Proceedings of the Standing Senate Committee on Social Affairs,
Science and Technology
Issue 8 - Evidence
OTTAWA, Tuesday, June 11, 1996
The Standing Senate Committee on Social Affairs, Science and Technology, to
which was referred Bill C-12, respecting employment insurance in Canada, met
this day, at 9:00 a.m., to give consideration to the bill.
Senator Mabel M. DeWare (Chair) in the Chair.
The Chair: We are continuing our discussion of Bill C-12. With us today is the
Archbishop of Ottawa, Marcel Gervais. I will ask the His Grace to introduce
the person who is accompanying him and then to give us some guidance on our
The Most Reverend Archbishop Marcel Gervais, D.D., Canadian Conference of
Catholic Bishops: Honourable senators, with me today is Bernard Dufresne from
the Social Affairs Department of the Canadian Conference of Catholic Bishops.
Mr. Dufresne is here to answer all the difficult questions.
I will be making my presentation in French.
Thank you for inviting me here and for giving me the opportunity to share with
you the profound concerns of the Social Affairs Commission of the Canadian
Conference of Catholic Bishops.
Bill C-12 is the most recent government initiative aimed at reforming the
unemployment insurance program. A number of reforms have been introduced in
recent years and virtually all of these efforts have resulted in lower
unemployment insurance benefits.
Bill C-12 completely overhauls the program. Rather than deviate from the
downward course taken by previous governments over the past decade, this bill
stays the course. Before identifying the principle changes proposed in the
bill, I would like to place these reform measures in context.
The economic strategy announced by the government in the fall of 1994 under the
theme "employment and growth" was aimed at the following: creating a
climate favourable to private enterprise, opening up markets, improving skills,
focusing on innovation, reviewing the role of the state, tackling the deficit
and so on.
As one observer noted, in a context such as this, social programs such as
unemployment insurance and social assistance are viewed as ways of turning the
economy around and adjusting to international competition rather than as means
of alleviating the growing economic uncertainty of people buffeted by economic
change. According to an article by Richard Langlois, now more than ever, work
incentives, lower wages and the war on the deficit remain priorities.
Therefore, it is not surprising that the system continues to be adjusted and
that benefits continue to shrink. Other governments of OECD member countries
have adopted a similar approach. They too have bowed to the pressure exerted
by the large transnational firms. They have, so to speak, retooled their
national economic policies to bring them in line with the global strategies of
the transnationals. The goals of these firms are to conquer new markets,
achieve the lowest possible production costs and gain unrestricted access to
production factors at the lowest possible cost. Their ultimate goal is
stronger growth, a healthier profit margin for shareholders and increased
Canada's job market is being restructured as a result of the frenetic search
for the competitive edge, this being perceived as the ultimate, and only
objective. In a study entitled "Expansion and polarization of employment"
published in 1991, the now defunct Economic Council of Canada showed how
Canada's job market had changed, and in particular how the number of
unconventional jobs had increased while employment income distribution had
become increasingly polarized.
This trend is even more marked today, with the emergence of what some have
called the dual society. On the one hand, a growing number of people have jobs
that are increasingly tenuous, while others, and their ranks are increasing as
well, are simply excluded from the labour market, condemned too often to
receiving social assistance over the long term.
On the other hand, the number of people with well-paid jobs in new sectors of
the economy is increasing. Only they seem to have the right of citizenship in
this new economic order where materialism is pervasive and where the belief
that nothing is impossible... if one has money predominates. Consumers and
investors have supplanted citizens, much like the notion of society has taken
a back seat to the notion of marketplace in this new economic order. I will
repeat what I just said because I think it is important: consumers and
investors have supplanted citizens, much like the notion of society has taken
a back seat to the notion of marketplace in this new economic order.
If it is true that a growing number of people have increasingly tenuous,
part-time and seasonal jobs and if the likelihood that they will remain
unemployed for extended periods of time is greater than ever, what then should
the objectives of the reform process be?
In its December 1994 message entitled, "Do the poor have more to fear than
other people about the outcome of social program reform?", the Commission
defined the context in which social program reform should be carried out.
Using as a starting point the love of God, as proclaimed in the Old Testament,
which delivers His people from bondage and provides mana in the middle of the
desert, and underscoring the fact that Christ was responsible for the
fulfilment of this love, the Commission identified two principles: priority
consideration must be given to the poor, the afflicted and the oppressed and
the value and nobility of human work must be emphasized, as each person is
created in God's image.
The Commission stressed that this pastoral approach must encourage participants
in the debate on social policy reform to redouble their efforts and to listen
carefully to the views of those in need of social assistance. In order to
develop and implement improved social policies, the most vulnerable members of
society must be full participants in the process. They are the ones who suffer
the most from the conditions which made these programs necessary in the first
Taking up the theme conveyed in its April 1993 message on widespread
unemployment in which it called for all forces in the country to mobilize and
criticized the government's economic policy, in particular the fact that
deficit reduction had been made a priority, the commission called upon the
government to adopt a job creation strategy and to refrain from threatening the
social safety net which has served the population so well in recent years. The
government should instead show renewed spirit and creativity and look for ways
to make the system even more efficient.
After briefly recalling our position on this issue, I have to respond in the
affirmative to the question asked by the Commission: Do the poor have more to
fear than other people about the outcome of social program reform?
In closing, I urge you to listen closely to the concerns and views expressed by
organizations representing the unemployed. These persons are on the front
line. You must listen to them and make the necessary changes. The government
cannot and must not abandon the less fortunate to the forces of the
I have with me a number of other documents to which I refer and quote in this
presentation. We have the document on social security reforms in French and in
English; the one on employment insurance in French and in English; and the
document from the Bishops of New Brunswick on unemployment insurance.
Senator Lavoie-Roux: I am pleased to see you again. I believe the concerns you
raised are shared by this committee. In my view, no one wants to destroy
social programs. It is a fact that the labour market has changed as a result
of market globalization and technology. Jobs have been lost.
However, there is also another reality that we must face. Governments, whether
provincial or federal, no longer have any room to manoeuvre. They must grapple
with their deficits and allocate a portion of their revenues to service the
interest on the deficit and the debt. Ultimately, they have no room to
manoeuvre when it comes to helping those in need of assistance.
I am not saying that I agree with everything in the bill, if only because I am
a member of the Opposition and I have to find some weaknesses in it. However,
we have to confront the job creation issue. We can ignore market globalization
if we want, but as a society, will we find ourselves worse off later on if we
do not embrace this trend about which, arguably, we can find much to criticize?
As a result of our quest to remain competitive, many people have fallen through
the cracks. However, what alternative does the government have? What other
choice do you think it has? As I said, the government's hands are tied because
of the deficit which prevents its from providing additional support or even
from developing services which society requires.
And while we can sympathize with your position and with the reality that you
describe, we also have to ask the question: what alternatives does the
government have? The fact remains that unemployment insurance costs countless
billions of dollars. The national tab for social assistance also runs in the
billions of dollars. We no longer seem to know how to go about tackling this
problem. We are caught in a sort of vicious circle.
You say that we should think about the poor, the less fortunate and we cannot
argue with that. However, in order to do this, we also need to have money. We
could argue that the banks earn excessive profits and then we get into the
whole question of taxation. Should the taxation system be fairer or better
structured? People all seem to agree about this as well. However, I am not
convinced that tax reform will reduce the costs of unemployment insurance or
I would like to see the programs maintained. Of course, adjustments need to be
made over time. Did you have any concrete suggestions to make as to how we
should deal with the myriad of problems that we face?
Mgr. Gervais: To answer your questions, at least in part, let me say that the
bishops do not profess to have the solutions to concrete problems. This is
really not our mission.
Even though we might hold some views privately, we have a responsibility to
recall those values which we hold dear and which are threatened today.
Generally, it is up to the politicians and to the economists as well to find or
rediscover ways of safeguarding these values. We are not saying that changes
are unnecessary. Not at all. However, we are saying that some values should
not be threatened. At this time, I would like to turn the floor over to my
Mr. Dufresne: Thank you, Your Grace. Senator Lavoie-Roux has indeed raised a
question which we at the Bishop's Conference are always grappling with. Of
course, I am not a bishop. I am only a staff member. What the Social Affairs
Commission does is seek out organizations and groups that have alternatives or
new ideas to suggest. Whether an idea is new or not always depends on one's
perspective. For members of the business community, certain alternatives are
unacceptable because they are viewed as irritants. As soon as there is talk of
changing the rules of the game a little, they express some reservations.
This being said, change cannot be ordered. It is a gradual process.
To answer your question, namely what alternatives would we suggest, for the
past two years, the popular movement, anti-poverty groups, student associations
and union representatives have come up with a parallel federal budget
containing new, and sometimes reworked, initiatives which ensure that the
burden of the deficit does not rest exclusively on the shoulders of the needy.
The strategy basically involves three components: a tax component, a public
investment component and a monetary policy component, all of which are tied in
with the responsibilities of the Department of Finance.
This is the second year that this budget alternative has been put forward. It
has been fine-tuned over time and the initiative will likely be repeated next
year. However, oddly enough, the media have not paid much attention to it,
despite the fact that it met and even exceeded the Minister of Finance's
projections in terms of deficit reduction within approximately the same time
While there may be alternatives, there are also obstacles, as you know, of an
administrative, political and economic nature. We cannot and we do not ignore
them. What we are suggesting is that we examine the proposals put forward by
others, often so-called experts who experience these situations first-hand.
As you pointed out, we do not have much room to manoeuvre. That is why I
personally share the views expressed by a number of groups.
Last year, Mr. Chrétien started to tackle this issue in a rather modest
way. I would be interested in knowing what progress has been made on the issue
of the tax on international speculation, with capital flowing 24 hours a day;
people sell or buy by computer, without giving any thought to the social and
human impact of their decisions. Some would argue that this speculation has
gone too far. I read somewhere recently that according to certain experts
closely associated with financial circles, 85 or 90 per cent of these
operations are for speculative purposes.
We are seeing cooperation at the G-7 and OECD levels and governments must of
course... A number of governments are experiencing the same situation as
Canada. They must be encouraged to pursue their efforts and coordinate their
policies. They have to take the upper hand because we live in a society, not
merely in a marketplace, as Monsignor Gervais pointed out. Society, whether it
be groups, elected representatives, advisory boards, community organizations
or others, must have its say and must take the upper hand. Individuals must be
acknowledged and involved in the policy-making process, a process which will
bring to the forefront community concerns. Decisions will be considered and
In answer to your question, these are possible alternatives. I do not know
whether I should mention it at this time, but you have heard from a number of
groups and representatives of coalitions who are opposed to the bill and have
demonstrated their opposition. You will likely hear from more groups like
this. We certainly want to say that we support them and, as Monsignor pointed
out earlier, we would like to examine a number of proposals which appear
interesting. I am thinking here about the National Anti-Poverty Organisation
which made a submission to the committee last week, focusing on the income of
people in difficult situations and the fact that this poses a number of
problems for them.
These are some of the other options that we are weighing.
Senator Lavoie-Roux: Thank you. You have given us an overview of the situation.
I apologize if I am being repetitive, but are there any particular aspects of
the bill that you find harmful or do you prefer to keep your comments general?
Because there is one positive thing about the bill, the fact that the
calculation is based on hours rather than weeks which will make more people
eligible for unemployment insurance. This is a positive step. They say that
this initiative is directed at women, but that remains to be seen.
The fact remains that there are indeed some positive aspects to the proposed
legislation. Which of the concrete measures proposed in the bill do you find
the most reprehensible? It seems I interrupted you when... That may have been
Mgr. Gervais: The government appears to be concerned mainly about competition
and the marketplace. As for the rest, it is trying to make the best of the
situation. We find things are a little upside down.
This is our main preoccupation. We do not question that it is important to have
a vision for the economy of the country and that we must put energy and
attention into that. However, we think it is equally important to put our
energy and attention on the effects of our economy. My main criticism is that
it is definitely secondary.
Senator Rompkey: Senator Lavoie-Roux asked you what was particularly bad about
the legislation. What is particularly good about the legislation?
There is provision in the legislation to redirect funds from the employment
insurance fund to those who have least. There has been a ceiling set of $26,000
per year of family income. People in that category will receive funds in
addition to the child tax credit.
Do you see that as a good measure?
Mgr. Gervais: Your question raises a greater one. We have studied various
reports and analyses of the proposed legislation. Some say that the effect of
it will be tragic; some say it will be tremendously beneficial, and we are not
in a position to say which is the case. We can say, as can ordinary citizens,
that this seems to be good or this seems not to be good. However, we are not
able to say precisely what the effects of this law will be. We have opinions
but, as bishops, this is not really our field. Our field is to tell you what
we believe is valuable and to what we believe we must cling if laws that are
passed are to fit into these preoccupations.
We have heard many comments on particular aspects of the legislation made by
NAPO, for example, among others. I am generally in favour of the provision to
which you refer. However, I do not have the skills of an economist to enable
me to say which position we ought to adopt.
I am sorry if I am being evasive, but that is the truth.
Senator Murray: Your Grace, let me try to relate the social teachings of the
church to this kind of bill. The church has not recently received the credit
it deserves for its influence on social thought and social policy.
In the European community these days we hear talk of the importance of the
principle of subsidiarity, which people are now relating to constitutional
reform in our own country. They are brandishing it about as if it were
something new. I recall being taught 40 years ago or more that that was in one
of the old encyclicals which itself was based on something which Aristotle or
Thomas Aquinas had fostered.
I am ashamed to say that I cannot remember which Pope or which encyclical it
was, but the principle of subsidiarity is not something which was invented by
You spoke about the valeur de la noblesse du travail. That is part of Christian,
Catholic, social doctrine. Last night we heard from the Greater Moncton
Chamber of Commerce. In their brief, they quoted a Royal Commission in
Newfoundland in 1986. They said:
The Royal Commission of Inquiry showed how the unemployment insurance system
had undermined the intrinsic value of work, skewed work and personal habits,
devalued the importance of good training, discouraged personal initiative and
I do not think the government would go as far as that but, at the very least,
it believes -- and this is the basis of the bill -- that the current system
has created a culture of dependence.
In the context of the church's social principles, is a culture of dependence,
perhaps from generation to generation, on an unemployment insurance system a
problem? If that exists as the government says it does, is it not a problem
which must be addressed?
Mgr. Gervais: Yes, it is clearly a problem which needs to be addressed. The
church's teaching is quite clear that, for the fulfilment of the human person,
work of some kind is necessary. The solution to the problem is to provide the
possibility of labour. The ideal is not unemployment insurance. The ideal is
That there have been people who have developed a dependence on unemployment
insurance over the years is not simply to be straightforwardly condemned
because, very often, the employment which they had, which was seasonal, was a
necessity for society. Society demanded that these seasonal workers be
employed for that season.
Senator Murray: Society still demands that.
Mgr. Gervais: It still does. There are, however, other aspects to the question.
Do we want these people to be seasonal workers to suit our needs and do we
want them to live where they have community, et cetera? Your questions raises
I do not say that there are no problems in the present system. There are
problems in the present system, but I doubt very much that simple legislation
will change that situation.
Senator Murray: I quite agree. Mr. Dufresne is perhaps chomping at the bit to
get into a discussion of the responsibility of the state in terms of creating
employment but, with great respect, we at this table understand that argument.
In terms of trying to lessen the dependence on the system, one of the solutions
proposed in this bill is to try to build in certain disincentives to staying
on unemployment insurance, as well as incentives to getting off it. I trust
the government does not believe that those are the only solutions; I do not
think they do.
Without getting into the details of this bill, in principle, is there anything
wrong with trying to build in disincentives and incentives in relation to
dependence on unemployment insurance?
Mr. Dufresne: You have touched on several points. First of all, you will be
pleased to note that I am not one of those who believes that the State must do
everything. Furthermore, I do not believe that I said anything of the kind
earlier. I said that the government must assume its rightful responsibilities.
This being said, I am not saying that the government should take all the
initiative; things could be done differently in a number of regions of the
Secondly, as for your question concerning incentives and disincentives,
certainly active measures would be the ideal solution, except that judging
from what I have read and heard so far, these measures have had rather modest
results. Any active employment measures must be accompanied by or be part of
an economic strategy centred on job creation. If we do not create jobs, people
will continue to be unemployed, they will not want to accept menial jobs here
and there and they will settle for seasonal employment.
In my opinion, we must not even contemplate reforming something like the
Unemployment Insurance Act without devising an overall economic strategy. If
we focus on the Unemployment Insurance Act without making job creation a
priority and if we make the unemployment insurance program the only variable,
without taking into account associated factors, then we will have people who
abuse the system. Judging from what I have seen, there are just as many people
who abuse the tax system as people who take unfair advantage of unemployment
insurance and social assistance.
This must not be viewed as a factor either. You alluded to it during this
morning's discussions, but I think that too often in society, abusers rob the
system. This is unacceptable. However, in general, this is not the case.
Senator Murray: I am not talking about abusers. I was alluding to the fact that
the program has created a culture of dependence. That is an entirely different
Mr. Dufresne: Yes, there is a problem with the culture of dependence, but here
again, if, as a result of economic policies, people in certain regions find
that they have no other choice but to work in the fishery or on the farm for
12 or 15 weeks during the summer season or from March until September or
October, we must then find a way to diversify that region's economy. Regional,
provincial and federal governments must work with local stakeholders when
formulating strategies and policies for economic diversification. The goal
must be jobs so that people no longer have to depend or draw on unemployment
insurance for two, three or five years. This is what happens in the long term
but I also believe that we must consider other variables. We must look at the
Senator Murray: The Conference of Catholic Bishops represents all the various
economies of Canada, from Vancouver where things are in pretty good shape to
Newfoundland where things are not in such good shape. What mechanism do you
have for representing all these perspectives in a brief such as the one you
have presented here today?
Mgr. Gervais: By being very general, senator. It is difficult to put forward a
statement that represents the bishops. Today, we represent the social affairs
commission, which is the arm of the Canadian Conference of Catholic Bishops
which looks at and studies social issues.
Senator Murray: How many are on the commission?
Mgr. Gervais: We have six member bishops from right across the country.
Senator Murray: Having studied, you speak on behalf of the others?
Mgr. Gervais: Yes, we speak on behalf of the others.
Senator Murray: As today's brief does, is that right?
Mgr. Gervais: Today's brief is a statement of the social affairs commission.
Senator Murray: We speak about the poor, the middle class and so on. You must
have some demographic profile of the people who are practicants, as we say?
What is it generally, the middle class who are still attending and supporting
the church or is it the poor?
Mgr. Gervais: I would say it is the middle class, generally, and regretfully. I
believe we are losing or have lost contact with the genuinely poor.
The Chair: Do you feel that in today's economy, compared to say the early 1990s,
the people you represent -- and here we are talking about the working poor --
are better off? Has their situation improved or deteriorated in the 1990s?
Mgr. Gervais: I can only guess at that, Madam Chair. We have some figures which
Mr. Dufresne is able to supply.
The general status of the lowest rung of our population appears to be worse off
now than it was before.
The Chair: Their situation is deteriorating, then?
Mgr. Gervais: Yes.
Senator Cools: Your Grace, I want to thank you for your very thoughtful
testimony. Our committee is privileged to have you as a witness.
I would also like to take this opportunity to remind senators of similar, very
excellent testimony given by the Canadian Conference of Catholic Bishops in
1989, when it testified before the committee which studied Bill C-21, the
predecessor of Bill C-12.
This testimony was supported at our committee meetings in Newfoundland and
Canso. In St. John's, Newfoundland, Archbishop Penny attended our hearings,
and in Canso we heard testimony from the local parish priest.
I thank His Grace for raising two important questions which I believe are
questions of the era. I know from your statement that you are not an economist
and that you do not profess to have knowledge of the fine detail of law-making
or the premises behind legislation.
The issue that you have raised is one of the pressing problems of the era.
Governments and ministers operate with large departments and large budgets and
well-trained personnel. They do their number crunching and come out with their
full costs and their conclusions, and many members do not have the ability to
burrow through those massive complexities. I urge our chairman and our
committee to examine that particular phenomenon.
The second issue you raised, which is one of the troubling issues of the day,
is: What is the cause of poverty? What is the cause of social privation? What
are the economic and social causes of deprivation?
I wished to highlight those two questions.
Having said that, I thank you again, and I urge you to appear before us again
The Chair: Thank you for your testimony.
Honourable senators, we will how hear from Ms Lenore Burton, Executive Director
of the Canadian Labour Force Development Board.
Please proceed, Ms Burton.
Senator Murray: While we are waiting for copies of your brief, would you
address, in particular, the recent announcement by Minister Young about
devolution of labour market training to the provinces as well as the remainder
of the offer which he has made to the provinces?
Ms Lenore Burton, Executive Director, Canadian Labour Force Development Board:
The focus of the work that we have done and which I can share with you today
is on Part II of Bill C-12 relating to employment benefits. Although the
question of devolution and labour market jurisdiction does arise, it really is
not the issue which the board is addressing.
Quite frankly, the board believes it is important to promote the need for a
skilled work force and the need for more training, in whatever jurisdiction
that training lies.
The Chair: Copies of the brief will be arriving shortly. Please proceed.
Ms Burton: Thank you for giving us the opportunity to attend here today and to
share our work with you. I begin by extending the regrets of the co-chairs of
the board. Jean-Claude Parrot, executive vice-president of the Canadian Labour
Congress, is the labour co-chair, and Jean Andrea Bernard, formerly of Bell
Canada, is the business co-chair. Both are out of the country, and they were
not able to rearrange schedules on short notice.
I also wish to make it quite clear that the document that you have in front of
you is a consensus document of the board. It was discussed and agreed to by
all the members of the board. I have brought with me some fact sheets which
describe the board and its mandate, the mission statement, the members of the
board, and our current work program for this year.
The board was established in 1991. Members of the board come from the business
and labour community, from training and education, and from the designated
employment equity groups. It is a multipartite board.
The board was established to advise the government on setting the expenditure
plan for UIDU, Unemployment Insurance Developmental Uses. This is the portion
of money from UI which is used for training and other labour adjustment
programs. Today, most of our work is focused on providing the minister with
advice on new programs and, more important, signalling and identifying emerging
labour market issues.
The board sees itself as a national board and would hope to be recognized as a
forum where all levels of government and the non-government partners, the
labour market partners, can work together on issues of common concern.
As I said earlier, the work that we have done on Bill C-12 has focused on Part
II, employment benefits. This most clearly aligns with our expertise and the
experience we have had with the expenditure plan from the old UIDU.
On behalf of the board, I would like to make some general comments about the
We believe it important that the legislation recognize the meaningful role that
the labour market partners, the non-government partners, can play in
developing policy, employment programs, and accountability measures. Business
and labour, as the primary workplace partners, feel that they are in a good
position to give advice on what is happening in the workplace and what is
happening to unemployed people. Recognizing a role for the partners, whether
at the national level or at the provincial level, is an important principle
which we would like to see endorsed.
The board wholeheartedly supports the emphasis on working in cooperation with
the provinces and territories. However, for us, the focus of decision should
be at the local level. Approximately 80 per cent of labour market action
happens locally. Supporting that local decision-making, guided by national
standards, is absolutely critical to the board.
National standards are important for labour mobility. Labour mobility is good
for employers and for working people.
Setting national standards in this country is not an easy process. There are
only three ways you can set national standards. You can do it by legislation
-- and with the proposal to the provinces, even for provincial standards it
would be difficult to use a legislative tool.
You can use a fiscal lever, but in the climate of fiscal restraint that is
problematic. The only solution left to us is to develop standards through a
The board has taken a consumer approach. We developed training standards, which
are essentially a guide to the purchase of training. If you have money to buy
training, whether you are an individual or a small company, these are the
questions you should be asking yourself. These are the standards of quality
you should be looking for from the proliferation of training providers that we
have out there now. That is the approach to national standards the board is
We continue to believe that training is the most critical labour adjustment
measure we have, and we do not believe this legislation gives it significant
priority. We know that adequate financial resources will not be dedicated to
training. However, financial resources will be focused on employment benefits,
and I would like to make some comment on that.
We see a problem in the area of skills loans. The federal government's
experience with loans is in the student loan program, but the client group,
the unemployed, are different from students. We do not think there is much
cause to worry about whether there will be a default rate on these loans. The
unemployed will be hesitant to even apply for loans. They are in a situation of
economic loss already. When training course costs were paid out of
unemployment insurance, there was a pooling of the risk. The unemployed worker
did not assume the risk alone. With better training, they would get further
employment insurance. However, in the loans situation, the unemployed worker
assumes all the risk.
Another concern is that employment insurance is an individual worker's
entitlement. However, the way the loans program is designed now, the decision
as to whether you get a loan or a grant will be made on the basis of family
income, not individual income or individual entitlement. We think this will
put many women, especially, in a disadvantaged position. As workers, they have
an individual right and entitlement to employment insurance. As members of a
family, they may not have an individual entitlement to a skill grant or a
Under the current Unemployment Insurance Act, if a person is in training and
their entitlement benefit period ends, it is extended to the end of their
training so that they can complete their courses. Under the new employment
insurance legislation, that entitlement will not be extended. How do they
complete their training? Where will they receive income support? Those
We believe the proposed legislation assumes that all the counselling and all
the information needed to get an unemployed person into training will happen
very early in the claim period. In an era of staff cutbacks when we are
developing self-service kiosk information, we think it is a huge assumption
that the unemployed will receive the counselling they need early in their
claim. We think the bill will promote quick-fix training and short-term
training because the unemployed have to get in, get trained and get out before
the benefit period ends. Everything we know about training and what works and
does not work tells us that quick-fix courses do not work.
Another tool being promoted is the earnings supplement. This has caused a lot
First, the program is costly. It is more costly than the purchase of training
courses, for example.
Second, we have very little experience in Canada with this kind of program. The
Americans have more experience, going back to the 1980s. Their studies have
shown that an earnings supplement works best when it is tied to education and
training courses. The program as it is written now with respect to employment
insurance benefits does not have a training component.
The tool which is most problematic for the board is wage subsidies. Wage
subsidies can work, but they work when they are targeted at a discrete
population -- a population of part of the labour force that employers are not
familiar with. People with disabilities spring to mind. Wage subsidies work
when they are tied to a training education component.
However, a general wage subsidy program has not worked for us in Canada in the
past. I ask you to recall the employment tax credit program we had in 1978-81.
There was an extremely high displacement effect. At the end of the day, the
best we could show was perhaps a net job creation of about 20 per cent. That
Canadian figure is in line with what OECD studies have shown for a general
wage subsidy program.
Two other proposed tools are job creation and self-employment. The new job
creation program will be very similar to the one under the Unemployment
Insurance Act. The board believes the federal government has an extremely
critical role to play in job creation, but whether this program fulfils that
role is questionable. No studies have shown any long-term gains from the old
job creation program.
When the board made recommendations on UIDU, money was dedicated to the program,
but it was capped at a relatively modest amount.
Self-employment is a relatively new program. We think it is still in its pilot
stage. We have no long-term studies on whether long-term viable businesses
have been created or whether stable jobs came out of the job creation program.
It is an important program for the board. We encourage that it be continued,
but we have reservations about how much money we want to donate to this
At the end of the day, the two recommendations are quite simple. We encourage
the federal or the provincial governments to involve the non-government labour
market partners in their decision-making. Whatever money they spend out of the
UI fund on employment benefits, the bulk of it should be dedicated to skills
grants. The knowledge we have gained from the OECD experience and from our
various studies shows that a skilled work force is probably the best investment
we can make in our economic well being.
Senator Rompkey: Let me begin by referring to your first comment about the
focus being at the local level. One of the things that happened before this
legislation was introduced was a devolution of decision-making or authority to
the local level with the CEIC. We had a presentation from the union two days
ago saying that this was terrible, that they would lose jobs and that it was
not working. However, I am satisfied that it is indeed a good thing. In fact,
the employees of the office in Labrador wanted their own authority to make
decisions at the local level in partnership with other stakeholders in the
I assume you are saying that the general direction to take the decision-making
away from Ottawa, Halifax and St. John's and to put it more at the local level
in partnership with the stakeholders is good.
Ms Burton: Absolutely, yes.
Senator Rompkey: That aspect of what the department has done is a good thing.
As well, you said that you can only develop standards through consensus.
Ms Burton: Yes.
Senator Rompkey: I assume you mean a consensus among the chambers of commerce,
the unions, women's groups, the community colleges, the town councils, and so
I accept what you said about training. You told us to put more money into
training, if possible. In fact, some money has been put into training here. It
may not be a great amount, but there is some redirection of funds, and people
will have access to funds for training. You do not think that it is enough,
Do you see here the beginning of an approach whereby funds are put in the hands
of the individual, and do you agree that market-based training is a good move?
In other words, if the individual is empowered with money to buy the training
for himself or herself, wherever he or she can get it and for whatever
program, is that a good direction to move in? Do you think we are moving in
that direction, even though we are not putting enough money into it?
Ms Burton: There is no question that the government-to-government purchases,
whereby federal officials try to buy training programs in provincial community
colleges, did not work. Often they bought courses that were available rather
than courses that were needed, and there was not enough linkage to the
We think that individuals probably have a better sense of where they can find
employment and what kind of skills they need. However, a lot must happen before
those individuals are empowered, more than just giving them a voucher. We have
to have good labour market information. We have to know where the skill gaps
are, where employment is growing rapidly, and then what kind of courses will
provide those students with the skills they need to get those jobs. There is
still an awful lot more work to be done on labour market information, on the
We do not yet know the impact all of this will have on our delivery system.
Community colleges will certainly be adversely affected by the ending of the
government-to-government purchases. Previously, when the federal government
purchased training, the price included part of the administrative cost of
running those colleges. When individuals purchase a course from Algonquin
College, they do not pay that admission top-up.
Senator Rompkey: Is it not true that that has been taking place anyway?
Algonquin College is probably getting as much money from Africa and Asia and
other parts of the world as it is getting from of Ontario. The fact is that
every community college has a marketing branch that goes out and sells the
college and attracts private sector money because government funds have been
declining over the years. Is that not just part of a trend to which community
colleges must adapt?
Ms Burton: They are adapting, but they have a significant period of turmoil
ahead of them.
Senator Rompkey: What do you think about services being provided by private
colleges as opposed to community colleges?
Ms Burton: If I may make a sweeping generalization, the reason the board
developed the training standards is that they wanted to use a consumer tool to
drive high-quality changes from inside the training-provider system. We in
Canada have invested a tremendous amount of effort and resources in our public
education infrastructure. Our community college and university systems are
among the finest in the world. We want to preserve that. They are able to
deliver high-quality training.
One of the concerns of the board is that, in adjusting to these changes,
community colleges will opt for delivering low capital-cost training, which is
what most of the private sector colleges do now -- in other words, training
people in word processing skills or upgrading their English skills as opposed
to investing in the heavy capital equipment needed to train people for something
like computer-assisted machine tooling.
The Chair: Do not most colleges have that kind of equipment today?
Ms Burton: No, only a very small number do. They are trying to develop a niche
expertise in certain areas.
Senator Rompkey: Is it not true that many community colleges are forming
partnerships with the private sector? For example, General Motors no longer
hires employees directly. They begin their search through the community
college system. General Motors, Ford and Chrysler have all put engines and
other equipment and machinery into community colleges with the expectation that
they are better off getting a person trained on their equipment, because they
know it is important for their productivity. That is the kind of partnership
that I was getting at. Actually, I was getting at the responsibility of the
private sector, which is a larger question than the government simply providing
However, let us restrict ourselves to the government providing funding. I
thought I heard you say that the bill does not give significant attention to
funding for funding. If so, would you elaborate on that. For example, you
talked about the skills loans. What should the mix be of loans and grants? How
can the government improve that situation?
Ms Burton: The board would promote putting more money into grants as opposed to
loans. Also, access to employment insurance benefits should be an individual
entitlement, not determined on the basis of family income and family need.
It is very difficult for me to say how much should be in loans and how much in
grants because that information has not even been released by the department.
We do not know the basic budget breakdowns. We do not know what funds will
come from the Consolidated Revenue Fund. Those funds are extremely limited
now, but in the past they have funded training for marginalized groups who are
not eligible for UI. There are many people, such as many immigrant women, who
have never been in the labour market, who access consolidated revenue funds
for their training to try to make the transition into the labour market. All
that funding will now be gone.
Senator Rompkey: Would you say that it will be very important to monitor the
impact of this legislation, to see whether adjustments are needed?
Ms Burton: Absolutely, monitoring it by the client groups and monitoring it by
the impact on the community colleges over the long run.
Senator Rompkey: We should ask the minister to give us an update from time to
time on how this system is working and what adjustments need to be made.
Obviously, we have no experience with this. It is the beginning.
Ms Burton: That is right.
Senator Rompkey: Perhaps there are some good moves in principle, although we do
not know what the eventual outcome will be.
You talked about how women will be disadvantaged. Is it not true that more
women will be eligible for employment insurance as a result of this
legislation? Will women not be able to re-enter the work force after a period
of three years, if they have been on maternity leave, with less penalty and
more ease than previously? Will that not be an advantage for women?
Ms Burton: What we are referring to in that comment is that the program has
been designed to assess whether a person gets a loan or a grant for training
based on family income.
Senator Rompkey: Would you say, though, that for single mothers there would be
Ms Burton: Yes, for single mothers there would be.
Senator Rompkey: Do you have any idea what proportion of women receiving
unemployment insurance are single mothers? Do you have any statistics on that?
Ms Burton: No, I do not.
Senator Cohen: A woman on maternity leave should not be considered a re-entry
into the work force so that now she must work more hours for eligibility. She
should not be penalized for maternity leave.
My next concern is community colleges. In New Brunswick our community colleges
are working at a very high level. We turn out tremendous graduates in many
areas who are gobbled up by private industry faster than students who come out
of the university system.
It has been suggested that many of the labour training programs may be taken
over by private industry. As to the discussion that moneys should go toward
skill grants, I feel that more money should be directed to community colleges
to bring them up to a standard that will allow them to continue to grow. We
have worked for 30 years to make community colleges what they are today and,
all of a sudden, we are about to say to industry, "Go out there and offer
the same courses." I am having a problem with that, too.
What do you think about a national labour market? There is much devolution now
to the provinces and training is being given to local authorities, which you
say is important because they can identify the needs. I should like to hear
your thinking on that.
Ms Burton: The board has some concerns which are contained in the larger
Labour market programs have been a shared jurisdiction for good reason: The
labour market is connected to the economy. If you believe that we still have
such a thing as a national economy, then there must be an ability, from the
federal government's point of view, to respond to certain economic adjustments
and to help the labour force do that.
A good example is that, when we negotiated and signed the Free Trade Agreement
and NAFTA, the work force underwent a tremendous adjustment as a result of
that economic policy. There have also been times in our history when we have
had real crises. God forbid that we must close a fishery down again but, when
that type of natural disaster happens, the federal government needs the ability
to respond. We hope they retain enough responsibility to do that, because
economies and national labour markets are linked.
Senator Cohen: I was glad to hear you mention national standards because that
has also been a concern.
Senator Losier-Cool: I should like to come back to the question of training and
responsibility. You say that the federal government should have a financial
commitment. We know that education is a provincial responsibility.
What is your opinion about an individual taking the responsibility and paying
for his own training to get a job? This brings me to what we said about private
enterprises that are giving courses to meet the standards of the labour force.
First, do you feel that the provinces do not do fulfil their responsibilities
in relation to education? Second, how do you feel about the personal
responsibility -- that is, someone paying for training so that they could get
Ms Burton: Many people do that.
Senator Losier-Cool: I know that they do. This relates to what Senator Cohen
said about community colleges. I agree with her that the community colleges in
New Brunswick give high standards of training. They also face competition from
private training programs. Do you agree that someone could pay for his or her
Ms Burton: Yes, and many people do. The question is how you define paying for
your training. Previously, apprentices have had their course costs covered by
the unemployment insurance fund. Under the new legislation, that will end.
Apprentices would say that, in a sense, they are paying for their training
because they work for very low wages. Their forgone earnings is their
contribution toward the cost of training to be electricians, or bricklayers,
or whatever skilled trade. There are many ways of looking at how a person pays
and what kind of commitment they have made for their training.
I would caution you because statistics indicate that the more education and
training people have, the more likely they are to get training. Part of that
relates to their economic means to pay for more training. But what about people
who work part time in the retail grocery industry? How can they possibly have
either RRSPs to pay for further skill training or, once they lose their jobs,
the financial wherewithal to take on a risk such as a loan? That is the
Senator Losier-Cool: But surveys say there are four requirements. They must
learn to write, to use the computer and to think -- and I forget the fourth
requirement. They must learn these things so that they can face the fast
changing pace of technology. Can private enterprise compete with community
colleges? Can they compete with the fast-changing technology? This is my
concern. It is also the concern of community colleges that governments may
favour private enterprise too much and that the labour force may favour private
enterprises that are offering training. If that occurs, what will community
colleges do? Who is better equipped to face this fast pace?
We say that the one thing that is constant is change. We must prepare the work
force for these changes.
Ms Burton: I would not venture to make a general statement, but there is no
reason that our community college system and our universities could not respond
just as quickly. We have spent 30 years building an infrastructure that the
world envies. Canadian community colleges have no trouble at all marketing
Senator Losier-Cool: I know, and they do respond to change.
Senator Murray: Your brief and the brief which your board submitted to the
House of Commons committee are both on Part II of the legislation. I will come
to that later. However, I cannot resist asking you why the board avoids giving
us some guidance on Part I. Is it that you cannot achieve a consensus on those
Ms Burton: No, not at all, but they would say that they were not given that
mandate. They were not asked to look at UI.
When the whole social security reform process was launched, Minister Axworthy
asked the Canadian Labour Market and Productivity Centre to give him advice on
unemployment insurance, or Part I, and he asked the board to focus its
attention on Developmental Uses, or Part II. That is why we focused on Part
Senator Murray: Perhaps we should have heard from the Canadian Labour Market
and Productivity Centre.
The government would say that these two parts are intimately related. I do not
know if they would go so far as to say that it is a seamless web, but they
would say that it is part of a whole. Part I and Part II are intimately
related. When criticisms are made of Part I, the government and its supporters
here will speak about the offsetting measures in Part II. You have not
Neither have you addressed the federal government's proposal to the provinces
and territories on active measures, as announced by Mr. Young a couple of weeks
ago. When we spoke before this meeting, you said that there was some rationale
for that. Are you planning to express a view on that, if not today at some
later date? Is the board trying to achieve a consensus as to where you stand on
these measures proposed by Mr. Young?
Ms Burton: There will be a board meeting on July 4 and 5. Some board members
have been briefed on these new measures, and they will be discussed by the
board as a whole at that meeting.
The board did come up with a consensus and made a presentation a few years ago
to the Beaudoin-Dobbie Commission on the Constitution. In summary, the
position was that labour markets should be a shared jurisdiction. The board
did not see it as its mandate to say where the line for that sharing should
fall, but it wanted to make the point quite clearly that there was a shared
jurisdiction for good reason and that the federal government must link labour
force development and national economic policies.
From the beginning, the board has consistently held the position that, be it
the federal government or provincial governments, non-government partners
should be involved in decision-making, much as they are in many OECD
countries. Also, the real action happens at the local level, so what will the
two levels of government do to ensure that the decision-making is done at the
local level with people at that level having a meaningful role?
Senator Murray: With regard to labour market training, and Quebec in particular,
do you recall the statement of principles which was agreed upon about three
years ago by the Government of Canada and the Government of Quebec for the
devolution of labour market training?
Ms Burton: Yes, I recall that.
Senator Murray: Does the board have a view on those principles?
Ms Burton: I would hesitate to say, without having the principles in front of
me, because I cannot recall them all. However, the board would have supported
wholeheartedly asking provinces to have their labour market partners involved
in the decision in a meaningful way. Indeed, we worked very hard to help get
our counterparts up and running in different provincial jurisdictions.
Senator Murray: In Quebec, as they will all tell you, they have it refined to a
very high degree. As I recall from the principles, one of the provisions was
that the federal government would get a seat in that.
Ms Burton: Yes.
Senator Murray: In your brief today, and at more length in the brief you
presented to the House of Commons, you have, to put it mildly, very limited
enthusiasm for the main elements of these employment measures. Some of them
existed under developmental uses anyway. You had reservations then and even
more reservations now. That is also the case with earning supplements, wage
subsidies and self-employment measures.
As I read it, the only thing you think is worthwhile is the skills grants in
Part II. Much of the rest of it, in your view, does not even belong in UI and
certainly should not be financed by the UI fund.
In your view, skills grants is the only thing that belongs there. Is there
anything which is not there which should be there?
Ms Burton: As the board developed expenditure plans for UI, the emphasis was
always on trying to get as much money as possible into long-term training
which would lead to the transition into a stable job. Studies which have been
done show that that is probably the best pay-back for any unemployment
Senator Murray: You mentioned international studies when talking about earning
and wage supplements. I have an excerpt of the testimony of your association
before the House of Commons committee.
You talked there about an OECD study. Direct us to the studies you spoke about
which show that skills grants are the best investment.
Ms Burton: The European countries do not have much experience with the earnings
supplement, but the Americans do. They have published a book called From
Welfare to Work. They have long experience in using earning supplements for
trying to get people off social assistance and into the labour market.
Senator Murray: I understand that. I am talking about your statement that skills
grants pay by far the best return.
Ms Burton: We used that language, "skills grants", because that is the
language of the bill. We are talking about training -- paying for training
for unemployed people.
Senator Murray: However designed?
Ms Burton: The design which works the best is a combination of on-the-job
training very closely linked to the workplace and classroom. That is the simple
Senator Forest: I have a question about the extent of private money funding in
job training. My experience was with CN as it privatized. There was a lot of
out-sourcing to community colleges of our training programs, not only for
those people still on the job who had to learn new skills, but also for the
people who were laid off. And as you know, there were substantial numbers of
those. CN paid for that job training. We developed partnerships with both the
community colleges and the universities.
How extensive is that? How much can we depend upon funding coming from private
industry to supplement the very limited resources which the government now
Ms Burton: We often hear the complaint that the private sector in Canada has
not invested enough in the skills of its work force. The best time to help a
person make the adjustment is when you know they will be displaced but before
they are actually unemployed, in order that they have the shortest possible
period of unemployment.
The business community is very sensitive to those criticisms. Larger businesses,
such as CN, invest tremendous amounts of money in training. It is much more
problematic for smaller businesses. It is difficult if they do not have a human
resources branch or training division. They rely more on informal job
training. Whether they will be able to pick up the load and buy courses at
community colleges remains to be seen. The key will be monitoring what
The Chair: With regard to the transition in funding from the federal to the
provincial governments, I would hope that the provincial governments will
continue to support their own community colleges and universities.
New Brunswick has had CadCam programs since 1980, I believe. I was involved in
the New Brunswick government at the time. They have progressed into computers
and are now doing a wonderful job in distance education programs.
Thank you for appearing here today. We appreciate your presentation and insight.
The committee adjourned.
OTTAWA, Tuesday, June 11, 1996
The Standing Senate Committee on Social Affairs, Science and Technology, to
which was referred Bill C-12, respecting employment insurance in Canada, met
this day at 6:00 p.m. to give consideration to the bill.
Senator Mabel M. DeWare (Chair) in the Chair.
The Chair: Honourable senators, we will start with Professor Nakamura.
Welcome, Professor Nakamura. I apologize for the delay. Please proceed.
Professor Alice Nakamura, University of Alberta: Thank you, honourable senators,
for this opportunity.
I will speak to three key structural reforms in my presentation. The first is
the switch from using weeks of work in UI covered jobs to using hours of work
for the main unit of account for the UI program. The second is the new
intensity rule whereby the replacement rate for insured earnings would fall
with increased use of the program over the previous five years. The third reform
is found in the new clawback provisions. These would result in repayment of
greater amounts of the benefits collected by those with relatively high
incomes, with the maximum repayment amount rising with increased use of the UI
program over the previous five years.
These three aspects form the core of the bill in terms of improvements. All
three reforms are made-in-Canada solutions. All developed countries face some
of the same problems as we face in our UI program. They all struggle to find
ways to cover the increasing number of people who are not in full-time jobs.
These solutions came out of Canadian suggestions and were supported strongly by
me as a member of the Axworthy task force. These solutions have been mentioned
in a number of my papers over recent years.
My reasons for believing in these three changes are rooted in features of our
old program. I would like to begin today by talking about some of the features
of our old program which I believe are causing problems. Second, I will discuss
two alternative sets of principles which could be used to evaluate a program
like UI. One is a set of principles for a user-funded insurance program; the
other is a set of principles for an income-transfer program. Third, I will
discuss the three key areas of reform as mentioned, before ending with a
phase-in strategy. It is not only important to have the changes but they
should happen without causing an enormous amount of panic or economic
disruption within the country and within people's lives.
The primary purpose of our old UI program would continue in the new one as it
is explained in Bill C-12: to provide partial income support for workers who
have lost their jobs. To qualify for benefits under the old program, a certain
number of weeks of work was required in a UI-covered job. The number of weeks
required ranged from 12 to 20, depending on the regional unemployment
conditions. In an area of the country with a high unemployment rate,
qualification levels were much lower.
Several types of employment were excluded from coverage. One particularly
important exclusion was that of jobs worked for less than 15 hours per week.
One person could work three part-time jobs, adding up to a very large number
of hours per week, but still be ineligible for UI coverage. If they became
unemployed, they would have no recourse but to apply for welfare. Increasing
numbers of people are ending up in that situation.
Another feature of our old program is that the maximum number of benefit weeks
also depended on regional unemployment conditions. The third feature of the
program is that it is entirely funded presently by employer and employee
payroll taxes. That detail is lost or misunderstood by a number of the people
who are concerned about the program.
The old UI program was not always a totally user-friendly program. If you go
back before 1990, the federal government paid a contribution into the UI
program. Between 1971, when the UI legislation was significantly changed, and
1990 there was a federal contribution to the UI program. This is the period
during which we had regionally expended benefits and the other things which
made it more like a regional transfer program. Employees paid in, as did
employers and the federal government. I do not think it was ever intended in
the 1971 act that regional transfer benefits for fishermen and general
benefits for people having trouble with earning enough to live on would be paid
for out of a user-funded program.
Prior to the 1971 act, there was a much closer relationship between what people
paid into the program and the benefits for which they were eligible. For
instance, part of the 1971 act and the further changes we had in 1978 were
such that if a person had what was thought to be a summer job for three months
and they lost that job in the second month into what would be the normal
season, then they could have collected UI for the remaining month that they
would have normally been employed. However, they could not collect for the
rest of the year. Key changes made at that point in time, I believe, put our
UI program on a course which was not anticipated at that point in time and
which was incompatible with the withdrawal of federal support for it in 1990.
There are two basic sets of principles under which I think we could fashion a
program like UI. One is insurance. Whether it is called unemployment insurance
or employment insurance, it is still insurance. A basic first condition for
having an insurance program is that the peril being insured against is
undesired and unforeseen. The second principle is that there is some sort of
experience rating. We can have one of two sorts of experience ratings. We can
either change the coverage for the same premiums or we can change the premiums
for the same coverage level. Either one of those will provide some
self-policing of the program, without checking up on people.
If we take the situation of workers who have jobs and it is known with 100 per
cent certainty that their jobs will not last the full year, we do not have an
unforeseen event. It may be an undesired event, but it is not unforeseen. If
in that situation their premiums do not cover the full cost of what will be
paid out to them in benefits, then there is a certain income transfer that
will take place from the other people who are paying into the pool for risk
sharing and those who are suffering this known risk to which they are subject.
If we consider what has happened since 1971, we see that there has been a steady
growth in the use of the program on a regular repeat basis by large numbers
of people, in a way which is neither unforeseen, nor is it something which is
in any way fully covered by the premiums that are being paid by those people.
If we take the situation of the program that is in place right now, then those
people who are employed for short amounts of time each year are paying in at
the same rate as workers who are employed for a full year. However, they are
paying in for fewer weeks for the total year. Therefore, what they pay into
the program is very small compared with the benefits they take out.
If we consider the situation of people who have this type of employment, year
after year, there is no doubt whatsoever that many of these people cannot find
more employment during the year. There is no question that we have a serious
lack of total employment in this country.
It is also clear that the majority of Canadians want to be helpful to people
who truly cannot find work and who do not have something to live on. I do not
think the UI reforms are about trying to deny help to people who truly need
that help. However, if you take income transfer programs, where you take money
from some and give it to others, there are basically three things which those
who are being taxed to pay for this transfer would like to know.
First, they want to be assured that those who are to get the transfer are
willing to bear the same burdens as those who are being taxed. One of the
letters I received while serving on Mr. Axworthy's task force was from a
person who had been in Newfoundland and at that point was working in the
province of British Columbia. What they said is that they had left Newfoundland
years ago. They had suffered through a period of uncertainty, isolation from
their family and everything else to re-establish themselves. They were in a
minimum wage job and being taxed on an ongoing basis to pay to help other
people who had not been willing to leave Newfoundland.
Second, they want to be assured that the recipients of these transfer payments
will not have a higher standard of living than those who are being taxed to
provide the help. After all, the UI tax is one that is only paid on income up
to the cap on earnings per week. Someone like myself pays a very low UI tax
because so much of my income is above that cap. Also, income from assets is not
taxed under the UI tax. This is not like our general income tax where a high
income person is paying a higher percentage.
Third, we would like this tax to be a progressive one and not a regressive one.
We would like it to be that way on an individual basis. This is not just a
matter of how it comes out for the economy as a whole, nor can you say that
there is some net transfer from the higher income group to the lower income
group? I think it matters on an individual level, too. Right now, a person
earning minimum wage is taxed on every single dollar they earn at the full UI
rate. That is not true for someone like myself.
I believe the present program violates all three of those conditions which
would make for a fair income transfer program. It is not a good income transfer
Let us take as an example two different workers. Let us suppose we have one
worker who has a regular 10-month job and another one who has a regular
year-round job working all 12 months of the year. Let us suppose that the
first worker is working 40 hours a week, four weeks per month, at $20 per
hour, but knows that they only have work for 10 months. Suppose that the other
worker is working for all 12 months of the year, but at $10 per hour. If you
work out such an example, what you will see is that the second person will
earn $19,200 per year. Every dollar they earn will be taxed fully under the UI
tax. They will be taxed to pay a transfer to the other worker who earns $32,000
for the year. This is an unfair situation. Some of the reforms that you see in
Bill C-12 try to deal with this type of unfairness.
The first measure in the program about which I am particularly concerned
involves the business of moving from weeks of work in UI-covered jobs to hours
of work as a unit of account for the program. Currently, we have a program
which does not cover a job if it is for less than 15 hours per week. Because
of this, there is an incentive in the program for employers to take what used
to be full-time jobs and chop them into mini-jobs that are under 15 hours per
week. If you look at what a grocery store makes as their mark-up rate on the
individual items they sell, you have to realize that the UI tax is a
significant tax. It is not just because an employer would be mean-spirited that
they would go to using part-time employees rather than full-time employees in
a situation like that. It is a significant tax wedge.
What is insidious about the tax wedge is that once employers go to a labour
saving device which allows them to use more part-time rather than full-time
workers, they will never go back. Once you change the way in which you carry
out your operation so that you no longer have to train people as much, you
will not revert, even if this UI tax is subsequently reduced.
It is also important to have a program which will cover part-time workers
because, even if we did not have the incentive of the old program, which
encourages the growth of part-time jobs, there are other forces at work which
will continue to ensure that part-time employment increases relative to
full-time employment. As that trend continues, more and more workers will not
be covered by the program at all. That means that their own situation is much
less secure. It is off-loading a problem on to the provinces which otherwise
would have been partially taken care of by the UI program. In addition, it is
undermining the coverage provided by the UI program and, in so doing, the worth
of the program as an automatic stabilizer. As coverage drops, the ability of
that program to help buoy consumption in a period of recession is eroded.
The last reason for covering part-time workers is important because it makes
the situation as between part-time and full-time workers more fair. We have
the idea that part-time jobs means part-time work. Yet, so many of my students
are working more than full time each week at two or three jobs. They have
already lost so much compared to what students graduating from my program used
to have. They used to get a job which allowed them to plan their lives. They
knew they had maternity benefits and vacation benefits. None of that exists
for the people who are working at two or three part-time jobs. If they at
least had UI coverage, it would make a big difference.
The intensity rule is important as a way of undoing some of what was done in
the 1971 act. The 1971 act was what set us on this course of mixing together
an insurance program and an income transfer program. We need both, but it does
not work out very well to try to provide them in one program.
The intensity rule reduces the replacement rate from 55 to 50 per cent for each
additional 20 weeks that the person is on claim over the previous five years.
That is a fairly small decline. However, I believe it is important because it
at least gives us a somewhat better relationship between expected benefits
paid out and what the person is paying into the program. I believe that bringing
back in some form of experience rating makes the program more nearly
self-policing than it is now.
The UI program is not means tested. I have heard a number of people argue that
it should be means tested. They say that rather than making this more like an
insurance program we should go the other way and make this more like an income
transfer program, that we should means test. Look at the numbers involved.
Look at how many people are on UI in a year compared to the number who are on
welfare and think what it would cost to means test that number of people. Also,
think about how intrusive it is. No one likes to have their finances examined,
although it is perhaps unavoidable when you are asking some people to give up
money in order that it can be given to others. You need some check on abuse in
order that people are not just freeloading on others. However, means testing is
not cheap and it is intrusive. All the things you can think of to make it less
intrusive make it more expensive to police. I think it is unworkable to have a
program the size of UI means tested.
There are many middle and upper income people who would like to have some sort
of unemployment or employment insurance protection. They have mortgages, they
have children, they have other people for whom they are responsible; they would
like to have some kind of insurance for periods when they are unemployed.
There are people in the business community who say that we do not need UI as a
public program that we should have private sector carriers provide coverage to
the workers who want it.
However, look at what your homeowners' policy exempts. Almost all private sector
policies exempt disasters. They exempt damage from acts of war. They usually
exempt damage from flooding and earthquakes. A private carrier just does not
have the finance reserves or the borrowing power of a government. It is not in
a position to provide dependable coverage which would protect people in the
event of a widespread disaster. That is what a widespread depression or
recession is; a widespread disaster for which individual insurers are just not
in a position to provide coverage. I believe that we need the broad coverage,
and I do not believe that means testing is a workable way of providing that.
The third provision I would like to support is the clawback provision. We would
not need the clawback provisions if the intensity rule were such that it would
fully experience rate this program. If the intensity rule would fully
experience rate the program, each participant in the program would be taxed at
a rate which would cover his or her expected benefits. The expected benefits of
individuals would be matched up with what they are being taxed. We are not
moving to that extreme. We are only bringing in a very mild degree of
experience rating to try to make the program a little more self-policing than
it is now.
The clawback provisions provide a greater degree of experience rating for upper
income people, while lower income people are left with a very mild degree of
experience rating. The clawback provisions are linked to how many weeks you
have been on claim over the previous five-year period. This means that a
higher income person is more constrained than a lower income person in terms of
using the program year after year. This is important.
These three proposed changes in Bill C-12 are major. Any time you try to make
major structural changes to a program on which people have counted for long
periods of time and which involves large amounts of money, it causes enormous
apprehension and concern. Thus a two-stage phase-in program is required.
First, it is important that parameters are introduced which make it possible to
have this new system, and the values for those parameters ensure that the
dollar amounts are not initially changed very much. Those parameter values are
later adjusted in order that you get closer to what you would like with regard
to how the dollar pay-outs are handled.
There are two places where that two-part phase-in strategy is quite important.
One is with respect to the intensity rule. Under the intensity rule there is
currently a drop from 55 per cent to 50 per cent and exemption of families who
qualify for the low-income supplement. This is a small reduction in the
person's benefit pay-out rate. It does not change the dollar figures very much.
Over time, that drop in the replacement rate could be increased, but I think it
is appropriate, even though many people in the business community feel that
the drop is so small it is not worth paying any attention to. I think it is
important to establish the principle first, and after people get used to it,
you can increase the size of the drop, if you want. At that point, people will
understand how the program works and the degree of panic over it will be far
I would also like to discuss this business of moving to an hourly unit of
account. If you work through the examples that the Department of Human
Resources Development supplied to you, under the new program, you will find
that a worker who is working 35 hours a week will get almost exactly what they
were getting under the old program. You will also find the regional transfers
are not greatly altered from what they are under the old program. That was
intentional, and I think it is important that it be that way.
In considering amendments to this bill, I urge you to think about two things. I
urge you to ask whether the amendment being proposed would enhance the
structural changes that are being attempted here. If it does, perhaps it
deserves support. I would also urge you to try to determine whether it is
something that affects the structure of what is being proposed or merely
changes the parameter values. You can change those parameter values all over
the place, and you will still leave intact much of what is important about
this bill. However, if you take apart the structure that is being put
together, you may cause a great deal of trouble because that structure was made
to fit together in important ways.
In closing, I would like to say that I think that the UI debate has been highly
polarized. I am grateful for your attention to the matter. You have heard from
defenders of the nation's financial health on one side, saying that if you do
not do something about this program we will hit a debt wall, and on the other
side, you have people who are concerned about those who are out of work, and
those who are in poverty. Basically it has been a highly polarized debate. I
think as people come to understand this bill better, they will realize that it
addresses the problems that came from both sides. It is not a business bill,
nor is it a bill that ignores the problems of the poor. It is a bill that took
the real problems raised by both sides and tried to find solutions for them.
I believe that, if this bill becomes law, you will find some number of years
later, just as we experienced with the 1971 bill, that people looking back
will see that something important happened in this year. The difference will
be that they will think it is an improvement rather than something that caused
a lot of problems. Thank you.
Senator Rompkey: Madam Chair, I welcome our witness and thank her for her
We have had testimony that the problem is not the unemployment insurance system,
that the problem is job creation, and that an effort should be made to create
jobs. We heard that if jobs were created, we perhaps would not need the
unemployment insurance system. We also heard that it is perhaps unwise, unfair
and inappropriate to change the unemployment insurance system before you
create the jobs. How would you respond to that?
Ms Nakamura: I believe the program in place right now is one of the forces that
is encouraging the growth of part-time jobs at the expense of full-time jobs.
If you look at the Canadian labour force survey, you will see that the
percentage of respondents that say they are involuntary part-time workers,
meaning they wanted a full-time job but have a part-time job because they could
not find anything else, has been increasing steadily.
I think that the program puts the greatest tax on the lowest wage earners,
which is the area that has been losing employment most rapidly. I agree we
have a serious employment problem in this country, but I do not think that we
should wait to fix our UI program until we do something about it because I
think there is some linkage between the two. The one is making the other worse.
Senator Rompkey: The existing program is making it worse?
Ms Nakamura: Yes, because the tax wedge is greatest for minimum wage workers.
That is where we are losing employment most rapidly. So it is putting a wedge
in where we already have the greatest problem, the greatest shortfall. In
addition, it is a force in favour of part-time jobs.
If you look at who will gain from this bill, lower wage workers presently are
disproportionately no longer covered by our UI program because they are not in
the jobs that qualify for it. I believe it would give back coverage to more of
the workers who are at the bottom end because they have been forced into
Senator Rompkey: What about women?
Ms Nakamura: Women particularly would benefit from that because women
disproportionately have ended up having to take these part-time jobs that are
not covered at all.
Senator Rompkey: Would more women be covered under the new system than under
Ms Nakamura: I could answer in two ways. Yes, immediately, they would be.
Furthermore, for the longer run, it is even more important because the trend
toward part-time jobs is only just beginning. If you look at developed
countries around the world, what you see is a number of forces converging to
encourage employers to hire in small blocks of time. As that trend increases,
we will have more and more workers who are not covered, and women will be
disproportionately disadvantaged there.
Senator Rompkey: What about students? We heard testimony from representatives
of the food and restaurant industry that this would impact negatively on their
operations. It would cost them more money, and they would perhaps have to lay
off students because they could not afford to pay the premiums. We heard from
the students, and they supported moving to an hours-based system, although
they did want some exemption. They saw some pitfalls, some weaknesses, in the
sense that students could not work the required number of hours per year to
qualify, so they wanted to see some modification and perhaps an exemption.
However, they clearly said that going to an hours-based system was better for
them. We had the students saying we should go to an hours-based system; we had
the employers, particularly in the food and restaurant business, saying that
that is not the way to go, that if we did that, we would be putting a burden
on them and they would have to lay off students. Do you have any comments?
Ms Nakamura: A very interesting study was done in the United States. It involved
two neighbouring states. One raised its minimum wage and the other did not.
Someone had enough foresight to collect data from food chains such as McDonalds
before and after this change came in. The study found that in the state that
raised the minimum wage, there was very little change in employment within the
fast food industry but prices of meals went up. I think the reason that can
happen is that meals in the fast food business are not traded internationally.
There is not the problem of foreign competition coming into a local market. If
the cost of business in a local area goes up for everyone, the price of a meal
also goes up a little bit for everyone. It may bring down demand a little bit
but basically the person who wants a hamburger will still buy it.
In summary, that recent U.S. study showed that the fear on the part of the fast
food industry before the change was made was not realized to a great extent.
With respect to the students pushing for an exemption, the changes in the bill
give them a two-year period over which they can collect their required hours
of work. They will be much more able to access the UI system than they could
I do not think that the UI system is the proper place to be providing help to
new entrants into the labour market, beyond what their premiums would cover.
The Chair: Thank you. We appreciate your brief. We will certainly take it into
Our next witness is from New Brunswick. This is our union representative,
Mathilda Blanchard. Miss Blanchard and I are old acquaintances from New
Brunswick. She is one of the foremost labour representatives of the people in
New Brunswick and she is a hard worker. She represents the Acadian Union of
Affiliated Workers and Fishworkers. We welcome you here to discuss Bill C-12.
Mathilda Blanchard, union representative, Acadian Union of Affiliated and
Fishery Workers: I am sorry, I do not think that was translated.
Senator Simard: That is not a problem.
Ms Blanchard: It is true we are late, but I was told this morning that it would
The Chair: The information you have for us will be translated as you go ahead.
Ms Blanchard: I go way back in time; farther than any of you here, because at a
point in time, you have to retire. As for me, I did not have to retire when I
reached your retirement age.
So I go a lot farther back than you do; I am older than you, because if you
were my age, you would not be here.
To help you put it in perspective I will tell you I experienced the 1930s, for
example, when there were beggars. We no longer have beggars who show up at our
doors with their hand out. That was stopped.
These beggars were just asking for 5 cents. We had 5 cents in those days. They
just asked for 5 cents because they knew very well that we could not give them
anything more than 5 cents. Sometimes, we also gave them a penny.
Before you here today, I feel a bit like these beggars from the 1930s, and I'm
just asking you for 5 cents; I'm asking you for two small amendments. I agree
with what the lady before me said. I will not repeat it; she said enough. She
also spoke the truth. But I know that you will not change the bill in its
You do not have time, because we live in an industrial era where everyone is in
a hurry. There is no time.
Senator Simard: Ms Blanchard, you do not have to worry about the translation or
the interpretation. If they cannot follow you, it is too bad for them. They
will perhaps tell us if you are going too fast, but speak normally.
Ms Blanchard: I want you to understand that I'm just asking for 5 cents. That
is why I mentioned it. I am only asking for two amendments. It is not much.
I'm especially concerned about one of the two amendments: the "plus two"
which has been brought back.
In the beginning of Bill C-12, during Mr. Axworthy's time, before Mr. Young, we
had 14 consecutive weeks, and no one could do that. So we asked for that to be
amended, and it was.
A few amendments were made. At the time, I met with Andy Scott who was a member
of the House standing committee, and they removed that clause. Now they've
come back with the same thing, i.e. if you work 12 weeks, it will be divided
by 14; this further reduces the rate that is already too low.
So we're asking you to leave it the way it was, so that if you work 12 weeks,
you will have your number of hours. Even if you talk about 420 hours, we'll
still end up with the same number of weeks, because they will divide it by 35
hours. It's the same thing; it's just an attempt to try and turn things upside
A worker will go for 35 hours per week, that makes 420 hours, he or she will
still have 12 weeks, at 4 times 35, I think that's what that makes.
So the amendment is as follows: workers who are entering the labour force for
the first time...
Now, the minister seems to be saying: they are young people. But that is not
true. Young people are not the only ones entering the work force. There are
women who have finished raising their families at age 30, 35 or 40, because
the young people of today, under age 20, will never have the strength to do
the work of the seasonal workers back home.
Or they are people who have been out of work for perhaps two or three years;
women who have had children or men: someone who has been ill. He or she will
have to come back. I'm talking about the 900 hours. He or she would have to
come back and work 900 hours. That makes 26 weeks, and that doesn't exist among
seasonal workers. I will explain to you a little later on what a seasonal
worker is, if you do not understand.
So, workers who are entering the labour force for the first time or who have
been absent for some time should be able to qualify with 120 hours or a lot
more, depending on the unemployment, like other workers, rather than 900 hours.
No one can work that many hours in one year, especially not seasonal workers.
The second amendment I am requesting is the elimination of the divisor, as I
explained earlier, the "plus two" whereby 12 weeks are divided by 14
and 14 weeks would be divided by 16.
If a worker applies with 12 weeks of work, the amount earned will be divided by
14 weeks, 14 weeks will be divided by 16, and so forth. With the bill in the
beginning, Mr. Axworthy said that in the first year, in 1996, when the bill
would come into force, the weeks earned would be divided by 14. The second
year, it would be divided by 16; 12 weeks would have been divided by 16. The
third year, it would have been divided by 18. In the year 2000, it would have
been divided by 20; 12 weeks divided by 20. We challenged that and it was
This little bit has been put back in because they absolutely want to put in
something to get you going, to bother you a bit, to overwhelm people as much
So they took some away but they left a little bit behind. That is what we're
asking you to remove, because I know very well that the bill will be adopted,
like I said at the start of the document.
Bill C-12 will become law on July 1, and I wonder why we have an Upper Chamber,
here, why can they not ask for an amendment that the government would accept?
And I think the government should accept this amendment.
In the spring, I had the privilege of appearing before the House standing
committee. When Mr. Young spoke, he talked for two hours. He said things that
really surprised me. At one point, he said that people, for example, who work
year-round should thank the Lord for having a year-round job, pay their taxes
and not complain.
He was still talking about seasonal workers. Asking you to try to get these two
small amendments through is like begging for a nickel.
That would help us a lot. It is the worst of the snags we are facing now. A lot
have been removed.
The entire bill is absurd. It is no longer an unemployment insurance bill; it
is an employment bill. Money will be taken from the employment insurance fund,
as it is now called, and a third may be given to companies; you know what
they'll do with that.
They say it's to create jobs. That does not create jobs. The other third will
go to administration, because you know how that works? Officials interpret the
Act one way; they send you to unemployment arbitration court or to Revenue
Canada with an appeal. From there, they send you to an umpire. Do you know how
much that costs? It takes two years to get to that point; that means the guy
is on the road all year, and sometimes even in the Tax Court of Canada after
That's where the money goes. The workers and the unemployed maybe get a third.
There has been much talk of fraud. I say that fraud does not exist as they say
Fraud is interpreting, for example, a work contract as a contract for work.
Saying contract for work changes everything.
So they say, the guy committed fraud. He worked, and is under contract. None of
it makes any sense. I say that, when the citizens of a country have to commit
what is called fraud -- if indeed there is fraud -- in order to survive in
spite of everything, the reason is that the system in which they live has done
a lamentably poor job of carrying out its primary responsibility, which is to
ensure the well-being of everyone of its citizens, and that those who pass the
laws governing this country have done a deplorably poor job of carrying out
They should turn on the taps, but they are elected. And who elected them? Who
are they elected by?
By us. Because we are the ones who put the money in circulation. So fraud
doesn't exist like they say it does.
I've been involved in this for 40 years. In 1967, I was one of the first to
appear before an umpire, before a judge. They did not want to give women the
dependent rate. Only men were entitled to it. That was one of my first battles
and I won it before an umpire.
But things have changed since. When you win something, they change it and make
it worse. As I said, I started 40 years ago, maybe even longer. But in the
sixties, there was the Burns Commission that recommended, if I remember
correctly, having a system which would help social assistance.
After that, there was Richard Hatfield, the best premier we ever had. And then
there were people like Jean-Maurice Simard, Brenda Robertson, Jean Gauvin,
Louis Robichaud, and I will name others. There were the Norbert Thériaults,
who had managed to set up a social welfare system that was almost acceptable,
and that went some way toward eliminating poverty and destitution.
Since the early 1990s, it has all crumbled. Do not think that people who will
have no unemployment insurance will end up on social assistance. There is none.
This is especially hard on men, because if you're not married, if you do not
have children or anything, your receive $250 a month to live on, but you cannot
even survive with that.
So this document I have prepared is a summary. For example, what are the
industries in the Acadian peninsula and in part of the south, around Moncton?
There is farming, forestry and fisheries. That is how people make a living.
All the activity starts around the month of April. Everything is bustling.
Everyone is outside, people are coming and going, this lasts throughout May
and part of June, which is lobster and crab season. After, there is seeding,
men go into the bush, there is a lot of work. It is seasonal.
At the end of June, or the start of July, it drops. Then comes strawberry time
and haying, it's a real holiday. We do not need to travel elsewhere, we travel
from one field to the other. Haying, harvesting strawberries and things like
that are a real vacation. All this work becomes a pleasure. No, but it's true.
It is such a wonderful life. That's why people back home live to be 100 years
In mid-August, the dance begins again. Everyone is on unemployment. But even
when they are not working, they still have to pay for licences and car
insurance. They have to pay for daycare at home most of the time.
It starts again with the blueberries. The blueberries have ripened. After it is
time for herring, and in September it's maple time.
The first frost in October, because we have to wait until there is frost to
make wreaths with the branches, is the time to cut branches for Christmas
wreaths and then Christmas trees. Along the logging roads in the bush appear
bales of Christmas trees, all for export. Then, in December, all this activity
comes to a sudden halt.
Who does that, they say there is a God somewhere. I am not an atheist, I believe
in God. He's the one who arranged things this way, so that people can rest in
the winter. The snow comes and stays until spring. The work stops. The
paycheques stop too.
And then, things cost a heck of a lot more. That's not a bad word, I have used
worse words than that recently. Everything stops, there are no paycheques or
nothing. But clothing costs a lot more.
Here in Canada, we need more clothing than people in underdeveloped countries
where we send our money. Heating costs are extremely high. We have to feed
ourselves a bit better.
So that's when unemployment insurance comes into play. And that is where it
will have to continue to come into play as long as we do not have a minimum
guaranteed income. Until that is the case, subsistence money must be provided.
Earlier, I heard one senator ask: what would you do to create jobs? The
industrial era is over. Don't forget that in your prayers. Pollution on earth
will get the better of the industrial era.
We have become truly crazy in the way we operate. We send money to
underdeveloped countries instead of sending them condoms. The world is
overpopulated. We cannot help those countries.
Moreover, if you want to talk about industrialization, how many jobs are there
on earth, for example, now that we are a global village? We do not know where
we are going. People don't like it somewhere, so they go elsewhere.
I would say that at least one job out of every eight in the world and perhaps
even more, involve building weapons. Money is sent, weapons are built. If that
were to stop, the only way to create jobs would be by meeting citizens' needs.
We must always start in Canada, because charity begins at home. We have to
start by helping people here. That way, we will create jobs. I mean by
providing food, clothing and perhaps public transportation, if possible.
So the industrial era is over. And here, I'm saying that while I've only asked
for two amendments, it's like a beggar asking for a nickel. I don't think you
can do much better. I know that you can't amend the entire bill. Because you
do not have the time perhaps. Parliament will adjourn in two weeks.
But Mr. Young said something to the committee, and I would have liked someone
here to have heard it. He told the committee that amendments were for
Parliament. He said: I will consider all of the amendments you request. So I
think that if you were to present amendments to the government, he would
probably consider them, and I beg you to do so.
Senator Simard: I would like to thank Ms Blanchard whom I've known for 25 years
at least. Ms Blanchard deserves the support, the praise, the congratulations
and the appreciation of many employees and employers, I believe, in New
I like the tone of your brief, Ms Blanchard. In the first part of your brief,
you have described the situation in New Brunswick better than anyone and
painted a better picture of it than anyone has been able to do in the past.
You have described the seasonal workers' sectors of activity. So once again
you are well deserving of our thanks.
I'm going to talk to my colleagues on this side of the Senate and I think that
you will be surprised, pleasantly surprised, that your amendments have not
fallen on deaf ears. I hope that the government will listen, that the
parliamentary majority in the Senate will also listen and perhaps support us
and help adopt certain amendments.
Yesterday we heard a presentation. I am not a regular member of the committee,
but I came to hear the presentation from the Conseil économique du
They told us that they, perhaps 90 per cent of their members massively supported
Bill C-12. After some questions, we learned, as I already knew, that they
represented more or less 1,000 employers. Before they could claim the support
of 20,000 employees, of these 1,000 members, like they tried to do, I stopped
them. They acknowledged that they were speaking only on behalf of employers.
You say in your brief, and I saw it yesterday when reading your document, that
the employees are the ones who keep the ball rolling.
Last night, I deplored the lack of sensitivity the Conseil économique du
Nouveau-Brunswick showed towards its employees. There was no beating around
the bush. Can you say on behalf of seasonal workers who are employed three to
six months a year -- who you have represented so well for 30 to 35 years --
whether these employees working in fish plants are happy with Bill C-12?
Ms Blanchard: I do not know if you are aware of what happened this winter in
the North-East. It was not pretty. Thousands of people had taken to the
streets not only in the North-East but also in the lower part of the province.
Later, you will hear from Ms Vautour who will address that issue.
Where are the members of the New Brunswick Economic Committee? Who did they
consult to be able to come here and tell you that? And I do not need to talk.
I saw it this winter. I spent full days out in the streets with them,
expressing our discontent. We are talking about jobs.
I will read an excerpt from the text that I read, for those who do not read
During the winter of 1996, in the small community of Paquetville, 40 jobs were
advertised. There were 600 applications received.
Next week, the Caribou mine will resume its activities. Yes! They will receive
money from the employment insurance fund. They have been closed for a long
time. They will reopen. They announced 200 jobs, and received 2,000
Senator Simard: People want to work.
Ms Blanchard: In Edmunston, where you are from, senator, the premier opened a
communication centre. They went into communications, and they don't understand
each other anymore. There are so many. They do not know where to turn.
They created 40 jobs. Two years ago, they promised 400 jobs. Where did these
jobs go? There are no jobs! It's not true. Seasonal jobs are the most
prevalent, and that's what is important.
So the pittance being provided in employment insurance, is not very much. I
admit that there were some people who earn high wages in the spring, and that
unemployment insurance went to all families. It was up to the government to
resolve that. Everyone cannot be blamed for mistakes made by a minority. When
someone commits a theft, he and he alone is convicted.
Someone who has not committed theft still goes out to buy bread. The one who
doesn't receive much. That money stays in the economy, it does not go to the
banks. The money stays in the banks. In 1995, the six large banks had assets
of $5 billion. This year, they were in line to make $6 billion.
I go a long way back. In the 1920s, I was old enough to understand. My father
was a scholar, my mother was a professor, and we had all the newspapers we
could get. We saw the recession coming. It was not hard to miss; there was too
much money in the banks.
When the money is not reinvested, the economy declines. That is what will
happen. I give it two years or more. Two years ago, I said that the government
should hit a little harder. It was hitting social welfare recipients and they
dared not say anything. I told myself that the government should hit harder so
that the people take to the streets.
I was the first to raise this idea. We take to the streets and we took to the
streets and it's not over. I'm not in favour of violence. We cannot always
control it. It is true that workers do not agree with Bill C-12. Last winter,
there were some mistakes made and some groups demanded that Bill C-12 be
withdrawn. We know that it could not be withdrawn. Some parts are okay. Some
people said that I was siding with Minister Young, but that is not true; he
does not need me to protect him, the poor soul! He told us we would give more
to those with less. That's starting to make sense: giving more to people who
I'm going to explain the situation of all seasonal workers. In the spring,
women who work in the lobster and crab industries end up in the maple and
blueberries sectors in the fall.
You have to realize that picking blueberries is not the same as processing
lobster. It's a different job. It takes skills to do it. So they go on to
When they finish with the blueberries, many of them work making wreaths. That
requires a lot of skill. It is demanding, but they succeed in doing it. They
have to go out into the bush to cut the branches. The government has to issue
a licence for cutting pine bows.
It is important to cut them properly so as not to damage the trees for future
years. These are all different trades. Nowhere else in Canada is such a mosaic
to be found.
I do not think that there is any other workforce like that in the world. They
go from one job to another. They learn the ropes from one job to the other.
That requires skilful people, and it is not in fisheries schools that they
learn how to do it. You can rest assured of that. They learn on the job. That's
how employers should train their people instead of paying them to go to school
where they don't learn anything. Moreover, they go from one place to another.
A person from Laureville travels 50 miles to go to Anse-bleue or to Maisonette
which is 10 miles farther, to work in the maple industry or the lobster
industry in the spring.
When blueberry time comes, they go back to Tracadie or Lamèque, where
there are a lot of blueberry farms.
They drive more than 100 miles a day, 50 miles there and 50 miles back. Others
travel farther than that. It is impossible to make plans. They no longer know
where they will go. One person goes to one place and looks for work everywhere.
There is no public transportation. In the winter, these people have to pay
for car insurance. They have to have daycare available at all times, because
they always think they might be called. Finally, what's worse, since they are
being sent to schools, they have to travel in the winter. They are creating
utter destitution with all this training. It doesn't make sense. I wanted to
explain that to you.
Senator Losier-Cool: Thank you, Madam Chair. I would also like to welcome Ms
Blanchard. Believe it or not, as unlikely as that may be, I have voted for you
in an election.
Ms Blanchard: That's not so bad. You didn't abstain.
Senator Losier-Cool: I don't remember why or when.
Senator Lavoie-Roux: It was a smart vote!
Senator Losier-Cool: Yes, it was a smart vote, but it would seem that I too go
back a long way. I have two questions. You referred earlier to the
demonstrations held by workers in Bathurst and in the Peninsula.
Following that demonstration, there were amendments and what might be referred
to as a few improvements.
Ms Blanchard: Yes, absolutely. Mr. Young met us at Saint-Idore. Everyone was
quite agitated. Mr. Young came to Saint-Idore with Mr. Réjean Malais,
one of the unemployment insurance officials, to provide us with some
explanations about the bill.
The people there became agitated and insulted him. They pushed him on his
shoulders. I tried to control them because normally I do control the workers.
When there's a demonstration, I don't have any problems. Mr. Young told us at
the beginning of the winter that he had removed the provision concerning 14
consecutive weeks. There were also two other things, and he said there was no
problem and that he would introduce them.
We should have asked him for more, but we didn't have the opportunity to do so
because the crowd was too agitated. We couldn't ask him. We did obtain the
extra things I asked for, and after Mr. Axworthy's visit three amendments were
made to the bill.
I think that Mr. Young was appointed precisely as to be able to amend the bill.
Mr. Axworthy could not do so, and Mr. Young was appointed with the requirement
that he do so. I think that is why he was appointed. Following the appointment
of Mr. Young, I issued press releases from the beginning stating that I was
pleased he had been appointed. Nobody wanted him there. I was told to ask for
Mr. Young's resignation. I didn't do so. That was done. I am sure that if you
insist on those two demands, maybe other people will also make demands.
I do not know what Ms Vautour will be asking for on behalf of the Coalition.
They will suggest other amendments which may be just as important, and I think
they will be along the same lines.
Senator Losier-Cool: As regards the amendments, Madam Chair, you pointed to
other witnesses that the members of the committee appreciated very much when a
witness makes clear and specific recommendations.
As regards the divisor, have you calculated the amount of money that could be
Ms Blanchard: I don't have the statistics. You can work it out in your head, if
you are good at figures. In any event, if someone earns $100 a week for 12
weeks, that makes $1,200. If you divide that by 14, the amount drops. And 50
per cent of $100 is only $50 a week. You can imagine what that means. They
won't get anything. It is already too low. In the bill, there is something
good. The minister says that more will be given to people earning less than
$26,000. The bill hasn't defined what is meant by a family. Some of us have
children of 40 to 45 years of age and we have to support them. They don't have
a job and they can't get one. It's not because they're not educated, they have
How do you define a family? There are two-person families, made up of adults or
a man and a woman with a son at home. Under the present system, welfare looks
after children. When they reach 20 years of age, they are just abandoned. Why
is that? Children are poor. That is not true. It is the parents who are poor.
Why should we say the children are to be pitied? They are no more to be pitied
than the poor devil of 30 or 35 years of age, living alone in his house and
unmarried because recently women don't always want to have a husband. So he's
alone in his house. There is no incentive for him to go out to work like mad.
All human beings are important, be they 10, 20, 30 or 40 years old. They are
all important. When you get to be 65, things are different. We have a certain
tranquillity and we are half dead. We can't enjoy ourselves as much as we did
at 40 with the same pay.
Senator Cohen: I have a comment, Madam Chair, not a question.
Madam Blanchard has not lost her magic. I think she has explained to this
committee more eloquently than anyone what a seasonal worker is. We all know
the word "seasonal", but we did not realize the intensity of the
jobs and the travel and how much effort is put into this.
Archbishop Gervais spoke to us this morning on behalf of the Catholic bishops.
He said, "Do not condemn dependence because it is a product of seasonal
workers." I thought that was a profound statement and something we should
All I can say to you, Madam Blanchard, is that I hope your message comes through
loud and clear to the powers that be because I feel we have to take another
Senator Robertson: Madam Blanchard, thank you for appearing here this evening.
We all know in New Brunswick how much work you have done to alleviate poverty
and to help those who cannot help themselves.
Madam Blanchard, I am pleased you mentioned the fact that the abuse in the
system is not what a lot of people think it is. If you look around our world
today, we see abuse in the clergy; abuse in the legal system; abuse in the
medical profession; abuse in the press; abuse in every walk of life, whether or
not people are employed and regardless of the milieux. As long as there are
people, we will see a percentage of abuse. I have always believed that there
is no more abuse in one area than another. I think the information around us
today and what we have seen in the last few years emphasizes that fact rather
clearly. I wanted to reinforce that point in your comments.
Looking at Bill C-12 the way it is, I, like you, doubt the ability of the
committee to introduce amendments acceptable to the government. I hope my
negative attitude is unfounded, but I would be very much surprised. If Bill
C-12 is passed in its current form, what will be the impact on your region?
Ms Blanchard: First, Bill C-12 is not a bill which seeks to protect workers. It
is drafted by lawyers, for lawyers, judges, government officials and such
like, for the government which will certainly use it for political gain.
Large amounts of money will be given to big corporations making millions of
dollars every year. People will be trained to work for those companies. This
training is not being provided for the workers themselves. In the fishing
industry, it is the companies which train the workers, and the training is
better than in schools. It's a joke.
Generally, the problem with all that is that the poor devil being paid $5 or $6
an hour will end up paying for unemployment insurance to be given to somebody
else who already has too much. If some companies do not find that it pays to
set up or work in a particular area, why are they in the industry?
Why make automobiles if they cannot be sold and are just left to rust. The
industry should just stop doing so. Money should not be given to them just so
that they can pollute further. Our water is polluted, our air is polluted, our
lands are polluted. Just look and you can see that it's a fact. We are helping
people in Haiti. We just let them kill one another. They don't have systems to
deal with their sewage or their waste. There are too many people. I am not
against aid, but really! Generally, the bill cannot be changed. Time will show
what it is worth. If something is bad, it always ends up by smelling. The
worse it gets, the more it smells.
I had three quarters of an hour here to speak. I have a picture of Pierre
Elliott Trudeau. It stated: "No more". No more money would be given
to corporations, that's finished. During the period of Ms Robertson, Mr.
Simard and Ms DeWare, or shortly afterwards, you gave money to big
corporations. Name them! Where are they? They have all left. They took the
money. There's no point in giving money to corporations. It's all right for a
small company, employing two or three people, but the big corporations, with
millions of dollars, what do they do? When a big company receives money from
the government and two or three years later closes down, why don't they
reimburse the government? That at least would be acceptable. The bill will
start to smell by itself.
Senator Anderson: Madam Blanchard, I am delighted to have heard you speak this
evening. I do not ordinarily come to this committee, but I thank you for your
eloquence and especially for your caring. I also wish to say that the people
of New Brunswick are mighty lucky to have someone such as you speaking on their
Ms Blanchard: Normally people say: thank you for allowing me to appear. In this
case, it's you who are thanking me. The roles are reversed.
The Chair: Perhaps Madam Blanchard wishes to wrap up.
Senator Simard: Madam Chair, I am not sure I am ready to wrap up now. I do not
need to remind you that Madam Blanchard began her testimony around seven
o'clock. She has only been at it for 40 minutes. I trust you will allow me two
or three minutes in conversation with her.
Senator Simard: I would like to ask Ms Blanchard a question. As you know, I was
sick last year and my priorities have changed. I have always tried to protect
the most disadvantaged members of society, but I also looked after big
business. At the present time, I am less concerned about big business and I
agree with you on that point. I think they're able to look after themselves. I
am an ally in terms of this bill.
I have made many statements, tabled motions, and being supported by my
colleagues in the past four or five months, and particularly in the last
month. We have even achieved the feat of having the Liberal senators vote four
times on a motion which, if it had been adopted, would have allowed this
committee to travel to New-Brunswick, Nova Scotia, Rivière-du-Loup, and
This was not possible despite all my press releases and statements. Several
were published in Acadie Nouvelle, on television and the radio. I was not the
only one who made such statements, there were also Senator Cohen and Senator
Robertson. We expressed the wish to travel. Two people called me.
The second person who called me last Thursday was someone 50 years of age who
had heard that we were travelling and was preparing to welcome us. I explained
to the person that the Liberal majority, that is the government, had decided
to rush it through, and did not find the time or money to travel to New
Brunswick or to Prince Edward Island.
Some Conservative senators are going to go to Prince Edward island and perhaps
meet a few people from New Brunswick during the week-end.
The first person who called me was, as I said, someone 50 years old, and there
was also you, Ms Blanchard, who called me two weeks ago, with the result that
you are here now to represent the public.
How can we explain the passive and desperate atmosphere, or the fact that
despite all our statements, there was not enough interest on the part of the
people of New Brunswick to demonstrate and pressure us and the Liberal
majority? Have they given up on the Senate or do they think that there is no
Ms Blanchard: The crab fight changed the history of unemployment insurance. It
was serious, lasted two weeks and took everything away. But since you've
stated that you were coming to New Brunswick, I have had many people say to
me, "He's going to come, eh? He's going to come." That's what they
Everyone is at work, with the majority of them beginning at 8 a.m. mostly women
in crab plants and finishing at 1 a.m. the next morning. They're killing
themselves with work. I am told that the members of the crew are gonna put a
stop to it, as it is incredible what is happening there. I was in contact with
Mr. Mifflin's office today to try and meet him, but without success.
The crab fight has been going on for a month. Now there is another fight. I am
sure that if you come, we will be able to organize people to meet you. Please
give us some notice of when you intend to come.
Senator Simard: I can go before third reading. And if we cannot convince the
government to accept certain amendments, if the bill is passed in its present
Ms Blanchard: I think that if you insist --
Senator Simard: I will go throughout the summer and I will go next fall and
next year with my colleagues.
Ms Blanchard: If the Senate committee recommends certain amendments -- not only
my two which are perhaps the two main ones -- I am sure that the minister will
take them into consideration, because I expect to meet him again.
I have one last question, Madam Chair, if I may? I was told that the document
would be translated and I would have liked to be able to read it in full.
Perhaps it could be translated. I didn't have the time, I would have preferred
to translate it myself.
Senator Lavoie-Roux: It is perfect and could never be as good in English. It
could never be as good in English as it is French.
Ms Blanchard: No. Because words like "charrié", and "bien-être"
are very familiar to us.
Senator Lavoie-Roux: There is a very special feeling associated with them.
Ms Blanchard: Yes, it's difficult. It's difficult to translate that.
Senator Simard: On that point, Madam Chair, I know that Ms Blanchard did not
read her brief in full, and I would like to move that her brief be printed and
included in the minutes of this meeting.
Senator Lavoie-Roux: I second that, Madam Chair.
Senator Simard: As a result, it will automatically be translated.
Ms Blanchard: Maybe the words won't come out the same. I myself am very
romantic, and it is a romantic language.
Senator Lavoie-Roux: I would have liked Antonine Maillet to hear you. If she
had heard you this evening...
Ms Blanchard: She always laughs at me. She doesn't talk like me. She laughs at
the Acadians. We are not all Sagouines. The Acadians were a very proud people,
after the deportation. We were not deported. Don't forget that I am a
monarchist. The Prince signed my book when he came to New Brunswick. The only
thing he signed in Canada was the book I presented to him, the book he wrote
himself and signed for me.
No, the Acadians have never been like Sagouines. We were Evangelines.
Senator Lavoie-Roux: No, what I was saying is that when she wrote La Sagouine,
she was able to paint an Acadian character. But I would have liked her to hear
you this evening because you have presented an argument...
Ms Blanchard: She has already heard me and she doesn't like the way I talk.
Senator Lavoie-Roux: That's her problem.
The Chair: Thank you very much. We appreciate your appearance before us today.
Members, we will hear next from witnesses representing the Moncton Coalition
for the Economic and Social Justice Committee: "Defend Our Rights."
They also represent Chaleur Coalition for the Preservation of our Social
Programs; the Fredericton Area Coalition for Social Justice; the Cap Pelé-Shediac
Committee Against UI Cutbacks; the Committee "The Future Homeless of
Restigouche"; the Group of Concerned Citizens for Fair U.I. and Jobs; and
the Committee for Employment and against U.I. Cutbacks.
Ms Angela Vautour, Spokesperson, Moncton Coalition for the Economic & Social
Justice Committee, et al.: The committee has a copy of our presentation. I
want to begin by giving you a picture of the situation of workers today before
we even talk about this bill.
Workers are in a critical situation today because of the first bill that went
through in the 1994 budget. Since that first reform, the qualifying period
went up, our rates went down, and the duration of claims went down. Duration
of claims was cut from 39 weeks to 32 weeks.
On the long-term basis, less people are collecting UI because some cannot get
12 weeks of work. As a result of these people who are without UI because of
the cut, the statistics show the unemployment rate going down. We will be
pleased when the unemployment rate goes down but not if it is because of
something other than job creation. Workers are no longer on UI but they are
also no longer looking for work.
What used to be a 32-week duration of UI is going down to 24 weeks. The 12
weeks to qualify is going up to 13 weeks. In our region, we are only 0.3 per
cent away from needing 13 weeks to qualify next month. It is not because there
has been a massive job creation. We are looking three months back, March,
April and May. In those months, everyone ran out of UI benefits and no one was
working. That is why the unemployment rate went down from 14.1 per cent to 13.2
per cent. That is a drastic drop which has nothing to do with job creation.
Last fall, people could not qualify for UI. They had to try to find 13 weeks'
work. Government had to step in and create make-work projects. There was no
work available in late fall. Those people only got 24 weeks of UI which, added
to 13, does not total 52 weeks.
This problem will happen every spring and it will get worse. It will worsen in
the fall also. With this reform, more people will drop out of the work force.
The 12-week qualification period will no longer exist. You are looking at a
maximum of 24 weeks which could go even lower. This problem must be examined.
The duration of the claims are not long enough. You cannot expect people to
live without anything for 13 weeks.
We have no problem with changing to an hours system. People will pay from the
first hour. However, we do have a problem with the increase in the qualifying
I heard one women say that it was great that women would be covered by UI. Yes,
they will be covered by UI but will they ever qualify? Most of them will not
qualify. They will be paying into it and that is all. Some who are paying into
it now, who can qualify for a stamp at 15 hours, will keep paying into it but
they no longer receive UI.
The government is playing with the term, "being covered." We cannot
disagree. Everyone will be covered, but a lot less people will qualify. Not
everyone is working three or four part-time jobs. In the rural areas, you do
well to find one part-time job. These people are not being considered at all.
This new system is being thrown at them without even thinking about it, while
the workers think that the government knows know it is doing.
So I don't agree with the legislation being reformed. This reform is being done
for big business. They have reduced unemployment insurance premiums by 7
I had a meeting in my small community. I heard the representatives of more than
125 small businesses who came to the meeting to have an explanation of the
I told them that since January there had been a decrease in unemployment
insurance premiums. They themselves hadn't even noticed because they have one,
two or three employees. With seven cents out of every 100, when you have two
or three employees, you are not going to create jobs.
However, a corporation which has 5,000 or 6,000 employees will save $1 million
a year, but is it going to create jobs with that $1 million? No. It sends the
money to the Bahamas. It probably didn't pay tax on it.
Therefore, this reform will not help the small worker or small business. They
are crushing small business. If the Economic Council of Kent thinks that this
is a good reform, I hope they will check that out with business. I have at
least 125 small businesses which are against the reform because they are laying
people off, and then stores are obliged to close down because people have no
money to buy things there. There is no money available.
And the fact is that in rural communities, whether we like it or not, it is
unemployment insurance which keeps are communities alive. We need unemployment
insurance and we need more than $50 or $75 a week.
That is what is going to happen with the divisor. The divisor is there for just
one reason, that is to reduce our rates.
If I'm not mistaken, the divisor is now a regulation and not part of the act.
Overnight, this "plus two" can become a "plus four" or a "plus
five" and then "plus six".
The intention of the current federal government is to have everyone working 26
weeks and receiving 26 weeks of benefits. That means that there is nothing for
us in our communities. Those people without a job will all be going on
welfare. The province told me that they don't have any money for us. So, what
do we do?
Tourism is not a year-round activity. That's a pity; we would like it to be but
once the summer is over, tourism is finished. Once the ice starts, you have to
get the boats out of the water. There's no alternative. Where we live, the
water is not open throughout the year. It is closed by the ice.
People in the logging industry cannot work all year because of the conditions:
drought, weather, the environment and winter. We do not choose to be seasonal
workers. We didn't wake up one morning and decide to be seasonal workers. That
is not the case.
We have seasonal work that has to be done. What will happen to seasonal work? I
am sure you enjoy your lobster suppers. Someone has to go and fish for that
lobster. People need paper to write to you. Someone has to go and cut the wood.
People like to visit our beaches, and there has to be someone there to welcome
The intensity rule is an example of absolute discrimination against seasonal
workers. This is a program to help people between the end of one job and the
beginning of another, but in the interim they're punished. You use the system.
That should simply not be allowed to exist, and can you imagine the living
conditions of families trying to support dependents on less than $26,000
income. With all the requirements of Bill C-12, these people will no longer be
eligible for unemployment insurance.
Very rarely will someone receive 80 per cent. He or she will receive 80 per
cent of what? If they can do so, they will automatically spend their $26,000.
Therefore, the $26,000 is not as great as they suggest.
There is also the question of 26 weeks: they give people just 26 weeks to get
the number of hours required. It's all well and good to say that they are going
to qualify, but once again this is a way of reducing rates. Why do we have a
surplus of billions of dollars? A fund which is paid for by the employee and
the employer? The government doesn't put a cent into this fund and then tries
to tell us that the fund or the program is responsible for the debt.
Those who think that unemployment insurance has created Canada's debt should
take the time to re-examine the books, because I think there's a problem here
today. Perhaps that is the problem. There is money there, and the government
sees that there is money and is dipping into it. That is what the government
is doing, and it is wrong.
There are also qualifying periods. They have changed that to hours. As I said
at the beginning of my presentation, the program was good. But they have
tripled the qualifying periods. So they have taken a good thing and made it
They require 26 weeks for a new worker. That will certainly have a considerable
impact on women. Bill C-12 will have more of an impact on women, harming
rather than helping them. That is a fact. Only time will prove what we are
saying today. Like the other groups who are saying what we are saying today,
that this measure will affect women, I am sure that will happen.
We already know people affected in our small communities. There are teachers'
aides who will no longer qualify for unemployment insurance. There are people
working in restaurants, the majority of whom are women, who will no longer
qualify for unemployment insurance. There are people in hospitals who will no
longer qualify for unemployment insurance. These are almost all women's jobs.
And you are trying to tell me that that will help women, but it is just not the
case. What else was there? I have forgotten.
Mr. Richard Pellerin, spokesperson: There are about 2,600 of us seasonal workers
in the Shediac region. We are involved only in fishing, tourism and to a small
degree forestry. Out of a total workforce of 6,000, there are 40 per cent of
us receiving unemployment insurance.
I myself came here although some people said I was wasting my time. I thought
that I would come and say what I have to say.
I am here with hope, to see what the committee is going to do.
As an example of how much people want to work, you may consider that when the
IGA opened in Shediac, with 60 positions available, they received 800
applications. I have checked that figure. On average, there are 150 to 300
applications a year. That shows that people want to work.
The government doesn't create jobs and jobs are not just created alone. In a
context of drastic cuts seasonal workers have to be helped. The percentage for
the month of May was 14.1 and for June 16.2, and you must include here the "plus
two" requirement. The number dropped from 28 to 26 weeks.
It is estimated that it will probably be lower for the month of July; it might
drop to 13 weeks for 24 weeks. That makes just 37 weeks. Where can people go?
Where can people go for those other weeks?
The way they are implementing the system, it will take about 28 or 29 weeks of
work to make the requirement.
And those weeks are simply not there. Not many trees are planted in winter.
People may work just a few weeks in winter, and that's all there is. There is
nothing else; there are many people from the region whom I see around the
table and who understand the situation.
And the minister, Mr. Young, calls us lazy. I do not consider women who work 60
or 70 hours a week for 50 or 60 consecutive days to be lazy. If there were
enough jobs, I think we could get rid of the problem. If jobs could be
created, the problem might be resolved. But with cuts of that kind, all I can
see is another system of welfare developing. And you can see that, in the
provinces concerned, the suicide and crime rates are also rising. You can see
what all this will lead to, that is to the most unpleasant consequences. If
you accept that, we will see what will happen in two or three years, but...
But that will be too late. If you want to do something, the Senate committee
will have to decide and say: We will no longer be "yes-men". You can
tell the Prime Minister that: We will decide for ourselves, your bill is not
good and we will vote against it.
There is no way we can survive with that. Everyone is worried. I see women 55
and 60 of years of age, which is admittedly not very old but nevertheless, and
they are working long hours. It's tough.
All that's happening is that people are receiving a small cheque from week to
week. I would like to see those people not having to worry, sure in the
knowledge that unemployment insurance benefits will continue to be paid for
the rest of the year.
In the present situation, people have more faith in the 6/49 than in the
government. It's mad. The problem has to be resolved. It is a serious problem.
Officials have been trained to implement the new amendments, even before the
Senate has voted.
I think it's an insult. I hope that when it's time to vote, you'll make the
Ms Vautour: With the first reform in 1994, we were treated as if we were all
lazy and didn't want to take up the work there was. For two or three springs
now we've been running into section 25, if you know what section 25 is. There
isn't any work. So that they had to come up with something else.
You can take my word, when people don't have anymore cheques coming in and
there's work available, they'll go out to work. There isn't any work. Someone's
got to do something about this. You are our last recourse. You are the only
ones that can send this bill back and ask for amendments. This legislation is
inhumane, it's made for corporations and for the rich.
You can't convince me that it's the poorest people in Canada who will have to
shoulder the burden of the debt. That is what you are doing.
I call on you to let your conscience be your guide before passing this bill and
consider the long term social effects. There are already children going to our
schools without breakfast and lunch. The teachers have to watch out to make
sure these children have something to eat.
And the bill hasn't been passed yet. Believe you me, there will be more of
them. There will be incredible social effects. The effects have already begun
to surface and I've been starting to receive calls. I know how many people
There's another point concerning Revenue Canada. They are ready to harass people
with this kind of thing. If you work for relatives, the file is sent to
Revenue Canada and they do an audit for the previous two or three years. There
are people who owe $10,000, $15,000, $12,000 or $20,000. There are cases where
people were receiving unemployment and then suddenly it was decided to look
into their file.
These are all different ways of taking money from the unemployment insurance
fund and making life difficult for people. We have to put a stop to this.
The Chair: I wish to thank you for your presentation. I should mention that
during the discussion on the amount of unemployment insurance that will be
paid out in the system, the minister pointed out that the amount would be
offset by the second part of the bill, which deals with training programs and
an influx of money into your area because of the unemployment rate. It would
take the form of wage subsidies, self-employment assistance, job creation and
so on. You have probably discussed this issue. We would like to hear what you
have to say about the fact that the government feels that the amount coming
out will be put back in terms of job creation programs and wages.
Ms Vautour: The government is no longer putting out money for job creation and
training. We are not using the UI fund for that. These are subsidies to
employers. We just heard about what that does. It is no good. We are seeing it
already. Businesses are laying off people knowing that there is money coming.
They will hire the same number of people thereafter.
The Chair: If it is over a three-year period and they lay off now, they will be
in trouble. This is the transition period. Some of the negotiations between
the federal government and the provincial governments have not even started.
Ms Vautour: What will happen after three years?
The Chair: Do you not think that the provinces would step in to control some of
that funding for training for your benefit?
Ms Vautour: It depends on what the province wants to do with it. That money is
there to pay benefits for the people. Why use it for that, knowing that it
will not work? It will be abused by the employer up to 100 per cent. We have
seen that over and over again. It will not create permanent, full-time jobs.
Once the money is gone, you are out the door. It is still an insecurity. The
money was there to help the people between jobs.
What will they do? There will be more of a surplus. They will bring down the
premiums again and the large corporations will save millions and millions of
dollars. We will be in the red again and they will say, "Excuse me, you
can only get 45 per cent of your rate now." It was 60 per cent at one
point; and we are now down to 50 per cent. They are trying to get it down to
45 per cent.
Senator Robertson: I wish to thank our witnesses for appearing before us today.
I know it is not easy to come this distance. It would have been much more
satisfactory had the committee travelled to our province so that more people
could have made their positions known. Unfortunately, we could not control
that. It is most important that people be heard. The people have not been
heard, particularly in this instance.
I have a brief statement to make, after which I should like to ask a question
or two. I must say at the outset I was somewhat encouraged when, a few years
ago, Minister Axworthy announced the grand scheme to redesign all the support
programs. I thought that that was the only way we could make progress in
dealing with poverty in our country. Coming from Atlantic Canada, we know about
Therefore, I was somewhat encouraged with all the great statements that there
would be some sort of a harmonizing of programs, eventually, and that we would
then be on the road to progressive recovery. In the final analysis, I guess it
was not the intent to harmonize the income support programs; instead other
harmonizations were afoot.
I am disappointed. We have lost a good opportunity. I believe that the various
income support programs need to be addressed in a serious manner. Obviously,
by doing it piecemeal, more people will be hurt. More people will fall through
the cracks in the program. The changes to the unemployment insurance system
contained in the bill will hurt Atlantic Canadians in particular and those
living in the coastal areas of Quebec.
I do not know where people in New Brunswick will get the work. I do not want to
be negative or critical simply for the sake of being so, but I do not know
where they will turn.
Since this bill was introduced, a sufficient number of people have spoken to me
to increase my concerns about this possibility. We have a responsibility to
our people to do better than this bill.
It may be that the big mistake was allowing unemployment insurance to develop
into a program of income support over the years. However, it has happened, and
yanking the rug out from under people's feet so quickly will cause increasing
Would it help if we could persuade the government to delay the implementation
of the bill until we formulate an intermediate step? Besides killing this bill,
which I know you want to do, because I have heard you before, have you any
other suggestions? Have you other suggestions of how the government can ease
the pain and suffering which people in Atlantic Canada will experience? If
jobs are not created and the cost of living keeps rising, it does not matter
whether you yank the carpet out today or in five years; we will still be in
Job creation is the only solution. I do not believe that there is a real problem
because there is money in the fund for everyone. Job creation is the only
situation to the problem because of what the government is doing with the UI
bill. There is money in the fund; it is just that government has decided to do
as it pleases with it rather than paying benefits to the people who need them.
The solution is permanent job creation. However, we must not forget that we
have seasonal industries and that some one must do that work. Who will do the
seasonal work? Why is it so bad that people work in seasonal industries?
Suddenly it seems to be in vogue to say that seasonal workers are lazy. It is
the employer who lays seasonal workers off when there is no more work.
Also, with regard to abuse, an employee cannot abuse the system without an
employer doing the same. Abuse is not everywhere. There is some abuse because
of necessity. When you are receiving $100 a week on UI, you need to work under
the table a little bit to survive. Do not forget that New Brunswickers are
being paid the least social assistance of any area of Canada.
I agree that there is a problem with the UI. Some people are living in deep
poverty with UI. However, this bill will only add to that problem.
Senator Lavoie-Roux: I'd like to thank you for presenting your brief. I found
your testimony very interesting as well as that of the previous speaker Ms
Blanchard. I didn't realize the extent to which seasonal work had such
ramifications. This is the first time that someone has explained to me the
kind of seasonal work where the fisheries stop but it's a lot more complicated
than that and you end up doing all kinds of jobs depending on the season.
You repeated two or three times:
"Okay, women will be covered but they will not qualify."
I'd like you to enlarge upon that.
Ms Vautour: It's because the qualification hours were tripled. At the present
time you can be insured for a week when you work 15 hours. They're going to
change it and make it 35 hours.
Right now someone may work a 180 hours at the rate of 15 hours a week. They
will increase this to 35 hours. How many weeks will be necessary for someone
working 10 to 15 hours a week to reach a total of 450 hours? He'll have 420
hours but it will be divided by 14 weeks. They say, you don't have to be
punished but you need 450 hours.
There are lots of people who will be paying unemployment insurance premiums but
will never be able to get benefits because they won't have the requisite
number of hours.
An employer called to tell me that his employees worked 30 hours a week for 12
None of these employees will qualify for unemployment insurance at the end of
the summer. They need 35 hours a week.
Senator Lavoie-Roux: I'll take a closer look at that. You make an interesting
point because I thought one of the good things about this bill was the fact
that the concept of weeks worked was replaced by hours worked. Everyone said
that that would be a good thing.
Ms Vautour: The hourly system is good enough but there's no need to triple the
number of hours. The hours should be kept to a maximum of 180 hours a year. A
person able to work 250 hours will be in a better position because he is
entitled to higher unemployment insurance benefits. But don't take away the
initiative from someone who is able to work only 180 hours. This person is
Senator Lavoie-Roux: It's not a matter of choice, that's the way things are.
Ms Vautour: Exactly. It takes away the person's incentive to work. So there
will be all these people paying unemployment insurance premiums including
people who haven't had to pay up until now. They won't be entitled to
benefits. We have people who paid into the program and received benefits,
they'll keep on paying but will no longer be entitled to benefits. Part-time
workers will be very hard hit.
Senator Lavoie-Roux: Are there any other points in the bill that penalize women
Ms Vautour: The divisors, it's mainly women who work fewer weeks. The divisor
should not exist nor should the 1 per cent.
Senator Lavoie-Roux: I'm in full agreement with you when you talk about
subsidies for businesses to hire employees. For a long time people thought
that this was an innovative solution. Employers were given incentives to create
jobs but I think we've reached the stage where we have to take a good look at
this practice because it also created a number of distortions.
It's not so much that employers were motivated to create jobs but they didn't
want to have to pay their employees or they wanted it to cost them less. There
were certainly abuses and there still are.
This whole matter of subsidizing employers for job creation requires a thorough
examination because not only is it unsound but it also has a number of perverse
effects that I've already spoken about. People who've never qualified for
unemployment insurance and who have always managed to find some work will
apply to these employers and be asked whether they've had unemployment
insurance or welfare. Since they've always been able to earn income from jobs
here and there, they've remained outside the system and are not eligible for
this particular kind of work.
Ms Vautour: There are lots of women who stay home to raise their children and
when they go back to work they will need 26 weeks. It's ridiculous. Once again
women end up being penalized.
Senator Lavoie-Roux: Thank you.
Senator Anderson: I must say I am a bit confused because the professor who
spoke to us first this evening said that most people would not see much change
in their benefits. I think you said that Bill C-12 would harm women
particularly, and then you said that people who work in hospitals and
restaurants will no longer be able to qualify. Why is this?
Ms Vautour: Many of them are part-time or what is known as on-call. I already
have three close friends who are out of the system because they are on-call.
Senator Anderson: You mean they do not work an 8-hour shift, for instance?
Ms Vautour: No. They can be called in for maybe a day, a day and a half, two
days a week, depending on the situation, which could mean they would work 8
hours or 16 hours. Right now when they are not called, they can file a claim,
and at least they have a little something coming in. Under the new system they
will not get enough hours to qualify.
Senator Anderson: Did you say the number was 35 hours?
Ms Vautour: They are increasing it to 35 hours. We have no problem with the
hourly rate. The problem is that the number of qualifying hours is being
increased. Right now you can have a week at 15 hours. They are increasing it
to 35 hours, and many people will not get those 35 hours. That is the catch.
The hourly base is fine, but I say they took something good and made something
bad out of it. They should keep it at 180 hours. If you can make 300, great;
your cheque will be that much bigger. That will be an incentive to work.
I know that in our region, where the unemployment rate is very high, we will
not qualify for 12 weeks anymore. I am being positive when I say the figure
should be 420 hours, because I do not think we will qualify with 420 hours
anymore. People who know they will not be able to obtain that 420 hours will
drop out, and that will jack up the unemployment rate. That is bad news because
it means that people will just give up on the work force.
Senator Anderson: Thank you.
Senator Landry: Finally we've got some people who get down to work. I am a
believer in job creation. I think that people are too inclined to believe
they're inferior. We think that manufactured goods can only be made in the
United States or Ontario.
I've started up businesses to create jobs. I've had to fight with village
councillors to get a construction permit. We think we can live off tourism
alone. The tourist season only lasts six weeks. When I try to get things done,
our village council seems to have a lot of trouble understanding that.
Last winter I was in the hospital. Once again they wanted to make a road between
the plants and the sea for tourists. I think we can set up plastic factories.
I had to fight with the village councillors for two years to get a construction
permit. Today we have more than 40 or 50 jobs. It never stops, 12 months a
With a bit of luck, we could build more of these. The fishery and tourism aren't
the only way of making a living, we have to come up with new ideas.
Ms Vautour: Exactly. Why aren't we able to set up a plastic packaging plant?
Why not do something that will create jobs throughout the year? We seem to be
punished because we are seasonal workers. In areas where there's a high
unemployment rate, there's obviously not much money in the community and it's
very hard to encourage industries to set up there. That's the reality we're
Senator Landry: You have to have money to start up.
Senator Lavoie-Roux: In the past 10 or 15 years New Brunswick has been quite
innovative in creating jobs and small industries. It seems to us that New
Brunswick is leading the way. That's the impression we have. New Brunswick
seems to be leading the way in job creation. Am I mistaken?
Senator Landry: I'm a strong believer. There are lots of town councils that
think tourism is their only salvation.
Senator Lavoie Roux: What you need is skiing in the winter.
Senator Landry: Yes.
Ms Vautour: The fact is we have to create jobs before we start taking away
unemployment insurance. It's ridiculous to say that we'll only be losing 5 per
cent. The divisor will mean that we'll lose a lot more than 5 per cent. It is
now a regulation. It's very dangerous.
Senator Cohen: In reference to what Senator Landry just suggested about building
a plastics factory, in Bangladesh they have what they call the barefoot bank.
It is where micro-lending comes in, where they lend small amounts of money to
people to create small, cottage industries. In China, women get a small loan
to grow mushrooms in the yard so they can raise the standard of living for
their family. I read recently that in Restigouche, New Brunswick, a
micro-lending agency has been established. I do not know the name of it, but
when you reach the point of desperation, there are no more jobs, the only work
is seasonal, and you are faced with living with the changes in this bill, I
suggest that you investigate the micro-loans and the small cottage industries.
Have you ever considered that route? It is just a suggestion, because the
repayment rate for women who used these bank loans has been 97 per cent,
according to the statistics I read.
Senator Simard: I'd like to ask the witnesses to confirm that they received a
mandate to come here to Ottawa and speak on behalf of these groups, namely the
Moncton Coalition, the Chaleur Coalition for the Preservation of our Social
Programs, the Fredericton Area Coalition for Social Justice, the Cap Pelé-
Shediac Committee Against UI Cutbacks, the Committee of the Future Homeless of
Restigouche, the Group of Concerned Citizens for Fair UI and Jobs, the Saint
John and District Labour Council and others. How were you given the mandate
from these groups representing thousands of people?
Ms Vautour: Since the government committee was unwilling to hold public hearings
in our areas, we decided that we would hold our own alternative public
hearings. About 34 groups came to make presentations in Bathurst, Blackville
and Moncton. We prepared our brief to you today based on these presentations.
We felt that it was important for people to have a chance to express their
concerns about this bill and everything went very well. We can't give thanks
to the present government, the coalitions themselves made all the arrangements.
Senator Simard: Bill C-12 is a complex, devastating and costly bill for
employees and employers and it will have considerable repercussions with
families being thrown into the streets, and hundreds and thousands of people
forced to turn to unemployment insurance. Do you sincerely believe that the
citizens of New Brunswick, whom you represent here this evening, and others are
aware of this bill?
Ms Vautour: No, not at all. There are lots of people in Canada who have no
knowledge of it. When we went to arrange these meetings, I was able to have
public meetings. The people whom I discussed this bill with, when I had the
time to explain it to them in the Peninsula, in Nova Scotia or elsewhere, were
not familiar with it, they thought they knew what its provisions were.
Unfortunately there will be lots of people in need of unemployment insurance
who are in for an unpleasant surprise. The government has made sure that people
are not well informed about the bill.
We have attempted to do this work with the limited resources that are at our
disposal, we've gone into the communities and explained the bill to them.
We have the forum made up of the mayors and all the communities in our regions.
The mayors have given us their support, they are against the reform. Small
businesses are against the reform because I've taken the trouble to explain to
them what it means. Unfortunately there are a lot of Canadians who don't know
about this bill that is going to be passed.
Senator Simard: Would you agree with the statement that not only are employees
ignorant of this bill but also employers?
Ms Vautour: Yes.
Senator Simard: That may be what Minister Doug Young, whom I have known for a
Senator Lavoie-Roux: One of your favourites.
Senator Simard: Yes, that may be what Mr. Young had in the back of his mind
when a few months ago he was ready to spend $2 million to go explain it to the
employers and the employees. Do you agree that it might be an explanation?
Ms Vautour: Yes, because when I met the small businesses in our region, they
had already been to see their member of Parliament and they didn't get the
same story from him as they did from us.
Senator Simard: They'll be taking money out of this fund for employees.
Employers will be paying a contribution of 4.24 dollars for every $100 in
payroll. Three quarters of the employees will be disqualified. The employers'
contribution will not be paid back. Maybe it's time that we announce this to
the world since we're on television this evening.
Ms Vautour: People who will no longer be getting UI benefits will have an effect
on businesses with the products they buy. There have been lots of layoffs in
the past two months, we checked before coming. The fact is, between February
and June lots of people have stopped receiving UI and businesses are having a
hard time, there aren't any more sales and our region is in a bad way.
Some consideration must be given to rural communities, they've been totally
ignored in this reform.
Senator Simard: I'd like to conclude. Ms Vautour and Mr. Pellerin, 11 years ago
I stopped making election promises. But I intend to make a commitment this
evening. I intend to go with my colleagues, next week, in three months, in six
months or a year, before and during the next federal election, like we did in
1982 when Mr. Young ran as chief of the Liberal party in New Brunswick.
I told him in the House in May, a few months before the elections, that I was
going to travel throughout the province and denounce him. I make the commitment
this evening to join with my colleagues in exposing Bill C-12 and denouncing
the federal Liberal MPs and Mr. Young in particular.
This worked the last time in 1982 and it will work again in the future.
The Chair: I should like to clarify that Ms Vautour and Mr. Pellerin definitely
represent this group. I had calls from several of them. They all would have
liked to have come here to represent their respective groups. Knowing that ten
groups would be impossible to hear from, when I talked to them, I asked them
about their collective representation. They agreed that Ms Vautour should
represent them here. I got a positive answer from all of them. They said, "If
she is representing us, that is fine."
I wish to put on the record that both of you were approved by the groups that
you are representing here tonight. It took a little arranging to get you here,
but we are pleased to have your submission. We look forward to working with
you again in New Brunswick.
I will adjourn tonight to the call of the Chair. We do not know whether we will
be meeting at noon tomorrow, or whenever, but we must have another meeting to
go through the bill clause by clause to decide what to do with it. I will try
to get back you to as soon as possible regarding our next meeting.