Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Issue 5 - Evidence
Ottawa, Tuesday, June 4, 1996
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill C-12, respecting employment insurance in Canada, met this day at 9:00 a.m. to give consideration to the bill.
Senator Mabel M. DeWare (Chair) in the Chair.
[English]
The Chair: Good morning, honourable senators. I would ask our first witness this morning, Ms Alexa McDonough, to please take a chair at the table.
Please proceed.
Ms Alexa McDonough, Leader, New Democratic Party of Canada: Honourable senators, first, I should like to thank you for the opportunity to make a presentation this morning on the unemployment insurance bill that is before you.
Joining me this morning are Mr. Chris Axworthy, critic for the New Democratic Party caucus on unemployment insurance, and Judy Randall, policy coordinator with the New Democratic Party of Canada.
We have distributed a much longer brief than you would want us to present verbatim this morning. We hope that you will have the opportunity to review it more fully. However, I would like to start with some opening comments, a bit of a summary, and then I will be happy to address questions that members of the committee may have.
The first point that we want to put before the committee is that Canadians expect their government to focus on the lack of jobs, not attack the unemployed. Yet, despite its campaign promises, the Liberal government has adopted the view that Canada must have high unemployment. The finance minister confirmed that his intention is to ensure that unemployment does not fall below 8 per cent. In a recent letter to the Canadian Labour Congress, he stated:
...the government's reforms are aimed at making sure that we never repeat the experience of the late 1980s. At that time, growth was strong and job creation was rapid. But as the unemployment rate fell below 8 per cent...inflationary wage pressures started to emerge.
Our worst fears were confirmed when, last week, the Prime Minister himself more or less said that Canadians better get used to 8 per cent unemployment; that it will be with us for a long time to come. I recall the last Prime Minister who made that statement in the middle of an election campaign. She and her party heard loud and clear the views of Canadians with respect to that approach by a federal government in dealing with chronic and high levels of unemployment.
Punishing the unemployed for the state of the economy is both hypocritical and unfair. If these proposals before us go forward, less than 40 per cent of Canada's unemployed will be able to qualify for unemployment insurance benefits when they are unemployed.
Close to 1.5 million Canadians are currently unemployed and looking for work. I know that we do not need to tell you that. As recently as 1990, 87 per cent of these unemployed workers would have been eligible for unemployment insurance benefits. By January of this year, only 46 per cent of the unemployed in Canada were receiving unemployment insurance.
The impact of the policy of high unemployment can be seen in growing welfare caseloads, longer stays at hostels and increasing use of food banks across the country.
When we suggest that hunger, homelessness, violence and crime will be on the increase as a result of these measures if implemented as presently proposed, people accuse of us of fearmongering. However, the fact of the matter is that this is exactly what happens in the instance of more and more unemployed people being eligible for less adequate benefits for shorter periods of time. It is appropriate to be fearful about the outcome.
Such cuts also drive many people from the work force, and falling labour-force participation is already a fact. The statistics from StatsCanada make it clear that the result of cuts in unemployment insurance and continuing high levels of unemployment result in lower labour-force participation. That is statistically documented for both men and women.
Cuts make others so desperate for work that they will take any job, no matter how low the pay or how poor and dangerous the working conditions. I know there is no one in this room who is not aware that one of the factors in the Westray tragedy, which cost 26 miners their lives in Pictou County four years ago, was the fact that when some of those miners went to the unemployment insurance office to inquire about their eligibility for UI benefits, so they could feed their families, they were told that because of recent changes -- and these are changes already put in place to make UI even more restrictive than it had been previously, but not nearly as restrictive as what we will have after these changes go into effect-- they would be considered quitters. They would therefore not be eligible for any benefits for at least 8, and probably 12, weeks. So they went back into the mine; did exactly what most working people would do under those conditions in order to feed their families and to keep an income.
The government's sales pitch is based on hostility toward the unemployed and on a deliberate tactic of generating even more hostility towards the unemployed. It is not the first time this has happened in Canadian history or in the parliamentary arena. The rhetoric of abuse was described in June 1980 by Bryce Mackasey, a former Liberal minister of employment and immigration.
He told the House of Commons at that time that each retreat from the 1971 UI act had been accompanied:
...by a well orchestrated campaign -- based on alleged abuse of the plan, thus preparing and conditioning people for the amendment, when in fact the main purpose was to shift the financial burden.
That shifting burden has seen government largely abandon its own labour market measures. With no government goal of reduced unemployment, the UI fund is being used to pay down the deficit.
Between 1975 and 1990, UI amendments transferred a cumulative total of about $10 billion annually in program costs from government to employers and employees. Provinces were also left with a greater burden.
This time, the government is shifting more than the costs of UI benefits, or related employment and training programs, or its departmental administrative costs. UI premiums are being tapped as a reserve fund to pay down the deficit. This was made clear in the recent federal budget.
By the end of the next fiscal year, 1997-98, there will be a surplus of $9.4 billion in the UI account. This is money that properly belongs to the 13 million workers who contribute to UI and, more specifically, to the 1,539,000 workers who are currently unemployed and looking for work.
The government is also raiding the UI fund to help finance welfare programs that it cut with the elimination of CAP, the Canada Assistance Plan, and the introduction of the Canada Health and Social Transfer tax.
Meanwhile, this same government is giving another huge tax break to business. As of January 1996, UI premiums were lowered. UI premiums also became more regressive through adoption of a lower maximum insurable earnings ceiling. In fact, Canada has one of the lowest rates of payroll taxes in the industrialized world, and considerably lower rates than the United States. This is added to nearly $1 billion less in revenue going into the UI fund, and a huge unearned unconditional tax break for business.
There are some directions and basic principles for reform of unemployment insurance which would reflect the reality of current and future labour market conditions, and which, at the same time, would be much fairer to the unemployed than the measures that are contained in this bill.
I want to outline briefly some of them. I might say that these alternative measures would also be a great deal more consistent with the stated commitment of trying to achieve some measure of national unity in this country.
First, the government should establish and meet targets to reduce unemployment and increase the levels of employment. A government which sets and meets deficit reduction targets should demonstrate equal effort and commitment to employment and meeting unemployment reduction targets.
Second, the government should recognize the economic and political necessity of real partnership in the economy, to reduce levels of unemployment and to establish social and economic priorities for the country as a whole.
Third, the government should broaden the debate about reforming UI from an exclusive preoccupation with cost cutting to a consideration of what is really taking place in today's market, including the changing nature and distribution of work, the impact of technology on jobs, and the impact of demographics on labour market needs for the future.
Fourth, in keeping with the notion of economic partnership, the government should establish a parallel fund, under arm's length control by labour and management, for the economic partners, in cooperation with provinces, territories and communities, to jointly design and put in place the best possible range of active labour market measures.
I could not help but notice that the Prime Minister last week was in the west bragging about the importance and the impact of the municipal infrastructure program; so this is not something unknown to the government, although they have decided to abandon it.
Fifth, the government should halt its attacks on the unemployed. Instead of merely providing assistance for UI claimants, for example, the government should support their active job searches by requiring employers to register job vacancies with Canada Employment, job information banks and job placement services. I am sure every member of this committee is aware of the concern that is being expressed in many parts of the country.
I might mention my own backyard in Halifax, where the CEC office in a low-income community, with the largest black population in Nova Scotia, is being shut down. The community understands this to be a total abandonment, not only of the community, but also of any notion of the government playing an active role in assisting with job search, job training and job alternatives.
Support provisions such as I have outlined would ensure that extensive information about available jobs, including where the jobs are, how long they will last, what skills they require, what support programs are available, such as child care, skills training and so on, will be available to those who most need it. In addition, such a requirement would immediately ease the problem of matching the skill sets of workers with the needs of employers and ensure that the CEC jobs bank is the place to look for work.
Sixth, there should be no reduction in UI premiums or any other taxes for profitable corporations who are laying off employees or for corporations who are not meeting or exceeding national standards for skills development and other human resource investments.
Seventh, the government should release a detailed impact analysis of how those amendments affect the unemployed and provide at least 45 days for the revised package to be studied by Canadians.
I think it is fair to say, certainly from my conversations with people right across this country over the last several months about these proposed UI changes, that people do not understand what the impact will be of many of the proposed changes, and it is no wonder, because they are extremely complicated. They are convoluted. They are almost beyond comprehension even for people who have all the facts and figures at their disposal. If anyone in this committee can suggest otherwise, they may be in a position to start explaining to people what the real impact is. The government has certainly failed to do so. As a result, people are not only fearful, but also extremely confused about what the real impact will be and what the gap is between what they know to be the impact on themselves personally, based on the information available, and the rhetoric that the government is spouting about what the supposed improvements will be as a result of these changes. There is a very great gap, and this information is at variance with people's own experience and what information is available to them.
I will stop there. I would be happy to address any questions that committee members may have.
The Chair: In one of your first comments, you said that less than 40 per cent of unemployed people will be able to collect unemployment insurance. Could you clarify that for me?
Ms McDonough: It is 40 per cent of those who are unemployed. If you go back not very far into the past, 87 per cent of unemployed Canadians who had contributed to UI would be eligible for benefits, with some appropriate waiting periods, of course. When the changes that are now before us go into effect, 40 per cent of unemployed Canadians will, in fact, be eligible to collect benefits, in the event they are unemployed.
In case anyone thinks this is some kind of exaggeration, fearmongering or hysteria, it is important to know that in this province alone, for example, only 33 per cent of those who are unemployed are eligible for UI.
Senator Phillips: Before turning to the witness, I wish to point out for your benefit that Bob White mentioned that figure of 40 per cent last night, as did Dr. Shillington, who did the research for the Council on social development, or something of that nature.
I should like to welcome the witnesses today. It is rather appropriate that Ms McDonough realize that around this table, all the committee members, except one, come from Atlantic Canada -- and I am sure that he wishes he did, too.
I went through most of the presentations to the committee in the other place. Unfortunately, I could not find yours. I should like to ask you what you think of the changes that were made in committee in the other place.
Ms McDonough: When you say that you were not able to find ours, I am concerned. Is it because they were not made available when you requested them or because there was some question in your mind about whether we made a submission to the Human Resources committee, the House of Commons committee?
Senator Phillips: As a former member of the other place, I am sure you would have.
Ms McDonough: I welcome the opportunity to clarify this, not to rub salt in my own wounds. I submitted a written brief and I also sought the opportunity to appear before the Human Resources committee. I was not given that opportunity, which is the polite description of the rejection of our attempt to make a verbal presentation to the committee. We are doubly appreciative of the Senate committee's willingness to hear from us today. I would be happy to make a copy of that brief available to you as well.
The brief that we have submitted today is updated and has some additional information in it, but it is substantially the same, as you would expect, because our analysis has not changed dramatically in the last month in the light of any new information.
You mentioned that most of the members of this committee come from Atlantic Canada. There will be immense impact on Atlantic Canadians, as individuals, as communities, and as a whole regional economy, and I am sure that members of this committee fully appreciate that that is so.
However, it is extremely important for all of us who understand what the adverse impacts on Atlantic Canada will be to ensure that the government understands -- and they appear not to understand or appear unwilling to acknowledge -- that there will be an immense adverse impact as a result of these changes. It could be statistically documented that more unemployed workers in downtown Montreal, or rural Saskatchewan, or northern British Columbia, or Manitoba will be adversely impacted than all of Atlantic Canada. The impact on Atlantic Canada will be disproportionate because the economies are not as diverse. But numerically, in actual hardship terms to the number of people who will be negatively affected by these changes, we should not allow the Government of Canada to get away with the fiction which I have watched them deliberately create; that is, that this is just an Atlantic Canada issue and the rest of the country should not worry too much about it. When you look at the rhetoric surrounding this, its intent has been to reinforce some notion that those of us from Atlantic Canada are welfare bums any way and that we should understand that this is a measure to finally get us off our asses and back to work.
This is a very serious part of the divisiveness that these changes are causing and will cause in the future to a country that is already badly strained and divided.
Senator Phillips: I agree with a great deal of what you have said, Ms McDonough, but do you think the amendments made before the committee of the other place met the objectives? Here I am thinking of the gap, the divisor, and all of these factors that have been explained to me. I do not have to go through the five of them. I think you know them. Do you think they have met the objectives?
Ms McDonough: No, we do not think they have met the objectives. That is why we are still speaking strenuously against the bill. There is no question that some of those amendments provide some minor improvements. It would be dishonest of me not to say so. But my fear about those amendments, and certainly my fear about this, was reinforced by sitting in on some of the committee hearings. The government is kidding itself and trying to deceive Canadians into believing that the most adverse aspects of this legislation have been ameliorated by those amendments. That is not true.
There is a concern that the minor improvements that have been made will create an aura of respectability and acceptability that is absolutely not warranted. In fact, they do not go far enough to deal with what the real impact will be, which is that an awful lot of unemployed Canadians -- unemployed through no fault of their own -- will be eligible for less in the way of benefits, for shorter periods of time, and great numbers who now are eligible under our UI system, whose conditions will not change from what they are now, will be ineligible for any benefits whatsoever.
Senator Phillips: My next question touches on what you describe as hostility. I do not think I will go so far as to say "hostility"; I think it is lack of understanding by the bureaucrats who drafted this bill.
I have been around the hill for some time. I have noticed that, regardless of the political party, the minister becomes captive of the bureaucrats after a while. People in the Maritimes are being criticized for only working so many weeks in a fish plant. I do not think the bureaucrats or the people in the rest of Canada understand that that plant only operates for a certain number of weeks -- a number which is set by the government, by the way. If those people were not willing to work for those few weeks, that plant could not operate. The fisheries would then be in an even worse situation than they are presently.
It is totally unfair to say to this group of people, "We will retrain you", or, "You must take training", and so on. If they left -- and it does not matter whether it is Miminegash, P.E.I., a harbour in Newfoundland, or Bathurst, New Brunswick -- there would be no one left to operate those fishing plants. The fishery would collapse. I feel that the legislation, the propaganda about the bill, completely overlooks this fact.
Have you conducted any research on what the effect would be if these people were taken out of the plants? What would happen to the fisheries?
Ms McDonough: First, senator, I agree absolutely with your analysis of how absurd it is to fail to understand the seasonality of our resource-based industries and the nature of structural employment and to create the impression that this is all about a bunch of lazy people who are not willing to move to where the jobs are. UI exists not only to provide income for periods of unemployment during which people are not able to change that condition, but also for the benefit of industry.
If the government were really moving to deal with the abuse of UI, it would recognize that if abuse exists at all, it is carried out at least as much, if not more, by employers. We have come to understand that the seasonal nature of many jobs throughout Canada is such that one must figure out how people will provide for their families when the pay cheque is not coming in. I strenuously resist, with all due respect, senator, the notion that the federal Liberal government does not know what it is doing because the bureaucrats have got a hold on the agenda. To my knowledge, it was not a senior bureaucrat who called seasonal workers in Atlantic Canada "agitators" and "subversives" because they were speaking out strongly against these measures, knowing what the impact would be on themselves, their families and their communities. It was the Minister of Human Resources Development who did that, and he has no excuse for such ignorance because he comes from that community.
The responsibility must be put squarely where it belongs. The federal government has chosen to scapegoat a lot of unemployed people for its own failure to deal with jobs as a top priority, which is, after all, what it was elected to do. The hardship which this will cause to many unemployed people will be massive.
Minister Young knows perfectly well that $4 billion was already taken out of the UI system in 1994. Now, with $2 billion more coming out -- a combined impact of $6 billion over a couple of years -- there is no way, short of perpetrating a hoax on the Canadian people, most of all on the unemployed, to pretend that this is somehow about improving the unemployment insurance system and creating better conditions for people who are unemployed through no fault of their own.
Senator Phillips: Madam Chair, with respect to the witness, there are others waiting to ask questions. I will keep my questions shorter; perhaps we could have briefer answers?
Ms McDonough: You and I have the same problem, senator.
Senator Phillips: That is because we are Maritimers.
It bothers me that retraining includes only those who are drawing UI benefits. The individual for whom I feel sorry is the one who left high school, started pumping gas and cannot now be retrained because he is working. Do you think that is fair?
Ms McDonough: It is a serious problem. The government is pretending that what this is all about is more active labour market measures, when in fact they are cutting back on training that is now available and making it even more restrictive. You are absolutely right; there are many people who will be even less eligible for training under the new regime than are now eligible if they do not happen to fall within the narrower categories of eligibility which the government is putting in place.
The Honourable Chris Axworthy, Member of Parliament, New Democratic Party: If we do not build more training into our workforce, we will not get very far. To set up artificial barriers between those who work and those who do not work for eligibility for training is not a very sensible approach. If the unemployed are the only ones taking the program, it may serve to stigmatize them. All Canadians should have the opportunity to train, thereby improving their opportunities, not only for themselves and their families, but also to contribute to the economy in general.
Senator Rompkey: I was interested in the picture which Senator Phillips drew of "Doug Young: Captive". I am having difficulty fitting him into that frame. There are people whom I can fit into the frame of captive, but Doug Young is not one of them.
Senator Phillips: I was only trying to help him out.
Senator Rompkey: I understand that, senator.
The witness mentioned the Liberal government, although not in flattering terms. At the beginning of her presentation, she mentioned the Red Book and said that the Liberals had somehow deviated from the course. The Red Book said that the party promised to redesign the current social assistance programs to help people on social assistance who are able to work to move from dependence to full participation in the economic and social life of the country.
It seems to me that that idea of moving from dependence to independence is an important one. Clearly, the present system has created a dependency; there is no question about that. People have become dependent on that income. I realize that there is a problem with alternate jobs, but surely the only way to provide those jobs is through the private sector. It seems to me that the government has done that through its budget measures.
In 23 years in the House of Commons, I have never seen a budget as popular as this one of Paul Martin. We went up 5 per cent in the polls after this budget.
Are you saying that the people of Canada are too stupid to understand what Paul Martin was saying in that budget and that he was on the wrong track? Clearly, the majority of people in the country supported him, just as the majority of the people in the country support this bill. Fifty-four per cent of Canadians in the Atlantic support this legislation, as do 72 per cent of people across the country.
Is the witness saying that Canadians are too stupid to understand what is going on here? After being elected seven times, I have a healthy respect for the intelligence of voters. I do not think they are too stupid to understand what is going on. I think they understand completely. They understand that this is giving people an opportunity; that it is enabling more people to participate in the social security net. Rather than drive people from the workforce, as the witness has suggested, I suggest that this draws more people into the social security net.
Three hundred and fifty thousand claimants and low-income families will now receive a supplement. Five hundred thousand more individuals will have their work insured. People who work less than 15 hours a week will now be insured. Employers, in both the private and public sectors, will no longer be able to get away with hiring people for short periods of time, laying them off and working the UI system. People will have to be insured from the first hour of work. I argue that that brings people into the system rather than driving them out.
This was the first time that I heard Westray blamed on the unemployment insurance system. I will not go into that at length, because it is far too serious a topic to treat lightly, however, I do not think it does credit to the New Democratic Party to suggest that the unemployment insurance system was somehow to blame for what happened in Westray.
Surely, the goal of the government is still the reduction of unemployment. That is achieved partly through the reduction of premiums. We have all tried over the years to make ourselves believe that government can create long-term jobs. I think it has been proved that that is not the case and that those jobs will be found in the private sector.
With regard to the shutting down of offices, I am surprised that in Ms McDonough's area of Nova Scotia, offices are being shut down and that she feels there is no effort at the local level to assist people. My experience has been the opposite.
As I said last night, one of the factors which we must put on the table in this changing environment is the devolution of decision-making to the lower level. Bureaucrats now have a great deal more authority in deciding "who gets" and "who does not get" benefits and "who gets" and "who does not get" help than they had before. In Labrador, for example, we have a region, which we never had before. The people who operate that region are operating not in a vacuum but in partnership with other partners in the community. They have a great deal more authority now than they had before.
I see this as a positive move rather than a negative one. No longer are decisions made in Ottawa and St. John's. They are now made on the spot in Labrador. I see that as a good thing, rather than a bad thing. I am seeing offices open up, rather than shut down.
Ms McDonough: I am at a bit of a loss. I am not sure whether that was 10 questions or 10 points. If I try to respond to all of them, I will certainly get in trouble with the timekeepers.
The senator is absolutely right when he says that more people will be insurable. More people are paying in, but a lot fewer people will be getting benefits back. That is absolutely clear.
Senator Rompkey: Where is the evidence of that? Can you provide evidence of that?
Ms McDonough: Yes, every bit of information which has been provided indicates that.
Senator Rompkey: HRD does not have that information.
Ms McDonough: Just think about it for a minute. If $2 billion is being taken out of the system and the number of eligible people is being increased, it is rather like saying that you are better off if I take $10 from you and give you $2 in return.
Senator Rompkey: You are, if the $10 is being used for a positive effect. Over $1 billion is being put back.
Ms McDonough: Add it up, senator. It does not help you to pay your rent at the end of the month if you know that several other tenants are getting in on some of your rent money but you must still pay your full rent.
We cannot allow this hoax to be perpetrated on people. The fact of the matter is that large numbers of people will be eligible for shorter periods of benefits and much lower benefits. Many people who are now eligible will not be eligible at all.
Second, if I could deal with your comments about Westray, believe me, it would be completely unfair and dishonest to say that UI was the factor that caused the Westray disaster. I mentioned it because it was a specific part of the testimony brought forward at the inquiry.
Let me tell you that as I travelled all over this country in the last 12 months, I have heard from workers who are increasingly fearful about the unsafe and unhealthy working conditions which they must endure precisely because of the threat of unemployment insurance being pulled back and the weakening of the social safety net. This is the reality in the real workplaces of real people and in their daily lives.
The Chair: Ms McDonough, just on that point, what has happened to our occupational health and safety commissions in the provinces across this country? It is their responsibility to see that the workplace is safe. It is not a UI responsibility. I will not defend UI, but that is their responsibility.
Senator Murray: There is a list as long as your arm, as I think you know, Ms McDonough, of factors that allow a voluntary quitter to claim unemployment insurance. There are many reasons that one can use to justify quitting voluntarily. I would think that safety was one of them, although I do not have the list in front of me.
Ms McDonough: Everywhere you go in this country, people are fearful about the increasing insecurity in their workplaces. This is what is wrong with the government's plan. They are not dealing with the shifting nature of work. They are not dealing with the reality of what is happening in the labour market.
Basically, the government is saying that they really cannot have much effect on the unemployment level. They are saying they cannot have much effect on the distribution of work. That is nonsense. They could be far more proactive about the distribution of work, in ways that many other industrial nations are doing, which would not have the adverse impact that these changes will have on people individually but would in fact create a lot more jobs.
They are not doing any of those things. They are creating more and more pressure for people to work in unsafe, unhealthy conditions, without the benefit of any kind of fallback and without very many alternatives. That is the reality of what is happening out there. This legislation makes it worse, not better.
Senator Murray: First, in support of my earlier comment, just cause for voluntarily leaving or taking leave from employment does exist according to the present law. This will continue in the proposed Bill C-12. Just cause exists for the reasons included on the list which, as I said, is quite long, beginning with sexual or other harassment. It includes working conditions that constitute a danger to health or safety.
If you invoked any of those reasons as a voluntary quitter, you would still be eligible. They may not have known that and they may not know it yet, but it was there in the law and will continue to be part of the new law.
Ms McDonough, I am afraid there is not very much time. There are so many things I would like to discuss with you in your position as a national leader. Let me ask you only for your comment, if you have been able to formulate a position, on the announcement by Mr. Young the other day about the devolution to the provinces of labour market training -- that is an old announcement; it will take place over a three-year period -- and also, effectively, of control over most of what is in Part II of this bill, the so-called employment benefits, wage subsidies and infrastructure and all the rest of it.
I would like to hear what you have to say about that, realizing as you do that, in respect of labour market training, that there is a real consensus in Quebec involving government, labour, management, federalists, separatists. Everyone agrees that the thing to do is to devolve labour market training to the provinces.
Before you reply, on another subject, I want to say something about a couple of studies that the Department of Human Resources Development had published last fall. I referred to them yesterday. In the dialogue between Ms McDonough and Senator Phillips a few moments ago, some of these issues came up.
I will not quote at great length, but these two studies were prepared by some professors at the University of Quebec at Montreal. One is entitled, "Unemployment Insurance and Job Search Productivity." The other is, "The Impact of Unemployment on Wages, Search Intensity and the Probability of Re-employment."
These studies seem to disprove the notion that there are serious behavioral patterns that somehow we must change or could change with a bill like Bill C-12.
The first study, published in August of last year:
...addresses one of the most common criticisms levelled at systems of Unemployment Insurance system: that the availability of UI benefits will lower the intensity of job search on the part of the unemployed workers and thereby raise the unemployment rate. According to this view, UI benefits are part of the problem rather than the solution...
The study found a relatively minor effect of UI benefits on job search intensity... However, it appears that those who have been unemployed for more than 12 months become discouraged and reduce their search effort. This suggests that a program specifically aimed at helping the long-term unemployed in their search would be highly desirable.
The other study, which focuses to some extent on this question of the seasonal industries, states:
Our analysis of search intensity shows that UI had no direct effect on search intensity, although it may have had an indirect effect by subsidizing seasonal industries.
They then make the point that you both made:
The seasonal nature of the lost job is one of the main determinants of job-search intensity. Without Unemployment Insurance funded through the general Unemployment Insurance pool, costs in seasonal industries would increase as a result of higher UI contributions to a separate pool or increased wages to compensate workers for the absence of revenues during the off-season. The industry would shrink, and the number of workers employed in seasonal industries and on UI during the off-season would decline.
I do not know if this is what the government has in mind, but I would hope not.
The re-employment probability of workers is affected less by UI than has been suggested by previous studies... It could be that studies that found that UI delayed greatly the return to work were in fact assigning to UI an effect that was due to other characteristics of unemployment not controlled for because of a lack of data.
Again, what that has to do with is seasonal employment.
An examination of the effect of UI history on current UI use shows that evidence of UI addiction largely disappears once individual factors are controlled for. In particular, the seasonal nature of the lost job is a very strong determinant of future use of UI, given past use.
I do not see how there is a behavioral problem here that needs to be addressed or that can be addressed by this bill. Again, I think these studies -- they are not conclusive, and I am sure Mr. Young has others -- indicate that UI is not the problem we are facing in the context that we are discussing today.
I am sorry to have taken up so much time. I referred to those studies several times yesterday. I wanted to put that on the record. Having done so, Ms McDonough, I would like to invite your comment on the devolution of the responsibility of Part II of this bill to the provinces and also the matter of devolution of labour market training to the provinces.
Ms McDonough: In response to citing those particular studies, you have helped further substantiate the position that we are taking before this committee and on this bill. To think that we have to change a behavioral problem -- in other words, to find a way to increase the intensity of peoples' job search by creating misery and hardship in the belief that that will produce jobs -- is a ridiculous notion. Yet, that is clearly what the government has set out to create. They are creating that impression and outcome. They are doing a great job creating the impression, but it will not create the desired outcome and, in the process, many people will be hurt.
We do not seem to be doing a very good job convincing Doug Young that this is completely wrongheaded and misguided. I would like to think, senators, that you could have somewhat better success in persuading your colleagues that that is the case. If we could enter into a unholy alliance around this, we are all for it. That is why we are here.
With respect to your question about devolution, senator, my reaction is the reaction of many premiers, which is that the federal government has done a rotten job with respect to labour market training and has completely failed to create the kind of partnership that needs to exist between the federal government, provincial governments, business and labour. The municipalities must be partners as well. That is where the buck stops in terms of many of these problems. The federal government has done such a rotten job that a good many premiers are saying that they think they can do better if the federal government gives them the tools to do the job. That is the reaction of some premiers; others are more sceptical. All, I think, are fearful about whether they will be given the tools. The resources must be there to do the job. The federal government has not answered that question yet. There is a genuine concern.
Given the trend in every other area in which the federal government has been offloading and downloading, there is a realistic fear on the part of the provinces that this will not be devolution for the purpose of a better job being done, but that it will be downloading from the point of view of getting rid of the responsibility, shedding any real financial responsibility, and that the provincial governments will be left struggling and in some cases committed to doing a good job but not having the resources. The jury is out on that point.
In any case, this is a pathetic notion of the kind of leadership that should be expected from the federal government. The federal government must recognize that leadership must come from the national level around attacking our number one problem, which is joblessness. It is our number one problem, so how can it not be the number one priority? There is no way that provincial governments will be able to do what needs to be done with any promise of success around labour market training if there is no leadership from the federal government around ensuring there are jobs for people to fill once they have been trained. Yet, we have watched both the Prime Minister and the Minister of Finance toss in the towel, and the Minister of Human Resources Development is willing to go along and be part of the fiction that tinkering with UI, instead of tackling unemployment, will produce an improved outcome in terms of jobs and training.
Senator Losier-Cool: Ms McDonough, I am also from Atlantic Canada, but I have been trained by my students to ask short, direct questions.
I am appalled by this list of negative words I have heard in describing this bill. I am told the bill is absurd. I am told that bureaucrats do not know what they are doing. I am told that the bill creates misery and hardship. I have heard the terms "misguided" and "rotten jobs". Does your party see any positive points in this bill? Do you believe that this bill recognizes the value of work?
Ms McDonough: I do not think this bill has anything to do with recognizing the value of work. It has to do with a mistaken diagnosis about the nature of unemployment and a mistaken diagnosis about human nature. It perpetuates a fiction, which is that, somehow, the unemployment problems in this country will be improved by attacking the unemployed and the unemployment insurance system. There are some things which potentially could be an improvement for people. The government is very fond of congratulating itself because it has opened up eligibility more widely by calculating hourly work instead of weeks of work. Potentially, that could be positive.
However, when you look at the actual rules the bill will impose, people who would have been eligible previously under the weekly arrangement will not be eligible under the hourly arrangement. Instead of requiring 300 hours of work before you become eligible, you will require 900 hours of work. That is an actual calculation in a case scenario.
One of the points that we have tried to make and would make here again is that if the government really intends to create an improved situation for hourly workers and intends to do so not by penalizing others who are unemployed, then they should say to people that their eligibility can be calculated and determined on the basis of which system benefits them and which is appropriate to their circumstances. In the instance where an hourly basis is used for calculation and that would benefit the unemployed person, then that should be an option available to that person.
Where a calculation based on numbers of weeks of work will benefit their circumstance because of the nature of their work, then they should be able to opt for the calculation based on that. But the government is not prepared to consider that.
Senator Bosa: Madam Chair, in view of the time, I am not going to ask any questions, but I would like to make one remark.
I thought that to link the Westray mine tragedy to unemployment insurance and to this particular bill was a nasty remark, particularly when you know well, as leader of the NDP, that in Nova Scotia, the safety of the mine is not the responsibility of the federal government but the responsibility of the provincial government. You do not look mean, but that was a mean remark.
Ms McDonough: I would like to respond to that briefly, if I could. We are not talking here about who is being mean to whom. We are talking about the reality of the testimony of Westray miners, who reported exactly what happened when they tried to seek relief and protect themselves from those unsafe conditions by going to the UI office. It does not take away the problem to say that the UI official was misinformed, or to ask why that worker did not know that they should have been able to quit their job and press through the courts to have their claim respected. I am talking about what happened in the lives of those miners and what people mean when they say that we are creating a Westray world by these kinds of changes.
Senator Bosa: You are relating it to this bill, and that is the tragedy of what you say. The wounds are still open and for you to make such an assertion is putting salt in the wounds.
The Chair: I think we have the point well made. We will have one quick question and that will be it.
Senator Lavoie-Roux: I apologize for having come in late. In the last part of your brief, you mention some direction and basic principles for a better choice. I must say that there is one concern that you express with which I am in total agreement. If we do not address it, I think not only this country but also the world will end up with the tragedy. You say we should give some consideration to today's labour market, the changing nature and the impact of technology on jobs. Do you have any suggestions as to how to approach this problem? Has your party undertaken any studies in this area?
To get the best employment insurance program, we have to create jobs. Otherwise, we will just pile up people on unemployment. What concerns me is the question of the globalization of world markets and competitiveness. Some say that the faster you go into technology development, the faster you will get to first place. In the meantime, we forget all the people who fall by the wayside because they cannot adapt to it or do not have the training. It is the number one problem that no one is addressing.
Do you have any specific recommendations or knowledge of studies that have been made on this subject?
Ms McDonough: Senator, you have picked up on what we feel is one of the most serious omissions in the government's approach to this problem. Instead of dealing with what is happening in this area and creating some energetic thinking around how to deal with the displacement of jobs, and so on, the government has decided to tinker with the unemployment insurance system instead. One cannot ignore the reality that there are hundreds of thousands of jobs being eliminated as we speak. Yet the government is doing nothing to create jobs by the use of job-friendly taxation measures. It is doing nothing to look at shorter work weeks and a different distribution of work. If the work week in Canada were shortened by four hours overnight, it would still have a longer work week than practically every European nation, yet we are not doing that. We could create tens of thousands of jobs just by shortening the work week by one hour. None of this is even being discussed.
Where is the federal government providing any leadership in this? Why are they not bringing the partners of industry, labour, and community together to grapple with this serious problem? It is not unique to Canada, but we have to find our own unique solutions.
Senator Lavoie-Roux: How do you counter this technological development race, which is getting faster and faster, while at the same time avoid losing jobs? I do not know how to go about addressing that issue, which is why I am asking you to shed some light on it. The problem will just increase to the point where we will not be able to do anything about it. It is the nature of our whole society that will be questioned. Everyone from our era around this table had a chance to work. Technology was not there. It is now another age. How do we cope with this change?
Ms McDonough: It is clear that tinkering with the unemployment insurance system will not help that situation. I would love to come back and discuss it in detail.
I appreciate your interest in the subject and I hope we can talk the federal government into providing some leadership in partnership with those who are affected.
The Chair: Thank you very much, Ms McDonough.
Our next delegation is from the Northwest Territories. We welcome the Minister of Municipal and Community Affairs. We would ask you to introduce the staff you have with you, and then we will listen to your presentation.
Ms Manitok Thompson, Minister, Municipal and Community Affairs, Northwest Territories: I am Manitok Thompson, the Minister of Municipal and Community Affairs of the government of the Northwest Territories. To my right is Conrad Pilon, Assistant Deputy Minister for the Department of Education for GNWT, and to my left is my executive assistant, Brian Menton.
Madam Chair and committee members, I would like to thank you for the opportunity to appear here today to discuss the proposed employment insurance legislation. Unfortunately, my colleague, the Honourable Charles Dent, Minister of Education, Culture and Employment, is unable to be here. As a result, I am standing in for him.
This federal legislation is important to the government of the Northwest Territories and to the people we represent.
The decision made with respect to this legislation will have a direct and significant impact on the lives and incomes of the NWT residents in the cities, towns and small hamlets across the north.
Today, I should like to give this committee an idea of how we see this legislation being applied in the north. I want to identify what we see as the three key challenges that will result if the legislation is approved in its current form. These challenges include access issues, benefit levels and training and support activities.
Before I begin with my comments, I would first like to say that as a member of the cabinet of the government of the Northwest Territories, I understand clearly the importance of programs being fiscally sustainable. In my view, we cannot continue to operate programs which are not fully funded. It is important that programs such as employment insurance be operated in a manner which is fiscally responsible while achieving its intended purpose.
For 1994-95, the latest year for which complete figures are available, it is estimated that premiums collected for unemployment insurance in the Northwest Territories equal approximately $50 million. Benefit payments, on the other hand, were $32 million. On average, 1,400 territorial residents in the Western Arctic and 400 from Nunavut receive monthly support under the current unemployment insurance program. This represents 6 per cent of the total workforce in the Northwest Territories.
Let me describe how the proposed program will operate in the north.
First, I will comment on access. For the most part, northern communities are isolated by distance and expense of travel. Technology is reducing this isolation. However, it must be understood that access to government programs and services can be difficult. In the case of employment insurance, only a limited amount of information is provided at the local level. Advice and counselling support is available only through seven of the NWT's 60 communities, making it difficult for clients to access the program.
We have a lot of unilingual people, who do not understand English, trying to access these programs. A lot of time these individuals, who are seasonal workers, get frustrated with the system and do not access the program at all because it is too complicated for them. We have hunters who work in the summertime to try to get their ski-doos for the winter hunting activities and cannot access the program. We also have people who have not gone through the high school system because we do not have high school in the communities. Presently, we are trying to offer high school from grades nine to twelve in the smaller communities of 300 or 400 people, but the people who need to access these programs have not gone through high school and find it frustrating to access the program. Therefore, only 400 people from Nunavut have accessed this program. But there are a lot more people who do not access it because it is so complicated to get into in the first place, and we do not have the support staff in the communities to explain the process to them or to help them out with the forms.
As a result of this isolation, the unemployment insurance program in the Northwest Territories has a very low penetration rate compared with other regions of Canada, particularly for the aboriginal people.
Employment insurance payments in the Northwest Territories have already decreased by 20 per cent of $8 million in the last year.
Next, I will address benefit levels. In addition to these difficulties, the proposed employment insurance legislation will require more hours of work before individuals can qualify for benefits, from 420 hours today to a minimum of 910 hours for new claimants in January 1997.
In the Northwest Territories, large numbers of young people are coming into the labour market. The large increase in the number of hours of work to qualify will further restrict the access of these young people to income and training benefits outlined in the legislation.
In isolated communities, work opportunities are scarce. Many northerners take advantage of limited seasonal work in areas such as construction and fire-fighting. We have just two months of summer in the Northwest Territories, where people do construction work. You can go three months, but the hours that you are asking for are too limited. We have a limited seasonal work time. With the new criteria for eligibility, many of these productive members of our communities will no longer be able to access benefits under the new employment insurance program.
The proposed legislation will reduce the level of employment insurance benefits for northerners. This will have a direct and major impact on the government of the Northwest Territories' social assistance and other income support programs. This is a matter of considerable concern to us.
Northern costs are high. Basic necessities are expensive. For example, in my community of Rankin Inlet, the cost of milk is $5.00 per litre; a half a loaf of bread costs $3.00; and a kilogram of hamburger costs $6.00. With benefit changes proposed under the new legislation, it is highly questionable whether many of the people receiving employment insurance will be able to make ends meet.
As I have said, the situation has the potential to impact on the income support expenditures of my government. This causes us considerable concern.
Finally, I should like to talk about training supports. I should like to speak to the issue of training for employment insurance recipients. As a result of the direction taken by the Government of Canada, federal support for training activities will be limited only to those eligible for employment insurance benefits. We are pleased with Mr. Young's recent proposal to transfer the responsibility for the development and delivery of active measures to the provinces and territories. Hopefully, this proposal will result in the elimination of duplication of training and income support delivery.
Given the high costs of training and developmental programming, a coordinated approach is needed to ensure that employment insurance recipients and unemployed northerners improve their skills and find jobs.
I have outlined some of the challenges provided by the proposed legislation. However, there are several positive aspects to the legislation which I would like to highlight.
As I mentioned earlier, the legislation emphasis on the increased coordination of programs and services with provincial and territorial jurisdiction is a good beginning.
The framework of fiscal responsibility is also important; however, we should go further. We must consider the impact on the individuals who will access the employment insurance program. We must determine how they can best be served. It is our view that we must focus efforts on streamlining our current systems. Where possible, we must provide improved coordination and access to all income support services, whether they be provided by the federal or territorial levels. Effective planning and implementation of employment insurance legislation should, in our view, be carried out in coordination with provinces and territories. Implementation should recognize regional variation. It should not penalize Canadians simply because they live in remote and isolated communities.
As well, benefit structures should be developed to prevent transfer of costs between jurisdictions wherever possible and implementation plans should be jointly developed.
I should like to close today by thanking the committee again for the opportunity to appear and discuss this important legislation. We believe that careful consideration of both the broad direction and specific detail of the proposed employment insurance bill is necessary. We look forward to hearing the comments of this committee.
The Chair: Thank you very much. You mentioned high school students in the first part of your comments. Do students have to leave home to attend high school? If so, how many months are they away from home?
Ms Thompson: The students have to leave in the fall. They are in school until Christmas, when they return home for the Christmas break. After Christmas, they stay away from home until June. If their parents can afford to pay for them to come home for Easter, they do so.
We are starting to offer high school programs in the smaller communities. Many of the people who need to access the unemployment insurance are those who went through the old system which was from kindergarten to grade eight. Those people have families now and are going out to high school to upgrade their skills.
Senator Rompkey: Madam Chair, I wish to welcome our witnesses and to thank them for coming.
I have much appreciation for this brief. It is one of the more balanced briefs we have received. I associate myself with the points made in it. That is perhaps because I represented Labrador for 23 years. This could have been a brief from Labrador. The same issues pertain: the high costs; the isolation; the lack of job opportunities.
This is one area on which the minister and the department must focus. It was raised earlier this morning by Senator Phillips that in some small communities there are single industries. Those single industries have a very short period of time in which to operate during the year and there are really no other alternatives. There are Canadians who are in situations of their own choosing, but whose cases need to be examined and who need to be treated fairly. There must be some examination of those circumstances, particularly in remote northern areas where people have short seasonal occupations and limited access to alternatives.
I think that can be handled through administrative means. I hope that somehow guidance can be given to the officials who will implement this law. They must be flexible and sensible when dealing with people in those circumstances.
We should also send a message -- at least I intend to do so -- that access to government programs must be as easy as possible and that language should not be a barrier. If people have difficulty dealing with the system because of language, as they do, we must take measures to deal with that. People should be able to deal with the Government of Canada, no matter where they live, and language should not be a barrier. If it is necessary to increase public service support for that, so be it. I do not think it will be overly expensive and it is absolutely necessary. This measure will not work unless it is properly implemented, and we must provide the means to do that.
While the entrance requirement for those people entering the system appears to be high, we must remember that the 910 hours for new entry can be spread over a two-year period. You do not have to get the entire 900 hours in one year.
I will reiterate the first point I made; that is, in certain areas of the country, we must be sensitive to local conditions and be flexible with respect to the administration of this program.
I wish to the associate myself with this brief and to support it.
The Chair: Madam Minister, would you like to comment?
Ms Thompson: I agree with the senator that the language barrier is very difficult in isolated communities. People may have street English, but that is not sufficient for filling out bureaucratic forms. It would be very helpful if the forms were simplified for those people.
We have the same problem in the smaller communities with people who do not know how to fill out income tax forms. The language is too difficult for them to understand. It is not the language of the majority of the clients in isolated communities.
Senator Rompkey: What is the impact of land claims on the administration of programs? Have you found that the change in the administration of the territories has had an impact on the administration of programs? For example, one element in all land claim settlements has been the acquisition of power over the administration of programs, be it wildlife management or whatever.
Is that relevant to this situation? Will the settlement of land claims be a factor?
Ms Thompson: The land claims group is very new. It is having an impact in voicing the concerns of the people and addressing some of the problems, but it is really too new. It is just starting to implement some of these things. It has been an ongoing problem, the fact that people have not been accessing the programs, because they are too difficult to understand, even though the programs may be very good for them.
Senator Rompkey: One of the advantages of land claim settlements is to enable the local area to take on more program administration. I am thinking about policing, for example. Clearly, we have moved quite a ways in that particular area. I am wondering why we cannot move further in the administration of a program like this.
The various elements in land claims include a financial settlement and a change in the administration of the resource rights on the lands in question, but clearly the administration of the territory in question is an element that flows through almost all land claims settlements across the country. That moves power from the national and provincial government to the local level. That is an element in all land claims. It is a good thing, in my opinion.
I take the example of police work, which is a national responsibility. In some aboriginal communities, the effect has been to put that kind of administration in the hands of local people who speak the language and understand the community. The same thing is true of health care. The same thing is true in some cases of wildlife management.
Do you see that the settlement of land claims could be of benefit for aboriginal communities in this particular area, being that of training and the administration of the employment insurance program generally?
Ms Thompson: My department, the Municipal and Community Affairs Department, is leading the community empowerment, where the people decide what programs they want to transfer into the governing bodies of their communities in order to implement the program in the way they choose, to meet the needs of the local people.
The land claims settlements are too new. By 1999, we need to have trained 50 per cent of the aboriginal people for the workforce. We do not have that right now. We have less than three years in which to do it. If we get to that stage, then we will have people who are working in our own language, working in the offices. With community empowerment, which is happening right now -- we are implementing it in my department -- the communities are starting to have more input into their community programming.
I will give you an example. In a small community of 400, you have an economic development officer who has his own agenda. His boss is the GNWT. If a local person wants to start his own shop of materials, the officer can refuse to help because, according to his research, the Hudson's Bay or the Northern Store or the Co-op is already providing material. The local person can say that those stores are not ordering the material that the hunters want to use in cold weather; they are ordering the clothing that is used in Africa or in the south.
With the transfer of responsibility and community empowerment, we are hoping that the economic development officer job will also be transferred into the governing body. Then the governing body of local elected people can impact that program; it makes better sense for the local people who can then create jobs for themselves. That is what we are trying to do.
The Chair: Madam Minister, some people on this committee listened to our friends from the north talking about interpretation and language barriers on the gun control issue. We certainly found that we had a language barrier, even in translating information for our northern people -- to get their responses about the gun control bill.
We really had our eyes opened at that time about how language can affect our work. Many northern communities did come before the committee and we really did appreciate their input.
Senator Murray: Madam Minister, are you the minister in charge of social assistance?
Ms Thompson: I am not, senator.
Senator Murray: Do you know or can your officials tell us the size of the social assistance budget in the Northwest Territories?
Ms Thompson: I am told it is about $38 million.
Senator Murray: I am ashamed that I do not know the answer to this question, although I should: With regard to health and welfare, are you in the same position as the provinces vis-à-vis the federal government? You were covered under the old Canada Assistance Plan and the Established Programs Financing and are you now part of the Canada Health and Social Transfer?
Ms Thompson: I will ask Mr. Pilon to answer that question.
Conrad Pilon, Assistant Deputy Minister, Ministry of Education, Culture and Employment, Northwest Territories: Yes, we are. Under the Canada Assistance Plan, we had an agreement with Canada. We have a funding formula which is quite different from the provinces. It is beyond an equalization payment, but our programs are still capped by nature because they are capped by the federal government. We are capping our social programs.
Senator Murray: You did not say what the unemployment rate is at the moment in the territories.
Ms Thompson: The overall unemployment rate in the territories is 17 per cent. However, I represent three very small communities and one of those communities has an unemployment rate of 80 per cent.
Senator Murray: Are those territories in what will become Nunavut?
Ms Thompson: Yes.
Senator Murray: It is very difficult, Madam Chair, to get a handle on the impact on the territories, because we do not have, except for what this minister was good enough to give us this morning, any information from the department.
I have before me a document which was prepared by Human Resources Development Canada and tabled in the House of Commons committee. It contains an impact analysis of this bill, as amended, on the different provinces on the benefit-to-contribution ratios analyzed by industry, and so forth, in 1997-98 and 2001-02. While it deals with the provinces, there is no analysis of the impact on the territories. Surely it must be possible to obtain that information.
Do you have it, by any chance, in your possession, Ms Thompson, you or your officials?
Ms Thompson: There have been no studies at all done in the Northwest Territories on the impact of this bill. There is nothing.
Senator Phillips: Shame.
Senator Murray: With a 17 per cent unemployment rate, I think we know how they will be affected in terms of eligibility criteria and the benefit levels and so forth. We know that much. However, we do not know the specific impact on the territories. I cannot believe that it will be difficult to get those numbers out of the department. We definitely should ask for them so that we know what we are dealing with here.
Finally, let me just come to the point raised by Senator Rompkey a few minutes ago. I do not know whether you have been able to get your mind around it. In terms of the problems you have raised -- access issues and benefit levels and training and support activities -- the question really is: How much of the remedy that you seek would require amendments to the legislation which is before us? How much of it can be done, as Senator Rompkey suggests, by policy and administrative means? Have you looked at that?
Mr. Pilon: Currently, as you may know, we are in negotiations with the federal government regarding Part II of the legislation, which deals with the active measures. Part I of the legislation is very much the responsibility of the federal government.
Our minister has written to Mr. Young to explain to him some of the difficulties we have with the benefit rates and schedules that are currently in place and the impact they have on our social assistance program.
Through our negotiations on Part II, we are hoping that we will be able to effect changes in terms of discussions around how the benefit levels will be changed and how people will be able to access them. That is the best way I can explain it to you, senator.
Senator Murray: You will not be able to do that through your negotiations on Part II. You will profit from the occasion and take the opportunity that is offered to you to make your points. In terms of the remedy you are seeking, the benefit levels, it would appear that you want special consideration for the territories.
Mr. Pilon: One of the things we would need and require is a better meshing, if you like, of the systems. Without the two systems -- our social assistance system and the employment insurance system -- talking to each other electronically, we have duplication of services and payments. We pointed out that it would be useful for the two systems talk to each other, and we entered into an assignment of benefits agreement with the federal government last year to do that.
Senator Murray: How does that work?
Mr. Pilon: It means that we can request, on an individual basis, information on a UI recipient to find out whether the levels they are receiving from the social assistance program take into account what we believe they are receiving from UI.
With respect to the majority of cases of individuals living in isolated communities, they are not only accessing unemployment insurance. It would be virtually impossible for a family of four to live on the $200 or $300 per week payment from UI. It would be topped up with our social assistance budget. I would say that that is the norm as opposed to the exception. We need better systems talking to each other in terms of management of the program. In the territories, that has been very difficult.
Senator Murray: I do not think that that situation is unique to the territories. The case that Minister Thompson was making this morning seems to be that that is an expensive place to live. Milk costs $5 a litre and a loaf of bread costs $3. A kilo of hamburger costs $6. She believed that some consideration should be given to the benefit levels on that account. Is that true?
Ms Thompson: Yes.
The Chair: Food has to be brought in.
Senator Murray: I understand the economics of the situation, Madam Chair.
Senator Phillips: The first question I have is based on your statement that the premiums paid in 1994-95 were $50 million and the benefit payments were $32 million; is that correct? I am having difficulty accepting those figures.
Mr. Pilon: If we look at last year's gross income in the Northwest Territories -- from income and wages -- we are looking at about $1.2 billion or $1.3 billion. You can estimate from that that the minimum premiums to the UI account would be about $50 million a year based upon the total income.
Senator Phillips: And your benefits were $32 million.
Mr. Pilon: And decreasing.
Senator Phillips: Which means that the Northwest Territories, in effect, subsidizes the rest of the fund for $18 million. That comes as a surprise to me. I am still shaking my head on that one, but I have your figures and I thank you for pointing that out.
A few years ago, I took a trip to the Northwest Territories and the Yukon. I have been to Yellowknife several times. I was rather surprised at the importance of the fishery industry up there. As a Maritimer from Atlantic Canada, I think of the fishery as being on that coast or on the B.C. coast. How will this legislation affect your fish workers in qualifying, because our season is short in Atlantic Canada, and I presume it is even shorter in the Northwest Territories?
Ms Thompson: In the Northwest Territories, we are putting in more than we are taking out. We are putting in $50 million and taking out only $32 million because of the problem with accessing the program. The majority of the people trying to access the program find it too complicated. There is not only a problem with language, but also a problem with comprehending the program. It is so frustrating that they would rather go on social assistance.
Access has been a real problem, more so in the Nunavut area because our language and culture in the eastern part of the territories is much stronger than the western part of the territory. They have more services. More people in the west know how to speak English by the time they are 40 or 50 years old. A real big part of the problem has been accessing the program.
With respect to hunters and fishermen, many of them are still unilingual. They have to prove themselves to be employees of their business in order to access this program. They have to be taxpayers in order to access this program. It is frustrating for a person who has been a hunter all of his life to access this program, and so they do not access it. The process is too complicated. They cannot comprehend.
Senator Phillips: I appreciate the difficulty with language. I have run into this problem in Senate hearings before. However, they overcome that problem with things such as old age assistance and welfare. I do not see it being the problem you describe, because if you can overcome it for old age security, you can overcome it for welfare.
There is probably another problem associated with this which we are not getting at.
I would like to turn to your unemployment rate. You said it was 17 per cent for the region, but 80 per cent, if I understood you correctly, in the areas you represent. Is that correct?
Ms Thompson: Yes.
Senator Phillips: What do you think of the provisions in this bill for retraining? The bill says there will be an inactive period until agreements are signed with the provinces and territories. Recent press releases have led me to believe that the provinces and territories will be nailed for a portion of the training costs. How do you see this as fitting into your needs for retraining? Indeed, will retraining meet the problem of the unusually high unemployment rate in your area?
Ms Thompson: I will respond to the first part of the senator's question where he said that if you already know how to access welfare, then you should know how to access unemployment insurance. In the 1960s, when social assistance was introduced in the territories, we aboriginal people understood it was for the needy, the people who were handicapped, and also the hunters who had a bad hunting season. We have been spoiled by people explaining to us how the system works. We have had assistance from the beginning introducing us to the system very well.
However, with unemployment insurance, we have not had the same service. That is what I am saying. You cannot say that because a person understands how to access social assistance, the same person can access unemployment insurance. That is an unfair statement because we have not had it introduced to us in the same way. The same level of service has not been provided in the isolated communities. A majority of the aboriginal people recognize that there is a problem with social assistance, that this has not been a good program, but it has been introduced very effectively. We were dependent. We thought that social assistance was for handicapped people, for the needy. Today, we have a generation who can sit at home watching TV and access social assistance because they have been introduced to it very well. The same individuals should be able to access unemployment insurance but cannot because the language, the bureaucracy and the way it is introduced to them are too difficult. The introduction of the two programs has to be balanced.
I will ask Mr. Pilon to deal with the rest of the senator's question.
Mr. Pilon: If I understood Senator Phillips' question, he is asking about the changes in EI legislation for training, for preparing people for employment in communities with high unemployment. In the first part of her answer, the minister talked about access as being a continuing issue.
What the federal government is doing is moving away from funding training through the Consolidated Revenue Fund, where the broad population was accessing training, and being much more selective as to who will be able to access training. In this case, these would be clients who are eligible for employment insurance.
Where you have a system that already has low access, this will have a double impact -- or a one-two combination, if you like -- in communities that are not accessing the program, because they will not access the training program.
Whether or not training has an impact on people's ability to access jobs, I can tell you that six or seven years ago, about 20 per cent of the students accessing post-secondary funding in the Northwest Territories were aboriginal, and today that number is over 60 per cent because our high schools are located in the smaller communities. That means that more students are accessing post-secondary education and gaining employment as a result.
As the minister mentioned, by 1999 we are looking at a 50 per cent level of representation in our civil service, and in employment overall in the territories, being aboriginal.
Senator Phillips: Before posing my final question, I should like to point out to the minister that I have visited an individual in Iqaluit who was there to train aboriginals to take over management of programs, so there has been some attempt to solve that problem.
When you have an unemployment rate of 80 per cent, what can you train these people for in that area? It will not do much good to train them as rocket scientists because NASA is a long way from there. What will you train these people to do?
Ms Thompson: What happened in the past in the smaller, isolated communities across the territories was that the contractors to build houses would come from out of town. We do have people in the communities with the skills to take up hammer and saw and build these homes. So we are starting to make changes, where the community decides that they will build these houses themselves and create jobs instead of getting people from outside to build their homes or buildings, or roads, et cetera.
The people about whom I am more concerned are the people who have not gone through the education system to complete their high-school training. Members of our younger generation now have access to high school programs; but the people we are talking about are those who are 35, 40 years old, a little bit older but still young, who have never gone through training. We have to find the skills of those people and access those skills and train them. That would be training in areas such as construction, seamstress work, carving, crafts, and so on.
Senator Lavoie-Roux: I am listening to you describe the work situation for training or retraining. What is the situation of the women up there, in terms of work force or work training or retraining?
Ms Thompson: There are really not very many more opportunities for women than there are for men. With the younger generation, there will be, but right now, for the same age group as I just previously mentioned, there is really not very much opportunity, other than staying home and doing their home chores and sewing and trying to sell their crafts.
The Chair: We really appreciate your coming here to be before the committee today. We appreciate your brief and we look forward to working with you again some time. Thank you very much and we hope you have a good trip back.
Senator Murray would like to bring up one point.
Senator Murray: This has to do with the future business of the committee. I would like to recommend strongly that you try to find a couple of hours to fit in representatives of the Canadian Labour Force Development Board, if they would agree to come. I think senators know what this board is. It is business, labour, educators, and others who do a lot of work in the field of labour market policy. Their representatives appeared before the House of Commons committee on March 19 and presented a very balanced brief.
Ordinarily, I would be happy to leave it at that and suggest that senators obtain the brief and/or read the testimony of the representatives before the committee. However, I would like to have them here, in particular to hear what they have to say about the announcement made by Minister Young the other day about the devolution essentially of Part II of this bill to the provinces and, of course, the devolution of labour market training. I think it would be well worth our while. I hope you would try to find a couple of hours to see if they would be willing to appear.
The Chair: Thank you.
The committee adjourned.
Ottawa, Tuesday, June 4, 1996
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill C-12, respecting employment insurance in Canada, met this day at 6:00 p.m. to give consideration to the bill.
Senator Mabel M. DeWare (Chair) in the Chair.
[English]
The Chair: Honourable senators, our first group of witnesses are representatives of the Canadian Construction Association.
[Translation]
Senator Jean-Maurice Simard: Madam Chair, I am replacing Senator Cohen. I would like to move the following motion. The thrust of this motion has been rejected twice -- once by the subcommittee on Agenda and Procedure, and another time by the committee on Social Affairs, Science and Technology.
Approximately two weeks ago, I tabled a motion in the Senate. Had it been debated and passed, the Senate might have instructed the Committee to authorize the holding of meetings in the Atlantic provinces, Quebec and elsewhere in Canada. We are still awaiting the results. We do not yet know what the intention or position of the Liberal majority in the Senate is with respect to giving instructions to this committee.
We do know the committee began its work yesterday and that the Minister has advised all Canadians that he would like Bill C-12 to be given royal assent in order that it might come into force on July 1st. If this committee intends to give the bill serious consideration, I believe it has no choice but to meet with Canadians in their province -- not well-paid union organizers, but people who will be affected by this bad, costly and incomplete legislation.
So, for all of those reasons, I would ask that the committee give further thought to its past decisions with respect to travel. The committee could take a few days to reconsider the issue and then amend its decision. That is both my wish and the wish of all the men, women and children who make up those families that will be affected by this very bad legislation.
I am therefore bringing forward my motion. My colleague has assured me that he will support it. I move that the committee authorize the holding of meetings and make the necessary arrangements to hear from witnesses in various regions of the country who would be prejudicially affected by this bill. That is my motion, and it is supported by Senator Phillips from Prince Edward Island.
[English]
Senator Rompkey: Madam Chair, it appears to me that the motion is not in order at this time. The committee has made a decision to bring it up again. We can bring it up six or seven times, and we can vote on it any time we wish.
We have asked witnesses to come here at some expense to themselves. They have put together a brief, and I think it is the height of discourtesy to take up witnesses' time discussing procedural matters that are better dealt with in steering committee or the Senate chamber.
The Chair: Perhaps I could clarify. We do not wish to take away too much time from the witnesses, but for Senator Simard's motion to be in order -- and we could deal with it quickly or we could wait until a later time -- he would have to ask that the previous motion of the committee be withdrawn and that we proceed with his motion.
[Translation]
Senator Simard: If my colleagues feel it is necessary, I can do that. But I would be prepared to add to my motion that past decisions be reversed and, in response to Senator Rompkey's comments, I would remind him that this afternoon, the Government Leader informed the Senate, and I quote:
[English]
It would be misplaced leadership on either side of this house to tell a committee of the Senate chamber what to do. Committees make their own decisions.
Senator Rompkey: We made a decision, and you think you should change that decision. It is our decision.
Senator Phillips: Madam Chair, may I say, in support of the motion, that we have heard witnesses who urged us to go out and hear testimony.
Last evening, we repeatedly heard the request that we go out and hear from the people, and I can point to honourable senators opposite who insisted on previous occasions that we do so.
Senator Bosa: I would like to raise a point of order.
Senator Phillips: Hold your point of order until I am through.
Senator Bosa: We have witnesses scheduled for six o'clock. We could discuss this after we have heard the witnesses. It is unfair to keep them waiting.
Senator Phillips: That is not a point of order, Senator Bosa.
Senator Bosa: I would like a ruling from the Chair on that.
The Chair: I realize that this is an imposition on the witnesses, but we can move quickly on this. There is a motion on the floor and we can deal with it quickly.
Senator Phillips: The mere fact that we have witnesses does not prevent a motion. Senator Bosa knows as well as I that a point of order takes precedence over everything, including witnesses.
The Chair: We have a motion on the floor to withdraw the previous motion of this committee to travel. The motion is that we proceed with travelling.
By the way, I have received legal advice on this. This is not just off the top of my head.
Are you ready for the question?
Senator Murray: Madam Chair, I am prepared to vote on this now. I quite agree that we should proceed with hearing the witnesses. However, with regard to the "legal advice" that you have received, I am very dubious about it as a procedural matter. I do not see why a motion to travel is not receivable now just because the committee decided some days ago not to travel. I do not want to debate it. I do not need a ruling now. I only want to flag the issue for future reference. I am prepared to vote immediately on the motion, whatever it is.
Senator Losier-Cool: We have an agenda. The second item on the agenda is "Other Business". Does this mean that I can move a motion at any time while the witnesses are speaking?
Senator Phillips: Of course.
Senator Simard: The rules exist.
Senator Losier-Cool: Thank you. I just wanted to know.
The Chair: The motion is that the previous motion be withdrawn and that this committee travel.
Will all those in favour of the motion signify by saying "yea" or by raising your hand.
Will all those opposed so signify.
The motion is defeated.
Senator Cools: There was one abstention.
The Chair: Senator Rossiter is not a regular member of the committee and therefore was not allowed to vote.
Senator Simard: Madam Chair, are the Liberal senators who voted against my motion all full-fledged members of the committee?
Senator Stollery: Madam Chair, I am officially replacing another senator.
Senator Simard: I see that two New Brunswick senators voted against my motion that witnesses be heard in New Brunswick.
The Chair: Senator Simard, I should like to continue, please.
Our first witnesses this evening are from the Canadian Construction Association. Mr. Brian Scroggs is the Chairman of that association. Please proceed, Mr. Scroggs.
Mr. Brian Scroggs, Chairman, Canadian Construction Association: I wish to begin by thanking the committee for providing the CCA with this opportunity to present our views on Bill C-12, the new employment insurance act.
You have our written submission, which we do not propose to go through point by point. We will, instead, offer a few opening comments and then invite questions and discussion.
My position as Chairman of the Canadian Construction Association is a volunteer one. I am not a paid lobbyist. I make my living in the construction industry and am President and Chief Executive Officer of Farmer Construction Limited of Victoria, B.C.
Madam Chair, the Canadian Construction Association represents some 20,000 construction firms from all sectors and regions of Canada which are engaged primarily in the non-residential area of the construction industry. Ninety-five per cent of these firms are small businesses. Collectively, the construction industry is one of the largest employers in Canada, providing some 750,000 direct jobs. Needless to say, human resource development and employment policies, as reflected in the proposed employment insurance legislation, are of extreme interest and importance to the construction industry and the Canadian Construction Association.
The Canadian Construction Association has long supported the need for a substantial overhaul of the unemployment insurance program. In the view of CCA, the current system is overly generous, presents disincentives to employment and labour mobility and has greatly departed from its original intent. To the extent that the bill now before the Senate begins to address some of those concerns, CCA is supportive, although we believe that the reforms fall substantially short of those suggested by our constituents.
Before asking John DeVries to outline some of our specific concerns, we summarize some of our major criticisms. They are as follows: The proposed employment insurance program is not the place to address regional disparities or other social policy objectives. Those should be addressed outside the program and should be financed by all taxpayers.
UI/EI premiums are a form of payroll tax and therefore a tax on jobs, a cost which the Governor of the Bank of Canada and the Minister of Finance have both stated to be one of the greatest barriers to job creation.
The UI/EI fund will be in a significant surplus situation, close to $5 billion, by the end of the current fiscal year; the surplus is projected to be $9 billion by the end of the following year. The federal government should begin to reduce premiums rather than diverting such monies to the Consolidated Revenue Fund.
When the federal government stopped funding the UI program in 1989, it asked employers and employees to make up the difference in increased UI premiums. This was done under the pledge that government would use these funds for human resource development and training purposes such as the funding of apprenticeship programs in the construction industry, which is an essential cornerstone of our industry's training.
The recent decision to withdraw funding for such programs is a breach of that trust. Such funds should be returned to employers and workers in order that they can apply what is, after all, their money to training priorities.
I will turn the floor over to John DeVries, who will deal with some specific issues.
Mr. John DeVries, Vice-President, Canadian Construction Association: Madam Chair and committee members, I will highlight a number of areas which shaped our recommendations and then move to an open discussion.
Our priorities are listed at the beginning of the brief, and these are based on a survey of our members. Our chairman went across the country, and, in 1994 and 1995, UI reform was at the forefront of those discussions. In forums from St. John's, Newfoundland to Victoria, our membership told us what we should be saying on these issues. This is a consensus view that we present to this table.
Priority number one is that we need a mobile construction work force. Construction means working where the client is. The current UI program is overly generous in benefits and is skewed to favour regions with higher unemployment, thereby keeping people in economically depressed regions.
Priority number two is to ensure global competitiveness. We depend on people to make investments in Canada, and if Canada is not competitive, we will not have people investing or continuing to invest. Certainly payroll costs are an important factor in the ongoing cost of business, so the total Canadian payroll burden must be kept in mind and kept in a competitive balance, especially to the United States.
Priority three is to reduce the underground economy. We have a generous UI system, with minimal enforcement, and I should like to emphasize that, because the UI system as we know it has no real enforcement. It is a strong inducement for workers to participate in the underground economy. The proposed reforms take a step in the right direction, but do not go far enough.
Priority four is fairness. The current UI system, with its overall generosity and its more favourable terms to satisfy regional and social objectives, has spawned a large group of frequent users and a large group of net contributors. As a result, the program is perceived to be unfair in its structure. UI provides excessive subsidies to certain sectors and to certain regions. The system is in danger of losing the national support necessary to maintain a pooled risk insurance program. We come here knowing that construction is one of those large users. We are one of those users that believes reforms to benefits is essential in maintaining national support for the UI insurance program.
I will move on to some specific highlights and deal with several aspects of the bill.
Part I deals with UI benefits, clauses 6 to 55. We do support the move to change entitlement to UI on a hours basis rather than a weeks-based formula. We do not believe there should be any variations in the entitlement based on regional employment. The formula you now have before you is very complicated. We do not see an easing of the complexity of administering UI and of employers filling out records of employment. We recommend a standard 700 hour standard, which we translate to a 20-week minimum requirement for benefits, right across the country.
We support the move to change the benefit formula under clause 14. Dividing earnings over a fixed period by a common divisor will be an incentive for an individual to seek additional weeks of work. We believe there should be a uniform divisor of 20 weeks, with no regional variance at all. Standardization is again the message, as well as simplicity.
We support the reduction in benefits under clause 15 for repeat users, knowing this will touch on the construction industry. The reduction is relatively minor, in our view. It will serve as an incentive for repeat users to seek additional employment.
Clause 16 provides additional family benefits for claimants with low incomes. We believe that if the government is prepared to look at this and to tinker with an insurance program to make it more on the social side, then you should consider the other side of the formula and look at those frequent claimants that have high family income. Statistics indicate that about 200,000 frequent claimants in 1991 had family incomes over $50,000.
Part II deals with employment benefits and the five tools the government is holding out. We have some strong views regarding wage subsidy, earning supplements and self-employment job creation. Quite simply, self-employment job creation programs should be eliminated. We do not think they should be part of the package. Wage subsidies and earning supplements, in our view, are inappropriate. They distort the efficiency of the labour market.
Skill grants and loans are reflected in the Prime Minister's announcement on November 27 that the federal government will back out of the direct purchase of training. These skill grants and loans are being held out as somewhat of a replacement for the block purchase of training. The construction industry strongly believes that we as an entity should be party to discussions between the federal and provincial governments as the parties get together to discuss how these new skill grants and loans are to be devised. We honestly do not believe the bureaucracies of the governments understand the full implications of moving towards a tuition-based system with full costing on apprenticeship, and we are strongly concerned that decisions made would not take into account all the potential impacts.
Part III deals with premiums -- and you heard my chairman comment on our thoughts on the UI fund surplus. I will leave it at that. We do raise with this committee a recommendation that is not often heard from Canadians, but we believe there is a good argument for equalizing the premium. Why should the employer community pay 1.4 times the premium that employees pay? My chairman did comment on the overall surplus, and we believe that a manageable surplus of $3 billion is all the EI fund needs.
I wish to comment on apprenticeship training. I mentioned that the Prime Minister has announced that the federal government is backing out of that training. The impact of seat purchases being vacated by the federal government is certainly unknown at this time because we are not sure how the provinces will react to the three year phase-in. We are certainly committed to an open dialogue with the government, and we would encourage this committee to make a recommendation to the House and to the Prime Minister to support open dialogue with the industry. Perhaps the upcoming June 20 and 21 first ministers' meeting would be an appropriate forum for such a dialogue.
Finally, on income support for apprentices, we make a technical recommendation that, under clause 25 of the bill, a claimant who is unemployed and capable of and available for work during a period of unemployment should include the definition of a registered apprentice. It is a technical matter we raise with the committee.
I will now turn it over to an open question-and-answer period.
Senator Phillips: I wish to begin by disputing your claim that UI is a disincentive to work.
I live in an area of high unemployment, seasonal unemployment, and if one of those people moved to Ontario, or any other region that you represented, you would be the first group to say, "No, despite your training and your qualifications, you are not eligible."
How can you sit there and tell me that UI is a disincentive? You people are the disincentive because of your rules and your collaboration with the unions. There is no mobility access between provinces because both the Construction Association and the unions refuse to accept people from other areas.
I have gone through this for a number of years, and I become greatly frustrated and annoyed when I hear that UI is a disincentive to work. I know too many people who have left the Maritimes for Ontario, Alberta and so on, and have not had their qualifications recognized. They were not recognized because of an agreement between the Construction Association and the unions.
Explain to me why you, as the Construction Association, do not accept qualifications from areas of high unemployment.
Mr. Scroggs: If you are asking me why we do not, I am here to tell you that we do, and I am an employer.
Senator Phillips: That I do not believe, sir. I am sorry, I should not have been that blunt.
Mr. Scroggs: Fair enough, senator. If you do not believe it, that is your prerogative. That is the nice thing about this country.
I am here to tell you as a contractor that I have several people from the Maritimes working for me. I do not know from where you get your information. I can tell you that in British Columbia, that is just not the way it happens.
Senator Phillips: To what trades are you referring?
Mr. Scroggs: The carpentry trade is one. I can tell you that I have firsthand knowledge of the electrical trade, which is another. We have a system called the "red seal" program in the construction industry in this country. Those provinces with their curriculums in line and that want to ensure that we have standard curriculums, which is something we are very much in favour of, have what we call the red seal. They have mobility, as far as trades qualification goes across this nation. We are working very hard to get that done. I spent a lot of volunteer time doing that; it is something for which I am not paid. I am giving something back to the construction industry in doing that.
There may be cases about which you know, senator, where that is not the case. However, when you say that it does not happen, that is not my experience.
Senator Phillips: You mentioned the red seal program. In Atlantic Canada, we are quite familiar with the fact that the seal ducks under water.
Mr. Scroggs: We have seals in British Columbia, too, senator.
Senator Phillips: Yes, I have seen them.
How many hours are these people from other areas required to work to qualify? I used to be associated closely with the brick layers and masonry union and am quite familiar with how your regulations work. You cannot tell me that someone from the masonry and brick laying training school in Summerside is accepted in Ontario, because they are not. You mentioned you have Maritimers working. What I would like to know is how many you have sent back home.
Mr. Scroggs: Senator, I have never sent anyone from the Maritimes back home; nor have I sent anyone from any other region of Canada back home. If that were my policy, or the policy of anyone else in British Columbia, I guess it would be a big problem. Not only that, but we would not have many people left in British Columbia. There are many people in British Columbia who come from other parts of Canada. We do not send them home. They are as qualified as any other Canadian to come to work in any part of the country.
Senator Phillips: I have been in British Columbia on a number of occasions. With all due respect, I cannot say that I found a great deal of respect for the people from Atlantic Canada, or for trades skills. It is for that reason that I am having difficulty accepting your testimony tonight. Without any discourtesy, I just do not accept it; or I just do not believe it.
The Chair: Senator Phillips, can we move on?
Senator Phillips: Thank you. Move on.
Senator Murray: Is there a shortage of construction workers in the major centres at the present time?
Mr. Scroggs: I do not believe there is a shortage in most areas of Canada. There are varying rates of unemployment at this time. However, I do not believe there is a shortage anywhere.
Senator Murray: What is your evidence for the statement that we have a mobility problem in this country and that regional variations in UI is what causes it?
Mr. Scroggs: Are you asking the question of me?
Senator Murray: I am asking the question of the witnesses.
Mr. DeVries: Senator, we track the labour force across Canada by region. Through the 1980s and 1990s, a discernible trend can be seen which shows that even when the boom of the late 1980s was hitting Ontario, when there were dire shortages in key trades such as carpentry and brick laying in the Toronto and southern Ontario area, we still tracked over 100,000 unemployed construction workers in this country. The construction industry always has double the nation's average in terms of unemployment. I think we can produce such statistics for senators. The study was prepared by HRD on the high pockets of available skilled people on UI in the regions across the country, mostly in Atlantic Canada and Quebec. We just could not attract people to certain regions.
Senator Murray: You are not suggesting that the regional variations are what prevented people from moving to Ontario for temporary construction jobs, are you?
Mr. DeVries: It certainly had an impact. In the late 1980s, I believe you needed only 10 weeks of unemployment in Atlantic Canada, which was an area of high unemployment, and you could be on unemployment insurance for much longer. In other regions, you would need 20 weeks to get on with a much shorter duration. When that is the situation, it serves to keep people in regions of the country. If too many people are chasing too few jobs, then the efficiency of the labour market supply is held back. That is what we found through the statistics and the analysis offered up by the department.
Senator Murray: As of now, there is probably a surplus of construction workers in Ontario, is that right?
Mr. DeVries: There is a surplus across the country. My chairman would say that in B.C., it may be a little better. Generally, the UI figures show a high level of skilled construction workers on UI.
Senator Rompkey: I wanted to follow along with the same line of questioning, although I note that the Canadian Construction Association supports the main thrust of the legislation. I am intrigued as well by the standardization, and I just want to explore it a little more.
There are some things that are standard in the country, such as pensions, for example. That is one of the few examples that comes to mind. Taxes are not standard, nor is the cost of living. We do not have free trade. You cannot sell New Brunswick beer in Ontario, for example, as important and as attractive as that might be, at least to me.
I am intrigued by the suggestion that benefits should be standardized without a general level playing field across the country. I am wondering how one would work without the other, how taking benefits out of context would work.
There may be mobility in the construction industry. From my experience, if you are an electrician in one province, you cannot get a job in another unless you have a licence there. The same is true of other trades. Certainly, in Quebec and Ontario, you have to be licensed in one province in order to get a job in that province.
The point I am making is that there is not a level playing field across the country. I am wondering if you thought of that context; or, what is the rationale for the standardization?
Mr. Michael Atkinson, President, Canadian Construction Association: Senator, I think you are missing the point. The point is not necessarily that there should be a uniform national standard. The point is that for regional policy, regional disparity and social policy objectives to be pursued, they should not be pursued through something called the employment insurance program. Unfortunately, we have turned what was supposed to be a horse or a zebra into a camel and are continuing to make it more and more lumpy. It is not a case of saying that we are opposed to certain regional or social policy objectives. On the contrary, they should be pursued, but not in an employment or unemployment insurance program.
Senator Rompkey: Have you some suggestions as to how they might be pursued?
Mr. Atkinson: That can be done through other types of legislation. Do not forget that EI is now being funded or financed totally by employers and employees in this country. If those social policy objectives or regional development objectives or disparity objectives are that important, they should be financed by all Canadians and through legislation that is properly structured with those objectives. They should not be financed on the back of a program that started off as a zebra and is now a camel.
Perhaps that is our most important point. We are very concerned about the other things that might be lumped in or thrown into the pot along the way in this program which is being financed solely by employers and employees in this country.
Senator Rompkey: So you would argue for a pure insurance system.
Mr. Atkinson: To the extent that the employment insurance program could ever be a pure insurance program -- arguably it is possible that it could not be -- we would argue that it should be closer to its intended objectives and its original goals.
Senator Rompkey: It is a question of degree then and not kind?
Mr. Atkinson: To a certain extent, it would be both.
Senator Bosa: It has been said that the government should not accumulate the collected premiums and use them to reduce the deficit. There was a reduction in the premiums this year. The government is of the philosophy that they should accumulate a fund in the event of another recession, at which time the accumulated surplus could be used to cover the gap between premium collection and benefit pay-outs. It would be very difficult to cover such a gap with increased premiums in the midst of a recession.
At what level would you suggest the government should keep that surplus fund?
Mr. Atkinson: It has been suggested at $3 billion to $4 billion. When the government needed to resort to stop-gap measures during the depths of the recession, I think the most that was put in was $5.5 billion. However, we must remember that we are moving to a new program which, by the government's own admission, is not as generous and is not as big a drain on the fund, if you will. We must remember that this is the money of employers and employees. Our biggest objection -- and this goes to degree, senator -- is that no limit has been put on the height to which that surplus can rise.
We have been told directly by both the Minister of Finance and the House committee that those funds are just turned into the CRF and used for whatever comes along. Quite frankly, call me naive, but I thought UI premiums in this country were used for the purposes of the UI Act, but then I remember what happened to the Canada Pension Plan.
Senator Bosa: That is not the case. Whatever premiums are collected are placed in some government financing, but they are premiums that will always go back to the employment fund. There seems to be a misconception there.
At what level do you think they should stop increasing the surplus and begin reducing premiums, since you are saying there is an accumulation in the fund right now?
Mr. Atkinson: I understand, based on historical figures, that it would be at about the $3 billion range.
Mr. DeVries: In our full submission to the committee in the other place, we recommended $3 billion. At 1995, the program showed total benefits of $13.7 billion and that has been declining since 1992 when it peaked at $19 billion. We just do not see the rationale for anything beyond $3 billion. You are probably at $3 billion now. It is projected to be $5 billion at the end of the year.
Senator Simard: Before I ask my question, I would like to remind the Chairman that at last week's meeting, which was attended by my caucus members and the department people, we were promised a chart which would show the incomes and the expenditures, the payments out of that fund, for the last 10 years and perhaps the projected figures for the next three or four years. Are these figures available? Have they been prepared? I would have liked to have them with me,
The Chair: I understood they were prepared. It was a flow chart showing when the UI started to run out.
Senator Simard: Yes, I am looking for a chart showing the contributions and the payments out of that fund each year.
The Chair: That is correct. You did ask.
Senator Simard: That may help me to illustrate the point I am trying to make.
The Chair: We did ask for that, senator. We did not receive it yet.
Senator Simard: Can we expect to receive it? We were promised it last week. When I reviewed the transcript today, I read that the minister quoted some figures last night. Obviously, he has those figures.
I would like to congratulate the Canadian Construction Association for taking this time and for being patient for what took place at the beginning of the meeting.
I am not trying to set you up, sir. I just want an explanation of a statement that you made at the beginning of your brief:
As a business organization that espoused significant structural reform of Unemployment Insurance...CCA is somewhat disappointed that the package did not go further in its reforms to aggressively address the major disincentives within UI. However, CCA recognizes that the measures in Bill C-12 are a progressive step forward in the ongoing evolution of this program and given the political dynamics surrounding UI, CCA has taken the position that this package of reforms should be supported through the legislative process.
You heard me, just now, ask for that schedule which might show the point I am trying to make.
You are supporting this legislation because it is a progressive step forward to correct some structural problems. Yet we know -- and if the requested chart was before you, you would see this -- that the last UI reform, presented by the Tory government some three or four years ago, was criticized by this Liberal government and by people associated with them. Mr. Martin and Mr. Young, a member from New Brunswick, were leaders in making the point that this Tory bill was such a bad thing.
Yet I suggest to you that they have compounded the problems. It is not correct to say that it is a progressive step forward. As a matter of fact, once we have the figures, and we will get them, the figures will show that income has surpassed the payment of UI benefits to beneficiaries for the last three years. Yes, there may have been a surplus which had been accumulating for perhaps three or four years from 1990 to 1993.
I suggest to you, sir, that if you check those figures, you will see that, since 1993 or 1994, there has been a surplus every year.
I am coming to this bill.
I stand to be corrected -- that is, if you do not agree and if you have a better argument against my case. Bill C-12 is not a progressive step forward. It penalizes employers and low-income employees. It removes from the roll of beneficiaries thousands of people in New Brunswick and elsewhere who will be disqualified.
This bill is literally a cash cow for this government. It is so much a cash cow that, under whatever method is used by Mr. Young or Mr. Chrétien and whether they start last year or the year before, they will have accumulated, according to their figures, $5 billion at the end of this year and, by 1997, $10 billion.
That tells me that it is not a progressive step forward, as you say. It is a cash cow. It will disenfranchise a lot of people. As you said, that payroll tax and all taxes are killers of jobs. You pointed that out, and I agree with the statement, that it is a killer tax.
You suggested that the employer premium be diminished gradually from $4.13 per $100 to the employee premium rate of $2.95. I submit that this government, if it did not even want to touch the employees' contribution rate, could now, before this bill is passed, reduce the employer contribution by 30 per cent. I suggest that you would be left with perhaps not $3 billion, as you suggest the level should be, but around $2.5 billion.
What do you think of my suggestion? Would you be supportive of an amendment that we, as a Senate committee, could make to the government, before this session is passed, so that employers see their tax load reduced, thus enabling them to create jobs, which, as you mentioned, is still important.
Mr. Scroggs: We made the suggestion in our report that the government should consider reducing the premiums to the premium payers in an appropriate manner that reflects that there be a surplus built of $3 billion. That is our recommendation.
Our information indicates that there has been a surplus in the UI account for the last two years and that it would be reasonable to reduce the premiums paid. The government has, in fact, reduced the premiums paid.
Senator Simard: Yes, by a nickel.
Mr. Scroggs: We do not think that that reduction was as much as it should have been. That is our position.
Senator Simard: We have a Chrétien government that every citizen can call a nickel government!
Senator Lavoie-Roux: Among the priorities you have established, priority number 3 states:
REDUCE THE UNDERGROUND ECONOMY A generous Unemployment Insurance system with minimal enforcement is a strong inducement for workers to participate in the underground economy. The proposed reforms take a step in the right direction but not far enough.
We have heard from every government and every province that they had to fight the underground economy and that this was a waste of money or gain for the government, whether it was the federal or various provincial governments. That is a sound criticism from people who we call "le travail au noir" in Quebec. That is to say, it is creating other types of problems in terms of fairness and equity.
You said that it is a step in the right direction, but in which way is it a step in the right direction? What would you have done to donner un bon coup de barre to correct the difficult situation that the entire country is going through?
Mr. DeVries: In our major submission to the Standing Committee on Human Resources, we detailed a lot more of the recommendations.
Put simply, the number one representation we wanted to state before the department was: Enforce the act. The act says that people who get UI are supposed to be currently available and looking for work. Often, people may be available to work but they may be afraid to get it. That is a problem. When there is no enforcement, it promotes a system where people can freely go and engage in activities, especially in the construction industry where people work on their services and their skills in exchange for cash. Effectively, they are making two incomes and there is no one watching out for that.
We are saying, first, enforce the system you have; and, second, make it tougher to get benefits. Bring it up to a level that is comparable internationally with all the other countries. Canada has by far the most generous UI system. Having 12 weeks to qualify is too easy, and having a protracted, lengthy period of UI also promotes the people who are active in the underground economy. We are saying: Make it a minimum of 20 weeks to qualify, and then have a direct ratio of benefits to the work. For example, two weeks of work to get one week of benefits. You certainly can draw these people in on a longer period of work and tighten up the benefit schedule. Those are our main recommendations.
Senator Lavoie-Roux: Are these recommendations contained in further detail in the brief that you presented to the House of Commons? Where are they to be found?
Mr. DeVries: They are contained in a brief that we presented to the House of Commons Standing Committee on Human Resources.
Senator Lavoie-Roux: One thing amazes me about unemployment offices. When you receive unemployment insurance, if a job is being offered to you, then you are to take it. You are supposed to be available for that job. I have known about approximately five cases, of which four involved professionals, for example, librarians, and so on. They are never offered a job. Is it because there are no jobs, jobs are scarce, or is it because the unemployment officers do not do a proper job?
Is this normal, that you must be available for a job and you are not to touch anything. At the time, they used to receive unemployment insurance for up to one year. But they would never get a phone call in the whole year to say, "Are you going to go for this job or that job?" If you are a librarian, I do not think you are obliged to look for a job as a librarian. That may be better, but no job whatsoever is being offered to those people.
Mr. Atkinson: On the enforcement side, I think you have found a system. When I was aware of people working side by side in the construction industry who were on UI, they were called in and asked for details of any interviews they had been on. They had to produce lists of people by whom they had been interviewed. There was regular monitoring and you knew there was a system in place. Now, you can go the entire period of UI benefits and you may never get a phone call. By becoming too lax, the system you merely promotes people going to the maximum with respect to benefits.
Senator Lavoie-Roux: Will this bill correct this or are measures being taken in the various regional and local unemployment offices to change this? Why are people being asked to be available, when they are never offered a job? They never get a phone call.
Mr. DeVries: With respect to the abuse of UI, we think we have made progressive steps forward, and we support those progressive steps. They are looking at the issue of repeat use. I believe that over 50 per cent of UI claimants are repeat claimants. It is a lifestyle. Fifty per cent of the 2 million claimants use it year in and year out. Ease of entry is being tightened up. We are looking at extended benefits and cutting back. It is a package of reforms that should be supported, but we will be looking in the years ahead to more progressive reforms.
Senator Lavoie-Roux: You had better, because we will be at the same spot five years from now.
The Chair: Mr. Scroggs, we wish to thank you and your colleagues for being with us this evening. We appreciate your time. I believe we can get a copy of the brief you presented to the human resources committee in the other place. We would like to pursue the recommendations in it.
Our next group of witnesses are representatives of the National Anti-Poverty Organization.
We are looking forward to hearing from you tonight. Please proceed.
Ms Lynne Toupin, Executive Director, National Anti- Poverty Organization: Madam chair, we very much appreciate the opportunity to present our views regarding this bill before you, particularly in light of the fact that we were unable to present before the parliamentary committee. Therefore, we feel it is important to be clear about our concerns relating to Bill C-12.
We are an organization with limited resources, and we apologize for the fact that we were not able to translate the document. It is my understanding that, procedurally, now that we have begun, we can at least give you the English copy.
François Dumaine, our assistant director, has done all of the research, and he will make the bulk of the presentation tonight.
[Translation]
Mr. François Dumaine, Assistant Director, National Anti-Poverty Organization: I will simply highlight the main points of our brief. I obviously have no intention of reading it in full. So, rest assured that I will be brief, in order to give you time for questions. I imagine that is what you want to do.
First of all, I think it is important to remind committee members that consideration of Bill C-12 is taking place in a very special context. The United Nations has declared 1996 the International Year for the Elimination of Poverty. When the United Nations declares an international year, all U.N. member countries are given very specific guidelines. In order for an issue to be the focus of an international year, it must be of interest to both industrialized and developing countries. Member countries must also take concrete steps to achieve the fundamental goal of the international year.
So, Canada is in a difficult position. It is facing a significant poverty problem. The United Nations is urging Canada to take concrete action. Indeed, Canada demonstrated its interest in addressing the issue of social security when it participated in the World Summit for Social and Economic Development organized by the U.N., and signed a declaration undertaking to work towards job creation and social protection. Similar commitments were made by Canada at the Beijing Conference on Women.
Today, you are considering a bill that is now practically unique in the federal social policy sector. You are considering legislation in an area over which the federal government has full jurisdiction. That is rare in Canada and is becoming even more rare, as the federal government has already taken concrete steps to withdraw from other social programs, notably in providing in the 1995 budget for the block transfer of social programs.
Thus unemployment insurance is now one of the few areas where the federal government can take concrete action. Clearly, that is increasingly important in terms of a federal strategy to eliminate poverty in Canada. While I do not intend to dwell on poverty statistics, we have witnessed in recent years a steady rise in poverty here in Canada. In fact, it was only in 1994 that the poverty rate dropped somewhat, mainly because of significant job creation that year. We hardly need emphasize that the rate of job creation in 1995, and especially in 1996, came nowhere close to rivalling the level achieved in 1994.
Under the circumstances, it is important to carefully consider the objectives of the unemployment insurance program. Of course, it must protect people who are out of a job. It must also facilitate labour market adjustment. As an organization that represents poor people, we are interested in determining to what extent the program actually meets those goals.
In that connection, I would like to comment on specific clauses of the bill that particularly affect the people we represent.
[English]
First, I wish to make a few comments about the fact that the name of the program was changed from unemployment insurance to employment insurance. What is rather striking when you look at the details of the bill is that it cannot, in any way, pretend to ensure that employment will be created in Canada, simply because this is not the purpose of an unemployment insurance program. The issue of employment obviously goes way beyond the issue of income support or even labour market policies. Although they play a significant role, other policies are critical, especially monetary policy, if we are looking to a strategy for full employment.
As a matter of fact, if this becomes the employment insurance, we will also need an unemployment insurance program because there will always be a need to support those who are unemployed. We will definitely need some income support assistance and some labour market adjustment policies. Unfortunately, with the conflict that we are facing now at the federal level between inflation and job creation, we cannot expect significant change in the employment profile of Canada in the years to come.
We find it interesting that the bill calls for a process to monitor the impact of the bill. The National Anti-Poverty Organization supports that and believes that it will be critical to monitor the impact of the changes.
On page 4 of our brief, Figure 2 shows that during the last four reforms of unemployment insurance, there were measures to limit access to the program. As you can see from this graph, the number of people receiving unemployment insurance has decreased constantly, but the number of people receiving welfare assistance has increased significantly. We know now that a major part of the explanation for that trend is the fact that we are switching people from unemployment insurance to welfare rolls.
People who work in the field of poverty are exasperated to hear provincial governments say that their welfare programs are out of control, that there are way too many people on the welfare rolls and that they have to limit access to it. Those governments obviously do not recognize that welfare is only part of the Canadian social safety net. As access to unemployment insurance is restricted, it is only logical that more people will have to switch to the welfare rolls. The impression that welfare rolls are out of control is a logical impact of the changes to unemployment insurance.
I will not spend too much time on the levels and duration of benefits because you have probably heard many times before that cutting the assistance given to unemployed Canadians will create hardship. As a matter of fact, the UI program is moving much closer to a welfare program.
Some amendments have been proposed by Liberal MPs and recommended by the House of Commons committee. Some of the concerns which we have raised in our brief would be addressed by these amendments, but they touch only some of our concerns. The new program will definitely mean reduced benefits for thousands of unemployed Canadians.
The family supplement which is being proposed in the bill is obviously something at which we have been looking very closely, because it is addressed specifically to low-income families. We were concerned that the bill was very vague about the family supplement. We had to rely on documents from the federal government to get more detail regarding it. The idea is that the supplement would be based on the child tax benefit. It is critical that this committee acknowledge that the child tax benefit has also raised a number of concerns since it was implemented in 1993.
One of the significant problems with the child tax benefit is that it is partly indexed. As a matter of fact, because of the low rate of inflation in Canada, the level of the child tax benefit has remained pretty well the same. In practical terms, it has been decreasing in terms of the support we give to low-income families.
Another important aspect of Bill C-12 is that the family supplement is targeted to families with annual incomes of less than $26,000. The child tax benefit is not limited to families with annual incomes of less than $26,000. This is a major difference. Families with incomes less than $26,000 can access the full benefits of the child tax benefit. Families with an income of $26,000 and over will continue to receive some child tax benefit, although it will decrease until it reaches zero, depending on the income of the family and the number of children in the family. We want to emphasize that the child tax benefit is providing assistance to more than only families with incomes of under $26,000. The family supplement under the new program would provide no extra assistance for families with incomes of over $26,000.
On the last page of our brief, we have provided you with some examples of poverty lines in Canada. Appendix A lists poverty lines for 1995. Depending upon where a family lives and the number of people in a family, many families with gross incomes of over $26,000 a year are still considered to be living in poverty. One can easily imagine that families of three or four in Toronto, for instance, are in need of more than $26,000 a year.
This information emphasizes the fact that the proposed benefits for low-income families will reach only some of the families living in poverty in Canada.
The definition of "insured participants" which is proposed in this bill is an attempt to build a new system in which more people would have access to active measures, such as wage subsidies or earning supplements. The idea is to go beyond those who are currently receiving UI benefits and reach more people. I wish to emphasize that the definition of who will have access to training or wage subsidy is critical for people on welfare. Breaking down the barrier between those unemployed who are receiving UI and those who are receiving welfare is certainly a good principle. The only problem is that we are not sure that it is a good idea to fund these programs, especially if they are no longer addressed only to UI recipients.
I will stop here. We will probably have an opportunity to raise the other points when you ask your questions.
The Chair: Your last point was excellent, and we are concerned about that as well. If the programs, the wage subsidies, the job creation, and so on, are only for UI recipients, what do we do about our contract training people and people on welfare? That must be addressed.
Could you tell me how many people you feel you represent in this country, approximately?
Ms Toupin: At this point in time, there are 4.8 million people living below the poverty line in Canada, according to the low-income cut-offs that were developed by Statistics Canada. We have approximately 412 group members across Canada. We have 651 individual members who are regular members. They are living below the poverty line. In addition to that, we have approximately 700 associate members and, at this point, approximately 15,000 people who contribute to the organization.
Senator Phillips: What would you like to see amended in this bill? Which clauses would be involved?
Mr. Dumaine: In the interests of time, I would simply say that our brief goes into more detail in terms of what should be amended. We mentioned in the presentation the areas in which we would like to see amendments; but for the specifics, I would simply refer you to the document.
Senator Phillips: I am sorry, but I do not feel you answered my question. Which clauses and why?
Mr. Dumaine: I can certainly summarize the clauses in which we would like changes made.
Clause 4 deals with maximum yearly insurable earnings. We believe that the maximum yearly insurable earnings should not be decreased. As a matter of fact, we would like some process put in place to ensure that it will be increased to take into account inflation considerations.
We would certainly like to see changes to clauses 7 and 8 on the qualification process. As I mentioned earlier, when we disqualify unemployed people from receiving UI, they switch to welfare rolls, which is not in their best interests.
We believe that clause 16, family supplement, should be changed to recognize that other families are also facing poverty and need assistance.
Those are the major ones, but we have others in the brief.
Senator Phillips: In clause 16, you referred to other families. I think I followed you on clauses 4, 7 and 8, but what do you mean by clause 16?
The Chair: I believe that is in the supplement, senator.
Senator Phillips: Explain to me how you would like to have that altered.
Ms Toupin: If you set the limit at a family income of $26,000, we have not done the calculation, but you are leaving aside families that are still living below the poverty line. Low income cut-offs average about $30,000 for a family of four. At the very least, we would like to see more correspondence between the $26,000 and the low income cut-offs, and that would move the $26,000 to $30,000. At least then you are capturing all families who are technically living below the poverty line.
Senator Phillips: I am very interested in that. I met with a woman who told me that her family income, that is husband, wife, unemployment insurance, was at the $26,500 level. She explained that they built a home in a small town, they have a mortgage, are raising three children, and everyone seems to be determined that they not rise above that level. I was very impressed with this young lady. She was very articulate. I must confess that I have thought about it a great deal since.
What sort of amendment could be made to meet her problem? I cannot decide what sort of an amendment I could suggest or attempt to make.
Ms Toupin: I would suggest that the amendment would have to take the shape of going to a higher level of cut-off, which we would recommend would be $30,000. The argument that you could use in that respect is that it would then be consistent with the low income cut-offs, which is the measure used by all government departments in relation to assessing poverty.
Senator Phillips: You say $30,000.
Ms Toupin: You could use $31,000. I would say that $30,000 is a number that would be acceptable and would at least encompass almost all of your low-income families.
Senator Phillips: That was my main problem. You would suggest amending it to $30,000.
Ms Toupin: To make it correspond to your low income cut-offs, yes.
Senator Rompkey: We were told that the Province of Quebec has also taken the figure of $26,000 as its threshold. I have always been impressed with the originality and creativity that have come out of the Province of Quebec in terms of social programs. I would be interested in your reaction to other jurisdictions using that figure.
Of course, no threshold will be perfect, because there is no perfect threshold. Would you agree that the amount varies across the country? As Senator Phillips knows, in the Atlantic, $26,000 perhaps goes farther than it does in Toronto. People help each other to build their own houses; they grow their own vegetables; they babysit each other's children. In fact, $26,000 in cash in a rural community in the Atlantic goes farther than it does in the city of Toronto. It is very difficult to establish an accurate threshold across Canada that would be perfect for the whole country.
I also want to ask you about your opposition to what could be and is described as the clawback, specifically lowering the maximum, for example. The object of that, as I understand it, is a redirection of money to lower-income people. The fact that there are savings through all of these measures, including the clawback, means that there is a redirection of funds, including those to people below the $26,000 threshold. Are you really opposed that redirection of funds, the taking of funds from those who have more and giving them to those who have less? Essentially, as I understand it, that is the thrust of legislation.
Could you comment on the statement you make that Bill C-12 will not allow any Canadian, young or old, who wants a job to find one?
Redirection of income has been to five different categories. One category is training, which I think is important for people who are to receive a higher income. Another is entrepreneurship; in other words, helping people to create their own jobs. Another is to give wage top-ups and wage incentives to those who find jobs but who cannot, for one reason or another, meet the level of income, and I refer either to the employer or the employee.
I would have thought that all those measures were designed to help Canadians find jobs. As a matter of fact, this is the first time in my experience that we have actually put money in the hands of the student, enabling him to go and buy a course wherever he wants. Before now, it was the institution that dictated what course he took. It now seems to me that there is empowerment. I think this applies more particularly to women, perhaps, than it does to men. For the first time, there is an empowerment as a result of this redirection of income.
Could you comment on all of those matters, please?
Mr. Dumaine: Regarding the issue of the $26,000, you arrive at a good point, senator. As a matter of fact, if you look at the welfare system, which is means tested, you will see that it is built to take into account the cost of living in different parts of the country. The UI program was not meant to be a means-tested program. It is certainly true, now that it seems to be moving toward that, that there will be difficulties in ensuring that the administration of the program is efficient. When it was created, it was not structured as a means-tested program.
Senator Rompkey: I wish to point out that the same thing applies to pensions and to the child tax credit. They were not means tested either, but they are now. In other words, there is a general shift toward mean testing across all programs, no matter which government is in power.
Mr. Dumaine: We could discuss the issue of whether it is appropriate to move toward a more means-tested program or not. However, if this is the direction that the program will take, then, obviously, there will be a need to restructure how it is administered to take into account these differences.
You referred to our brief in which we referred to the capacity of Canadians, young or old, who want a job being able to find one. That part of the brief was referring to a speech given by Prime Minister Pearson in the House of Commons when he said, in 1963, that any Canadian, young or old, who wants a job should be able to find one. The government of the day was announcing a number of measures to create jobs.
On that point, senator, I would like to emphasize that wage subsidies, earnings supplements and training were programs implemented during the 1960s and the 1970s. Some were successful; others had serious problems. Overall, they were not sufficient to reduce substantially the unemployment rate in the country.
What we are saying is that we are not moving necessarily into new territory here. We are going back to programs that were tested in Canada. Certainly, they helped some individuals. However, overall, they did not change the employment picture in the country.
Senator Rompkey: You said that employment goes well beyond UI policy, and you are quite right, of course. It goes to fiscal and monetary policy. You cannot see what is happening here outside the context of budgetary measures, for example.
I do not want to involve you in a discussion on the budget. However, clearly, you are quite right. An employment policy goes well beyond a UI policy.
Mr. Dumaine: That is one aspect of it. The other important aspect is that we have to look at the measures around wage subsidies and earnings supplements in the context of the agreement proposed by Minister Young to the provinces. Obviously, what we will see now is a portion of the UI fund being transferred to provinces, which will be invited to create active measures. If we try to be positive, the only thing we can say is that we hope that the provinces might be able to find more efficient ways to implement these programs. The programs are not very different, however.
Therefore, we are tempted to say that it is hard for unemployed Canadians to really celebrate the announcement of these proposed agreements. By themselves, they will not necessarily change the situation of unemployed people. They will simply change who will decide on these programs. There are still a lot of questions marks around these programs.
Ms Toupin: The bottom line in terms of our concern is that we are faced with a growing number of people who have done all the right things. We are seeing a fairly dramatic shift in the face of poor people across Canada. They have worked. They have lost their jobs. They have gone on UI. They are now on welfare. They want to work. They are stuck between a rock and a hard place. They are seeing the programs at a national level through UI being reduced. The programs at the provincial level are also being reduced because of the deficit. They see as well that there is no significant place in the labour market for them.
That is where we are coming from in some respects. We are seeing more and more people who are, in fact, going through the training, doing the entrepreneurship, or doing whatever they can, but it is still not helping a substantial number of people, unless we can find better ways to increase the number of jobs for all those who want to work.
Senator Rompkey: Do you agree with the hourly-based system as opposed to the weekly-based system? Do you think that is a positive move?
Ms Toupin: It is positive because it brings in more people. Working an increased number of hours, however, becomes difficult because of the fact that you have many people who are only able to work part-time on a limited basis.
Senator Rompkey: They could add their part-time jobs together.
Ms Toupin: In some cases, employers will not allow an employee to work two part-time jobs. The employer wants the employee to be there and available, to be on call, which becomes very difficult, if not impossible, to have access to another part-time job, for example. There are some real difficulties in the market in terms of access to more than one part-time job.
[Translation]
Senator Lavoie-Roux: I want to thank you for your brief. The government is trying to sell us on this legislation by telling us that a lot more people will be able to access the employment insurance program now that compensation is to be based on the number of hours worked.
I believe you had already begun to respond to that. But your brief does raise serious questions in that connection.
Essentially, it will be no more difficult than it was before to build up a sufficient number of hours.
There is one other thing I noted in your brief. The amount of compensation will actually decline. When all is said and done, there is some question as to whether this is legitimate action on the part of the government.
Is it true that the government will be able to save a certain amount of money, even though it is trying to sell us on the idea by saying it will be less difficult to qualify for employment insurance than in the past, since people will be able to accumulate hours of work?
Will that make lower income people poorer or will it create additional problems for them as far as entering the labour market or social integration are concerned?
We all know there is no easy answer to the employment problem. All levels of government are seeking a solution, but it is not a simple issue to resolve. The only thing we can say to the government is that it must do whatever it can.
In the final analysis, though, will those most affected be penalized even more or will this bill improve their lot somewhat?
M. Dumaine: According to government studies, people who could not qualify previously will indeed be able to qualify under the new program.
But what the government sometimes forgets to say is that many people who now qualify will no longer be eligible for U.I.
According to government studies, the overall impact is neutral, in the sense that about the same number of people will qualify under the new regime as will no longer qualify after the changes.
What will happen -- again according to these studies -- is that a shift will occur in terms of those who will now qualify and those who will no longer qualify.
That will most certainly create added problems for some people in Canada. And that is under the best scenario, based on what has been said.
As far as the more general issue of its impact on poverty, the new regime will clearly force more families into poverty, for two very simple reasons. There will definitely be a decline in benefits for some families. I think it's important to point out that these changes are occurring in a context where jobs are increasingly precarious, and where wages have been frozen. So, when they calculate a percentage of your existing salary to determine your benefit payment, well, in the case of many families, they're starting from such a low level in calculating 50, 52 or 55 per cent of that amount that it obviously means those families will be living in poverty.
Senator Lavoie-Roux: I don't think this is a bad bill, but overall, what positive elements do you see in this bill, other than the fact that new people will be in a position to qualify who would not have qualified previously, with a corresponding number who will no longer qualify -- as you say, the overall effect is neutral; but as far as the general population and workers in Canada are concerned, will this be beneficial or not in your view?
Mr. Dumaine: I would say that, as a general rule, the measures proposed under the new program are intended to channel more money, in terms of what is provided in the form of assistance, towards certain activities by reducing the size of the cheques families now receive. We are trying to use more of that money to invest in job creation programs or other active measures. It is clear that in the current economic climate, a number of people will be negatively affected by that. As far as the more positive aspects of the bill are concerned, one can point to the effort made in this legislation to extend active measures to more people receiving U.I. cheques and others without employment who do not necessarily have access to U.I.
In practical terms, this raises a number of problems. It is an interesting idea. As the senator mentioned earlier, the idea of calculating hours rather than weeks of work is not a bad one per se. But by increasing the number of required hours to such an extent, we have reduced access even further. But it certainly seemed to be a positive move. That would be my conclusion anyway.
Senator Lavoie-Roux: You have been looking at this issue for years now. People have been talking about this reform package and other employment programs and initiatives as a means of upgrading workers' skills. We have heard endless discussion about this for many years now, in Ottawa, Quebec City and other provinces. Based on your observations, are these effective measures in terms of skills upgrading and manpower training?
Are they yielding any results? We hear a lot about programs in Quebec -- training programs, practicums, schools and so forth. Does this mean we will be putting even more money into these kinds of initiatives? I'm not necessarily against the idea, provided that we see some concrete results at the end of it. What has your experience been?
Ms Toupin: I will respond by citing a specific case that perhaps symbolizes the risks involved.
We met a woman in a food bank who had been trained three times, first as a secretary, second as a plumber, and third, in informatics -- she had taken every imaginable computer course.
When we met her, she was in a workfare program. She had found a place where she really liked her work, the employer liked her a lot, and for all intents and purposes, it was re-training.
She was allowed to stay there for six months, before she had to give up her spot to someone else. That is what really concerns us.
People are being trained. They enter the labour market, but it is a revolving door in a way; they're put there, and then we go and send someone else to replace them.
It may ultimately be a good idea for a while, but we certainly won't eliminate poverty that way.
It is something that is happening more and more among the people we represent. The reason I am making this point in response to your question is that we see this more and more. It is a training process. That is important. The people we represent really want to be trained and have access to stable and well-paid jobs.
Senator Lavoie-Roux: It's like a revolving door.
Ms Toupin: Yes, and it's the revolving door aspect that concerns us, because it is an increasingly common phenomenon.
Senator Lavoie-Roux: Thank you very much, Madam Chair, for giving me so much time.
[English]
The Chair: Senator Simard, do you have a question?
Senator Simard: Yes, but I have an announcement to make first. I have received, thanks to your staff and committee personnel, the chart which I requested earlier. I should like to quote from that chart two figures which tell something about the status quo as opposed to the situation proposed under the bill which we are studying tonight and over the next month or two if the Liberal majority will allow us to travel to New Brunswick.
In 1994-94, the fund reached $6.6 billion. It is estimated that, in 1996, if Bill C-12 is not legislated, the fund will have accumulated another $5 billion. In other words, without Bill C-12, the fund will be in the black by $11.6 billion. This government does not need this bill to claw back or to reduce abuse.
It must do what the previous witness told us tonight: Make sure that the present legislation is obeyed and is abided by. I will come to that. So much for my announcement, Madam Chair.
[Translation]
Senator Simard: You said, Ms Toupin and Mr. Dumaine, that you were refused by the committee in the other place. Did they indicate their reasons for the refusal? Had you been allowed to appear before the committee, you would have had an opportunity to put forward your arguments and those of the 12,000 or 15,000 members you represent. It would have given committee members the chance to amend or improve the employment insurance legislation.
Ms Toupin: Perhaps I should explain the circumstances surrounding our inability to appear before the parliamentary committee. We were asked to appear on very short notice. Although we understand that that is just the way the committee works, it's important to realize that non-profit organizations such as ours have very limited staff at their disposal.
Mr. Dumaine, one other person and I are the only full-time staff. We make commitments some time in advance. In the case of the parliamentary committee, we were given only 24 or 48 hours' notice to appear, and it was simply impossible for us. Because we don't have the resources to hire additional staff, we require more advance notice.
As for possible amendments, while it's very kind of you to say that our appearance might have had an impact, I am not convinced that would have been the case.
Senator Simard: Senator Lavoie-Roux asked you whether you saw anything positive about this legislation. At one point, I was tempted to intervene and point out to committee members and the other witnesses present here today that your silence at that moment really spoke volumes. It took you about 30 seconds to think about the question and find something favourable to say about the legislation.
The government has made much of the fact that almost 400,000 or 500,000 people who were not eligible before this legislation could become eligible now, since the first hour they work will count. But what the government is forgetting to say is that of the 75 per cent of potentially new U.I. claimants that will have paid premiums -- and their employers as well -- only 25 per cent will actually qualify for benefits.
Is there anything you could add on that particular issue? Is this something you deplore? Are you enthusiastic about the part of this bill the government is defending and putting across to the people as nothing more than a smoke screen?
M. Dumaine: What is surprising, Senator Simard, is that we are talking about people who theoretically could qualify -- a half-a-million people approximately. In its own analysis, the government has indicated that of these 500,000 people, probably only 90,000 would actually be in a situation that would entitle them to a cheque.
These same studies show that half-a-million people will no longer qualify for U.I. benefits. Of that number, approximately 90,000 need benefits but will no longer have access to the program.
If I had quoted those figures tonight, I'm sure some people would have said they found it strange that it could be exactly 90,000 in both cases, thus cancelling out any impact. I have no choice but to rely on the government's analysis, though.
That analysis shows that the impact of these measures will be completely neutral; 90,000 people who were able to qualify and 90,000 who need benefits but are not eligible to receive them. All of this in a context where approximately a half-million people could theoretically qualify.
Senator Simard: You talked mainly about young students who might end up in jobs like the ones at McDonald's. Can you point out any aspect of this bill that would be favourable to women?
The Chair: That's all the time we have, Senator Simard.
Ms Toupin: Once again, we would emphasize that, yes, women will be covered to some extent, but the opposite is also true. Will they be able to work long enough in an unstable job to actually receive benefits? I am certainly not convinced they will. Most women end up in jobs which are in fact unstable. They will probably be among the 75 per cent who never actually have access to benefits.
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Senator Rompkey: On a point of order, Madam Chair, I wonder if Senator Simard would check his figures from the table that he was given.
Senator Simard: I checked those, senator.
Senator Rompkey: I understand that the table was presented last week, but he saw it tonight. Another reading of that table would show that the cumulative supply in the unemployment insurance fund at the end of this year will be $5 billion, not $11.6 billion. I know he does not want to mislead the committee.
Senator Simard: Senator Rompkey, if you heard my statement correctly, it does not need to be corrected. I did not use the cumulative effect or the figure at January 1, 1994. I mentioned the actual excess of revenue over expenditure for 1994 and 1995, and then I proceeded to state the 1996 surplus of that fund. If you want to take into account the deficit as of the first part of 1994 when your government came to power, the auditor general and the then Minister of Finance and Mr. Martin used to lock this so-called deficit of the UI fund into the annual cumulative deficit as of March 31, 1994. So, yes, this Liberal government has benefitted from $6.6 billion in excess of that fund since 1994-95.
Senator Rompkey: It is not the government that benefits, it is the workers who benefit. When your government was in power, you had to increase premiums during the recession at a time when wages were going down. If you build up a surplus in the unemployment insurance fund, you will have it there when another recession comes. That is the whole point of the increase in the unemployment insurance fund. It does not go to the government, it goes to the workers.
Senator Simard: It goes to pay down the deficit.
Senator Rompkey: It is used as all government funds are used. Are you claiming that when your government was in power your Minister of Finance did not use the surplus in the unemployment insurance fund to balance his books?
Senator Simard: No. As a matter of fact, there was a deficit for most of those years.
Senator Rompkey: Every government does that. That is a normal bookkeeping practice whether you are a Conservative or a Liberal.
Senator Simard: This government did not use Bill C-12 to combat the deficit.
Senator Rompkey: Why do I get the impression that Senator Simard does not like Liberals?
Senator Simard: This government will continue to penalize and add taxes to employers and low-income employees, thus killing jobs, Madam Chair, and killing the opportunity for new jobs and penalizing hundreds of Canadians workers.
The Chair: Senators, you are welcome to carry on this conversation if you wish, but, first, I must thank our witnesses for being here. We appreciate your brief and the time it took for you to prepare it.
Senator Phillips: Madam chair, before we adjourn, my honourable colleague and friend Senator Rompkey referred to me in his questioning. I would point out to him that the OAS is the same across Canada. I would ask him: Is the Liberal Party now retreating from their policy of universality?
The Chair: We will get permission to sit on Thursday at 2:30.
The committee adjourned.