Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Issue 9 - Evidence
OTTAWA, Wednesday, June 12, 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 12:00 p.m., to give consideration to the bill.
Senator Mabel M. DeWare (Chair) in the Chair.
[English]
The Chair: Honourable senators, we have officials from the department with us today. They here today to ensure that we understand the bill. If there are any questions that need clarification, they are prepared to do the best they can to answer those questions.
I wish to place on the record the fact we have had 24 hours of hearings on this bill. We have heard from 34 groups of witnesses. We heard from Canadian groups and organizations. We have heard from one group from the Northwest Territories and one from Alberta. The bulk of the remaining witnesses were from Atlantic Canada. One would think this bill will affect them more than anyone else in the country, but apparently it is a bill for all Canadians.
Honourable senators, the floor is open for questions.
Senator Cohen: Could you provide us with information on the hour bank or carry-forward system that the Canadian construction industry asked us to consider? I think it has merit, and I want to know if it is possible. Could it be considered?
Ms Norine Smith, Executive Director, Department of Human Resources Development: The banking proposal that the construction workers would like to see in the program would be a very significant departure from the basic design of the current system. It would take away from the notion of an insurance system designed to deal with an immediate job loss to one more akin to a life insurance system. It would need to be extensively studied and modeled before one could give an authoritative assessment of what it would actually mean.
Without having done that extensive body of work, our impressions of the proposal are that it would be very expensive. It is definitely more expensive. The extent to which it is much more expensive or excessively expensive is difficult to judge. However, there is no doubt that it would be a more expensive system. I cannot say much more about it, other than to say it would be a big departure from the principles that currently underlie the program.
Senator Cohen: I do not know if this question is naive, but in the not too distant future, if you have not done enough study, would it be conceivable for the department to consider such a system on a trial basis to generate business in the construction industry in Canada? As you know, there is much unemployment in Canada. Perhaps you could take an area of the country or a province of the country and float a trial project. It is just an idea, but it is something that struck me.
Ms Smith: I think one must place the notion of a banking system applicable to an industry such as construction against the backdrop of the use of the UI program by an industry such as construction. Even under the current system, that industry receives between three and four times the level of benefits from the system as it contributes to the program. That amounts to receiving something in the order of about $1.7 billion more in benefits out of the UI program than it contributes. That would be after reform, and I believe the number is about $2 billion under the current system.
That leads me to the conclusion that an industry such as construction is already benefitting considerably from the UI program and that there are perhaps not many hours left to bank. It is not entirely clear to me how a banking system based on the notion of people being able to draw out of the insurance program something that is more closely linked to what they have contributed into it would actually be helpful for an industry such as the construction industry.
[Translation]
Senator Lavoie-Roux : Could you give me some clarifications on the statements made last night - I think you were here, sir, if I'm not mistaken - to the effect that women in the end will be penalized in the sense that, and I think my quotations are quite accurate, more women will be covered by Bill C-12, but a smaller number of them will qualify for employment insurance.
I asked for further explanations on that matter. I was told that, for example, the fact that from now on it's not the number of weeks but the number of hours that will be counted on - what we have always recognized since the beginning - might be an advantage.
On the other hand, the fact that the number of required hours is much higher, at the end of the day, even if there are more people who, they say, are covered, in reality, it will be more difficult to qualify for benefits and there will be less people qualifying for the program.
Were you here last night?
M. McFee : Yes.
Senator Lavoie-Roux : You were here last night. We heard the testimony of Mrs. Vautour. I'd like to have your opinion on that because she seemed to be quite convinced of what she was suggesting.
[English]
Ms Smith: The best way to answer that question is to explain that our analyses and statistics tell us that women constitute more than 50 per cent of part-time workers in Canada, and part-time workers who work less than 35 hours a week are primarily working for longer periods of time. There are not many people working short hours every week and only for a few weeks a year. Typically, part-time work is over a much longer period of time, indeed up to a full year of work.
Our calculations tell us that about 90,000 people who cannot qualify for UI today because they are working less than the required 15 hours a week will be able to qualify in future. Of that 90,000, about 36,000 are women.
Moving the program from weeks based to hours based will allow those people who work few hours in a week, but for many weeks of the year, to qualify.
Senator Rompkey: Ninety thousand will also lose benefits unless they acquire more hours of work. Do we know what percentage of those will be women?
Ms Smith: Of those 90,000 who may not be able to qualify in the future but can today, 88,000 - a very significant portion - are trying to qualify for the first time. That leaves very few people who might fall into that category of people who have part-time jobs over very short periods of time.
Senator Rompkey: I am trying to get the bottom line on women.
Senator Lavoie-Roux: It is not a matter of women or men. It is equally bad, whether it applies to men or women. The point that Madam Vautour made yesterday is that women will contribute to EI from the beginning, but they will not qualify because they will not be able to accumulate enough hours. She raised it as a women's problem, but it could also apply to men.
Senator Rompkey: In order to get a balance, we must look at both the 90,000 that are coming and the 90,000 that are going.
Senator Lavoie-Roux: Related to that is the situation of women returning to the labour market after maternity leave or years of child rearing. They will need almost nine months to qualify again, or 910 hours, instead of the current 20 weeks. That is fine if they can get 910 hours in a stretch, but if they cannot, it will be difficult for them to qualify.
I want to believe all you are telling us, but we heard from a women who represents a large group say exactly the opposite of what you are saying. I do not know who to believe.
Ms Jackson: It is absolutely right that our analysis tells us that with the move from a system based on weeks to a system based on hours, 90,000 people who cannot qualify for benefits today will be able to qualify in the future. That is offset by an equal number of approximately 90,000 people who will not be able to qualify in the future.
However, a much more telling factor is that under the current program, close to 450,000 people pay premiums into the program but cannot collect benefits when they lose their job. With the changes found in this bill to reform this program, that number will fall quite significantly to about 300,000 people.
Senator Lavoie-Roux: Only history will tell.
Senator Cohen: I believe that women who leave the work force to bear children should not be considered re-entrants. That is a whole different area. Women should not be penalized for that.
Senator Phillips: My question has to do with the regulations regarding fishermen which were mentioned by the Newfoundland Fish, Food and Allied Workers. Where would I find those regulations in the bill?
Ms Smith: There is reference to the regulation-making authority in Part VIII of the bill, section 153, page 123.
Senator Phillips: That is an extensive section.
I am curious to know why we cannot have some indication of those regulations before we pass this bill. You are asking us in effect to buy a pig in a poke. The Irish have taught us not to do that.
Can you give us some explanation of what effect this clause would have?
Ms Smith: In general terms, the minister has, on a number of occasions, indicated that the overall effect of the regulations for fishers would be of the same order of magnitude as the effect of the changes on other seasonal industries. As such, the general nature of this reform would apply to fishermen as it would to any other employed workers.
The fishing regulations are needed in order to adapt the proposed act to the unique aspects of the fishing industry. One example might be the notion of a work week; this has always been problematic in the fishing industry because it is very hard to define how long a fisherman is actually working when he goes out to sea. The current set of regulations converts earnings into a week of work in a rather artificial fashion. That conversion into hours of work is an example of the issues which must be dealt with in the fishing regulations.
The bottom line of Part VIII of the bill is to assure the government that there is no need to buy a pig in a poke by providing, in clause 153, an explicit process for tabling those regulations in the House of Commons. That is what this part is all about.
Senator Phillips: Why are they tabled only in the House of Commons? There is a joint committee between the House of Commons and the Senate on statutory regulations. If the regulations are not tabled in the Senate, how will the Senate members of that committee review them?
Ms Smith: You are asking an historical question, because these provisions have been in the act for at least a few years now with no changes. Why it was structured in that way at the beginning, I really do not know.
Senator Rompkey: Perhaps we should ask that consideration be given to including the Senate in that clause.
Senator Phillips: Yes, we have a fisheries committee. We have the joint statutory regulations committees. Neither of these committees is being informed by this clause.
Will there be any change in the status of a fishermen who owns a lobster boat and hires two or three helpers on that lobster boat? Will that fisherman be described as self-employed?
Ms Smith: No consideration has been given to changing the basic notions of insurability. The intent is simply to import the notions that are reflected in the bill that is in front of this committee into the world of fishing, but not to go beyond that.
Senator Rompkey: Before we move from that point, I would like to know about the procedure. Do we need some sort of motion to put into effect the suggestion of Senator Phillips? How do we deal with that?
The Chair: It could be done as a recommendation to the minister.
Senator Roux: They do not necessarily follow recommendations.
Senator Rompkey: We can follow that up. We can call the minister into committee meetings and ask him why he is not doing it.
The Chair: On page 124, subclause (3) states:
The Minister shall table the regulations in the House of Commons within three sitting days after the day on which they are made.
We could recommend to him that they also be tabled in the Senate.
We could also advise the fisheries committee of our recommendation so that they can follow up on it. We can attach it as an addendum which goes with the bill.
Senator Phillips: I would move that we recommend an amendment to clause 153(3) to include both Houses of Parliament. That would let us report our committee's concern.
The Chair: Do we have the agreement of all senators on this motion?
Hon. Members: Yes.
The Chair: There is agreement. Carried.
Senator Phillips: On page 54, clause 55(3) states:
The Commission may at any time alter the authorized method or rescind the authorization, subject to any condition that it considers appropriate.
I have difficulty interpreting that.
Mr. Gordon McFee, Assistant Director General, Insurance Policy, Department of Human Resources Development: The purpose of that clause is to enable regulations to be written to include hours of insurable employment in employments where people work in irregular fashions. That is what the clause does.
Subclauses 2, 3 and 4 provide maximum flexibility to amend an authorization if it is determined that the agreement between the people negotiating both sides of the work was based on information that was not correctly assessed. That is the purpose of the three subclauses in clause 55.
Senator Phillips: If you do that, then you have no universality. You have a law and then you have certain groups of people who can negotiate agreements with the minister. I find those two concepts to be in conflict.
Mr. McFee: Perhaps I should explain the genesis of the section; it might make it easier to understand. It arose from the fact that several groups have testified in the other place.
Senator Phillips: What do you mean by "several groups"?
Mr. McFee: Among the groups were representatives of airline pilots, airline attendants, people who drive taxis and people who work in barbering and hairdressing. In essence, they are people who are not paid on a hourly basis, or for whom determination of an hourly basis is a guessing game, to put it inelegantly. As a result of those submissions, and because there is no simple way to adapt the legislation to those individuals, it was determined that there would be a process put in place whereby there would be a series of consultations and meetings with the individuals involved. Rather than the legislation trying to spell all that out, it would have a permissive section which would pertain to people with respect to whom it is not possible to determine how much they are paid by the hour.
The key point of clause 55(1) is that it cannot be determined how they are paid on a hourly basis. At the end of the day, when those consultations have taken place, regulations can be written that will adapt the thrust of hourly coverage to those individuals in their particular circumstance.
Senator Phillips: I presume it also gives the commission the ability to change the number of hours required, with the approval of the Governor in Council. If you can make any regulations, then it is quite possible to have one group requiring a specific number of hours and the next group requiring another 100 hours.
Mr. McFee: I would not put it in those terms, senator. It will not permit the number of hours required to access EI to change. Once again, to put it slightly inelegantly, it will permit regulations to be written which, in some cases, may have to approximate hours, or may have to include factors that are not normally included in the consideration of how many hours someone works.
I will give a brief example because what I just said may be muddled. In some lines of business - airline attendants and pilots are a good example - there is what is known as lead-up time built into their contract. For example, when they work seven and one-half or up to 15 hours over a two-day period, there is a certain preparation time that they are obliged to do contractually, both before and sometimes after the flights take place. As you are probably aware, there is also intervening time where they are expected to rest between flights and that kind of thing for safety reasons. This clause would permit the writing of regulations to take into account that kind of situation.
For example, if the person had worked nine hours, that might not be reflective of what they really did. It would therefore permit a regulation to be written that would take that into account. That being said, it would not go the extra step and permit, for example, the regulation to override the qualification requirement.
Senator Phillips: Senator Cohen asked a question earlier concerning the banking of hours.
Senator Rompkey: Before you leave that, senator, I should like to intervene. The discussion brings to mind artists. We heard testimony from artists that they had particular circumstances. They asked for a number of things. One of the things they mentioned was that when you are training for a part in a play, for example, you are expected to read and to spend so much time in preparation. The question that was asked was: If a writer is thinking about what he is going to write for eight hours, is he really working? The answer was, "If he is waiting that long, he probably should be in another profession." However, the point is taken that artists are in a category, perhaps not unlike airline pilots in principle. We recognize that all people have to have lead-up time. Artists have to have lead-up time, too; or at least the case can be made that there are special circumstances pertaining to that particular occupation.
If we are to give consideration to airline pilots, I would like to see us give some consideration to artists so that we give them the maximum latitude to qualify for unemployment insurance as well. Am I making myself clear?
The Chair: There is a clause which could apply to them.
Ms Smith: That is correct.
Senator Rompkey: I would like to have an undertaking from the department that they would consider artists as a separate category. I would even make that as a recommendation.
The Chair: No one is mentioned in this particular clause. You would not mention categories.
Senator Rompkey: Perhaps not. However, I still would like to highlight the situation in our report, if the committee agrees. I should like there to be a review of the circumstances in which artists find themselves, so as to ensure that their special circumstances are considered with regard to their qualification for unemployment insurance. We can find the right wording, I am sure. I would like to include that in our report as a recommendation.
Senator Phillips: Your remark raises another interesting point. The groups mentioned by you, Senator Rompkey, are all represented by unions.
Senator Rompkey: Yes, and powerful unions.
Senator Phillips: There is discrimination, in that farm labourers, for example, do not have a union to represent them. I doubt if barbers have a union. I think there is discrimination in that clause which we should attempt to correct. It is fine to consider specialized unions, but there are many non-unionized people out there who face the same situation. We will certainly not deal with every individual who comes before the commission.
I should like to see your idea enlarged to include artists, who have an association. That is something to which the committee should give consideration. Perhaps we can mention it at third reading, or something of that nature, rather than attempt to amend the bill today.
Senator Rompkey: Before we leave the matter, I should like to see some words on paper that we can agree to as a committee. Do we need to do that before we move on?
The Chair: We will draft a recommendation to that effect. I do not know how long you want this attachment to be. It could read something like this: "The committee recommends that the commission consult with groups in the arts community in determining regulations under clause 55(1)."
Mr. McFee: Madam chair, I believe Senator Rompkey and Senator Phillips deserve a brief comment on the exchange of a few minutes ago. I have two points. The first is that when I was mentioning the groups with whom we have begun consulting, I ought to have included artists in that list. We have begun consulting with artists' groups already. I just thought I should put that on the record.
Secondly, I was present at your hearings when the witness from the council testified, and you will remember he is a very forthcoming gentleman. He made the point that artists would like to be considered self-employed for income tax purposes, and not self-employed for EI/UI purposes. Our department and its predecessor department have been in negotiations with artists off and on - and we are not the only department - at least since 1988, and that has been their position somewhat consistently since that time. The dilemma they have faced is precisely the fact that they have wanted to be treated somewhat differently for two different statutes. That is one of the challenges we have had over that period of time. To be honest, it will be one of the challenges we will have in the consultations we are undertaking now.
Senator Rompkey: We have solved the riddle for fishers but we have not solved it for artists or farm labourers. The dilemma was solved, as far as fishers are concerned, because they are self-employed for tax purposes and yet they qualify for unemployment insurance. They have their cake and eat it too. We are saying fishers can have their cake and eat it too, but artists cannot.
Senator Cohen: So we are discriminating.
Senator Rompkey: Yes. There is the dilemma there. We are negotiating. We have solved others. I realize it was solved before 1988, before you took over the portfolio, but I do not know what that means. Maybe it does not mean anything. If we have solved the earlier dilemma, we can find some solution to this one too.
Senator Phillips: This question is supplementary to the one asked by Senator Cohen regarding the banking of hours. I do not see why that could not be done under clause 55(4). It establishes alternative methods.
Mr. McFee: Senator, the alternative method, at the risk of oversimplifying, would deal with the proxy point I made a few minutes ago and/or how you would find the hours, but I am not aware that it would permit the hours to carry forward farther in the future than they occurred. As you know, when a claim is set up, one looks back at the previous year and sees how many hours the person worked during that year. All the hours are counted now, and if I am not mistaken - I am not a legal officer - in order, as the witness put it the other night, to not count all the hours and carry the hours that are unnecessary to qualify forward into the future, amendments would be required to the bill.
Senator Phillips: Do we not have any legal counsel present?
The Chair: Not today.
Senator Bosa: May I ask a question?
The Chair: On the hours?
Senator Bosa: No.
The Chair: Before you do, let me ask the officials to look at clause 54(z.1) and tell me if that is not an area where you could consider hours as well.
Mr. McFee: It talks about allocating hours of insurable employment to a qualifying period.
The example that we just discussed would be allocating those hours to a period subsequent to the qualifying period. Once a claim is set up, the qualifying period is over. So the authority in clause 54(z.1) would not be broad enough in scope to allocate the hours past the end of the qualifying period.
Senator Phillips: Could you repeat that, please?
Mr. McFee: Page 53, clause 54(z.1) talks about permission to write regulations for allocating hours of insurable employment to a qualifying period; for example, by including them in that period or excluding them from that period. The element that would be required to do what the question just dealt with would be something in there that would allow them to be moved forward in time, which is not in the section now. The reason for that is that when a claim starts, by definition the qualifying period ends, because the qualifying period is a period during which the person accumulates enough hours to allow the claim to start. Therefore, since the period is now over, there is nothing in the legislation that permits unused hours to be used. In fact, I am not aware that there is anything that even permits some hours not to be used, but there certainly is nothing that would permit unused hours to be dealt with in some other way, for example by being carried forward to a future period. So it is a simple matter of there not being the scope in that clause that would be required for what was suggested a moment ago.
The Chair: You are saying that if I apply for UI today, I would base that application on my last 26 weeks of work.
Ms Smith: And the hours during the last 52 weeks.
The Chair: That is right. There would not be any carry-over because you do not use them.
Ms Smith: The concept of not using them does not exist in the insurance program.
The Chair: I understand that.
Senator Bosa: Going back to the suggestion that Senator Rompkey made about including artists in the same category as fishers when it comes to drawing unemployment insurance, be they employees or employers, what other categories of professions or trades would ask that they be treated the same way?
Ms Smith: The issue of coverage of self-employed workers is perhaps an issue of the future, given the development of the labour market. Perhaps I could comment on international experience in this area rather than on Canadian experience. As Senator Rompkey pointed out, the only group of self-employed workers covered by the Canadian UI system is fishermen, and it is an area that has always been of some considerable controversy within the UI program.
As part of the research work building up to the development of reform proposals, we did some research into other countries and whether or not there were any systems of employment insurance for the self-employed. We found only two, through our fairly extensive research. One is a system in Denmark, and the other is a pilot system in the State of California.
There are a few hallmarks of both of those systems. One hallmark was that for an individual to be covered by those provisions, if memory serves me correctly - and forgive me, it has been a few years since I have looked at this - that individual had to have been in business for at least three years and had to declare bankruptcy before they could draw benefits from the provisions.
The second important hallmark is that these were very self-contained programs. They were self-funded from the premium contributions of that group of workers. The reason for that is because of what is referred to as the moral hazard issues and the whole area of insurance coverage for the self-employed. The bottom line is that it is very difficult to determine when self-employed persons are no longer employed - that is, whether it is voluntary or involuntary, if I can put it that way. It is a very difficult area to design a program well, but it is one for which we have begun to do some research. Because of the growing nature of self-employment and contract work in the economy, it is probably one for the next waive of consideration in reforms of the insurance system.
Senator Bosa: Is amount of income one way of measuring when an employee ceases to be an employee and becomes an employer, and vice versa?
Ms Smith: The difficulty is reflected in the fact that in these two examples we found, they asked someone to declare bankruptcy in order to qualify. How do you know for sure that the lack of income flow is related to the fact that they have not gone out and hustled for the other contract or that there are not any other contracts out there? It is very difficult to know. That is the nature of the moral hazard problem.
Senator Cohen: My question concerns employment benefits, as found on page 56 of the bill, clause 59(e), and page 58, clause 61(a). I have two concerns that I should like to bring to the committee's attention. I have voiced them before, but I do not know if they can be included or are realistic. The employment benefits would still be funded by UI, but it will be like block funding in the provinces or in the municipalities. I have two concerns there.
First, they could be going helter-skelter all over the country. In New Brunswick, it could be one thing; in Nova Scotia, another. We have heard this from many witnesses also. Why can we not have some basic national standards set in place so that if you move from one province to another, your skills training would be comparable? That is a concern that I have, but I do not know if it could be worked in anywhere.
Second, historically, the federal government used to buy their services from community colleges. According to clause 61(a), private industry can now buy those services. We know that some services by private industry are very good, and some are not so good. We have spent 30 years building up the community colleges in this country, which in my region are doing a wonderful job in skills training. Businesses are buying their services faster than they are from universities. I should like to see the protection of the community college system included somewhere in the bill.
Those are two areas that we should look at. I do not know how we can do this. This is the first time I have really read a bill, but those are two important areas. We have heard this concern from a lot of people. If you want to comment, I am willing to listen.
Mr. David McDonald, Director, Federal-Provincial Negotiations: Perhaps I could start with linking your question to the federal proposal on labour market programs under the EI account that Minister Young released to all provinces on May 30. That proposal has been sent to all provinces. Provincial governments are now reviewing the proposal and assessing how it will link to their own labour market development priorities - that is, their particular policy needs in each province. We are in a period of review and reflection on the proposal and we are waiting to hear from the provinces.
There is one very important aspect of that proposal that has not received as much attention as it deserves; namely, that as a result of Part II of the legislation, there is now a requirement that any active employment benefits funded under the EI account be subject to a very strict results-oriented regime. This is a new way of dealing with these programs. We have very specific criteria outlining what we mean by results. We mean that individuals participating in the programs are to get jobs; that these active measures are to reduce the costs of the overall EI account; and that individuals are actually to get meaningful attachment to the labour force. Whether the programs are delivered by the provinces, by the third party or by the federal government, there will be a national system of results in place from one jurisdiction to the other. This is new. This is driven off the legislation, so that in some ways, as a result of the results-oriented regime, there will be national consistency in how these programs are delivered.
Provinces will have the flexibility to determine how those programs link to their own priorities, but we will all be subject to a very strict, rigorous accountability regime that has not been in place previous to that.
Senator Cohen: If I am in business and I am buying the service, who will check my accountability: a federal body or a provincial body?
Mr. McDonald: The first point to start with - that is, in terms of the availability of funds under the EI account - is the delivery agent in terms of dealing with individuals and clients. You are correct in noting that the legislation has a number of different models in terms of who delivers. Some fundamental principles are in place that apply to the federal government, to the provinces or to third parties.
First, there is no unconditional transfer of funds. The use of funds to individual clients will need to be tracked through case management systems, through data sharing, and through a comprehensive information system. Second, the results of these moneys, in terms of how they are serving clients, is to be made public. Third, the use of these moneys is to be evaluated and assessed on a very regular basis. Whatever the delivery agent is, that agent will be obligated to the same standards and requirements.
Senator Cohen: Should something like that not be included in the bill? If it were important enough for this announcement to have been made on May 30 to the provinces, would it not be a natural step to have something like that included somewhere in the bill?
Ms Smith: If you turn to page 55 of the bill, paragraph (f) states:
(f) implementation of the benefits and measures within a framework for evaluating their success in assisting persons to obtain or keep employment.
Senator Cohen: That somewhat says it, but it does not have any teeth.
Mr. McDonald: The department and HRDC officials, in their preliminary contacts with the provinces, are spending a lot of time in what we call the accountability framework, which is the requirements that will exist for the use of EI funds. It is safe to say that that accountability framework will be as rigorous if not more demanding than anything we have in place now.
Senator Cohen: I am glad to hear that. It must be. Once it goes out of the hands of the federal government and into private industry, and not necessarily into community colleges, that will be very vital.
Senator Lavoie-Roux: I should like you to look at clause 57, paragraph (d.1), which states:
[Translation]
(d.1) availability of assistance under the benefits and measures in either official language where there is significant demand for that assistance in that language;
What kind of standard are you using to say that demand justifies it or not? The words «significant demand» are now more or less used for everything. We use them in education, health services, where the number justifies it. When someone has to face an employment problem, and has to go to the courts to know if his trial can be in one language or the other because the number does not justify it, what is the standard you are referring to when you use such a wording?
[English]
Mr. McDonald: As you know, senator, the Government of Canada has gone through a number of processes whereby either it has transferred responsibility to the private sector or has privatized certain things. Where there has been a transfer of federal resources or federal programs, the government has been very clear that the requirements of the Official Languages Act in terms of service standards and service provisions are to be respected.
There is to be no decline in the level of service which official language minorities receive as a result of the federal government providing service directly. The provisions of the Official Languages Act in terms of services to official language minorities will be respected in the delivery of employment benefits. The existing service standards for official language minorities will continue.
Senator Lavoie-Roux: What is it?
Mr. McDonald: I do not have sufficient details, but there will be no variation from current practices.
Senator Lavoie-Roux: Everyone agrees with the statement, but what is that number?
Senator Rompkey: Do you mean the percentage of the population?
Ms Smith: We do have those provisions in writing. I will call the department to get them for you.
Senator Rompkey: As I recall, it used to be around 20 per cent.
Senator Lavoie-Roux: That many people will not get services in their own language.
Senator Rompkey: I thought that years ago, it was 20 per cent, but the percentage may have lowered since then.
Senator Bosa: Do they not always use the expression, "where numbers warrant"?
Senator Lavoie-Roux: Yes, but the number is too vague. I would like to know what you are referring to.
My second question is on paragraph (f) of the same clause, which reads:
implementation of the benefits and measures within a framework for evaluating their success in assisting persons to obtain or keep employment.
[Translation]
Can you tell us if some evaluation tools are available to assess the relevance of the help provided through all employment insurance programs? Is the relevance of those programs already in place subject to a kind of evaluation?
[English]
Mr. McDonald: As you know, in the legislation we make reference to five employment benefits: the wage subsidies; the earning supplements; job creation partnerships; self-employment assistance; and skill loans and grants. A number of those kinds of programs have been subject to independent evaluation. They have been studied through pilot projects. So there is a fair bit of empirical data on these programs.
Those studies, both within Canada and in other countries, have come to two basic conclusions: First, the income of individuals who participate in these programs increases by thousands of dollars; and second, they keep their jobs longer. Therefore, they tend to reduce their dependency on social assistance and unemployment insurance.
So the selection of these programs in Part II is based on evidence that these are the programs which work. We will extend these evaluations to the full range of active measures in Part II and begin to develop a nation-wide evaluation system with the provinces to continue to improve and test these programs.
Senator Lavoie-Roux: Therefore, this already exists with the present program and you will extend it with the new program. Could you provide us with a couple of evaluations which have been done? All of this is being done, but is it worthwhile? Could it be improved; is it sufficient?
Ms Jackson: I believe that we did table those evaluation studies with your committee. We will check into that right now. If they are not here, we will get them to you.
Yes, we do have precise numbers from past experience on how much people's earnings increase after participation in the self-employment program, for instance, and how much less time they spend on EI after that.
Senator Lavoie-Roux: Do these studies include the methodology of the evaluation?
Ms Jackson: Yes, they do.
Senator Phillips: I am curious about the child tax benefit, which can be found in clause 16 on page 24.
As I interpret this, subclause 3 says that the child tax benefit shall be deemed overpayment under the Income Tax Act. Yet, I understand other sections of the act to say that a child tax benefit will not be included as part of the FIS.
Ms Smith: We will ask our lawyers to explain that rather technical wording.
Senator Phillips: You two are confusing enough without bringing in lawyers.
Ms Smith: It is a reflection of the Income Tax Act for which, I am glad to say, I have no responsibility.
Mr. Luc Leduc, Counsel, Legal Services, Department of Human Resources Development: In fact, this is lifted straight out of the Income Tax Act. We wanted to ensure that we had the same definition. It is a deemed overpayment because the Income Tax Act is not designed to deliver benefits, per se. It basically provides for the payment of income tax and, in the case of an overpayment, Revenue Canada pays you back. They had to find a way to pay the child tax benefit. The solution they found was simply to deem the child tax benefit an overpayment of taxes. If is a fiction, but that is the fiction which was used in the Income Tax Act. We parallel that to ensure that we are consistent with the Income Tax Act.
Senator Phillips: Does a child tax benefit then becomes part of the FIS?
Ms Smith: It is used as the basis for determining the amount of the family supplement. The family supplement which a claimant could receive could be equal to the weekly equivalent of their tax benefit, or it could be a bit less than that because there are two limitations on the amount of benefits an individual can receive. The first limitation is that they can never receive more than the maximum weekly benefit of $413; the second is that they cannot receive more than the specified benefit rates that start at 65 per cent and, on maturity, will reach 80 per cent.
Senator Phillips: I am having difficulty following the explanation. Is the child tax benefit part of the FIS?
Ms Smith: No. We are working with Revenue Canada to gain the ability to check whether an individual is in receipt of the child tax benefit.
Suppose they are receiving $100 a month under the child tax benefit. The family supplement, the amount that would be added to their UI cheque, would be the weekly equivalent of that child tax benefit amount. More or less, that would be $25, which amount would be subject to two conditions. The first is that their UI cheque cannot be greater than $413. The second is that their benefit rate cannot be greater than the limitation set out in the act, which starts at 65 per cent and which will reach maturity at 80 per cent.
We anticipate that the typical claimant who qualifies for the family supplement will receive $30 per week. How much they actually receive will depend on how many children they have and their benefit rate.
Senator Phillips: I understood it would average about $30 per week; or, as Senator Rompkey said, about $800 per year.
Ms Jackson: That is correct.
Senator Phillips: You make references to grants, loans, et cetera. Can you give us some idea of the nature of the grants and loans? Who would be eligible and so on?
Mr. McDonald: As you know senator, the skill loans and grants have been identified in the legislation as sort of the fifth active benefits. The legislation makes clear that the federal government can only deliver skill loans and grants if a province agrees. Therefore, we need provincial consent.
We have been working with provincial governments on the actual design of skill loans and grants in terms of how they would be used to offset the federal withdrawal from training and how to moderate the impact on community colleges. The access to the money and the amount from the $2 billion that would go to skill loans and grants have not yet been determined.
There would be two components. There is a loans component and a grants component. The grants component would be based on needs, in terms of the resources required by a student to participate in a training course. That money would be available for books and the purchase of the classroom itself.
There have been talks with provincial governments at various stages. Discussions are well advanced with Alberta and Ontario in terms of the design of the program. There has been talk of combining the delivery of the skill loans and grants program with the Canada Student Loans Program in order to increase access.
In terms of eligibility, the client definition would be the one that is found in Part II. You would either have to have had an active claim over the last three years or be an EI claimant. That would be the determination of the client base, which is governed by the legislation.
Senator Phillips: A person who is not drawing unemployment insurance would not be eligible?
Mr. McDonald: They would be, if they met the client definition, yes, over the past three years.
Ms Jackson: Senator, eligibility for the Part II measures extends to someone who has been able to establish a claim in the last three years. You do not necessarily have to be an active EI claimant at the time.
Senator Phillips: Is an unemployed individual who wishes to become an entrepreneur eligible for any loan?
Mr. McDonald: Under the regime set out in the Part II benefits, there is the self-employment assistance program. Under that program, there is a range of activities that we could provide to individuals, including counselling in terms of hiring staff, business and financial management, as well as some seed money to start the business. Again, if the individual who wants to be an entrepreneur satisfies the client definition of Part II, then they would be eligible for those kind of programs.
Senator Phillips: Is there any limit on the amount they can borrow?
Mr. Mark Foley, Senior Policy Analyst, Department of Human Resources Development: Yes, senator, there is. The loans will be such that the people will be able to repay them. The loans are to develop skills for employment. There will not be a set formula. It will be based upon what we are calling the loan or grant split. The amount of loan will be based upon the employment prospects and the ability to repay.
Senator Phillips: Madam Chair, I suggest that since these regulations are to be published, we should also have a look at those regulations.
Senator Roux: I agree with that.
Senator Rompkey: I agree, too. How will an amount be transferred to each province for skill grants and loans? Presumably, there will be a transfer of funds to a particular province and a particular region. Will there be any flexibility in determining how much of that money goes into skill grants and loans as opposed to rates, top-ups, et cetera?
My first question is: How do you determine the amount of money transferred to a province? Second, how do they determine the amount of money transferred to a region? Third, what flexibility is there in switching the amounts from one vote to another?
Mr. McDonald: As you know, senator, there are two baskets of money involved in the EI account potentially available to the provinces. The first amount of money is what is called development use money, which totals $1.4 billion. The second category of money is the $800 million in re-investment. The $1.4 billion is subject to what is called a development use formula.
Senator Rompkey: Where does the $1.4 billion come from?
Mr. McDonald: It is from the EI account.
Ms Jackson: Senator, it is the current amount of money that is spent on what we call unemployment insurance developmental uses. It is the existing budget used for this type of programming out of the EI program.
Mr. McDonald: It is distributed by province, based on a rigorous formula that has 17 variables. Each province gets a share based on that formula. Let us say that province "X" gets a share. Depending on whether the province agrees to deliver the active measures - which may not necessarily be the outcome, it still may be the federal government - then the department would sit down with the province to decide what the mix of active measures will be. The provinces will have flexibility in terms of wage subsidies versus earning supplements.
Senator Rompkey: Do you mean the provincial government?
Mr. McDonald: Yes, in cooperation with HRDC. The planning assumption is that we want a mix of active measures in terms of dealing with the range of employment needs in a particular province. In terms of the specific funding for each program, that will be part of the negotiations with the provinces. We do not have good answers on that at this point.
Senator Rompkey: We heard testimony from Professor Nakamura who said that she had put almost all of it into training.
You are saying that there will be an amount, at least $1.4 billion, which will be transferred to the provinces on the basis of 17 different variables. The provinces may or may not agree to become involved in the distribution of those funds.
There is another $800 million and then $350 million in the transitional fund. Will those two amounts be subject to the same variables?
Ms Jackson: No, senator, they will not. They are subject to different allocation principles. In the case of the $800 million, that amount is attained only at the maturity of reform. That money, too, is indeed part of the offer that was made to provinces two weeks ago. Yes, that money could be spent in future through this new federal-provincial arrangement.
Senator Rompkey: The $800 million will be distributed across the country?
Ms Jackson: That is correct.
Senator Rompkey: On what basis?
Ms Jackson: There is an allocation formula being used which will result in reducing the net impacts of the reform. The minister spoke to you of the established principle to reduce the impact of this reform on those provinces who have traditionally been net contributors to 4 per cent through the allocation of re-investment money.
In the other set of provinces who are net recipients of the program, year after year, the reinvestment is allocated such that the overall impact in those provinces will be 5 per cent.
Senator Rompkey: I am trying to get a handle on how each province gets its funds and how flexible they can be in the distribution of those funds.
Mr. McDonald: The provinces will get their share of those two pots of money on an annual basis. If we work on the assumption that they are handling all the active measures and the federal government does not deliver any programs, then the provinces will have considerable flexibility on how they distribute the money among those programs.
Senator Rompkey: Instructions will go to HRD offices on that basis then. I assume that the funds will be distributed by the HRD offices?
Mr. McDonald: Not necessarily. There will be different arrangements in some cases.
Senator Rompkey: I would like to find out more about that. I suppose we cannot get all the answers today.
Senator Lavoie-Roux: One question which came up last night related to entitlement based on family income and not upon the rights of the individual to benefits.
This is a new tendency. It appears in the Old Age Security changes as well. It is always too bad for the woman, but now the government is doing the same thing here.
Ms Jackson: Senator, I was not hear last night. In the calculation of insurance benefits or income benefits, the basic benefit requires no family income test whatsoever.
The only situation where family income does come into play for insurance benefits is in eligibility for family income supplement. That is the family income threshold of $26,000, being the same threshold as in child tax benefit program for the working income supplement. That is where family income does come into play.
The Chair: The reference last night was the needs test for a loan. I believe family income was taken into consideration in that instance.
Mr. Leduc: I was not here last night.
The Chair: That was a question of concern from New Brunswick.
Mr. Leduc: The skill loans and grants initiative is yet to be developed with the provinces. There is no stipulation, as of yet, in terms of how you would determine a loan. We have recommended, regarding training, that the additional costs to the trainee be examined. The next question that must be addressed is how the costs will be covered. What will the government contribute? What will the trainee contribute?
The Chair: We are talking about transportation and child care and those kinds of things.
Mr. Leduc: That is as far as we have gone.
Senator Lavoie-Roux: It could go further.
Mr. Leduc: The Canada student loans model, which is available in the provinces, provides a detailed needs assessment. We are working with the provinces and HRDC to help them figure this out, but it has not been defined. Students and unemployed workers are in very different circumstances. We cannot take the student program and slap it over this.
We are well aware that women, particularly on re-entering the labour force, often do not have generous access to the household income. We are aware that this is a sensitive area and we are developing our counselling around this.
Senator Lavoie-Roux: It could be different from one province to the next, correct?
Mr. Leduc: That is correct.
Senator Lavoie-Roux: Did I understand correctly that in assessing the employment supplement, you take into account the family income?
Ms Jackson: We do not take it into account for the basic benefit, but for the family income supplement, yes.
Senator Lavoie-Roux: That is okay, because the other choice would have been quite unwise.
The Chair: If there are no more questions, we will move on to the bill.
Shall the title and clause 1 be postponed? We usually vote on it last.
Hon. Senators: Agreed.
The Chair: Shall we proceed clause by clause, or shall clauses 2 through 190 be carried?
Hon. Senators: The latter.
The Chair: Is it agreed?
Hon. Senators: Agreed.
Senator Lavoie-Roux: No amendment has been presented here. Does this prevent us from presenting amendments in the chamber?
The Chair: Not at all. Almost anything can be done at third reading - speeches, amendments - as long as it does not affect the principle scope of the bill.
Shall clauses 2 through 190 carry?
Hon. Senators: Agreed.
The Chair: Carried. Shall Schedule I carry?
Hon. Senators: Agreed.
The Chair: Carried. Shall Schedule II carry?
Hon. Senators: Carried.
The Chair: Shall the title and clause 1 carry?
Hon. Senators: Carried.
The Chair: Shall I report the bill without amendment?
Senator Rompkey: Yes, but what about our report?
The Chair: Shall I report the bill without amendment but with our addendum attached?
Senator Rompkey: Agreed.
Senator Lavoie-Roux: Madam Chair, this bill is very complex. Others senators seem quite happy to accept everything as fine. I do not usually abstain, but I am not comfortable to vote for something about which I am unsure. This is a far from perfect bill.
The Chair: You can abstain or you can disapprove, in which the case the committee will approve the bill on division. On division?
Senator Lavoie-Roux: Yes.
The Chair: Carried, on division.
Does the steering committee have the authority to approve the addendum to the bill, providing it is translated and vetted with committee members? It will be faxed and members can respond if they have comments.
Hon. Senators: Agreed.
The Chair: Is Bill C-12, then, respecting employment insurance in Canada, to be reported to the Senate without amendment, but with an addendum?
Some Hon. Members: Agreed.
Senator Lavoie-Roux: On division.
The Chair: Carried, on division.
Senator Rompkey: I would like to confirm whether the committee has agreed to append to its minutes the written briefs of Professor Nakamura and Mathilda Blanchard?
The Chair: Is that agreed, honourable senators?
Some Hon. Senators: Agreed.
Senator Rompkey: Agreed, on division.
The Chair: Carried. Thank you, honourable senators, for your attention.
The committee adjourned.