.
Under the proposed system, both jobs are insured if the worker loses the first one. If that happens, the worker's insurable earnings will total $600, which means he qualifies for $330 in benefits. His eligible income will be $83. Therefore, a person with two jobs who loses the one that pays the highest income will receive $413 in UI benefits whereas someone with only one job earning only $100 less will receive $275.
I would have liked to have questioned the senior officials about that. I intended to do so. I consider this a gross distortion. A person who has only one job will be treated less fairly than someone with two jobs. That's criminal, Mr. Chairman, considering the world we live in where young people are dying to find work, to drive people to find a second job. It's absurd.
I have the feeling that the bill was drafted by senior officials who perhaps amuse themselves at their computers but who certainly gave no thought to the real world and the people in it.
It's not true that the reform will result in a fairer system for part-time workers since the proposals encourage full-time workers to hold part-times jobs as well and part-time workers to hold a second part-time job.
Under the new system, all hours worked will be counted. However, this incentive creates a distortion which will have a destabilizing effect. The distortion is apparent not only in terms of the amount of the benefit, but also in terms of the qualification requirement and the duration of the benefit period.
.0735
[Translation]
In any case, the least one can say is that the opposition is not only within its rights in asking those questions but is entitled to have answers because these are questions that are too pressing, too worrisome in relation to the future.
The Liberals were in opposition, but not for very long, because theirs is a party that considers it natural to be in power. Speaking for myself, I am used to considering things over long periods and from an historical standpoint. Over a long period, you were not in opposition for very long.
Mr. Boudria (Glengarry - Prescott - Russell): In my case, from 1981 to 1984 provincially and from 1984 to 1993 federally. I thought it was long enough.
Ms Lalonde: But now you are lengthening the periods.
I would love it if the effort we are making were taken into account. My very young colleague, Stéphane Tremblay, was saying earlier that, coming from his region, he found it somewhat surprising that the Bloc acts as the Official Opposition. But it is true that we have this role to play.
I respect my Reform colleagues, but when it comes to defending the status of the people who need unemployment insurance, I would say they at minimum need someone to give them a hand. We saw this throughout the tour on reform of social programs. As for the Liberal MPs, who since 1984 had become used to being the defenders of ordinary people, of those who need a security system, now they are stuck. They cannot say what they would like to say, I am sure. I can say this not only in respect to you, but in recalling what you said during all those years of the reforms by Mr. Mulroney. One need only reread your speeches. It is inconceivable that you were lying at the time. What is conceivable is that you are now being discreet.
Our task is to try to convince you. This means more - and you are well aware of this, of course - than contributing a document here, of having a mechanical reflex. It means trying to convince you to examine the proposal more closely, to convince you that there is nothing urgent because the Minister of Finance has a billion dollars more this year. There is nothing urgent. We can take the time to conduct a real reform, with the help of all those who would like nothing better than to sit down with us at the table.
You know, Mr. Young upbraided the CLC president in a way that one might characterize as cavalier. One could also say that in an industrialized country in which consensus-building is now a mandatory approach on the part of government, even in the OECD countries, Mr. Chrétien has not adhered to the pattern that is called for when you have a Minister of Human Resources Development and you are supposed to be promoting consensus-building among the viable forces of society. Let us say that he has not done so. I am not saying anything new to him; he knows this.
With the present unemployment situation, the transformation in the world of employment, with what is happening, with the state of public finances, the labour centrals, the groups that represent people in need, the small and medium sized businesses, and no doubt all the big companies are more prepared to have a genuine discussion, a real debate.
What this involves is making unemployment insurance the most effective support for individuals, and for the economy. This is what is at stake: providing improved support for individuals who are going through a destructuring situation, who more often than not will be coming of age in a situation that they did not anticipate. And this will apply not only to people who were earning $16,000 a year.
.0740
You must have met some. I have some friends in Toronto, and these friends in Toronto, who had a very well-paying job, were in short order faced with the loss of that job. Once this well-paying and stable job is lost, even if you have a big name - sometimes it is even more difficult when you have a big name - you are no longer able to relocate. You are going to need unemployment insurance and you are going to be looking for small contracts. That is life. The real life of real people, that is what it is, even for people who today are in a good situation.
Someone who loses a stable and well-paying job, especially someone who is 40 and has always done the same thing, has great difficulty in finding another stable job.
During the first reform, when we saw the tables presented by the Department two years ago, what did they tell us? They told us that there was an explosive growth in the number of claimants who had held long-term employment. When those claimants first go on unemployment insurance, it is extremely unfortunate, but they have a hard time finding some other stable employment.
If you have even a modicum of blue-collar workers in your riding, you know that when a factory shuts down there is only a small percentage of workers in the 40, 45 and 50 year age group who relocate, and the others struggle along. They get ``McJobs''. That is why the unemployment insurance plan must remain an instrument that is serving people and serving the economy.
There are some conditions to this, some conditions that we are fully prepared to discuss. I am going to thank Mr. Proud again for making his proposal. Although it was done in difficult and painful circumstances - and we may apologize to those who have not slept tonight, which includes ourselves - it was one way of getting into a debate.
What we want is a real reform of unemployment insurance. What we know is that we have the means to conduct a real reform of unemployment insurance. No one here can deny it. No one can say it is impossible, today, to increase the maximum insurable wage, to reduce everyone's premiums, to build a system that is genuinely fairer, more equitable and more flexible, and not to give gifts to big business and senior employees and make small businesses pay, as is now the case.
Yes, it is possible. Yes, we are prepared to work at that. But we cannot accept that the Liberals, who got themselves elected with jobs, jobs, jobs, especially in the Maritimes, conducted an initial reform of unemployment insurance in 1994 without a single minute of consultation, and are now preparing to conduct a reform that is expensive for the economy and for individuals. We tell ourselves that the Liberal caucus is made up of reasonable people, that many people have social concerns. In any event, they have economic concerns and they are capable of understanding our arguments. I hope that this night has been the beginning of a real debate on that issue.
.0745
As for me, I am sorry that we, the members of the committee, were unable to speak together before finding ourselves in the present situation. It is still possible, however, for the government to agree to increase the maximum insurable wage and tell the committee to make some proposals. It is possible to set in motion some mechanisms that would prevent the government from ending up with disastrous cuts that would further increase the anger of the people who have no hope.
I am sorry that we have not been able to discuss the title of the bill, which is far from being an employment insurance project. We should be seriously helping the unemployed to find a job. These people, who need employment, training, a nudge in the right direction, are at least entitled to benefits. We refer to employment benefits. Well, one of the characteristics of these employment benefits is that they are given at complete discretion; no one can protest, saying he did not get an employment benefit he wanted to get. It is the total and absolute discretion of the official, a discretion that makes these provisions so obnoxious. The benefits are necessary, desirable, desired, but they are given only under the employment heading. If the official is not satisfied, the person will not have access to these employment benefits.
For a growing number of citizens, the officials are the ones who provide benefits, who have the power of life or death over people. The officials often have a hard time of it. On the one hand, they are pushed by their managers, who want them to watch out for cheaters, they have to achieve formal and informal quotas and they have an attitude that is often far from receptive. This does not apply to everyone, but even when it doesn't the officials are required to have an availability and open-mindedness that they don't always have.
.0750
I do not envy the lot of the various officers in the employment centres, and in unemployment insurance.
The people who cannot get access to what they think they are entitled to, when a family depends on them, when they have debts, when they are immersed in bills to be paid, when they are on the point of losing their dwelling and their car, are angry, not at the government or management, but at the person who is in front of them, at the officer or official who is there. It is sad, but that is what we are seeing.
Since the beginning of the reform of social programs, we know that one of its objectives is to decrease the redistribution effect of the unemployment insurance plan across Canada. It is interesting to recall that when unemployment insurance was being created, Bennett very clearly attributed to it a function of interregional subsidies. In 1935, after the Depression, Bennett in fact said the following:
- During the years of distress that you have just experienced, you were able to observe the great
weaknesses and abuses of the capitalist system. Unemployment and poverty are manifestations
of this. Profound changes are occurring around us. The circumstances have changed. To
respond to the new needs, it will be necessary to overhaul the capitalist system and make it an
instrument that is more useful to the people.
- I think this is very timely.
- You will be presented with measures that are part of an overall plan the purpose of which is to
lessen the present social and economic inequality and to distribute more equitably the benefits
of the capitalist system between the different classes of the population and -
- I emphasize this
- - the various regions of the country.
There is something odious in now wanting to forget the necessarily seasonal nature of these regions, which cannot be otherwise thanks to the climate, and to make the people who live in them pay for it, and to want to deter them from remaining there.
Suzanne Tremblay witnessed the anger of the 5,000 people who participated in the demonstration. The violence is no doubt related to the fact that people are already living in difficult climatic situations. They experience the remoteness, the lack of control over their lives. They now feel that their last life preserver is being taken from them.
.0755
We should not be surprised that they react, because they grasp very clearly the effect of this reform on their region. These people are in the best position to say to the Liberals that after conducting the struggle they did against C-113, it is impossible that they have twice put the knife to the unemployment insurance plan.
Not only have they not corrected C-113 or prevented people obliged to abandon their job from completely losing their unemployment insurance benefits, but they are making access to unemployment insurance infinitely difficult for people who now have access to it.
Mr. Boudria cannot cite any emergency because if the reform is not enacted in time the Minister of Finance will have a billion dollars more in the unemployment insurance fund this year. The Minister of Finance certainly has no problem with that. There is no emergency for the simple reason that the plan, with the cuts you have advocated and a small, extremely feeble economic upturn, will have by the end of the year a cumulative surplus of 5 billion dollars without the reform, and 4.5 billion dollars with the reform.
This is important to note. There is no urgency because the Act will reduce the surplus in the unemployment insurance fund. There is no real urgency in limiting the number of people with access to unemployment insurance. There is no urgency in making gifts to big business. Workers making $39,000 to $42,000 do not see the urgency in receiving a gift of $2 a week, courtesy of the federal government.
The Liberal party repeated many times that it was the trustee of employees and firms. Normally, a trustee shall take account of the interests of the employees and firms.
The final proposal in our brief was participation in sharing the administration of the unemployment insurance fund.
Why? Because the two parties together, obliged to talk to each other - not only through briefs in which each party stands on its position - in order to administer a fund in common, could agree to measures that could result in a real unemployment insurance program.