Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 18 - Evidence - May 31, 2012


OTTAWA, Thursday, May 31, 2012

The Standing Senate Committee on Social Affairs, Science and Technology met this day at 10:29 a.m. to examine the subject-matter of those elements contained in Division 54 of Part 4 of Bill C-38, An Act to implement certain provisions of the budget.

Senator Kelvin Kenneth Ogilvie (Chair) in the chair.

[Translation]

The Chair: Welcome to the Standing Senate Committee on Social Affairs, Science and Technology.

[English]

My name is Kelvin Ogilvie, and I am chair of the committee. I am a senator from Nova Scotia. I will ask my colleagues to introduce themselves, starting on my right.

Senator Housakos: Senator Leo Housakos from Montreal.

Senator Wallace: Senator John Wallace from New Brunswick.

[Translation]

Senator Verner: My name is Josée Verner, and I am from Quebec.

[English]

Senator Martin: Yonah Martin from Vancouver, B.C.

Senator Dyck: Lillian Dyck from Saskatchewan.

Senator Hubley: Elizabeth Hubley, P.E.I.

Senator Cordy: Jane Cordy, and I am from Nova Scotia.

Senator Callbeck: Catherine Callbeck, Prince Edward Island.

Senator Eggleton: Art Eggleton, a senator from Toronto and the deputy chair of this committee.

The Chair: Before I go to our witnesses for the first part of this meeting, I want to review the agenda with my colleagues and remind them we have two sessions this morning. The first one will end at or before 11:30, the second one at or before 12:30.

Is that agreed, colleagues?

Hon. Senators: Agreed.

The Chair: Thank you.

I am pleased now to welcome officials who will follow up from the minister's presentation to us with regard to Division 54 of Part 4 of Bill C-38. I want to welcome this morning from Citizenship and Immigration Canada, Sandra Harder, Director General, Strategic Policy and Planning; David Manicom, Director General, Immigration Branch; and Alain Laurencelle, Counsel, Legal Services. From Human Resources and Skills Development Canada we welcome Campion Carruthers, Director, Program Integrity Division. Welcome to you all.

The officials will not be making a formal presentation. They are available to answer your questions that follow from the minister's presentation earlier. I recognize there has been a little gap of time, but I am sure that will not interrupt our normal thinking with regard to this. I will open up the questions immediately, starting with the deputy chair.

Senator Eggleton: As I understand it, there are three parts to the proposed change in the immigration section of Bill C- 38. The first has to do with the minister's authority to issue instructions. What is the rationale or the justification for the need to increase the ministerial instruction authority, and what is the accountability and oversight for it?

Normally, I would have thought these kinds of things were done by Governor-in-Council, but this one will be a unilateral decision-making process by the minister. What is the justification for this, and what is the accountability and parliamentary oversight for it?

Sandra Harder, Director General, Strategic Policy and Planning, Citizenship and Immigration Canada: Thank you, Senator Eggleton. There are actually four parts that are germane to the Immigration and Refugee Protection Act. We can go over those. With respect to ministerial instructions, the provision in Bill C-38 allows the minister now to apply new ministerial instructions to applications that are already on hand, covered by existing ministerial instructions.

Regarding the rationale for ministerial instructions, these are actually an authority that the minister gained in 2008 from the budget bill, Bill C-50. It is essentially an authority that deals with how we prioritize processing of applications. As you may know, the ministerial instructions have been applied to help us manage intake of Federal Skilled Worker applications since that time.

As to the degree of oversight and authority, this is a ministerial authority. There is a requirement for the minister to discuss ministerial instructions with his cabinet colleagues, so those do go to cabinet. They are also published in the Canada Gazette, so they go through that type of process.

Senator Eggleton: There is no parliamentary oversight procedure provided here, then.

Ms. Harder: There is cabinet authority.

Senator Eggleton: Just cabinet. Okay.

One of the things that he gains under ministerial authority that is new is this provision for new economic class immigration programs is that up to 2,750 permanent residents a year may be established on a pilot basis of five years. Why that number? I do not know how many classes we are talking about here, whether 10 or 100. That certainly changes the numbers a lot, so maybe you could describe how many people are expected to come in under this provision and why the 2,750.

David Manicom, Director General, Immigration Branch, Citizenship and Immigration Canada: It is a little bit difficult to answer the question as to why that exact number was arrived at. It was probably a classic Canadian compromise in that some people were of the opinion that 2,000 was the right ceiling and others thought that 3,000 or 4,000 was better. The number 2,750 was arrived at by the minister after various internal discussions.

That is the ceiling for the number of applications that could be accepted in any given year under the classes created by the new ministerial authority. As with the ministerial instructions relating to other issues that my colleague spoke about, the creation of any new economic class by the minister would go to cabinet for cabinet approval. The instructions would be published in the Canada Gazette for all interested parties to review. CIC would report to Parliament annually on the operation of economic classes established through ministerial instructions within the annual report to Parliament.

The ceiling of 2,750 applications could mean up to 5,000 or 6,000 individuals, when you count dependents. The number of dependents varies a good deal from class to class; it depends on the profile of individuals.

That is a ceiling. We have not yet created a class under this, so we are in new territory. The idea is that, because of the rapidly-changing economic landscape and concerns that some of our programs do not perform as well as we would like, the minister would be able to relatively quickly create a new, small, temporary class. We could determine how it was working and if it was working well and if we wanted to continue with it. It automatically sunsets after five years and cannot be renewed under ministerial instructions, so if it was working and the minister of the day wanted to continue it, it would have to be written into regulations in the normal way.

Senator Eggleton: How many classes are you looking at? Give me an example of a class.

Mr. Manicom: The one we are working on most actively right now is a new entrepreneur class. Design of immigration programs is always a challenge because you are faced with trying to identify genuine entrepreneurialism through complex sets of regulations. In that particular example, we are interested in working with the private sector in creative ways to identify entrepreneurial innovation where we would get more value added for their participation in the Canadian economy. The applicants would still have to meet all legislative requirements with regard to basic standards of language and education and with regard to health and security screening.

This new program that we are thinking of has not yet been through the formal approvals process, so it is conceptual at this stage. We would anticipate that it would initially be quite small — perhaps involving a few hundred individuals in the first year as it gets going.

Senator Eggleton: Individuals as opposed to classes. You do not see many classes, then. You have not given me a number yet.

Mr. Manicom: There are no limits in the legislation with regard to the number of economic classes.

Senator Eggleton: What is anticipated at this point in time?

Mr. Manicom: I think it would be safe to say that we would anticipate in the next several years creating one or two.

Senator Eggleton: That is it? Okay.

Let me ask a question about temporary foreign workers and the provision that they get 15 per cent less pay than Canadians. When the minister was here, he indicated that that was below the average that would be paid, not below the minimum but below the average.

For example, in southern Alberta, apparently an agricultural worker could get between $16 and $20 an hour. On that basis, the average would be $18 an hour, but then if you take 15 per cent off of that, you actually get that person in below the minimum. Then we are expecting that Canadians might want to go into some of these jobs, but we are driving it down not only for the foreign temporary worker but for the Canadian worker. How can we do that?

Campion Carruthers, Director, Program Integrity Division, Human Resources and Skills Development Canada: Perhaps I should go back to the basic policy. There are two things at play here. There is the wage policy and there is wage methodology.

The policy remains unchanged. The policy is that employers and temporary foreign workers have to pay those workers the same as what they pay Canadians. What is changed is how we figure out the methodology of what the same is.

The 15 per cent number you hear about in the press is one of two numbers. You can pay your temporary foreign worker up to 15 per cent less if he is a high-skilled worker than what you pay the average Canadian if you demonstrate that you pay your own Canadian workers in that region and in that same occupation that same wage, but only if it is 15 per cent lower. If it is more than 15 per cent lower than the average, even if you pay your Canadian workers 20 per cent lower than the average, you can only pay the temporary foreign worker up to 15 per cent less than the average.

If it is a low-skilled worker, the limit is actually 5 per cent. Even if you pay your Canadian low-skilled workers up to 10 per cent lower than the average wage, you can lower the wage you pay to the temporary foreign worker by up to 5 per cent.

There are many employers out there that say that in their particular region and the occupation that they use, there is still an effect on them, which means they end up paying their temporary foreign workers more than their Canadian workers. This is designed to at least alleviate that effect on employers. Does that help?

Senator Eggleton: That is not very clear at all.

The Chair: I did not understand that, either. I understood what you said, but I do not understand it in relation to Senator Eggleton's question.

Senator Eggleton: Go back to the math I gave you. Is that math correct or not correct? Minister Kenney said they would not get below the minimum. If you do that math, they get below the minimum. Is that correct or not?

Mr. Carruthers: Below the minimum wage?

Senator Eggleton: No. In the case I used, the southern Alberta agriculture workers, they get between $16 and $20 an hour, as I understand. The entitlement to go below is 15 per cent below the average. The average is $18. If you go 15 per cent below that, you are below the minimum of $16. He said you would not go below the minimum. Is that correct or not?

Mr. Carruthers: I do not have the minister's statement in front of me, but I can tell you the wage methodology. What was announced by Minister Finley was you can go up to 15 per cent below the average, what we call the prevailing wage for that occupation and that region, if you demonstrate that you pay your Canadian workers the same wage.

Senator Eggleton: Tell me about the enforcement of this. How will you enforce this? Will you have fairly frequent visits and checking of records to ensure this or just random every now and then? Tell me about that.

Mr. Carruthers: We will do both random and targeted, what we call risk-based employer compliance reviews, and we will do them across all 520 regions in the country and across all occupations. There will be a representative sampling across the whole country and across all occupations. The target is 18 per cent of employers to be reviewed.

Senator Eggleton: Is that what you are doing now? Maybe you are not doing the 15 per cent, but with the other provisions you put into effect in August of last year, are you doing about 18 per cent?

Mr. Carruthers: No. Under that, we are actually only doing about 2 per cent. This is an increased level of compliance, but the difference is that we have recently initiated an accelerated labour market opinion where employers actually get their temporary foreign worker based on attestations. They say they are doing what they are supposed to do up front, and we do not give them much of a review up front.

In order to balance that, instead of just 2 per cent compliance, checking them 2 per cent of the time, we are now checking them 20 per cent of the time in the accelerated review.

Senator Eggleton: Have you told employers that you will be checking them more frequently?

Mr. Carruthers: Yes, absolutely. We have done what we call a soft launch, which means we have not taken out ads in newspapers, but it is in our website. All the letters that go to employers clarify exactly what our process is for them.

Senator Eggleton: I have a lot more questions.

The Chair: I will work you in as we go along further. I will now go to Senator Callbeck.

Senator Callbeck: Thank you for coming this morning. How many temporary foreign workers entered Canada last year?

Mr. Manicom: We would have to get you the exact figure after the session. I do not have those statistics with me, but about 200,000.

Senator Callbeck: Around 200,000 entered. Altogether, how many do we have here right now?

Mr. Manicom: I believe the stock is on the order of scale of 400,000. Again, we would want to verify the exact figures. I brought materials related to the budget measures and I do not have those statistics with me, senator.

Senator Callbeck: I am not sure exactly how that works. They get a temporary licence. Is that for five years? How does it work?

Mr. Manicom: A temporary foreign worker enters on the basis of a labour market opinion based on the need of the employer. Those will range from very short term, such as repair persons coming in for several days, to labour market opinions for up to one and in some cases two years. Mr. Carruthers will correct me if I am wrong.

Once in Canada, they can renew their temporary foreign worker permit if the employer still needs them, and a new labour market opinion is issued by HRSDC. They can extend their stay in Canada. They can normally extend their stay in Canada for up to four years, and there are some exceptions that enable some individuals to remain longer than four years. Four years is the general maximum stay.

Senator Callbeck: That is the maximum. After that, even if there are employers that want them, they have to go back?

Mr. Manicom: Generally speaking, yes, with some exceptions, but that is the general norm. The idea is that we do not want to create extremely long-term underclasses, if you will, of individuals with temporary status.

They are in many cases eligible to apply through any number of our Permanent Resident Programs, whether as provincial nominees, Federal Skilled Workers and particularly the relatively new Canadian Experience Class, which enables people with skilled work experience in Canada to apply for permanent resident status. They are eligible to apply for that status if they want to stay.

Senator Callbeck: Generally, let us say they are here, you say short term one to two years, and then they can renew for four years. If they are in positions for five years and they can be paid 15 per cent less than the average, is that not going to have a tendency to lower rates for our Canadian workers?

Mr. Manicom: I want to clarify again that the policy with regard to temporary foreign workers, which is the lead of my department, is very clear in regulation that temporary foreign workers are not paid less than Canadians for doing the same work. That principle has not changed.

As Mr. Carruthers was saying, the issue for employers was around methodology of calculating averages within regions. I believe EI regions were used, or a variant on that. We had situations where, for example, a town is in the same region for statistical purposes as Fort McMurray, but in that town, where that employer is, salaries for welders are much lower than in Fort McMurray. In those situations, the average wage in the region, which is posted on HRSDC's website, is driven up by the situation in Fort McMurray. The employer in the other town in that region can pay a temporary foreign worker less than the regional average if they have Canadian employees doing the same work. They can pay the temporary foreign worker the same wage that they pay their Canadian employees. They cannot pay the temporary foreign worker doing the same job less than they pay their Canadian employees. The 15 per cent relates to the regional average in that occupation. Through the data they have, HRSDC establishes a median wage in a given occupation in a given district. It is a median, an average. A Canadian employer may be paying his staff $18 to do a given job while the regional average is $20 an hour. He cannot pay a temporary foreign worker less than he pays his Canadian employees doing that job. That is the principle of the modifications, and the bedrock principle that temporary foreign workers shall not be paid less to do the same work has not changed.

Senator Callbeck: I find that difficult to follow. It says that the foreign worker can have as much as 15 per cent less, but you say there is a wage rate set for an occupation in a district. What do you mean by  "district "?

Mr. Manicom: I believe it is Employment Insurance regions, of which there are 520 across the country. The prevailing wage for that district in a given occupation is based on data that HRSDC has about the median salary payment in that district in that occupation. An employer can pay up to 15 per cent below that figure if they can demonstrate they are paying the temporary foreign worker the same as they pay their employees doing the same work. If they do not have employees doing the same work as the temporary foreign worker, they must pay the prevailing wage, the median for the district.

Senator Callbeck: So they can pay 15 per cent less if they can demonstrate that Canadians are getting 15 per cent less.

Mr. Manicom: Yes. If the median for a welder, for example, in a given district is $35 an hour, that means that some welders in that district are being paid $42 an hour and others are being paid $30 an hour. If a given employer is paying his Canadian welders $30 an hour, he can pay temporary foreign workers $30 an hour. We can see how awkward it would be to be paying your temporary foreign workers on a given shop floor more than you are paying your Canadian workers. This was the discrepancy that Minister Finley attempted to address through this different formula for ensuring that temporary foreign workers are not paid less than Canadians doing the same job for the same employer.

Senator Callbeck: That is pretty confusing.

Senator Seidman: I want to clarify one very specific thing. You have used the words  "median " and  "average, " and we know the two are very different. Would you please clarify that? It might help.

Mr. Carruthers: The policy that was announced by the minister is that basic wage methodology is average. We can provide the precise statement of the minister and the policy direction that we give to Service Canada officers, if that would be of interest to the committee.

Senator Seidman: It is absolutely of interest. You are saying clearly that the minister used the word  "average " whereas Mr. Manicom has used the word  "median " several times. We need to clarify, because the two are very different.

Mr. Carruthers: Yes.

The Chair: Actually, I heard Mr. Manicom say  "median " and then go immediately to  "average " in his response. I think it did create confusion, but my conclusion was that he went to average as the defining observation.

Senator Seidman: Oh no, he used  "median. "

Mr. Carruthers: I erred.

The Chair: I can read you the minister's comment to us on that matter. I will go to the end.

The problem was that the average was not the starting wage, so Canadians who were being offered employment in those workplaces were typically coming in at the starting wage, which was, by definition, below the average. You had the awkward situation where many temporary foreign workers were being than paid more than Canadians, as a start.

He went on to discuss the importance of moving to make fairness with regard to Canadian workers.

Back to you, Senator Callbeck.

Senator Callbeck: I want to go on to the backlog of Federal Skilled Workers. My understanding is that the applications of everyone who applied prior to Budget 2008, and there were hundreds, will be sent back to them and they will have to reapply under new criteria. Is that right?

Ms. Harder: That is correct.

Senator Callbeck: Why would Citizenship and Immigration Canada not evaluate the backlog of applications based on this new criteria?

Ms. Harder: To clarify, the applications that were received by the department before February 27, 2008, and for which there was not a selection decision made by the date of the budget, which was March 29, will be closed and fees will be refunded to people who submitted them. They will receive their application fee back and, should they have paid the right of permanent residence fee at the same time, that will also be returned. Those people are, as you correctly say, able to reapply under the existing Federal Skilled Worker Program.

Senator Callbeck: How many years does this backlog extend back?

Ms. Harder: The oldest application we have there is from 2003.

Senator Callbeck: They have waited nine years and now they will get their application back and have to reapply. Why can the department not look at those applications and judge them on the new criteria?

Ms. Harder: I think the decision was made that it was important to have a clear cut-off for how we would treat applications received before the budget bill came down. We have done significant work and calculations over the last number of years, and we have put in place ministerial instructions that have reduced the old backlog, that is, those applications received prior to the issuance of ministerial instructions, and we have reduced that fairly significantly through the use of ministerial instructions.

Our calculations indicate that it would take us until 2017 or 2018 to get through all the applications in the old backlog. A decision was made that it was important to have a platform for a new, more responsive immigration system, and the decision was made to close those applications.

To clarify, the physical applications would not be returned to the applicant. Their fees would be refunded and applications would be closed.

Senator Callbeck: They would have to reapply. This seems to be grossly unfair. These people have waited for years and now, through no fault of their own, they are told they have to reapply.

Ms. Harder: If they decided to reapply, they would probably receive a decision within six to twelve months. If they waited in the backlog, some of those old applications would not come through the entire the process until 2017 or 2018.

Senator Callbeck: These people have waited for years, and now you are saying they will be cancelled and have to reapply. Will they get any priority?

Ms. Harder: No. In fact, we might find with the program changes that have taken place that some of them will not qualify. However, they may not have qualified under the existing as well.

Senator Callbeck: That is true, but I just do not understand why you have the applications that have been with you for years and would not review those looking at the new criteria. It seems grossly unfair for the people who are trying to get into Canada under that category.

Ms. Harder: To be clear, for the applications that are currently in that backlog, there will be people who are disappointed. When decisions are made to change policy program directions, people are affected; there is no question.

Senator Callbeck: Yes, there are, and I do not see any reason for it. I do not know why they cannot be reviewed under the new criteria.

Ms. Harder: Part of the rationale for this has been explained by the minister in terms of the broader directions for the future of the immigration program. It is to have a program that is more labour market responsive, responds to changing economic needs and is more active than passive. In order to set the stage for that, a decision was made that closing those existing applications would be the best way to proceed.

Senator Martin: Following along a similar line of questioning, you are saying that with the new criteria — without clearing the backlog — these applicants would potentially wait until 2017 or 2018 to find out that they do not meet criteria. By the process of eliminating this backlog, or a certain percentage up to the date, those who do qualify will actually be assessed faster under the new criteria, correct?

Ms. Harder: If they reapply and meet the new criteria, they will receive a decision much more quickly, within six to 12 months. I should also say that in terms of the efforts made by the department to address what we refer to as the old backlog — during the implementation of Bill C-50 and thereafter — we sent out a huge number of letters to people who were in the existing backlog. We indicated that there was an opportunity for them to close their existing application and reapply under the new rules. Less than 6 per cent of the people who received those letters decided to take that up. Efforts have been made.

Senator Martin: Once the pre-February 2008 backlog is cleared or these applications are terminated, a backlog of about 136,000 will still remain. Is that correct?

Ms. Harder: That is correct.

Senator Martin: Do you have an estimate on how quickly that backlog may be cleared?

Ms. Harder: Yes. As senators may or may not be aware, there is a levels plan that governs the number of people who come into Canada on a yearly basis. Based on existing levels, we estimate that backlog — those people who came in under the ministerial instructions — will be cleared within two years.

Senator Martin: Going back to the group that would be affected or the applications being terminated, can you outline what options they have, or have you done so already? Is it simply that they reapply? If so, what are some of the categories under which they can apply — to clarify those options for them — and are the applicants clear of what options they have?

Mr. Manicom: Once their applications are terminated, they are in the same situation as any other foreign national and can make an application under any of our programs. Many individuals will not be able to qualify under existing programs and that creates an unfortunate situation for those individuals. In attempting to move toward a more responsive, just-in-time processing system, certainly there are consequences for many individuals. The minister has commented on that, and that it is unfortunate.

They would have the full range of programs available to them. The two largest are the Federal Skilled Worker Program where the selection criteria are quite specific with the point system, and currently with a list of occupations that enables you to come in, or anyone who has received an approved offer of employment from a Canadian company. They are always eligible to apply. In addition, they would have access to the provincial nominee programs and there are website links on the CIC website for applicants to follow to the various provincial nominee programs. They can see if they may qualify and therefore would contact the province to see if the province is interested in nominating them.

Senator Martin: Are you working at all with some of the service providers, Canadian organizations that are overseas to help communicate the information to such applicants?

Ms. Harder: The applicants will receive a letter that will indicate their ability to reapply. Our website will be clear in terms of the options that are open to people who would want to reapply.

Senator Cordy: Thank you very much for being here, although I happen to believe strongly that the issues we are discussing today should be in stand-alone legislation and that it should not be part of an omnibus budget bill, but that has nothing to do with you.

I also think that as parliamentarians we should not take any great glory in saying how we have reduced the backlog, when we have done it by eliminating almost 300,000 applications for the Federal Skilled Worker Program. It would be easy for any of us to say that is this great. We have reduced our list substantially and we will now be able to deal with things much faster because we have just eliminated almost 300,000 applications. I do not think that is the way we should work. By saying these applications could not be dealt with until 2016 or 2017 is almost disingenuous. I think there could be a better solution by hiring more staff and getting through the applications so those who are on the list could remain there.

What was the rationale for removing almost 300,000 applications from the program, and what is the fairness for removing them? Ms. Harder, you said these people have the — you used the word —  "opportunity " to reapply, but I think they should have had their applications dealt with in a timely manner.

Ms. Harder: Certainly I am happy to respond to your question, Senator Cordy. I will say a couple of things.

First, increasing the number of visa officers in our missions overseas or in Canada would not make a difference in getting through those applications. That always seems a bit difficult for people to understand, but it is very much bound by the existing levels plan. We have a levels plan for the country that states how many immigrants will come in, under what category, on a permanent basis. That is approved by cabinet and is reported in the annual report to Parliament each November. Those set the goalposts for the numbers of people who can come into the country.

Should we have — in a different kind of setting — been able to increase the number of staff and our visa officers and plow through the applications in the backlog, we would find ourselves in a position where we would need to have a levels target that would allow us to bring in 500,000 or 600,000 immigrants in a year or two. That has not been the direction of the government.

In the last number of years we have stayed in the 240,000 to 265,000 range for permanent residents arriving in Canada. That is based on a number of policy considerations around processing capacity, but also around the absorptive capacity to integrate new immigrants into the country and provide them with adequate services for them to enter the labour market, et cetera.

That is one of the issues around the idea of just bumping up the number of visa officers: It would not necessarily solve the issue.

As to the fairness issue, I think we have said that a number of options were considered. It was decided that in order to set the stage for an immigration system that would be timelier, more responsive and more internationally competitive with our key competitor countries, there was a need to close the applications of those in the backlog in order to set ourselves up for an immigration system that would be more active, more responsive and timelier for an applicant.

The Chair: On this matter, I believe there is a question of clarification of numbers.

Senator Seidman: Sorry to intrude again, but I just want to be clear. Senator Cordy used the number  "over 300,000 " skilled workers applicants. I would like you to clarify that, because it was my understanding that only a third of those were actually skilled workers and the rest of them were family members. I think we need to be clear.

Senator Cordy: That is what he said, but the fact is that we have a backlog of nearly 300,000 Federal Skilled Worker applicants who applied before February 27, 2008. I have the minister's speech.

Senator Seidman: Maybe the department members will clarify that. I would appreciate it.

Ms. Harder: There is the application and the applicant. An application has a principal applicant and can have accompanying family members and dependents on that application. The number that the minister used was the total number of persons, including principal applicants, spouses and dependents.

The Chair: To be absolutely clear, there are two numbers. One is the number of applications. The second is the number of applicants included in those applications.

Ms. Harder: Exactly right, senator.

Senator Cordy: It is 300,000 people.

Ms. Harder: That is right.

Mr. Manicom: If I could add for further clarification —

Senator Cordy: It is still 300,000 people.

Mr. Manicom: We believe it is generally preferable to refer to the number of persons because that is how the annual levels plan operates. It is the number of persons who come into Canada each year, not the number of principal applicants.

Senator Cordy: For my clarification, though, it is still almost 300,000 people.

Mr. Manicom: Yes.

Senator Cordy: I will use the term  "people " and not  "applications. " Thank you for those clarifications. It is still people who will be affected.

If this legislation is passed, and one can assume that it will since it is a budget bill under a majority government, you are saying that the number of people on the list will be accepted, admitted to Canada and gainfully employed within a few months. That is what the minister said in his speech last week before us.

Ms. Harder: I am not sure what you mean by the number of people on the list.

Senator Cordy: We are just talking about the skilled workers program list. The minister said they will come to the country, they will be accepted or admitted to Canada and gainfully employed here and that it will take only a few months.

Ms. Harder: That is right.

Senator Cordy: When can we expect this timeline to be in place once the bill passes? Is it just a few months from time of application to being gainfully employed?

Ms. Harder: In the new system that the minister was referring to, which we are looking at right now, we would expect it to be akin to what New Zealand currently has in place and what Australia is implementing on July 1. We would expect to be able to hopefully roll that out by 2014. In 2014, a new applicant could expect to receive a selection decision within 6 to 12 months and be arriving in Canada in that time period.

Those people who are currently covered now by ministerial instructions are receiving their decisions much more quickly than were people who were admitted without ministerial instructions. Those people are receiving selection decisions in approximately 12 to 18 months right now.

Senator Cordy: The minister's comments about it only taking a few months instead of a few years will be for applications that come in after 2014; is that right? I need some clarification here.

Ms. Harder: This will be in the context of the new system that the minister referred to a little bit in his remarks to the committee. He was talking about a much more active immigration system. Yes, the expectation is that it will take us quite a while to figure out all the nuts and bolts of that new approach, and that would be something that would likely roll out by 2014.

Yes, under those conditions, after we work out a number of the policy details and the operational issues, the decisions and arrival of a new immigrant could be even quicker than 6 to 12 months.

The Chair: Senator Cordy, I will put you on the next round.

Senator Seth: Thank you, all of you. I am sorry to be late. I missed out on a few things. It is a very interesting topic.

I would like to divert the point here. Bill C-38 extends the scope of ministerial power to allow for the creation of experimental group of immigrants to better address the economic needs of Canada.

How will Citizenship and Immigration Canada advertise its needs to individuals wanting to take advantage of these new pilot projects?

Mr. Manicom: Per the last discussion, generally speaking, our challenge at Citizenship and Immigration Canada has not been in attracting enough applicants but in managing the avalanche of interest. I have done a number of Asian postings and, when asked by headquarters what our promotion and recruitment strategy was, we tended to say we turn on the lights and unlock the doors each morning and that seems to work fine.

It is a little difficult to answer your question because none of these new classes have been created yet. The minister does not yet have the authority to create them. It is designed to provide the minister with the ability to quickly set up pilot programs to respond to new and emerging economic needs in Canada and to try them and see if they work. If they do work, then they get written into regulation.

Normally speaking, we would not be advertising. We would ensure that the program details are readily available on the website. That is generally how we function. On the home page, there is a big button to click if you are interested in immigrating to Canada. That takes you to the various options.

There is also an extremely active immigration industry, which tends to be quite good at identifying individuals who might qualify under any of our programs. There is also the work done by the provinces. In some specific situations, we do more proactive recruitment abroad.

The programs we are looking at under the new ministerial instructions will likely be in various types of partnerships with private sector investment funds to try to attract dynamic entrepreneurs. Therefore, the motivating factor may not initially be an applicant who wants to come to Canada but a very exciting business idea, and the person attached to that business idea is the one we want to bring here. There would be that kind of synergy.

Senator Seth: Currently, the parents and grandparents sponsorship program is on hold and under review. Does Citizenship and Immigration Canada consider economic immigrants as important as family and student immigrants? How will these groups benefit from amendments in Bill C-38?

Mr. Manicom: There is nothing directly related to family-class programs in Bill C-38. As the comments of the Prime Minister in Davos recently and the comments of the minister in the context of Bill C-38, as my colleague has mentioned, the government is intent on improving the responsiveness of our programs to the needs of the Canadian economy. The minister has also been clear that Canada will continue to maintain a balanced immigration program with family reunification and humanitarian components.

When the levels framework is established each year, we establish the number of immigrants who will be admitted to Canada in each of the classes. In recent years, that balance has been, roughly speaking, 60 per cent economic and 40 per cent family and humanitarian.

As you know, when the minister announced his Action Plan for Faster Family Reunification last year, the parent and grandparent class had a problem not dissimilar to the Federal Skilled Worker class in that inventory backlogs had accumulated over many years. Throughout most of my career, the government has been very good at managing output in the immigration program. Even with a complex global network and lots of global events each year, we manage to issue exactly the right number of visas to meet the government of the day's commitment to Parliament.

However, to be frank, we have not done a good job at managing intake. If you do a very good job at managing output and you have an open-ended intake, you accumulate inventories that are frustrating to everyone, inefficient and that lead to the frustrating situations we have to deal with right now.

In the parent and grandparent class, the minister has announced much higher levels to come in for 2012 and, at the same time has temporarily frozen intake so that we can reduce that inventory and, again, hopefully get into a situation we process someone's application when we take it.

Senator Seth: What happens to those who are already —

The Chair: I will move to Senator Dyck; we are running out of time and I want to get the questions on the record.

Senator Dyck: I was going to follow up because my questions were also with respect to the effect of this bill on family reunification. I think the general feeling in the public is that it will have a detrimental effect; that bringing family is one way of ensuring that people who come to Canada from other countries integrate well here.

It sounds like you are saying the parent and grandparent rule has been suspended and that you will actually have higher numbers. I am a little confused. Please explain that again.

Mr. Manicom: Over a large number of years, the Government of Canada accepted about twice as many applications for parents and grandparents as they admitted to Canada under the levels plan. That led to the accumulation of a backlog or inventory of about 160,000 individuals. To get rid of that, you have to have more output than input. To get rid of it most quickly, you increase output and stop new intake. That is what the minister has decided to do. On a temporary basis, he has increased the number of parents and grandparents admitted to Canada from about 15,000 to about 25,000.

I believe it will be the highest number in about 20 years. At the same time, he is putting a pause on new intake so that the backlog can be reduced much more quickly so that when we reopen to new applications, we can process them in a much more timely fashion.

Senator Dyck: Therefore, will it be the case that anyone who is currently applying will be put on hold, but they will not necessarily be turned down?

Mr. Manicom: Applications that have already been received will all be processed. Due to the much higher levels commitment this year, we will be able to get through that group of 160,000 persons more quickly. However, no new applications are being accepted at the present time.

Senator Dyck: With the backlog, then, it sounds as though it is probable, because of the intake from the previous years, that the parents and grandparents in the backlog may not be allowed in.

Mr. Manicom: No, that is not correct, senator. There is no intention of the Government of Canada not to process the applicants in the parent and grandparent inventory. In fact, to process them more quickly, the output has been increased for this year. Minister Kenney has stated he intends to maintain that higher level of output for parents and grandparents in 2013, as well.

Senator Dyck: How will this bill affect the provincial programs? In Saskatchewan, I believe, we have had a policy to reunify families. It is probably a little more open-ended or generous than other provinces. Will this affect what goes on in the different provinces? Will there be a differential effect?

Mr. Manicom: There are no provisions related to the provincial nominee programs in Bill C-38.

Senator Eggleton: If you related the backlog to the present Federal Skilled Worker list of 29 occupations, how many in that backlog would qualify under the 29 occupations?

Ms. Harder: We have looked at that. I do not have those exact numbers with me, but we can certainly provide them to the committee. We have actually coded, by NOC level, every application that is in the Federal Skilled Worker backlog, so we would be able to make that relationship.

Senator Eggleton: Please do that within the next few days before we finalize this.

If the backlog at the current rate remained to be processed, how long did you say it would take to process it?

Ms. Harder: Our estimate is that we would be through the entire backlog, at current immigration levels, by 2017 or 2018.

Senator Eggleton: There are 136,500 in the backlog that you are maintaining; you would do it in two years. That is 68,500 a year, so you should be able to do it in four years without acceleration; right?

Ms. Harder: The issue is, though, that we are still taking in new applications.

Senator Eggleton: But you will be processing 68,500 a year of the old ones, anyway.

Ms. Harder: It would depend on the output in the Annual Immigration Levels Plan. As I said, we are always constrained by the number of Federal Skilled Workers we can bring in through the plan itself. Currently, our numbers on Federal Skilled Workers are around 50,000 a year. Therefore, our estimates, in looking at the entire backlog, would be that it would take us until 2017 or 2018 for the old backlog.

Senator Eggleton: I am not okay, but okay. I object to this program.

The Chair: You agreed, Mr. Manicom, to provide a couple of follow-up figures with regard to total numbers that were indicated earlier in the question. With that, on behalf of my colleagues, I want to thank you very much for being with us today and helping to clarify these issues.

I am pleased to welcome Shannon Phillips, Policy Analyst, Alberta Federation of Labour, joining us by video conference. Ms. Phillips, we would ask you to make your opening statements and then be prepared to answer questions.

Shannon Phillips, Policy Analyst, Alberta Federation of Labour: Thank you for having me and for accommodating the video conference. I am the senior policy analyst for the Alberta Federation of Labour. We represent 145,000 Albertans, 25,000 of whom work in the oil sands and energy-related construction.

As we head into another oil sands boom, I am here today to talk about the temporary foreign worker changes contained in Bill C-38 and possible alternatives to the changes that Human Resources and Skills Development Canada has proposed.

Under the old temporary foreign worker process, employers had to obtain a Labour Market Opinion and had to pay temporary foreign workers the prevailing wage in the region. This offered little advantage to employers who wanted to undercut wages by replacing Canadian workers with TFWs.

Changes to the TFW Program now allow employers to suppress wages by up to 15 per cent in areas with skilled labour shortages, like Alberta.

Under the Accelerated Labour Market Opinion process, or ALMO, TFW wages can be up to 15 per cent lower than the prevailing occupation's' wage in the region, so long as that wage is no lower than the Canadian average and is no lower than the wage of a Canadian or permanent resident worker with the same job in the same workplace.

Under the old wage structure, employers were required to pay temporary foreign workers at least the average wage for an occupation in a specific region, regardless of what they were paying their Canadian employees. Employers must still provide documentation that clearly demonstrates that the wage being paid to a temporary foreign worker is the same as that paid to Canadian employees in the same job and in the same location.

It is unclear, however, how a workplace is defined and further how  "the same job as a Canadian " is defined. This could be an area ripe for abuse of temporary foreign workers.

In our analysis, these changes mean that this is a huge advantage for non-unionized employers in the construction sector of the oil sands in Alberta. Non-union construction firms, for example, pay lower wages than unionized construction jobs. Under the new rules, employers no longer have to prove any real effort to hire Canadians before TFWs. We believe these new rules are designed to give a competitive advantage to non-union construction firms in Alberta's oil sands.

TFWs brought into a unionized work site must be paid the same as Canadian workers. Unionized construction workers tend to negotiate wages that keep pace with the high cost of living in Alberta. On the other hand, non-unionized workplaces tend to have lower wages. Non-union construction companies will now have an advantage because they will have a ready supply of non-Canadian workers willing to work for lower wages. They will have approval of TFWs in just 10 days and will not have to prove they attempted to recruit Canadians for the jobs in any meaningful way.

Non-union construction firms like Merit Contractors can now have just a handful, or even just one, Canadian or permanent resident worker willing to work for the lower wages and benefits they offer. Because Merit and other non- union shops have trouble attracting and retaining skilled tradespeople because they do not offer as attractive wages in Alberta's booming economy, they can fill most of their workforce needs now with temporary foreign workers.

In terms of the real story on oil sands construction costs, we often hear low wage groups like the CFIB say that wages are going through the roof and construction costs are going up because of labour costs. However, according to a recent report by equity firm Raymond James, wage rates increased by only 20 per cent during the last oil sands boom, reflecting increases in the cost of living in Alberta's average weekly earnings index. Oil sands construction projects went over-budget by an average of 100 percent. Some projects went 260 per cent over initial cost estimates, and most of those cost overruns — according to the Raymond James equity firm report — were due to productivity losses and the high cost of steel.

Low wage lobby groups like the CFIB claim they need be to be able to pay temporary foreign workers less because there is a labour shortage; they must have quicker access to TFWs in order to remain productive.

We, at the Alberta Federation of Labour, submit that we do have a shortage of some skilled labour in select fields, but as the Bank of Canada noted in their last Monetary Policy Report, Canada actually has a tremendous amount of slack in the labour market left over from the last recession. A great number of involuntary part-time workers remain in the economy, and firms report lower-than-usual labour shortages to the bank.

What we have is a training deficit, especially in the construction trades in Alberta. We do not require firms to invest. We have no provincial or federal leadership on the matter beyond a public relations exercise. The result is we have low wage lobby group groups saying they need to bring in temporary foreign workers and, by the way, also pay them less than the going rate.

These changes to the Temporary Foreign Worker Program are going to make the problem worse. By bringing in skilled guest worker labour, we deny a whole generation of Canadians the opportunity for training and absolve firms of their responsibilities to train apprentices in the skilled trades as other industrialized countries do.

There is all manner of lax oversight with the new Accelerated Labour Market Opinion process that has come in under Bill C-38. Also, there are fewer advertising and recruitment requirements under this new process; advertisement is recruitment in this new process. The only thing a potential employer has to do to prove that they are willing to look for Canadian workers is to advertise.

Under the old LMO process, employers had to document efforts to recruit Canadians or permanent residents, including copies of advertisements, number of Canadian applicants and why they were rejected. However, under this new accelerated process, efforts to recruit Canadians or permanent residents appear to have been scrapped. Employers are required only to advertise and be prepared to prove they have done so if requested by the federal government for a compliance review after the fact.

Fewer than 20 per cent of the successful ALMOs will be subjected to a compliance review, a change we believe exposes temporary foreign workers to further vulnerabilities when they enter Canada. There are no real punitive measures for employers found to be non-compliant with the accelerated process. Employers will have an opportunity to provide justification as well as corrective action where applicable, and that is all.

In summary, the Alberta Federation of Labour recommends that ultimately the Temporary Foreign Worker Program be phased out entirely. We have been through this labour shortage scenario before; just three years ago, during the last boom. If there is a shortage of skilled workers — and there are, in some occupations in Alberta — we ought to be bringing people in as immigrants so they can build our country, instead of building a guest worker program modeled on approaches that have been shown to be catastrophic policy and human failures in other industrialized countries, particularly in Europe.

Thank you.

The Chair: Thank you very much.

We now welcome Corinne Pohlmann, Vice President, National Affairs, from the Canadian Federation of Independent Business.

For the record, I note you arrived just as we were beginning, and so I am very pleased to welcome you.

Corinne Pohlmann, Vice President, National Affairs, Canadian Federation of Independent Business: Thank you, and my apologies for being be slightly delayed.

Thank you for this opportunity to speak on the budget bill that addresses the immigration issues before us. My name is Corinne Pohlmann and I am here representing the Canadian Federation of Independent Business, or CFIB. We have 109,000 small- and medium-sized businesses as members, all of whom are independently owned and operated Canadian companies. They collectively employ about 1.5 million Canadians. They are in every region of the country and every sector of the economy. While my remarks do not directly address all aspects of the changes proposed in Bill C-38, I do want to share why immigration is important to small businesses and the economy and why changes to immigration and temporary foreign workers is needed.

You should all have in front of you a slide deck that I will walk you through very quickly with some key slides and information that I will be pointing to as I walk through my remarks.

I want to talk a little bit about the economy, though, from a small business perspective. On slide 2 is our latest barometer, which is a measure of business confidence. Our index is the blue line, which is then mapped against GDP, which is the red line. As you can see, there was a bit of a setback last summer when the European crisis hit. Small businesses have gradually since then been gaining confidence, but gradually.

April shows a slight downturn from the previous month, but having said that, an index between 65 and 70 indicates a growing economy and the current number sits at 66.4 we expect the economy to continue to grow.

In that same business barometer we also ask a series of other questions, including about their main business constraints, as you can see on slide 3. In April, one third cited shortage of skilled labour as a main business constraint exceeded only by insufficient domestic demand. In addition, another 16 per cent cited shortage of un/semi-skilled labour as well.

In fact, while insufficient domestic demand has been coming down as a main business constraint over the last few years, concern over the shortage of skilled labour is starting to creep upwards, as you can see in slide 4. This is really not a surprise, as we see hiring plans of small firms starting to increase.

On slide 5, you can see that in April, 21 per cent of business owners plan to increase full-time staffing levels in the next three or four months — that is the blue line — while only 12 per cent plan to cut back, which is the red line. In fact, since the beginning of this year, we have seen many more firms wanting to hire than firms looking to let go of employees.

While the previous slides all come from one source of data, the business barometer, the next two sliding, 6 and 7, come from another data source, but also show the increasing importance of labour and skills shortages amongst smaller firms. This is an ongoing survey that we do that is done face-to-face with individual members, asking about the issues of highest priority for their business. In the first three months of 2012, almost half — 46 per cent — cited shortage of qualified labour as a top concern. While the shortage of qualified labour has moved up to about third position prior to the recession, and has since fallen after the recession, we are now seeing it start to grow again and gain some momentum.

In fact, in some parts of country it is already becoming an important priority. In places like Saskatchewan, Newfoundland and Labrador and Alberta, it is already an issue for more than half of our members, but also in places like Quebec and Nova Scotia, more than half struggle with this issue and it is growing.

What kind of skills do these small- and medium-sized business owners really need? While the data is a little bit older, we believe it remains relevant. We are currently in the process of developing a new survey to update this information you will be now seeing on the next slide that should be available in mid to late fall. As can you see on slide 8, most firms on the small business level require skills that require some post-secondary education or occupation-specific training. Very few of the labour shortages require university education among smaller firms.

However, when we match the needs of small employers against the skills of those being brought into Canada through the immigration and foreign worker program, we see a real disconnect between the labour market needs and those supplied by new immigrants. As you can see on slide 9, 42 per cent of smaller employers require people with skilled and technical skills, but only 22 persons of economic immigrants and 19 per cent of temporary foreign workers had those skills. In contrast, only 7 per cent of smaller employers required people with a university degree, yet 65 per cent of those coming in through the permanent immigration system and 30 per cent of those of the Temporary Foreign Worker Program were university educated. While we compete with many other countries for skilled labour, we also risk alienating those highly educated immigrants who are not able to find work in their field in Canada, if we continue this disconnect. This needs to be addressed in some of the issues and policies that are being brought forward.

What has been the experience of smaller businesses when it comes to Canada's immigration system? Again, we borrowed data from a few years ago, but the results remain very compelling. About 22 per cent of small businesses have had experience hiring a new immigrant, and the larger the firm the more likely they will have that experience. That is slide 10.

Given the complexity of the immigration and Temporary Foreign Worker Program, it should be no surprise that most of those who have had the experience of new immigrants is with those who are already in Canada and have permission to work in Canada, as you can see on slide 11. Only 16 per cent went through the Temporary Foreign Worker Program and just 9 per cent attempted to bring a new immigrant to Canada through the permanent system.

For those that did attempt to use the immigration system to bring in needed workers, so far the biggest issues were delays in processing and complexity of the system, as you can see on slide 12. Similarly, for the Temporary Foreign Worker Program, as you see on slide 13, it was delays in processing, but also keeping new immigrants who have temporary status were the biggest barriers.

As a result, we have been pleased with the progress made since 2006 to try to address some of these issues, and more still to come. For example, we have supported the introduction of the Canadian Experience Class, which allows an avenue for temporary foreign workers to become permanent residents, as well as the growing importance of provincial nominee programs to address specific labour shortages in a province.

We also continue to push for changes to the permanent immigration system so it puts more of an emphasis on a job offer. We also supported the introduction of an accelerated LMO process for a Temporary Foreign Worker Program to address delays cited here and bring in those needed workers more quickly.

However, more still needs to be done. None of these changes address the growing shortage of semi-skilled and unskilled labour that will be coming at us, and this continues to be a strong demand for them in Canada. In addition, the complexity of the immigration system is a real barrier for smaller firms who continue to rely mostly on the local labour market, as it is extremely costly and difficult for smaller firms to go through the temporary foreign worker process, much less the permanent immigration system. Changes that address these barriers and bring new immigrants who can find meaningful work in their field in Canada is ultimately the goal we all want to reach.

I will now be happy to try to answer some of usual questions.

The Chair: Thank you very much. I will go immediately to my colleagues for questions.

Senator Eggleton: Thank you very much to both of you. Let me start with Ms. Phillips.

Just refresh my memory. What is the minimum wage in Alberta?

Ms. Phillips: It has just been raised. It is something in the neighbourhood of $9 an hour.

Senator Eggleton: Have there been calculations — I think there have been — in Alberta of what we would call a living wage, which is something more than the minimum?

Ms. Phillips: Yes, that is somewhere in the $13 to $14 an hour range. It really depends who you are asking, but certainly groups like Vibrant Communities Calgary have done a lot of work on a minimum wage campaign, and it is around $13 or $14 an hour.

Senator Eggleton: Canadians or foreign workers who work in the agricultural business in Alberta, how would they compare to the living wage? Are a great number of them would you say above or below the poverty line? Do you have any idea?

Ms. Phillips: In terms of farm workers, farm workers are exempt from employment standards and occupational health and safety in Alberta. It is the only province where farm workers are still exempt. You see very low wages for Canadian and permanent resident farm workers in Alberta. Something in the $13 an hour range is normal for people working on feedlots and so on.

In terms of the temporary foreign workers who come, seasonal workers, those wages are quite a bit lower; they are around minimum wage level. You do see seasonal agriculture workers coming from Mexico and so on, in particular in southern Alberta, but the vast majority of people coming in under the Temporary Foreign Worker Program in Alberta are working either in low-skilled occupations, such as hospitality and food service, or, at the other end of the spectrum, people who have had some kind of vocational training apprenticeship in the trades. The vast majority of them are working outside of the large centres.

Senator Eggleton: A companion move by the government in this connection comes in the Employment Insurance provisions, which are now intended to get more Canadians into some of these kinds of jobs instead of temporary foreign workers. How do you see that playing out?

Ms. Phillips: What we have in Alberta is not a shortage of people who are qualified to work in low-skilled occupations. We still have a large number of involuntary part-time workers, a large number of people who have left the labour force in Alberta, left over from the last recession. What we have in Alberta in very select occupations is a skilled labour shortage in oil sands-related construction.

We have taken the position that these EI changes will make that situation worse, because if you have construction layoffs, and let us face it, the construction industry is based around this seasonal hire and layoff, and many of them base their business model around the availability of EI for their workers, if you are then taking those people out of construction jobs and having them go to work at the Tim Hortons down the road, you will lose those workers when you need them again when the next construction season starts. We know that construction companies have expressed concerns to the government about these changes to EI. We believe that over the long term it will make the training deficit, which is still readily apparent in this province, even worse.

Senator Eggleton: Our primary concern here is the immigration provisions of the budget bill, which is really the foreign temporary workers provision in your regard, but overall, do you see these provisions, including the EI, driving down wages in Alberta?

Ms. Phillips: We have certainly taken that position. With respect to temporary foreign workers, we need to realize just how many of them are here in Alberta. When employer groups say things like,  "It is so difficult to bring in temporary foreign workers, " the fact is that 25,000 temporary foreign workers came into Alberta, and those numbers remain the same even through the recession. We now have in the neighbourhood of 60,000 temporary foreign workers in Alberta, the majority of whom are working outside of our major cities. The fact is that we already have a very robust temporary foreign worker program in this province, accelerating it will give a gift to certain construction firms who want to drive down wages even further in the next construction boom, which we are in already.

Senator Eggleton: Let me turn to Ms. Pohlmann. There are three provisions in Bill C-38 with respect to immigration. One is to remove the backlog pre-February 27, 2008, which is about 100,000 applications or 300,000 people. The second provision has to do with creating new special classes of 2,750 people each. The first one might be entrepreneurial, so I imagine that that would be very favourable to CFIB.

There is this foreign temporary workers provision and this 15 per cent figure, which we are trying to get clarified here with officials this morning. Actually, I think Ms. Phillips' description of it is pretty accurate. In any event, how do you see those provisions in light of what you have presented to us today?

Ms. Pohlmann: As for cancelling or eliminating those applications made prior to 2008, we do not have a position on that. An issue is the backlog and the delays. The fact is that that is four years old. Many of those people may have moved on to other opportunities, so perhaps it is worthwhile to look at that. However, overall, we do not really have a position on that one.

The second part was the smaller classes that they want to test, for lack of a better word. We think that that is a good idea in that you are starting to do some pilot projects on ways to use the immigration system more effectively. I know the entrepreneur class is one of the ones that they are working at right now as a possibility. We have a business class right now that I do not think works that well, so finding new ways to attract entrepreneurs from other countries to set up businesses here is something that is worth exploring. Keeping it limited and studying it is a good idea. Then, of course, you talked about the temporary foreign worker programs. We support the changes to the Accelerated LMO and the fact that employers can pay as much as 15 per cent less than the prevailing wage. We actually pushed strongly for that because we felt that it was becoming almost perverse in some parts of the country. It is a prevailing wage — an average wage — that includes smaller and larger numbers of workers, so the prevailing wage will be higher than a lot of smaller businesses can afford to pay. What was happening — and we would get these calls — is that they were paying their temporary foreign workers more than they were playing their Canadian employees. They want to pay them the same. I believe the provision is that they have to pay them the same as their Canadian employees, even if it is up to 15 per cent less. That is to accommodate the fact that the Temporary Foreign Worker Program became a barrier for smaller companies because they found themselves paying them more than they were paying the Canadian workers for the same job. There are good reasons why smaller companies pay less. They often do more training. They often get their people scooped up by larger companies very quickly. Simply, they cannot afford it. If they could, they would try to entice people with higher salaries all the time because look at the numbers. The shortage of labour is a big issue, and, in order to attract people, they will do what they can to increase benefits and wages.

Senator Callbeck: Ms. Phillips, I wanted to be clear. You talked about notice of employment to Canadians. I get the understanding from you that Bill C-38 will deny Canadians opportunities for employment. This would mean less advertisement and less recruitment of Canadians, am I right?

Ms. Phillips: Yes. They have changed the requirements for employers who want to hire temporary foreign workers. In the Labour Market Opinion Process previously, employers had to prove a certain amount of advertising and recruitment, but, under the accelerated process, advertising is recruitment. The only thing a potential employer has to do to prove their willingness to hire Canadians is to advertise. Under the old process, employers had to document efforts to recruit Canadians, including copies of advertisements, number of Canadian applicants and reasons they were rejected.

They only have to be able to prove that they have advertised if requested by the federal government for a compliance review after the fact.

Senator Callbeck: If they show that they advertized once, is that enough?

Ms. Phillips: Yes, for a period of days. I believe it is five days with the Canada Job Bank.

Senator Callbeck: You mentioned that less than 20 per cent will have compliance review. Could you explain that, please? Is that in connection with this?

Ms. Phillips: Yes. Essentially, employers have to prove certain things about their workplace, the conditions of work for temporary foreign workers, their recruitment process, advertizing and so on under the old LMO process. Now, according to the HRSDC ALMO factsheet, fewer than 20 per cent of successful ALMOs will be subject to a compliance review.

Senator Callbeck: What was it before, do you know?

Ms. Phillips: I believe that, under the previous LMO, you had to prove a lot more things before you got your LMO. This way, you fill out an application and send it in, and they sort of trust you that you have done the homework. They will come back and ask you later on.

Senator Callbeck: Ms. Pohlmann, on the last sheet in your presentation, you talk about the top problems for SMEs in hiring temporary foreign workers. I think you said you have 109,000 members. You have a lot of members there, and we know that it is the small and medium sized businesses that create the jobs. For the top problems in hiring temporary foreign workers, you list five things: delays in processing, keeping new immigrants with temporary status, too complex systems, advertising requirements to demonstrate hiring difficulties, and industry sectors not registered by government as needing new immigrants. Does Bill C-38 address any of these problems?

Ms. Pohlmann: Not just Bill C-38 but also some of the issues that have been introduced since 2006 because this is 2006 data we are in the process of updating. It has started to address some of the issues, for example, keeping new immigrants with temporary status. Prior to the introduction of the Provincial Nominee Programs in many provinces, as well as the Canadian Experience Class, there was no ability to keep temporary foreign workers in Canada. They had to leave. When you have a temporary foreign worker at a place of business for a year or two years, and they have established a connection to the community and to their coworkers and all of the rest of it, it would be natural that they should become permanent immigrants because they already have a connection to the community. That has moved forward a little further. Delays in processing have certainly been addressed somewhat by the Accelerated LMO process. However, I want to point out that the Accelerated LMO process for employers is restricted to employers who already have a record of going through an LMO process in the previous capacity. That is my understanding. They have already proven that they have gone through the LMO process many times before and have a record with the government and experience in going through it, and they can move into this Accelerated LMO process. Therefore, that is why they do not necessarily need to do as much. That is my understanding of how the program is supposed to be working going forward, so it still limits those who maybe do not use the process that often or have never used it before. They are still expected to go through the regular LMO process. That is my understanding of how it will be working. It is partially addressing some of the issues.

The system is too complex. That has not really stopped. It is still a fairly complex process. It is something that, given the low numbers of small business owners who have actually attempted to get a temporary foreign worker, even less going through the immigration system, much of it has to do with complexity. It is a very expensive process for them. It takes a lot of effort on their part. For them to actually get to that point means they have pretty much exhausted all their options locally. The fact is they still have to pay temporary foreign workers as much as they are paying their Canadian workers, so there is no benefit for them, from a wage standpoint, to go after a temporary foreign worker, other than that they need to fill some needed skills.

Senator Callbeck: What about the advertising requirements?

Ms. Pohlmann: The advertising requirements, under this Accelerated LMO, will certainly be addressed for those businesses that have a record with government of having gone through this process successfully and done it well. It will not necessarily change, in my understanding, for those who have never gone through the process before.

Senator Seidman: Ms. Pohlmann, I would like to thank you for this very visual presentation. For those of us who need visual presentations to help us hone in on the issues, it is really good.

If I could look at slide 7, which shows the shortage of qualified labour concerns by province, where we see indeed that it is not only Alberta, in fact; there are provinces, such as Quebec and Nova Scotia, probably due to socio- demographic factors, that are having extreme concerns about labour shortages in the future.

Ms. Pohlmann: Correct.

Senator Seidman: I think that is worthy of note.

When we go to slide 9, it is clear that the supply-and-demand profile is incongruent. Therefore, there is not a good fit at all. My observation — and I would appreciate your comments on this — is that this philosophical change in these amendments to the current Immigration and Refugee Protection Act, which establishes a demand-driven economic immigration program, is something that perhaps will really respond to some of these concerns on the part of small business, where jobs indeed are created.

I will leave it at that and perhaps hear your reaction.

Ms. Pohlmann: I would agree that it is a start. We know that none of these issues are easy. These are fairly sensitive issues that we need to deal with in a proper way. I do believe that we need to move our immigration system, both the Temporary Foreign Worker Program, as well as the permanent immigration system probably even more so, more towards a demand-driven type of system. It does not have to be 100 per cent that, but I think it is important that it reflects that a little more.

I do not have the numbers in front of me, but I would suggest to you that the Temporary Foreign Worker Program is primarily used by larger companies. We are trying to get smaller companies to also get access to it because their shortage of labour issues are as dire as in many of the large companies.

I can tell you that 60,000 temporary foreign workers in Alberta are not mostly in small- and medium-sized companies; they are in larger companies. Part of the reason has been the complexity of the process and the difficulty in being able to pay temporary foreign workers the prevailing wages, which are bumped up higher because of the large companies that exist in a place like Alberta. This hopefully will help address and make it a little easier for smaller firms, who do create the jobs in this country, to access those types of workers and help them grow the economy.

Senator Seidman: There has been a lot of talk about backlog, people who are sitting in the system for many years. As we know, the labour market changes and the needs of the labour market change over time.

In slide 9, if I look at the professional category, for example, the supply of professionals who grossly out-supply the demand, it is another indication of why perhaps it might not be fair, in fact, to process immigrants who have been in a backlog for four, five, or six years, who no longer would be able to find employment in this country in any case.

Ms. Pohlmann: Yes. We all know of the unfortunate person who is driving a cab or doing something, who has a Ph.D. in something. We have not been able to properly connect. They themselves get alienated by the process in Canada, and they go back to their countries and say,  "It is really not the place it is supposed to be. "

Is it not better to connect the job to the individual, so that they come here and see that this is a land of opportunity for them to do more? We are hoping this opens up some eyes and they can see there is a problem here.

I should say that the 7 per cent in small- and medium-sized businesses, that is where they see the demand. It does not mean they are not hiring more of them; it is just that we have a lot of university-educated folks in Canada and they get hired into those positions. We are actually competing amongst ourselves with the new immigrants. Why not be able to ensure that we are fulfilling the economy in a way that everyone is feeling like they are doing meaningful work in their field?

Senator Seth: It is a little puzzling to me that Human Resources and Skills Development Canada indicates that the consequences of failing to comply with the requirement could include revising the labour market, banning non- compliant employers from the program for three years, and publishing the names and addresses of these non- compliant employers on the CIC website.

Do you feel that the blacklisting of employers is an effective compliance measure? Why or why not?

Ms. Pohlmann: I would be concerned if they were going to start making those types of blacklisting approaches, such as publishing their names and so forth, without ensuring that it was not done intentionally. I think intent is an important part of what has to be decided upon when they decide on sanctions for those employers.

We have many examples in many different areas of the government where a small business owner inadvertently does not do something correctly and should be given an opportunity to correct that before being blacklisted, for lack of a better term. Having said that, if you have been warned and you have been given the opportunity to correct it, and if you continue to do so, then I think there should be measures to penalize that.

Senator Seth: It is not as seriously taken, just writing their names. I do not feel comfortable with just blacklisting their names.

Ms. Pohlmann: I would agree with you. It would only be after a lengthy process of doing things the wrong way repeatedly that I would see maybe there is an opportunity. It may make sense to do it at that point, but I would definitely not want to see that being done after a first offence.

The Chair: Ms. Phillips, do you want to comment on that issue?

Ms. Phillips: To our minds, there are several different avenues that government can use under the Immigration and Refugee Protection Act to do things like crack down on unscrupulous employers, brokerage firms and recruitment firms, which all exist. Since we have been watching this issue, we have published three reports on the Temporary Foreign Worker Program. We do not believe the federal government is actually using the legislative tools it has already to crack down on some of the abuses we have seen in the Temporary Foreign Worker Program since its meteoric rise during the last oil sands boom in Alberta. That is the first place to start.

Second, we believe that ultimately this program will not solve the skilled labour shortage here in Alberta, and it creates situations that are ripe for abuse, whether those are within the workplace itself, within the recruitment process and other fees charged to temporary foreign workers to get here in the first place, or in the housing or other aspects that are required under an LMO to give to foreign workers. There are all kinds of ways that people are exploited in this system.

We believe that is why we need to move towards more permanent immigration for our skilled labour shortages. We need to ratchet up the provincial nominee programs, which so far the federal government has refused, even though the Alberta government, their Conservative counterparts, have asked them to do. Simply publishing a company's name in a newspaper or some other place after a lengthy process is not enough to actually catch what is going on in this process and how it is having a detrimental effect for temporary foreign workers right now.

Senator Dyck: I have two quick questions for Ms. Pohlmann. I was looking at slides 11 and 13 in relation to your comments that small- and medium-sized businesses have a problem sometimes where they have to pay more for their temporary foreign workers. You made it sound as though it were a significant problem. Yet, if we look at slide 13, it is not listed as a significant problem.

Ms. Pohlmann: I would not say it is a significant problem, but it was a problem in certain parts of country where wages were far higher and you were dealing with multinational corporations who tend to drive up the prevailing wages. Alberta is the common example that is used, and that is definitely where we heard it the most. It is not a common issue across the country. There are provisions already that people are willing to pay the same amount as they are paying their employees currently. That is something that is accepted and wanted by small business employers. The problem was sometimes it actually ended up skewing the differences within a workplace.

Senator Dyck: On slide 11, when you are listing the types of new immigrants that are hired by small- and medium- sized businesses, if I am reading it correctly, it says only 16 per cent of temporary foreign workers are utilized, so actually there is very little uptake.

Ms. Pohlmann: Correct. That would be true. That is only 16 per cent of the 22 per cent overall who actually hire new immigrants, so it is even smaller. Of the 12,000 responses, I would suggest to you it is maybe 400 to 500 that are actually actively involved at that point in time in hiring temporary foreign workers. It is a difficult process to go through, and small business employers would much rather hire Canadians locally.

Senator Hubley: I am going back to slide 7. When you are gathering information from your members or the members' opinions, do you differentiate or do you identify what we would call seasonal businesses or seasonal industries? How does that affect the outcome of some of your graphs?

Ms. Pohlmann: We do not do it in this particular chart you are looking at, but we have asked about it in the past. We do know that about 35 per cent of our members across Canada do hire seasonal workers, not exclusively. It just could be a part of their workforce may be seasonal, part of it may be year-round, so about 35 per cent. The lowest is maybe 25 to 30 per cent in Western Canada, and it can get as high as closer to 50 per cent in parts of the Atlantic provinces.

Senator Hubley: As Ms. Pohlmann has suggested, in some areas of Canada, the use of temporary workers in seasonal industries is very high, and therefore they would be used for a period of time but then probably they would return to their country. You were suggesting that you would be looking at more of a permanent residency for some of these workers. Are we looking at two different types of businesses here?

The Chair: Ms. Phillips, would you like to respond to that?

Ms. Phillips: Was that question directed at me?

Senator Hubley: Yes, please. I am sorry.

Ms. Phillips: There are seasonal agricultural programs as well, which are different and distinct from the temporary foreign worker program. Many employers in southern Ontario, southern Alberta and elsewhere do use those programs, and they come with different wages and different requirements.

The 15 per cent reduction of wages under the Accelerated LMO process only applies to higher-skilled occupational classifications, that is to say, the 0, A, and B, and I will just read out who they are. They include all construction trades, including plumber, pipefitter, carpenters, machinists, electricians, heavy equipment and transportation operators and mechanics, underground miners, oil and gas drillers, other related occupations and engineers. However, an A-level process may expand to include all occupations under the new regulations.

Let us be clear about what this is not about. This is not about an employer having to pay a temporary foreign worker $12 an hour when everyone else is making 10 under the current process. This is about higher-paying occupations looking for ways to bring labour costs down. We have already been through the fact that the people who will use it are firms who have already had an LMO. In Alberta, that often means large oil sands construction operators. This sets up two categories of temporary foreign workers, one under the regular process and the others come into large fly-in, fly-out towns where there are just a few Canadian workers, and those operators can pay 15 per cent below the going rate to temporary foreign workers as long as there are one or two Canadians on that work site also willing to earn those wages. That is what this is. It is a gift to the non-union construction sector as we go into a planned massive boom in northern Alberta so that they can bid on projects that were previously the purview of only unionized construction firms with a lower labour cost and therefore win the contracts. They have gotten to a point in Alberta where they can bid on multi-billion dollar projects. They have built that business model since the last boom. We expect this will continue. This is about giving them market share and competitive advantage.

The Chair: Ms. Phillips, I wanted to be sure I heard correctly one of the analogies you used in your opening remarks. If I heard it correctly, you indicated that, as an example, in some of the seasonal construction, major construction activities, when employees are laid off, they would go to take up I think you referred specifically to jobs in Tim Horton's, and that that created a problem in terms of getting them back subsequently when they were rehiring. With the possible exception of the Tim Horton's in the hospital in Newfoundland, this is the first time I have heard of Tim Hortons being a serious competitor for people who have the capability of working in the construction area in Alberta. Perhaps I misunderstood you.

Ms. Phillips: As Minister Finley indicated when she introduced these EI changes, people could go work at McDonald's instead of being on EI, and certainly seasonal employers have expressed a great deal of concern over these new EI changes. As soon as you are a repeat claimant under EI, your threshold for suitable work becomes lower and lower under this new EI system. Let us face it: Construction workers are often repeat claimants because of the seasonal nature of the work and the fact that construction companies have effectively built their business model around the Employment Insurance Program. Therefore, if you have repeat claimants, that threshold for suitable work ratchets down after a certain period of time, after a couple of claims. That can set up your skilled workers having to take jobs that are below their skill level and finally getting them back again or having to relocate will exacerbate the labour shortage that you have already identified as a policy goal you would like to eliminate or reduce. We have been saying that the EI changes are problematic for the labour shortage, certainly, but more than that, writ large, if what you are looking for is a larger labour pool, then might we suggest investments in training, taking training in apprenticeship programs seriously, particularly in this province, and actually making the Employment Insurance Program one that works for out-of-work workers.

The Chair: I understand your explanation, and I still find it a curious example, but I thank you very much for the detailed clarification.

On behalf of my colleagues, I want to thank you both. Ms. Phillips, you have been very clear in your enunciation of your comments and responses to questions. The video channel has worked very well. I want to thank you again, Ms. Pohlmann. I extend the same comment to you. You have been very clear in your comments. Thank you for that clarity.

Senator Cordy: Ms. Phillips, we did not catch all of your initial presentation. Could you send the clerk a copy of your notes?

Ms. Phillips: Yes, I can. No problem.

The Chair: Thank you very much. The clerk will be in direct contact with you on that matter.

Colleagues, with that, on your behalf, I thank both of our witnesses and declare the meeting adjourned.

(The committee adjourned.)