THE STANDING SENATE COMMITTEE ON SOCIAL AFFAIRS, SCIENCE AND TECHNOLOGY
EVIDENCE
OTTAWA, Wednesday, May 22, 2024
The Standing Senate Committee on Social Affairs, Science and Technology met with videoconference this day at 4:15 p.m. [ET] to study the subject matter of those elements contained in Divisions 3, 4, 5, 14, 21, 22, 23, 31, 32 and 38 of Part 4 of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.
Senator Ratna Omidvar (Chair) in the chair.
[English]
The Chair: My name is Ratna Omidvar, and I am a senator from Ontario and Chair of the Standing Senate Committee on Social Affairs, Science and Technology.
Before we begin, I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents.
Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters. If possible, make sure that you are seated in a manner that increases the distance between you and the microphone. Only use a black approved earpiece. The former grey earpieces must no longer be used. Please keep your earpiece away from the microphone at all times. When you’re not using your earpiece, please place it face down on the sticker placed on the table for this purpose. Thank you all for your cooperation.
Colleagues, today we are studying the subject matter of certain elements contained in Part 4 of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament.
As this study constitutes a study of the subject matter of Part 4 of Bill C-69, the report of this committee will be made to the Standing Senate Committee on National Finance. The final report on Bill C-69 will be made by the Standing Senate Committee on National Finance to the Senate of Canada.
Before we begin, I would like to do a round table and have senators introduce themselves, starting with the senator on my right, Senator Dasko.
Senator Dasko: Donna Dasko, senator from Ontario.
Senator Seidman: Judith Seidman, Montreal, Quebec.
Senator Osler: Gigi Osler, Manitoba.
Senator McBean: Marnie McBean, Toronto, Ontario.
Senator Bernard: Wanda Thomas Bernard, Nova Scotia.
Senator Moodie: Rosemary Moodie, Ontario.
Senator Burey: Sharon Burey, senator from Ontario.
[Translation]
Senator Cormier: René Cormier from New Brunswick.
[English]
Senator Cuzner: Rodger Cuzner, Nova Scotia.
Senator Mégie: Marie-Françoise Mégie, Quebec.
The Chair: For the first panel, we are joined by officials from Employment and Social Development Canada, or ESDC. Thank you for joining us.
In the room are Hugues Vaillancourt, Senior Director, Social Policy Directorate, Strategic and Service Policy Branch; and Jonathan Wallace, Director General, Canada Student Financial Assistance Program.
At the table are Christina Norris, Director General, Canada Education Savings Program; Neal Leblanc, Director, Canada Pension Plan, or CPP, Policy and Legislation; Douglas Wolfe, Director General, Policy Development and Legislative Reform, Labour Program; Neil Burron, Manager, Strategic Policy and Legislative Reform; and Charles Philippe Rochon, Senior Policy Analyst, Labour Program.
Thank you for joining us. I imagine we will see some musical chairs happening as we proceed through different divisions of the study. Ms. Norris and Mr. Wolfe will be making some opening remarks. Please proceed.
[Translation]
Christina Norris, Director General, Canada Education Savings Program, Employment and Social Development Canada: Thank you for inviting us to join you this afternoon. It’s truly a pleasure.
[English]
I’m going to start my remarks by speaking to four divisions in the act: Divisions 3, 4, 5 and 14.
Division 3 of the bill intends to enable the Minister of Families, Children and Social Development Canada to enter into bilateral agreements with provinces and territories to transfer funding for the purposes of the National School Food Program as early as the 2024-25 school year.
Budget 2024 committed $1 billion over five years to create this program, and the Government of Canada seeks to work on existing efforts by provinces and territories to launch this program in partnership with Indigenous partners. The program will increase access to school meals for up to 400,000 additional children, and it aims to improve children’s access to nutritious meals, improve academic outcomes and help reduce food insecurity.
Division 4 of the bill would amend the Canada Student Loans Act and the Canada Student Financial Assistance Act to permanently add a list of 10 occupations for student loan forgiveness: early childhood educators, dentists, dental hygienists, pharmacists, midwives, teachers, social workers, personal support workers, physiotherapists and psychologists — all as eligible occupations for Canada student loan forgiveness. This division also provides for the Governor-in-Council the authority to make regulations to define these occupations.
Canada student loan forgiveness for doctors and nurses was originally implemented in 2013 to help address health care worker shortages in rural and remote communities. The expansion of this list of occupations will help ensure that Canadians who live in rural and remote areas continue to access the health care and social services support they need regardless of where they live.
Division 5 of the bill would amend the Canada Education Savings Act to introduce automatic enrolment to the Canada Learning Bond. The Canada Learning Bond is a $2,000 benefit deposited into the Registered Education Savings Plans, or RESP, of children of families who have experienced low income. Automatic enrolment for the bond would provide a long-term solution to the historical low take-up rates of this benefit, reaching only 42.5% in 2022.
Budget 2024 proposes to automatically open these accounts for children born in 2024 or later. This division also proposes to extend the age limit so that young people from ages 20 to 30 could apply for this benefit retroactively to support their education studies. This division also provides for an authority for the Governor-in-Council to make regulations to this effect.
Finally, changes to the Canada Pension Plan. Division 14 of the bill would modify the Canada Pension Plan, reflecting the agreement in principle reached by Canada’s Ministers of Finance as part of their 2022-24 Triennial Review of the CPP.
First, a top-up of $2,500 to the death benefit would be paid in cases where no other CPP benefit, with the exception of an orphan’s benefit, has been paid in respect of the deceased contributor’s contributions.
Second, a new child benefit for dependent children aged 18 to 24 will be paid to those who are in part-time attendance at school.
Third, eligibility for a disabled contributor’s child benefit will be maintained in cases where a disabled contributor reaches age 65.
Fourth, the Canada Pension Plan’s incapacity provisions will be extended to protect the date of application for a disabled contributor’s child benefit.
Fifth, entitlement to the survivor’s pension will be precluded in cases where an individual has received a credit split in respect of their deceased separated spouse.
Sixth, and finally, the determination of the payee of the disabled contributor’s child benefit will be clarified, using terminology that mirrors that of the Divorce Act.
I will now turn to my colleague Mr. Wolfe for presentation of the remaining four divisions under study today.
Douglas Wolfe, Director General, Policy Development and Legislative Reform, Labour Program, Employment and Social Development Canada: Good afternoon, everyone. I will speak to a number of proposed changes to the Canada Labour Code.
Beginning with improving gig workers’ access to job protection under the Canada Labour Code, Division 21 of Part 4 amends the Canada Labour Code to extend job protections to gig workers. The proposed measure would respond to the Government of Canada’s commitment to improve labour protections for gig workers, as outlined in the 2021 mandate letter to the Minister of Labour and in Budget 2023.
Many gig workers, including digital platform workers, in the federally regulated private sector should be considered employees but are currently wrongfully classified or “misclassified” as independent contractors by employers, effectively denying them their labour rights and entitlements under the code.
Proposed amendments to the code would strengthen existing misclassification provisions. They would introduce a presumption of employee status, so workers would be presumed to be employees unless proven otherwise, but true self-employed entrepreneurs could assert their independent status using the classification tests established in common law and the Quebec Civil Code.
To improve enforcement on misclassification, the government would extend existing prohibitions on misclassification to new parts of the code, Part I and Part II, which deal with labour relations and occupational health and safety. Amendments would be made to strengthen the existing prohibitions in Part III of the code which deals with labour standards.
Broadly, one of the amendments would remove a requirement that the labour program must prove that an employer intended to misclassify a worker. The amendment would simplify enforcement.
Moving to the right to disconnect policy. Division 22 of Part 4 would amend the Canada Labour Code to require federally regulated private sector employers to issue a policy that includes the employer’s expectations for work-related communication outside scheduled hours of work.
Evidence shows that disconnecting from work is critical to well-being. Right to disconnect policies can reduce the informal expectation that employees must remain constantly connected while maintaining the flexibility employers need to keep the economy moving.
The proposed measure would respond to the Government of Canada’s commitment to complete the development of a right to disconnect policy. More specifically, the proposed amendments would require employers to, first of all, issue a policy that includes the employer’s expectations for work-related communication outside scheduled hours of work. It would require the policy to be reviewed and updated every three years. The employer would be required to consult with employees when developing or updating the policy. It would authorize the Governor-in-Council to make regulations to specify how labour standards such as hours of work and overtime apply to work-related communication outside scheduled hours of work.
Furthermore, Division 22 of Part 4 also proposes two technical amendments to Part II of the code. These address a concern over regulatory authority raised by the Standing Joint Committee for the Scrutiny of Regulations and add a missing reference to the Head of Compliance and Enforcement in the English version of the legislation.
Finally, other proposed amendments to Part III of the code are aimed at ensuring that all employees whose employment is terminated by their employer are entitled to termination and severance pay, as long as they meet length-of-service requirements and are not dismissed for just cause. This would reverse the effects of a Canada Industrial Relations Board decision that restricted the right to claim these entitlements for persons who had access to, but did not use, the code’s unjust dismissal recourse.
Thank you very much.
The Chair: Thank you very much, Mr. Wolfe.
Colleagues, we’ll go to questions. You know the drill. Many senators, many questions. You will have four minutes each for your question, which includes the answer. Please indicate who you are asking the question to. I will start with a question to Ms. Norris.
The National School Food Program will be welcome news to many Canadians and many children. This program will work in coherence with existing provincial programs.
Could you tell us how the federal government is working with the provincial governments so that this new funding does not replace but add to existing efforts?
Ms. Norris: Thank you. I will turn to my colleague responsible for the food program.
Hugues Vaillancourt, Senior Director, Social Policy Directorate, Strategic and Service Policy Branch, Employment and Social Development Canada: Thank you for the question. It is an excellent question.
We have been working with provinces and territories. We have been working with stakeholders for a number of years now on the development of the new program. Last fall, we released a “what we heard” report that summarizes what we have heard through those conversations and engagement with stakeholders and partners.
One of the things we heard is what you’ve pointed to: the need to build on what exists and work in partnership with our provincial and territorial colleagues. The intent of the investment from Budget 2024 is definitely to build on the efforts that have already been made in that space from provinces and territories. Every province and territory has some form of school food program in place, and the intent is very much to build on that so that we are effectively expanding existing programming or implementing new programs in schools that currently don’t have access to such programming.
The Chair: Do you have any guarantees?
Mr. Vaillancourt: Guarantees. It’s a fair question. I think the plan going forward will be to work with provinces and territories on how these investments, the federal funding, helps support the implementation of how to build on. Certainly, I think the intent there is not to displace but rather to build and continue to add to investments that currently exist from provinces and territories and, I would argue, civil society as well, who are also important players.
The Chair: Is there an annual report required or a three-year report on how the funding has been used to provide additional food programs to existing ones or not?
Mr. Vaillancourt: At this point, there is no such requirement. Part of the objective is to work with provinces and territories to establish bilateral agreements with each province and territory so that we can get to how that funding is invested. We understand and we know that each province has a different starting point. Some provinces are very advanced. Part of building on what exists implies different starting points in different provinces and territories. We want to establish the starting point so we can measure where —
The Chair: Thank you very much.
Senator Seidman: I had a very similar question to Senator Omidvar, but I’m going to leave it behind unless I get some extra time and go to Division 23, which is Employment Insurance for seasonal workers.
The temporary measures that would be extended by this division were first introduced in 2018 as a pilot project and were subsequently extended in the 2021, 2022 and 2023 budgets. Last year, when studying the subject matter of this specific measure, the committee reported that it looks forward to the development of a more permanent solution that will support seasonal workers across the country. Could you provide any update on the implementation of a more permanent solution to this issue?
Mr. Wolfe: If I may, I believe our colleagues from Employment and Social Development Canada that work with the Employment Insurance, or EI, policies were not invited to the meeting today as far as I’m aware.
Senator Seidman: Okay. I will leave that again and go back to the national school food program. That’s too bad because I think that’s an important question and I’m sorry that we don’t have anyone to answer it.
I presume that you’re going to do consultations and negotiate some type of bilateral arrangements with the provinces. Are you already in the process of doing that or are you going to use money budgeted for 2024-25 to do that part of the process?
Mr. Vaillancourt: We have been working with provinces since 2022, as I mentioned. It has been a few years, at least, that we have been working with provinces and territories. In the context of the Budget 2024 announcement, yes, the plan is to sit down with provinces and negotiate agreements with them so that we can come to an agreement on how funding from Budget 2024 will be invested in each of the provinces and territories to support the development and expansion of school meal programming.
Senator Seidman: In Quebec, for example, some school service centres support one or more schools in the implementation of a school food program, but not all. Most programs operated by organizations target only the most disadvantaged schools.
Is your aim, as you negotiate with provinces, that policies within provinces are maintained or there is some attempt to roll them out to all schools? I’m trying understand how the provinces are going to be able to prioritize their own policies.
Mr. Vaillancourt: As I mentioned earlier, I think we want to build on the systems that exist. You mentioned Quebec. Quebec and others have programs that are often targeted at schools in underprivileged groups. Certainly, we don’t want that to stop happening. What we want to do is give them the flexibility, and then, yes, there is a good case to be made that there are more children that would benefit from school meal programming. It’s really to build and expand on that. Looking at a needs basis, there are certainly some groups that currently don’t have access to school meal programming that would benefit from it.
Senator Seidman: Okay.
Senator Osler: Thank you to the witnesses for being here today. My question is on Division 4 of Part 4, the Canada student loan forgiveness. Canada student loan forgiveness for family doctors and nurses was implemented in 2013, yet Canadians, especially in rural and remote communities, continue to face emergency room closures and worsening access to primary care providers. I understand there was a recent survey of Canada student loan forgiveness beneficiaries where 50% indicated the benefit had a degree of influence over their decision to work in a rural or a remote community.
Do you have any data — not surveys that show a degree of influence, but data — to demonstrate that Canada student loan forgiveness has helped to reduce health care worker shortages in rural and remote communities?
Jonathan Wallace, Director General, Canada Student Financial Assistance Program, Employment and Social Development Canada: Thank you, senator, for the question. It’s a good one. We did complete an evaluation of the loan forgiveness benefit in the fall, and that evaluation used a number of different means to try to get an answer to that question. A lot of the methods used were survey-based, key informant interviews, that sort of thing. Based on those results, similar to the survey that you mentioned, the evaluation did suggest that the benefit did have some impact, but it is one of a range of factors that is used to decide whether someone moves to a rural or remote community. We don’t have statistical data in the manner that you are requesting.
Senator Osler: Do you have any information on what degree of influence it was? Was it a small degree or a significant degree?
Mr. Wallace: If I remember correctly, “to a certain extent” was the wording used. So there is some influence, but it depends on the individual.
If I recall correctly, the factor that was the most significant was previous ties to the community. If the individual grew up or had strong family connections to the community, that seemed to be a greater incentive than a financial one. That being said, the evaluation was based on lower amounts of forgiveness. In fall of last year, the government increased the maximum amount of forgiveness by 50%. We’re not sure how that’s going to play out yet because it’s too soon.
Senator Osler: Thank you. I understand the complexity of the situation.
[Translation]
Senator Cormier: My question is for Mr. Wallace, still on the subject of student loan forgiveness. How is it determined what constitutes a rural region or remote region? How are these criteria set for the targeted regions?
Mr. Wallace: If I may, I’ll answer in English.
[English]
Currently, the definition of a rural or remote underserved community is any community in Canada that is outside of a census metropolitan area, a census agglomeration with a population of 50,000 or more or a provincial capital. If a community isn’t within one of those three criteria, it’s included. That’s the current definition.
However, in Budget 2023 the government announced that it would be changing the definition to ensure that no rural community was left behind. This is because, with the current definition, certain rural communities that happen to be part of census metropolitan areas are excluded from the benefit.
The example that was referenced in the budget was Sheet Harbour, Nova Scotia, which is technically part of the Halifax Regional Municipality, but is actually a rural area that is quite far away from the centre. Therefore, regulatory amendments are currently under development to modernize the definition, which will use Statistics Canada’s population centre methodology. That means any community in Canada with a population of under 30,000 will be scoped in. The timeline for implementation of that depends on approval by the Governor-in-Council. We’re targeting fall of 2024.
[Translation]
Senator Cormier: Thank you. I appreciate your lengthy response. I had a supplementary question, but I’ll instead direct my question to Mr. Vaillancourt concerning Division 3.
In keeping with the questions asked by my colleagues, but specifically…. I understand that there will be bilateral agreements between the federal government and the provinces. Given that education falls under provincial jurisdiction — I’ll use the example of my province, where the education system is divided between anglophone and francophone districts — how is the federal government ensuring that the province will take into account the needs of official language minority communities? I would be shocked to hear you say that the bilateral agreement will include a language clause. How can we ensure that the funding given to the provinces truly reaches official language minority communities?
Mr. Vaillancourt: You’re asking good questions. The preferred way to reach an agreement with the provinces is through bilateral agreements, which will certainly include a number of different elements. The minority languages issue is very relevant. The government plans to publish a national policy for the school food program that will address and identify a number of principles and goals and help guide discussions on bilateral agreements with the provinces. We have had several conversations with the provinces on these issues and on the guiding principles for the national policy.
Senator Cormier: Has the federal government made a firm commitment on service delivery for official language minority communities? It has obligations under the Official Languages Act, as you know. I wonder if, in practical terms, something specific has been included and planned by the federal government to reach these communities.
Mr. Vaillancourt: At this time, if we’re talking about what has been included…. We’re not yet at the negotiation table with the provinces. I can’t confirm that something has been included in writing because we’re not at that step yet. Certainly, this is part…. We’re aware of the obligations in this area. We’re also aware of the provinces’ and territories’ roles and responsibilities in the education system. The goal is to strike a balance in order to meet several objectives related to the program.
Senator Cormier: Remind the federal government…
[English]
Senator Moodie: Thank you to the witnesses for being here today. I have two questions, one on Division 3 and one on Division 4.
Mr. Vaillancourt, does the government have data to allow it to roll out this program in a manner that targets kids and communities with the greatest need?
Mr. Vaillancourt: Thank you for the question.
Senator Moodie: I think I know your answer, but go ahead.
Mr. Vaillancourt: We have been thinking hard about how to ensure that every additional dollar goes to children who are most in need.
How we want to approach this, it is important to recognize provinces and territories that already have programming share many of these objectives to begin with. If you look at provincial policies, where and how they target school meal programming in the schools they target, it is important to recognize that, in many cases, they try to meet those goals.
When you think about the additional investment committed in Budget 2024, it will help facilitate targeting more of these groups and schools where the children are in greatest need.
Senator Moodie: You don’t have particular data about communities in the greatest need. Would that be true?
Mr. Vaillancourt: There is some data. To be honest, trying to have a detailed landscape of school meal programming is not an easy undertaking.
Senator Moodie: The second question I have is on Division 4. It has to do with understanding where we are with loan forgiveness as it is.
This report that was referenced earlier on student loan forgiveness for family doctors and nurses benefits, more than half of the nursing students surveyed in 2022 had never heard of this benefit, nearly 10 years after its implementation.
How does the government intend to meaningfully increase awareness about the federal student loan forgiveness program for its intended new beneficiaries moving forward because it has not done such a good job in the past, as we are learning?
Mr. Wallace: Thank you for the question, senator.
It is interesting because you are correct in quoting that survey result. We also undertook a number of consultations in the summer of 2022 with stakeholders representing many organizations who represent different medical professions, including nurses. The general sense was awareness was high.
What we have determined is that more needs to be done to make folks aware not just of this benefit, but of the program and its benefits in general.
There is some work under way within the department to develop an engagement and awareness plan on the program and the benefits that are offered through it. In addition, we engage with our stakeholder group on a regular basis to make them aware of changes to the program so that they can then communicate that to their membership.
Senator Moodie: I will return to the food program.
What we’re trying to understand here is this program is targeted at the current school system, the current system as it is, with no clear indication of how it will be scaled up, potentially.
Can the government share what proportion of the gap this program will cover?
Mr. Vaillancourt: We know our best estimates from some of the research and academics who have been looking at the current landscape estimates that about 1 in 5 kids have access to school meal programming.
As announced in Budget 2024, we estimate that an additional 400,000 children could receive access to school meal programming through the federal investment. The 1 in 4 is roughly a million.
Senator Moodie: Thank you.
[Translation]
Senator Mégie: Thank you, witnesses, for being here. I’ll ask my question in French. My question is for Mr. Wolfe.
You talked about disconnecting. I asked myself some questions when I heard this idea. It should be understood that this is a new concept. You can let me know if I have the right idea. This new concept is related to the evolution of technology. In the past, there were landline phones in homes, and now our phones are in our pockets. Our employer can reach us at any time on our laptop or anywhere else. How can the law regulate this? Couldn’t regulations or a change in company policy have handled the matter? I would like to hear your thoughts on that.
Mr. Wolfe: Thank you for the question. If I may, I’ll answer in English.
[English]
You are quite right. In recent years, we have seen a massive change in technology. Most people now have cellphones which wasn’t the case many years ago.
In terms of work, we do find there are a growing number of employees who engage in work-related communication outside of normal scheduled hours. We’re seeing this problem of what some have called hyperconnectivity. It certainly can have an impact on the health of individuals, including their mental health.
The idea behind the policy is to require federally regulated employers to issue a policy on work-related communication outside of normally scheduled hours. That’s the purpose of the policy. The idea is really to try to limit the amount of work-related communication outside of those hours.
[Translation]
Senator Mégie: Thank you for your answer. I understand that very well. However, I wonder whether changing company policy…. Should we go so far as to introduce a bill containing such provisions or be satisfied with a regulation stating that the policies should be changed? Then each company could adopt the policy it deems appropriate, depending on the type of business.
Would that work, or do you think that we absolutely need a law?
Mr. Wolfe: Good question.
[English]
Again, I’ll respond in English, if that is okay. We do know that for many employers out there, some of them have already engaged in policies. We know that many have such policies that currently exist.
I suppose the idea behind creating legislation is to create a level playing field between employers so that everyone is operating on the same playing field. Of course, we recognize that within the federally regulated sector there is a huge variety of different employers, and the government’s view is that this provides a certain amount of flexibility for employers in those different sectors.
[Translation]
Senator Mégie: Thank you.
[English]
Senator Burey: I have two questions. One on the school food program and then on the loan forgiveness, Division 4. On the loan forgiveness, Division 4, in the Statement and Impacts Report on Gender, Diversity, and Quality of Life that accompanied Budget 2024, it reported that this measure should significantly benefit women, youth and persons in rural and remote areas. My question is that one of the primary eligibility criteria of the present Canada student loan forgiveness program is for individuals with the Canada student loan to be in good standing. What are the measures within the program designed to address the potential barriers faced by individuals facing poverty who may be struggling to repay their student loans, and how does this program address the need of such marginalized populations to ensure equitable access to loan forgiveness opportunities?
Mr. Wallace: The Canada Student Financial Assistance Program is designed to support students from low and middle income families in financing their post-secondary education. As a result, it is targeted to those who are from families that have disproportionate challenges and could likely not otherwise access post-secondary education. We offer loans, but we also offer non-repayable grants, and the benefit of the grants is that they don’t need to be repaid, which helps reduce the loan burden in repayment.
Senator Burey: Just to interrupt you — I know my chair is watching carefully, timing me — but I just wanted to get to that eligibility criteria of being in good standing and how that would affect people who are not in good standing who really need the loan forgiveness.
Mr. Wallace: Good standing refers to when a student loan borrower is in repayment, they have to make monthly payments on the loan. If they can’t afford to, we have a program called the Repayment Assistance Plan. With respect to that plan, if you are on the plan, you are still considered to be in good standing.
Senator Burey: Okay. So you can offer that. Thank you very much.
I’m going to move to the school food nutrition program. A whopping 58% of all food produced in Canada, many tonnes are wasted according to a report by Second Harvest — among other factors — produce being left to rot. This program may provide an opportunity for innovative farm-to-school models that would help our Sustainable Development Goals, or SDG, climate, which could probably bolster local farms and urban agriculture. Would the National School Food Program facilitate such food models?
Mr. Vaillancourt: What you just described are things we have heard when we engage with Canadians and the opportunities that it presents to engage and have local producers involve and engage in school meal programming in their local communities. To some extent, it already happens in some parts of the country. So when we say we want to build on what exists, we want to leverage the best practices that are out there and scale them up, and in some instances, it means working with provinces.
Senator Burey: I will ask you again because my chair is listening. Is there a specific metric with the rollout of this program that we want you to engage in such models? Is there any kind of bilateral agreement that you could name that says they actually agree to do this?
Mr. Vaillancourt: As part of the bilateral agreements, we want to release a policy that articulates a number of principles and objectives. Some of those speak to how local communities, how different models that are out there that leverages —
The Chair: Thank you, Mr. Vaillancourt.
Senator Bernard: Thank you all for being with us, and thank you for your patience.
I want to ask a couple of questions on Division 5, the Canada Education Savings Act. One of the things that we have learned — and I think you mentioned this in your opening statements, Ms. Norris — is that there hasn’t been as much uptake as you would like, and so you have made some changes. What were the barriers to the uptake, and how would the changes address those barriers? Or do you know what the barriers were?
I also want to ask about data. One of the things we saw from the report on gender diversity and inclusion was that there was a lower uptake in rural communities. Do you have other disaggregated data that would tell us about the uptake or lack of uptake from other communities, marginalized communities, people who are very disenfranchised, who may not even know about this program?
Ms. Norris: Thank you for the question, senator. It is true that the take-up rate for the Canada Learning Bond has been unacceptably low. We have done a number of research projects looking at the barriers to take-up. Many of the barriers relate to things like a lack of trust of vulnerable communities in financial institutions with whom we partner to deliver this benefit. We know that other barriers relate to the actual need to open a Registered Education Savings Plan with the financial institution and then make decisions regarding those investments. Those are a lot of pain points for families who are experiencing low income.
We know from our research that those underrepresented in take-up of the Canada Learning Bond are those who are low income — by definition the benefit is income-tested — but those in the lower income segment. You also mentioned rural and remote families. We know that Indigenous children and families are underrepresented in our benefit take-up.
We publish data every year on the take-up rate disaggregated by data, for example, but do a number of other research projects as well.
In terms of your question related to how this measure would address those barriers, what we’re going to do is allow parents and children — up to four years — to open a Registered Education Savings Plan should they choose. If they are unable to — and through no fault of the child — the government will open an account on their behalf to address those take-up barriers.
Senator Bernard: How do the poorest of the poor, who have no access to funds to open a registered education plan for their children, access funds? These are the people who need it the most.
Ms. Norris: Absolutely. Fair question. In the registered education plan model, there are different parts of the benefit. Some of the part requires parents or caregivers or actually grandparents or others to contribute to an RESP, and that tracks particular government incentives. Twenty per cent return on investment is the government program that is universal. We also have income-targeted benefits, so there is an additional 10 to 20% of incentives for families who have experienced moderate or low income.
But the Canada Child Benefit requires zero dollars of anyone to attract the benefit, so no dollars are required at all. There is not an obligation to make any contributions to these accounts for low-income children.
Senator Bernard: How do those families learn about the program?
The Chair: Thank you, Senator Bernard. My clock doesn’t lie. Sorry.
Senator McBean: Thank you. It is funny. I am new here, and when everyone introduced themselves, they introduced themselves by their province. For whatever reason I said, “Toronto, Ontario.” I didn’t know why, but now I do.
Looking at student loan forgiveness, what comparable financial supports are available in the 10 work areas for people who are in underserved urban communities like in Toronto?
Mr. Wallace: The benefit is offered to those professionals who seek to work in underserved rural or remote communities. The intent was to address the particular shortage of health care workers in those communities which data shows is more acute than in urban areas. Currently through the Canada Student Financial Assistance Program, there isn’t a similar benefit offered to professionals who work in urban areas.
Senator McBean: All I do is hear about emergency rooms that are packed because people don’t have doctors and access to them.
My second question is about the school food program. Ms. Norris, maybe you can come back — sorry, I should have started there because you were already in the seat, but maybe it is just fun to make you move. If my notes are correct, you started off by saying that the school food program could be working as early as 2024-25. Is that what you said? We have been asking your colleague about it. At this point, it seems like the proposed National School Food Program is a bit of a bullet point. It doesn’t seem like there is policy or information about how we are going to reach 400,000 kids. The agreement with the provinces doesn’t seem to be there.
How did you come up with the idea of saying that it will be up and running next year when it seems that — and I don’t think it is a fault — you don’t know how to connect with the provinces and the bilateral agreements?
Ms. Norris: I’ll defer to my colleague since it is his area of responsibility.
Mr. Vaillancourt: Thank you for the question. There is definitely an interest. Part of the reason why I am here today is because we introduced year-one funding as part of the budget implementation act to have access to that funding in the most timely manner. We went through and outlined provisions in the budget implementation act because it’s the fastest way for the government to have the funds available to negotiate with the provinces and territories.
In terms of how quick we can come to an agreement with provinces, that is a difficult question to answer. Based on the conversations we have had with provinces and territories, I think many provinces are actively working on school meal programming in their jurisdiction. It is ambitious, but I think it is feasible.
Senator McBean: Do you know how many kids are receiving food program support currently? Is it 400,000 new kids or 400,000 kids total?
Mr. Vaillancourt: It is difficult to have a precise number, but academics have looked at the landscape and estimated about 20%, just over a million kids, currently have access to some form of school meal programming. The 400,000 would be additional to that number.
Senator Cuzner: I would like to call Mr. Wolfe up to the table.
Mr. Wolfe, I think back to when you first joined the labour program. We were dealing with misclassifications back then. I applaud the government on this initiative. It makes it illegal to misclassify now. I recall back in B.C. that contractors were bringing people onto the work site and referring to them as subcontractors so that they didn’t have to pay CPP, EI or Worker’s Compensation. There was a pilot project then that allowed Service Canada and WorkSafeBC to go on-site right into the action.
How is the labour program resourced? Are we looking at a reactive approach to policing this or a proactive approach to policing it? Is it going to be responding to complaints or will you be taking a more proactive approach?
Mr. Wolfe: Thank you for the questions, senator. You are quite right that when you were the parliamentary secretary, we did put in place a pilot project on misclassification which was very successful. We found that a great deal of misclassification was occurring across the federally regulated sector. Many employers were classifying employees as independent contractors or subcontractors in some sense. The pilot was so successful that the government decided to expand it nationwide. That did occur. Legislation was brought into place in 2021, which initially prohibited misclassification. Today, we’re proposing to strengthen that initial prohibition on misclassification. The idea is to make it —
Senator Cuzner: How many resources did you field to — it will be more reactive than proactive?
Mr. Wolfe: I think it will be both. The labour program does receive complaints regarding misclassification and those are duly investigated. We found that many employees are not in a position to complain, so it is important to have proactive investigations. The labour program intends to do both.
Senator Cuzner: The federally regulated sector of gig workers would represent around 10% of the gig workers in the country. What sectors are most impacted? Are Uber drivers, and what have you, more provincial?
Mr. Wolfe: That’s a great question. It is true that most gig workers are under provincial jurisdiction, so the Uber drivers of this country, all of that, is within provincial jurisdiction.
There are a number of workers in telecommunications and in truck driving, for example. There are gig workers there as well. It is these types of workers, but it is definitely a smaller number of workers than at the provincial level.
Senator Cuzner: We hope that they see the benefit in this and that it bleeds over to the provinces. Great.
Senator Dasko: Some of my questions have been answered already. This goes back to the National School Food Program again.
To clarify, I understand that among the objectives is to increase the number of students receiving the program as opposed to going deeper with the numbers of students who are already receiving the program. The 400,000 is a top-up — that is, it is what you are expecting to add to those students who are already part of the program. Is that correct?
Mr. Vaillancourt: That’s correct. It is new and builds on those that currently have access.
Senator Dasko: Right. Are you anticipating that the provinces will be getting about the same on a per capita basis in this program or have you looked at what the provinces currently have in place? Would some provinces be getting more than others?
Mr. Vaillancourt: Yes, so the funding allocated to each province and territory will be largely based on a per capita basis.
Senator Dasko: Is that one of the principles? You mentioned earlier that the program has objectives and principles. Is that one of the principles of the program, that it’s essentially per capita equal across the country, or are you basing it on other principles? Is that a principle?
Mr. Vaillancourt: It’s not, strictly speaking, a principle that we envision as part of the school food policy. It’s more a question about how to distribute funds to all provinces and territories. We looked at different approaches that are used, and, for example, early learning and child care would come to mind in terms of a series of bilateral agreements where funds are allocated mostly on a per capita basis. It’s a very similar approach.
Senator Dasko: Just one more question, and this builds on Senator Moodie’s question about how you determine where the need is.
Wouldn’t you be using socio-economic status of school districts and of schools? Is that part of the data that you use to determine where there is need?
Mr. Vaillancourt: That’s certainly how some provinces are making their decisions in terms of where they allocate funding. As I mentioned before, I think we definitely want to build on the systems that provinces and territories have currently running.
Yes, there certainly are many specific policy objectives that provinces have to target those most in need. By building on what exists, it will help, again, target those most in need.
Senator Dasko: Would that be the main indicator of need, the socio-economic characteristics of, let’s say, a school district or of schools, but by using census data? Is that the basis of determining where the need is?
Mr. Vaillancourt: That’s certainly one way that I understand some provinces are using for the purpose —
Senator Dasko: Are there other indicators? Are there any others or would that be the main one?
Mr. Vaillancourt: I think what the literature says when you look at the benefits of the school meal programming, certainly socio-economic factors are key drivers in terms of where the needs are. But it’s also important that there are many reasons why a kid doesn’t go to school after having had a breakfast that goes beyond the socio-economic reasons. It’s a bit more complex than just one data point that answers all the questions.
Generally speaking, I think it’s fair to say that when you look at current programming, it’s often the case that it is based on the socio-economic.
Senator McPhedran: Welcome. I wonder if I could ask Ms. Norris to rejoin us, please.
I wanted to pick up on some of the questions that my colleagues have already asked, and it’s, perhaps, a cut-out kind of question.
We’ve been talking in specifics, but can you say something more to us about the necessity of the section of the bill particularly as it relates to low-income recipients? Exactly where does this give you greater discretion, authority or capacity in order to hone what you know about the shortfall of programs in terms of them actually being used by low-income people?
Ms. Norris: Thank you so much, senator, for the question.
I think there is a two-part answer. One is in terms of eligibility to ensure that this benefit is targeted to low-income children and families, those data we’re very confident about. We get income-level data for these children and families from the Canada Revenue Agency, or CRA, so we have a good sense on those children who are eligible and not receiving. We have good information on that, so it is for those children that the accounts will be open. The barriers with financial institutions and other barriers to accessing these funds will be largely removed.
In terms of use of the program, that would happen when these young people graduate from the K-to-12 system and start entering the post-secondary education system. In that case, the current rules for use of registered education funds would continue to apply as they do now.
So young people, regardless of income, whether their benefit is in the Canada Learning Bond portion of their Registered Education Savings Plan or in the more general Canada Education Savings Grant, individuals would provide information to their financial institution that they’re enrolled in a qualified program at a qualified institution. Those rules would remain unchanged for these children.
Senator McPhedran: Thank you.
Can we feel confident through your answer to this question that there is sufficient money in these funds so that at the point of graduation — or after — low-income people, new graduates or younger adults who want to access the funds, do you ever see a situation where the money is just not adequate for what it is that they want to do?
Ms. Norris: Thank you for that question.
Certainly, you’re speaking to a broader issue of student financial assistance in Canada. What I would say is that the funds that exist in a Registered Education Savings Plan typically form part of the financial assistance that is offered to children. My colleague Jonathan Wallace spoke to some measures through what was the Canada Student Loans Program — now the Canada Student Financial Assistance Program — that provide additional non-repayable and repayable financial assistance. We also know that there are other provincial post-secondary education level incentives for young people to attend post-secondary education.
The RESP portion typically forms one aspect of that overall funding envelope for a young person to attend post-secondary education.
Senator McPhedran: Thank you.
If it turns out that there’s not adequate money, what happens at that point? The money that’s in the account, is it just assumed that that person is not ever going to use it and it is recouped or what happens?
Ms. Norris: Thank you for the question.
Funds that exist in a Registered Education Savings Plan can stay in that account for 35 years, so it’s quite a long period of time.
We do know that children from low-income families — to whom this measure is targeted — over 70% of them do attend some post-secondary education programming such as college, university or trade school, so we’re fairly confident those funds will be used for post-secondary education studies.
Unused funds that are federal grants get returned to the federal government, and that happens now. That happens for our existing clients now.
The Chair: Miracles do happen; we have found some time. Second round.
Ms. Norris, I have a question for you about the Canada Education Savings Act, an important measure to alleviate poverty for youth.
I notice that this measure about automatic enrolment will only come into force on March 31, 2028. What is going to happen in four years? Why do you need so much time?
Ms. Norris: That’s a fair question.
One clarification about the measure is that the measure will apply to children born in 2024. Children born in this year who are eligible and not receiving will benefit from automatic enrolment.
Our intention is to do outreach to the families who are eligible to receive this benefit to let them know that an account will be opened when their child turns age 4, if an account has not already been opened to them. The reason for that four-year time delay was two-fold: One reason is to give parents the longest period of time to open an account, should they choose. That is still, in our view, the best approach.
Entrance into the K-to-12 system in most provinces typically starts at age four, so that is another common time our data shows a small spike in RESP enrolment. We think there is a nice trade‑off between ensuring that these children will have access to their funds over their young adulthood until they turn 18 while giving families a maximum amount of time to make decisions that work for them.
[Translation]
Senator Cormier: My question concerns Division 4 on student loan forgiveness and repayment. I can see the list of professions. Are any groups less likely to be eligible for this forgiveness program? The list is lengthy. I gather that it covers the priorities, but is it comprehensive? Does it take into account other considerations and other community needs for assistance?
Mr. Wallace: That’s a good question, thank you. I think that a number of professions were included, but the government ultimately had to make decisions.
Senator Cormier: On what basis were those decisions made?
Mr. Wallace: In principle, there were four key elements: first, the labour market data; second, stakeholders’ input during the 2022 consultations; third, the alignment of the chosen professions with the government’s priorities, such as mental health; fourth, the budget and the costs of this measure. That was another factor.
Senator Cormier: I see. In your consultations, did the provinces agree with these priorities? Were the same priorities identified by the provinces and communities?
Mr. Wallace: We consulted provincial and territorial representatives and used what they told us to create the list. However, the process didn’t involve reaching an agreement or a consensus.
Senator Cormier: The provinces may decide to negotiate with the federal government, then?
Mr. Wallace: No. The Student Financial Assistance Program is federal, so the loan exemption measure is solely federal and provincial governments don’t receive support.
Senator Cormier: Thank you for that answer.
I have another question for you, just out of curiosity. Bill C-322, tabled in the House of Commons by member of Parliament Serge Cormier, my New Brunswick colleague, concerned the development of a national framework for establishing a school food program. Do you know whether that bill, which is currently being studied in committee, aligns with this initiative announced by the government? What can you tell us about that?
Mr. Vaillancourt: Good question. If passed, Bill C-322 would require the government to design, publish, examine and then report on a school food framework. The new national food program announced in Budget 2024 is generally very consistent with the intent of the bill.
Senator Cormier: Okay. Thank you.
[English]
Senator Moodie: I would like to ask a question about Division 21, the gig economy.
In what ways does the government anticipate these amendments influencing the future landscape of gig work in Canada? Does the government anticipate any reductions, specifically, in the availability of job opportunities as a result of the amendment?
Mr. Wolfe: Thank you very much for the questions.
Certainly, the government is looking to really improve upon the situation with respect to misclassification. The government absolutely understands that, for many individuals, gig work is an important source of employment. However, the government is interested in trying to do more to prohibit misclassification.
We’re not seeking to reduce employment in that sector; the government is simply trying to ensure that employees have the layer of rights they’re entitled to.
Senator Moodie: Will you be tracking whether it reduces opportunities?
Mr. Wolfe: We will certainly be tracking the number of complaints. I would say it is difficult for us to track the number of opportunities overall, but we will be tracking the number of complaints that are provided over time as well as the number of proactive investigations that we do.
Senator Moodie: I want to jump quickly to Division 38, dealing with the Immigration and Refugee Protection Act — no?
The Chair: No. That’s tomorrow. Thank you, Senator Moodie.
Senator Moodie: You’re off the hook.
The Chair: Colleagues, I want to thank all the public officials who have been so generous and done the musical chairs so effectively. We really appreciate your answers to our questions. Senators, you have all done a fantastic job.
Colleagues, we will continue with our next panel.
Representing the Canadian Trucking Alliance, we welcome, in person, Stephen Laskowski, President, and via video conference Jonathan Blackham, Director, Policy and Public Affairs. Representing the Canadian Labour Congress, we welcome Bea Bruske, President, also joining us by video conference.
Thank you so much for being with us today. We will begin with opening remarks from Mr. Laskowski.
Stephen Laskowski, President, Canadian Trucking Alliance: Thank you very much Madam Chair and the rest of the committee.
My name is Stephen Laskowski, President of the Canadian Trucking Alliance, or CTA. I am joined on screen by Jonathan Blackham, our Director of Policy and Public Affairs. By way of background, the Canadian Trucking Alliance is a federation of seven provincial trucking associations. We represent about 5,000 trucking companies and 250,000 employees. Today, I’m pleased to talk to Bill C-69, Divisions 21 and 22.
Just for clarity’s sake, we are an organization governed by a board. Our board will be discussing and voting on these two measures next week. I’m here today to give you their preliminary reaction from both legal counsel and our executive. Don’t worry, I won’t be short of comments. I rarely am.
The Chair: Five minutes, sir.
Mr. Laskowski: For nearly seven years now, the Canadian Trucking Alliance has been sounding the alarm bell on an underground economy scheme known as Driver Inc. This scheme sees drivers purposefully misclassified in order to avoid employee entitlements like overtime, vacation pay, 10 sick days, personal leave and the employer portion of payroll taxes. In turn, many drivers knowingly or unknowingly file their taxes improperly, take deductions they’re not entitled to or, more often than not, do not file taxes at all. The employer can easily save around $30,000 per year with an employee engaging in this scam. CTA estimates that both on the employer and employee end of it, the Canada Revenue Agency is missing out on billions of dollars a year.
We have proposed many solutions to both Employment and Social Development Canada and CRA over the past seven years, but, in general, the response has been slow and remains short of what we believe to be truly needed to curb this non-compliance. This is especially true for the CRA. This is a crisis for our industry. I wanted to emphasis that.
Nonetheless, more recently, we’ve seen more action on the part of ESDC, and we are hopeful they will continue to make this issue a priority. From CRA’s end, there was a commitment made in the Fall Economic Statement 2022. Nothing was brought forward in either of the subsequent budgets as promised. In short, CRA must lift a 14-year moratorium on T4As that has been causing this issue. Misclassification is a symptom of a tax evasion scam and requires greater enforcement on what these individuals are. The misclassification is a tax-compliance scheme run under the personal services business, or PSB, model. I want to emphasize that. It is critical that we address misclassification. It’s equally critical — if not more critical — to address the tax side of the scam.
With regard to Division 21, we are referred to as presumptive employment. We have been told this will help ESDC better address driver misclassification schemes and will allow for faster and more effective enforcement. We sincerely hope this is true. However, we want to be clear. These individuals are long-term employees with stable employment who typically do not fit the gig employment or gig definition.
With regard to the changes, we want to make sure this new measure does not take away the right to be independent. We have many truly independent contractors. The critical aspect of this is that they own their own tools — in our case, the truck. Again, we have pleaded assistance for seven years, and we are hoping this measure provides some relief.
On Division 22 and the right to disconnect, we believe the Government of Canada has taken a more sound, reasonable approach to this issue when compared to the first round of consultations a few years ago. While we certainly understand the issue, we nonetheless urge everyone to remember that not all jobs are the same and not all workers see the issue the same. In fact, many outright oppose it, and for good reason. In trucking, our business is 24-7, 365. We also have many workers out there on the road alone. Much of the focus over the past decade has been to better connect the driver so they can receive timely information on weather events, infrastructure outages, route changes and delivery requests — among countless other variables. In turn, those drivers must rely on staff back home when issues arise. When it comes to workers like truck drivers out there on their own, virtually all experts in the field agree that free and open communication is absolutely essential, and protecting against communication breakdowns is the best practice.
Again, when it comes to the right to disconnect and what we imagine it will mean in practice, we need to be very careful that we do not assume all sectors have the same working patterns and that all the workers inherently want to be disconnected in the same way. However, although we do still think there is a possibility this may be impracticable to the trucking industry for a host of operation and safety reasons, we are happy to see that there is at least a flexible, policy-based approach being taken that will allow employees to design policies that can fit with their businesses and their workers’ needs.
Thank you, and I’m happy to take questions.
The Chair: Thank you very much.
Ms. Bruske.
Bea Bruske, President, Canadian Labour Congress: Thank you, chair. Good afternoon, committee members. Thank you for the opportunity to appear before you today.
The Canadian Labour Congress, or CLC, is Canada’s largest central labour body. It brings together 55 national and international unions, representing three million workers in virtually all sectors, industries, occupations and regions of the country.
The two parts of Bill C-69 under review today — Divisions 21 and 22 — amend the Canada Labour Code. They establish a default presumption of an employment relationship. They introduce a requirement that federally regulated private sector employers must have a policy on disconnecting from work.
I’ll start with misclassification. We believe that employee misclassification is a very serious, widespread and growing problem in Canada. It affects vulnerable workers in digital platform work, trucking, construction, the care economy and personal services. Employers often have a material incentive to falsely classify employees as independent contractors rather than employees. By falsely claiming workers are self-employed contractors rather than employees, employers avoid paying Employment Insurance premiums, Canada Pension Plan and Quebec Pension Plan contributions, workers’ compensation insurance premiums and other unremitted taxes. Employers also avoid having to pay vacation pay, overtime pay and termination and severance payments. Employers also don’t have to provide occupational health and safety protections they would be legally required to provide to their employees. In our mind, employee misclassification is payroll fraud.
Business models based on the systematic misclassification of employees have emerged in industries like trucking and food and parcel delivery. They have emerged in response to ambiguity in the law as well as weak enforcement.
Bill C-69’s changes in this respect are a significant improvement over the current language in the code. We welcome the default presumption of an employment relationship with the onus falling on the employer to prove otherwise. However, the employer doesn’t carry a burden of proof in a prosecution or when an administrative monetary penalty is imposed.
The CLC and many unions have urged the government to clarify the law by legislating an “ABC test” to crack down on misclassification. This kind of test would clearly separate bogus self-employment from legitimate independent contracting.
I will now speak to disconnecting from work and related communications.
A very high proportion of workers in Canada struggle with the expectation that they will be available to respond to emails, text messages or cellphone calls after normal working hours. Work-related emails, texts and phone calls during vacations, weekends, early mornings and evenings are common.
Facing heavy workloads and not wanting to displease management or their co-workers, workers often feel obligated to respond outside of normal working hours and find it difficult to take vacations without taking their devices along since they could be called on by management or by their co-workers.
In 2020, Statistics Canada’s Canadian Internet Use Survey asked respondents if there is an expectation from their employer whether they have to use the internet to stay connected outside of their work hours. An astonishing 1 in 5 employed Canadians answered, “Yes.” These employees are parents, caregivers, students and workers holding second jobs. During the pandemic, almost 3 in 4 Canadians reported being very or extremely concerned for their ability to balance child care, schooling and work, and women in particular are stressed since they primarily are burdened with the unpaid care work in the home. Many employers are profiting from this. According to Statistics Canada, almost half of employees — 46% who worked overtime — reported working unpaid overtime in any given week.
In our view, Bill C-69’s policy of disconnecting from work-related communication is too weak. It simply requires employers to have a policy on disconnecting; it does not go the further step of protecting the right of employees to actually disconnect from work. Budget 2024 stated that the government would require federally regulated employers to establish a right to disconnect policy limiting work-related communication outside of scheduled working hours, but unfortunately, this bill does not do this.
The record shows that employers commonly don’t comply with the requirement to have policies in place. That was seen 10 years ago when the Canada Labour Code required that every employer has to have a policy concerning sexual harassment in the workplace, and yet despite this, the federal jurisdiction workplace survey found that only 36% of employers had such a policy in place when they were legally required to have that policy. Because of this, in 2018, the federal government passed Bill C-65 abolishing the reliance on employer policies. Bill C-65 created a much more robust set of protections against sexual harassment in the workplace in Part II of the Canada Labour Code.
In our view, Bill C-69 misses the opportunity to protect the rights of employees to detach from work after normal working hours. Thank you, and I would be pleased to answer any questions you may have.
The Chair: Thank you very much to both witnesses for setting us off. Colleagues, we will have slightly more time this round per question. Let me ask the first one of Ms. Bruske.
Ms. Bruske, you heard Mr. Laskowski’s testimony about the context in truck driving — and I understand that is completely different. It is a different context. What would your response be to him about his concerns?
Ms. Bruske: Every industry and sector, quite honestly, is unique. Employers, unions and workers need to work together to find solutions that are going to work.
What I know is that we have a surging mental health epidemic in this country with people having more and more challenges being able to take the time that they need for their families and for themselves to be healthy. We need to find solutions to these problems. We cannot expect workers to put in a full 8, 10 or sometimes 12 hours, go home and still feel the need to be on call, answering their phone and responding back to their workplace. If there is such a requirement, that needs to be acknowledged and additional time offsets must be given in order for employees to actually be able to navigate their personal life responsibilities and their family and community responsibilities with their work responsibilities.
The Chair: Thank you very much.
Senator Osler: Thank you for being here today. I have the same question for both the Canadian Trucking Alliance and CLC, and perhaps I will ask CLC to answer first.
Division 22 of Part 4 contains a proposed amendment to the Canada Labour Code to establish a policy on federal employees’ right to disconnect. Can you foresee any unintended consequences that may come as a result of the proposed amendment?
Ms. Bruske: I cannot anticipate unintended consequences at this time, but certainly, as I noted, every sector is unique and different. Care has to be given when we’re looking at enforcing any kind of policy that it meets the needs of that particular employer, sector and of those workers. We can be creative in problem solving and finding solutions, so I am very sure that can be accommodated.
Senator Osler: Thank you.
Mr. Laskowski: With regard to the flexibility built into it, there is provincial legislation that exists that is similar to the proposed legislation, and it works. Like with any legislation, it is going to require that flexibility in whom enforces it and, indeed, that it is enforced. It is all of those elements.
Senator Osler: Thank you.
The Chair: Can you describe a provincial legislation that works and that informs this legislation?
Mr. Laskowski: Sure, I will defer to Jonathan Blackham, who is up on the screen, to talk about the Ontario model and how it works in Ontario.
Jonathan Blackham, Director, Policy and Public Affairs, Canadian Trucking Alliance: Thank you. As we understand it in Ontario and in trucking, we have both provincially regulated companies and federally regulated companies. It is a similar sort of policy-based approach, where employers have some flexibility to come up with policies that meet their workers’ needs and their business needs. To the question about perceived unintended consequences, in the first round of consultations on this, going back to the 2021 period, a lot of our members responded with this fear that with more prescriptive approaches to the right to disconnect, that there may be apprehension on the part of staff, be it the driver on the road or people back home that respond to emergencies, to second-guess whether they should be passing critical information back and forth to one another if this is something that is happening late at night or outside of normal hours. That was something we heard loud and clear as something that needs to be guarded against in the right to disconnect policy.
The Chair: Thank you.
Senator Moodie: Thank you to our witnesses for joining us today. I wanted to follow up, if I could, Mr. Laskowski, on a comment that you made about Driver Inc. I think you were talking about that. I was trying to understand, is this a widespread issue across the nation or is it limited to or abused especially in certain areas?
Mr. Laskowski: It is a widespread problem. It has what I’ll call bigger hot spots than others. For example, as I mentioned in my opening remarks, there is a tax code called the personal services business model. That is how you get to the misclassification. Ten years ago, trucking wasn’t even on the road map in terms of sectors that use the PSB. We are now the number one personal services business model in Canada, and it is not even a close second. There are no — and I repeat this — no tax advantages associated with a truck driver being a PSB. There are different reasons to be a PSB. In fact, when you add in all the labour, and the risk of what you lose — when I mentioned that before in the opening — you are well in the negative with regards to your compensation package.
The issue is that it is growing. It is at a crisis level. It is at such a crisis level that the largest trucking company in Canada is a shared company. It also owns major holdings in the United States, but it is based out of Quebec. In their quarterly statement, their chief executive officer stated that they would leave a certain segment of the trucking industry referred to as the “truckload sector” because of Driver Inc.
Senator Moodie: I want to shift gears a little bit to the policy on disconnecting and other measures. This question is for all of the witnesses. What specific criteria should be used to determine which employees are exempt from a policy on disconnecting? If you can think of any, can you tell us what criteria should be included?
Mr. Laskowski: When this policy came up years ago, there was a conversation around that — and I will kick it over to Mr. Blackham, who will walk you through how we had those conversations with ESDC and how complicated they became.
Mr. Blackham: Thank you. We think of trucking as a truck driver on the road, but really, it takes a village behind the driver to really support them in what they do out there. I think the most basic answer to that question would be the people acutely involved in safety incident response and that sort of thing. But when we went out to members, they made very compelling reasons for a host of other positions, potentially dispatchers that have unique connections with drivers, or operations and support staff along with those who know the customers and that. It could be a large group.
We keep coming back to flexibility. I think there needs to be flexibility in there for companies to decide who the critical people are to respond to the drivers’ needs on the road and make their policy accordingly.
Senator Moodie: The movie must be here. The lights are dimming.
The Chair: Do you need a bit more time?
Senator Moodie: No, thank you.
Senator Burey: Thank you so much for being here.
I wanted to thank you for bringing this to our attention and to my attention. I am wondering about how you think the government or your organizations should educate these employees about the misclassification and what is needed to educate the truck drivers about misclassification? That’s the first question.
Could someone tell me more about this ABC model? I think it was to see how you determine the classification.
Mr. Laskowski: I will turn it over to Mr. Blackham again. We will work from the last one first. It is critical with the ABC test. There is a three-point test to determine their status in trucking. Mr. Blackham, could you provide the senators with an overview of how that test in general works?
Mr. Blackham: As Mr. Laskowski mentioned, it is a three-point test. Our most acute experience with this comes from the U.S. and in California where there have been changes similar to this. But we know from our counterparts in California that there was significant opposition to this within the trucking industry, particularly from those that are true independent contractors, that the net was perhaps too wide and that it was killing the entrepreneurial spirit within the industry, which is very strong, by the way. It is a very entrepreneurial sector.
It is interesting. I can’t proclaim to be an expert myself on the ABC test, but I can say that I have heard issues from our counterparts in the U.S. Here in Canada, I think that jurisprudence on classifying independence is fairly well established. People understand what it takes to be an independent contractor here. The missing part is enforcement.
Senator Burey: I think the CLC wanted to comment on the ABC.
Ms. Bruske: Most recently, the ABC test was used by the Ontario Labour Relations Board in 2020 on a decision with regard to foodora food courier drivers. In Ontario, the labour board did consider the ABC test to determine whether those individuals were independent couriers or employees of foodora, the company. It determined that they were, in fact, employees.
The ABC test sets out a guideline that the worker has to be free from the control and direction of the employer, so they have to work completely independently; that the employee performs work that is outside of the normal course of what that employer’s business is, so it’s a separate type of work from what the employer would normally perform; and that the worker is engaged in an independently established trade, occupation or business of the same nature as that involved in the work that they are being asked to perform. They are being hired for a function specifically, not to augment the already existing work of that particular employer.
Mr. Laskowski: From our standpoint, that is not the test that is jurisprudence nor that we support in Canada. There is a three-point test in Canada that ESDC currently uses and others use. One of the key measures is your tools of the trade, meaning the truck. It is complicated. It is a three-point test. Mr. Blackham, how would you quickly summarize the key components of the three-point test of the ESDC?
Mr. Blackham: That’s right. It looks at the control, the integration, the opportunity for profit or loss and ownership of tools. As Mr. Laskowski mentioned, in our case, the ownership of tools tends to be the important variable because it directly impacts all the others — the level of control they have, the opportunity for profit and loss and so on. It works well in our industry. People understand how to be independent and what is not.
The thing that misses, and whether it is ABC or the current test, is there is no enforcement, and then it doesn’t matter what the test is. The enforcement element is really the issue in our sector.
Mr. Laskowski: It is key to remind everyone here that we support the test because it is jurisprudence. It is not always the employer who ends up being ruled upon, correct? Many times, it is the contractor, employee, whatever status. It is established. It merely needs to be enforced and clarified moving forward.
Under presumptive employment, it will be critical, when it is enforced, that it be enforced in a manner that is consistent for everyone.
Senator Burey: How are they going to be educated about the necessity for that? Whether it is the government or your organization, how are truckers going to be educated about that?
Mr. Laskowski: The term “education” is a bit of a hot button in our industry on this one. I think education is important, and we do that too. We were supportive of education seven years ago. Seven years have passed. We do believe there is an element of education, especially people who do not understand the tax code. There is an element of that, but the reality is, senator, that to curb this, it needs to be enforced. The law needs to be enforced on the employers and those who are willingly participating in this.
In our industry, 8 out of 10 truck drivers in certain parts of Canada ask to be paid incorporated. Many of them only pay GST and HST. Ask yourself this, from your own personal perspective: If you only pay GST and HST, what would your compensation package look like? The education has to be enforcement, to say that it is our job as Canadian citizens to pay taxes so we can have roads, hospitals and schools in our social network. It is being robbed in the billions by this. Yes, there is an element of education to this, but the vast majority is enforcement.
The Chair: Mr. Laskowski, you painted a dire picture. This committee doesn’t normally deal with issues of the tax code, but thank you for educating us.
Can you tell us whether this division will help to help resolve the problem? Would you give it a 4 out of 10, a 5 out of 10? You have talked about enforcement, but it is not in the division, so tell me what you really think.
Mr. Laskowski: When I ran this by with legal, there was a bit of a collective yawn among our executive because the issue was: Will it actually be enforced? Will penalties be increased? Will it be the cost of doing business? Will workers who are robbed of back pay actually get their back pay? Will employers look at this as the cost of doing business?
I give you a lot of ifs, Madam Chair, because we need to discuss this more with ESDC. I think ESDC and the minister understand the scope of this problem and the need for enforcement. Our members just need assurance that, indeed, that is going to happen. When the enforcement comes, it is a deterrent to the employers.
There was a question, I believe, asked of the previous panel about would this be reactive or proactive. We have the same question. We do not want reactive. Ask yourself this, Madam Chair and senators: People would ask us from ESDC, well, why aren’t drivers calling if they are being robbed of these rights? Well, if they are benefiting on the tax side, there is complicity. We need to understand that, yes, we need to protect workers who have been taken advantage of in this camp. And we also need to understand we need to protect the Canadian tax base and a level playing field for fair employers who are paying the ten sick days, who are paying overtime and who are paying workers’ compensation because it is the right thing to do to protect workers.
But as I mentioned in one of my opening comments, when you have one of the largest trucking companies saying they may sell off assets in a certain part of the trucking industry because there is lawlessness on the tax and labour side, that is a wake-up call to us all because that impacts them. It impacts their stock value. I think we need to pay attention to that, senators.
The Chair: I hear you say without enforcement you are giving it a 4 out of 10.
Senator McBean: I wouldn’t go so high as a four, from what I am hearing.
I think all of that was in the lane where I was going because it seemed not education but willingness. I did hear you at the beginning saying that they are partners into it. The misclassification of the drivers is not just the employers or the employees. They are all in it. But I am hearing you say it is like you are the parent and you have it all going on here. You seem to have companies that are trying to do the right thing and drivers doing the right thing, but you also, in your organization, have people who are quite happy with the status quo.
The question to you and to Ms. Bruske is: On both sides, are employers running to or running from this? Are the employees running to or running from this? I think we are protecting the gig workers here, but then I am hearing maybe we’re not. Do they want this? Do they not want this? Will this continue to be misclassified?
Ms. Bruske: Thank you. I would say it’s a bit of both. At the end of the day, we want good jobs with good benefits and with a good social safety net. We can’t have a good social safety net if we are not also paying for that good social safety net, and that requires paying things like Employment Insurance premiums. That means paying things like our CPP and those types of things. So when you have employers choosing to hire a contractor versus employing people, that breaks down those opportunities and it breaks down employment relationships.
Most workers want to have full-time, permanent employment. That is what we hear over and over and over again. Being able to find full-time employment, being able to count on your schedule with full regular wages, regular benefits is getting worse and worse as we speak. While there may be some bad actors, as my colleague has expressed, for the most part, the workers I speak to are looking for employers to be able to offer that. This kind of legislation will go a long way to creating those additional opportunities.
Mr. Laskowski: So the question I will gravitate towards is how employers are dealing with this. My members, the 5,000 members, are beside themselves with rage. They feel abandoned. They see their businesses shrinking, some going bankrupt. Trucking competes on pennies. It literally competes on pennies. We use operating ratios in trucking, and so an operating ratio, a good one, is probably .91. For railways it would be .68, the lower the better. When you have a 30% cost advantage plus plus, it is the difference between your trucks being full and your trucks being empty because part of the challenge for our members is, despite education, many large customers that use trucking are price-driven. So, “The price is there, I’ll move my business to X, and I really don’t care how they got to X.”
It is becoming a huge issue. As you may have read and heard about the driver shortage, if one company is losing business because they are doing it the right way, the driver just has to go and drive a blue truck versus a red truck the next day. They are very employable, especially if they are a good and safe driver, et cetera.
To your question, senator, it is enraging our members. They are getting desperate. There are pockets, to the other senator’s question, in the industry where the majority of fleets in certain areas are underground economy misclassification fleets. We are sounding the alarm bells here.
There is one thing I will mention not talking about today but in the budget. The potential for joint audits or information sharing which led to joint audits between CRA, ESDC and potentially — we have to learn more — provincial agencies like Workplace Safety and Insurance Board, or WSIB, et cetera, is needed and needed quickly.
I want to emphasize, going back to the point — and I can’t belabour it enough — it is equally important to protect the legitimate contractors that are out there. Many of these trucking companies you see today started out as one-person trucking companies. They owned their truck and bought a second one and a third and grew it. It is a very entrepreneurial business. Some of these individuals still would be happy with one or two trucks. That’s all they want. But they are legitimate, small businesses. We need to protect them in this process. We do not support the ABC. I cannot emphasize that enough. There is jurisprudence. We don’t need new tests. We have them. We just need them enforced and enforced consistently, and the PSB model — ESDC has already ruled on this — is in no shape or form an owner-operator or independent contractor. It is an employee.
[Translation]
Senator Mégie: My question is for Ms. Bruske. I want to come back to the idea of disconnecting.
We hear about employers and employees disconnecting outside working hours. Has anyone thought about the flip side of the coin, meaning employees in the workplace who aren’t disconnected from the outside world, such as their family and friends? Have you considered this when talking about disconnection?
[English]
Ms. Bruske: Thank you. When workers come to work, obviously they bring their personal life to work with them to a certain extent. You can’t park your personal situation at the door. If you have a sick child at home, you can’t park thinking about that situation at the door. Obviously, we want workers to be fully present during their work hours, and we want them to be able to effectively and efficiently do their work. That also means that you need time to offset that effectiveness and efficiency you have at work by having down time to be able to take care of those tasks that you need to deal with for your family and your community responsibilities. What we really need under the disconnect component is not just a policy but to have a strong definition of what deemed work actually is so everyone understands that.
What was raised earlier in this meeting was a concern around safety issues and critical notification issues in certain industries, and those are rightful things that we should be thinking about, talking about and finding solutions to. But the average workers going home at the end of the day shouldn’t have to be connecting with their workplace to answer an email that could wait until the next day or dealing with a phone call asking a question that could wait until the next day. We do have to enshrine some family time and some community standards time, and that is sorely lacking.
When we hear 1 in 5 Canadians will suffer a mental health situation within the year annually, that is something that is very concerning. We need people to be happy and healthy when they get to work so that they can be as productive as possible when they are, in fact, at work.
[Translation]
Senator Mégie: Thank you.
[English]
Senator Moodie: I just wanted to follow up, Ms. Bruske, if you could help me understand. Life has changed. We are certain we have remote work. We sometimes have unclear definitions about what is work time and what is not. Mental health issues don’t just arise when you are at work and disappear when you have time off. They continue over time.
There is a lack of definition about the issues about which we speak. As a physician, I worry that our reporting of mental health issues is increasing. Maybe it is because we are recognizing it and now reporting it, and it has become our priority as a society.
How has it changed? Ten or 15 years ago, did we have a different problem? What has changed it, in your mind? Can you help us understand the new order?
Ms. Bruske: Absolutely. Thank you for that excellent question.
The reality is that more workers are feeling more and more pressure own a daily basis. You have more workers working in precarious jobs, working part-time and cobbling together two or three different jobs rather than having one full-time, 37- or 40‑hour-a-week job. You have workers working in precarious industries where change is coming, so there is fear of the unknown. They wonder what the transition will look like for them, their communities, their jobs and their families. You have additional pressures that are put upon families in many different ways.
Yes, we do see a higher reporting of mental health challenges and issues, and that’s a good thing so that we’re recognizing it and can work on these particular issues. But that also means we have to put some safeguards in place so that people can exceed those challenges and be healthier in their workplace so they can be fully present when they are, in fact, at work.
The Chair: Thank you, Senator Moodie. I believe we have exhausted our questions, although I do have a great deal of curiosity about —
Senator Mégie: May I?
The Chair: Please.
Senator Mégie: I have a comment.
[Translation]
Division 5, section 163, entitled “Canadian Learning Bonds — application,” contains an error in both languages. The English version talks about children born after 2003 and less than 31 years of age. The French version talks about less than 30 years of age.
It may be necessary to correct the 31 years of age and 30 years of age.
[English]
The Chair: Thank you for always being on your toes with our English-French versions. We will discuss this likely when we go in camera for our observations to the report, but thank you for the heads-up.
I was going to say, Mr. Laskowski, that I am concerned about what you have put on the table. It is not a minor matter. But we are limited in our study at this point on the divisions. I hope, at some point, a Senate committee does a study on the particular issues you have pointed out in the trucking industry.
With that, colleagues, I wish to thank you and our witnesses, who are online, for their aid in helping us understand the context of these two divisions we have been studying.
(The committee adjourned.)