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.

[English]

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 deliberations.

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.

[Translation]

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 control.

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 place.

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 marketplace.

[English]

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.

[Translation]

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 social assistance.

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 assistant.

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 frame.

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 adopted.

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 the case.

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.

[English]

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 Jacques Delors.

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:

[Translation]

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 encouraged abuse.

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.

[English]

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 full employment.

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 many others.

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?

[Translation]

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 country.

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 matter.

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 bigger picture.

[English]

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 and 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 proposed legislation.

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 consensus process.

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 taking.

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 training grant.

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 questions remain.

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 of concern.

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 program.

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 community.

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 on.

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, obviously.

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 workplace.

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 counselling front.

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 funding.

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 benefit here?

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 document.

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 a job?

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 own training?

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 problem.

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 themselves overseas.

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 matters?

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 II.

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 addressed that.

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 insurance fund.

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 message.

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 has?

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 happens.

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.

[English]

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 program.

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 smaller.

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 presentation.

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 part-time jobs.

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 the old?

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 before.

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 consideration.

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. Please proceed.

[Translation]

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 be translated.

[English]

The Chair: The information you have for us will be translated as you go ahead. Please proceed.

[Translation]

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 entirety.

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 down.

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 amended.

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 as possible.

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.

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 it does.

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 their duties.

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 old.

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 Brunswick.

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 Nouveau-Brunswick directly.

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 French.

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 applications.

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 have less.

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 something different.

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 involved?

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 university degrees.

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.

[English]

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 remember.

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 look.

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?

[Translation]

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.

[English]

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 behalf.

[Translation]

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.

[English]

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.

[Translation]

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 other locations.

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 point?

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 are saying.

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 form...

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.

[English]

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 period.

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.

[Translation]

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 cents.

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 reform.

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 them.

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 bad.

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 right decision.

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 are.

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.

[English]

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 poverty.

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 hardship.

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 trouble.

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.

[Translation]

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:

[English]

"Okay, women will be covered but they will not qualify."

[Translation]

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 weeks.

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 finished working.

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 in particular?

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.

[English]

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.

[Translation]

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 year.

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 faced with.

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.

[English]

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.

[Translation]

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 long time...

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.

[English]

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.

The committee adjourned.