Evidence of meeting #60 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cancer.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kenneth Kyle  Director, Public Issues, Canadian Cancer Society
Manuel Arango  Assistant Director, Government Relations, Heart and Stroke Foundation of Canada

3:35 p.m.

Conservative

The Chair Conservative Dean Allison

Order.

Pursuant to the order of reference of Wednesday, November 8, 2006, we'll begin our meeting on Bill C-269, an act to amend the Employment Insurance Act for improvement of the employment insurance system. Since we have a limited amount of time, I think we should try to get started as quickly as possible.

Ms. Deschamps is going to talk about her bill for a bit. Before we go to her, I'll mention to you that today's meeting has been structured so that we have two meetings. The first is from 3:30 to 4:30. After we take a break, Mr. Eyking will come in and talk for the second hour about his private member's bill.

We'd like to get through at least two rounds of questions, so for the sake of time, I'm going to ask that the first round be five minutes instead of seven, and that the second round be four minutes instead of five. This is just so that we can get in a couple of rounds and we can all ask Ms. Deschamps some questions about her private member's bill.

Without any more talking on my behalf, I would ask Ms. Deschamps to make her opening remarks.

We welcome you. Thank you for being here today to discuss your private member's bill.

3:35 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

Thank you very much, Mr. Chair

I am very honoured to be here as a witness. I feel a little off kilter because I am used to being seated on the parliamentarians' side. I ask your indulgence, my dear colleagues.

I am pleased because, during this session, I also had the privilege of sponsoring Bill C-269. This bill is the result of a great deal of hard work by the committee and my colleague Yves Lessard. I am very honoured to have had the opportunity to present this bill in the 39th Parliament.

The purpose of Bill C-269 is to improve the present employment insurance system, which the Conservative and Liberal governments have distorted over the years into an unfair program that bears increasingly little resemblance to an insurance plan. More than 50% of unemployed workers are not covered by this insurance, even though they pay premiums and the plan continues, year after year, to accumulate surpluses in its coffers.

It seems that the contributions of workers and employers have turned into a disguised tax and that the amounts amassed in this fund are used for purposes other than those of employment insurance.

The House of Commons Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities studied this issue in 2004 and, on February 15, 2005, issued 28 recommendations for improving the program.

You will recall that the Conservatives supported certain recommendations of the House of Commons Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities whereby the plan would be reserved for the benefit of workers.

The Bloc Québécois worked on this committee and was primarily responsible for adoption of the report. Thus, on May 8, 2006, I tabled a bill on behalf of the Bloc Québécois, which, if adopted, will make sweeping changes to the program.

Enacting Bill C-269 will provide a lifeline for workers and that is why the government must have the political will to change the system before any more damage is done.

We should recall that, until 1990, the Canadian government contributed to the unemployment insurance fund. In 1990, however, Brian Mulroney's Conservative government destroyed that equilibrium by terminating the federal government's contribution to the fund, leaving the entire funding of it to employers and workers. The withdrawal of federal funding created a major deficit in the fund at that time. The government then tried to solve the problem by slashing the coverage that the system provided, cutting the benefits paid to unemployed workers and tightening the eligibility rules for workers. The effect of this was to reduce the number of people covered by the system by half between 1989 and 1997 and to create enormous surpluses in the fund.

For more than 15 years, workers and employers have been the only contributors to the fund, and every year, the fund surpluses are swallowed up by a federal machine whose appetite knows no bounds. The EI account cumulative balance has ballooned since 1994, reaching about $50 billion to date.

There is no doubt that this cumulative balance is the result, among other things, of many changes that have restricted coverage of employment insurance since the early 1990s. The reform of employment insurance, in 1996, gave rise to a more restrictive system by tightening the eligibility criteria.

The EI account cumulative balance belongs to the employment insurance system and the government has the moral obligation to restore it in full. The EI account surplus must be applied to the employment insurance system.

In her November 2005 report, the Auditor General of Canada, Sheila Fraser, said there was an accumulated surplus of more that $48 billion. She also declared that the federal government had the obligation to respect the Employment Insurance Act and added that:

For the past six years, we have drawn Parliament's attention to our concerns about the government's compliance with the intent of the Employment Insurance Act, with respect to the setting of employment insurance premium rates and its impact on the size and growth of the accumulated surplus in the Employment Insurance Account. The accumulated surplus in the Account increased by an additional $2 billion in 2004-05 to reach $48 billion by the end of March 2005.

Today, about 40% of people who lose their jobs manage to qualify for employment insurance benefits. That is 4 workers out of 10. The people the most affected by the federal government's reforms are women, young people and seasonal workers. Of course, they are the same persons who are the most dependent on the program because they occupy precarious and unstable jobs.

With the changes to the system, the number of women covered by employment insurance decreased from 73% to 33%. They often have seasonal and unstable jobs.

In some parts of the country, it is impossible for people to accumulate more than 360 hours of work because of the large number of seasonal jobs in agriculture, forestry and tourism. The regions are suffering economically from plant shutdowns and, more recently, job losses in the forestry sector. In my riding, for example, in the regional municipality of Antoine-Labelle, 80% of the local economy is dependent upon the forestry sector; 80% of this industry's activities are at a standstill because of the current crisis.

Workers are victims of massive layoffs and often they do not qualify for employment benefits. Yet, they contributed to the fund for many years. Not only do workers become poorer because they are deprived of the right to EI benefits, but their families and their regions are also impoverished. Statistics show that the number of claimants has gone down since 1996; however, contrary to what we might thing, it is the number of eligible claimants that has gone down. The eligibility requirements are so strict that fewer and fewer workers qualify.

The time has come to give contributors what is owed to them and to stop looting the fund. The system we had in the 1990s is no longer suited to today's realities. That is why reforms are needed to help workers. Bill C-269 aims to restore some fairness for workers in the way employment insurance benefits are delivered. The employment insurance system must be updated to make it more accessible for vulnerable workers.

First of all, this bill aims to reduce the qualifying period to a 360 hours regardless of the regional unemployment rate.

This measure will eliminate the inequities between regions on the basis of their unemployment rates. This rule would also cover seasonal workers and those with unstable jobs. The required 360 hours correspond to 12 weeks of 30 hours. The benefit period varies according to the region and the regional unemployment rate. For regions with a high unemployment rate, this would eliminate the infamous “seasonal gap”, which leads us to the following recommendation: increase the maximum benefit period from 45 to 50 weeks.

Every year, seasonal workers face the seasonal gap, leaving them without benefits for as long as 10 weeks. Statistics show that 35% of recipients use their full benefits. In a regional municipality in my riding, that figure rises to 43%. According to an excerpt from the report, witnesses stated that the benefit period should be increased to 50 weeks, as is the case for special benefits. This measure would solve the longstanding problem of the seasonal gap, which mainly affects seasonal workers who have no benefits before the start of the next season. Although the government has taken measures to address this problem, further action is required. Resource regions are particularly affected. Bill C-269puts an end to the seasonal gap by increasing the benefit period from 45 to 50 weeks.

Next, the bill aims to increase the rate of weekly benefits to 60% of insurable earnings rather than 55% as is currently the case.

Unstable jobs are generally the least well paid and these changes would provide claimants with a bare minimum. The Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities made this recommendation in 2005. This measure would help women in particular, since the 55% rate primarily affects low-wage earners, two-thirds of them women.

The Bill also eliminates the waiting period between the time when people lose their jobs and apply for benefits and the time when they receive their first cheques.

Workers should not be penalized for losing their jobs. Their financial obligations continue even if the money is late arriving. The waiting period penalizes workers who have lost their jobs without being fired or resigning. These workers often have a low income and it is further reduced by the period of unemployment they are entering, and which is not justified because the waiting period does not affect the maximum benefit period.

The Bill eliminates the distinction between a new entrant and a re-entrant to the labour force.

This practice is completely discriminatory, especially with respect to young people and women whose work situation is more precarious. The fact that a worker has received benefits is a determining factor in whether or not he or she is considered a new entrant or a re-entrant to the labour force. The eligibility conditions have become incoherent and fragmented. A person not considered a new entrant or a re-entrant must accumulate fewer insurable hours to be entitled to regular benefits, whereas a new entrant or re-entrant must accumulate 910 hours, which is becoming increasingly difficult in many regions. This becomes a major deterrent for individuals who wish to work in agriculture, forestry and several other sectors providing seasonal employment. It is virtually impossible for these individuals to accumulate 910 hours in these sectors.

The Bill will eliminate the presumption that persons related to each other do not deal with each other at arm's length.

The burden of proof with regard to dealing at arm's length is always shouldered by the employees of family businesses, who are deemed guilty until proven otherwise. We understand that it is important to discourage fraudulent relations between employers and employees. However, it should not be up to workers to prove their good faith when they lose their jobs; it should be up to the system to investigate when there are doubts.

The Bill increases the maximum yearly insurable earnings, which stood at $39,000 when the Bill was tabled.

The maximum has now been set at $40,000. We were asking that it be raised from $39,000 to $41,500 and that an indexing formula be introduced. The current contribution formula is actually a regressive tax that affects low-income earners the most. Once the maximum insurable earnings have been reached, higher income-earners pay no further premiums, whereas lower income-earners contribute for the entire year.

The Bloc Québécois is recommending that there be greater fairness. The maximum was once $43,000. Furthermore, higher income-earners are only covered for 55% of $39,000, the maximum yearly insurable earnings when the Bill was tabled. It is difficult to pay one's bills with so little, even if it is only for a few weeks.

Benefits must be calculated based on the 12 best weeks so as not to penalize seasonal workers who sometimes work short weeks.

Only the weeks with the highest earnings in the new benefit calculation period would be considered and the average earnings would be calculated using the 12 best weeks of insurable earnings. The NDP member, Yvon Godin, tabled Bill C-265 in May 2006 in this regard. We believe it is vital that this new formula be implemented.

Finally, we must extend program coverage to self-employed workers, given that they currently represent 16% of the labour force. These workers have no coverage should they become unemployed. Premiums would be paid on a voluntary basis and the rate would be established by the chief actuary on the basis of need. Complete coverage should be provided.

In closing, I would like to remind the committee that workers, employers, the Auditor General of Canada, the Bloc Québécois and now even the UN have criticized the federal government and its employment insurance program. In an article that appeared in La Press on May 23, it was reported that the UN Committee on Economic, Social and Cultural Rights, and I quote:

—recommends that the State party reassess the Employment Insurance scheme with a view to providing greater access and improved benefit levels to all unemployed workers.

Furthermore, during the last election campaign, the Conservatives made a commitment to put in place an independent employment insurance program and to create an autonomous fund administered by employees and employers. They also supported the recommendations of the Standing Committee on Human Resources whereby the plan would be reserved for the sole benefit of workers. They deemed the practice of accumulating a surplus intellectually dishonest, and a deliberate attempt to overtax workers and their employers for the purpose of diverting funds to finance other government priorities.

Obviously, there are serious shortcomings in the management of the employment insurance fund. The priority is to end the injustices that harm workers, their families and businesses. We must quickly enact the necessary measures allowing workers to benefit from the insurance program to which they contribute.

Thank you.

3:45 p.m.

Conservative

The Chair Conservative Dean Allison

Thank you, Madame Deschamps.

We're now going to move to our first round. I'll just remind the members that for the sake of time, we're going to have rounds of five minutes instead of seven for the first round.

Mr. Savage, you have five minutes, sir.

3:45 p.m.

Liberal

Michael Savage Liberal Dartmouth—Cole Harbour, NS

Thank you, Chair.

I'd like to congratulate Madame Deschamps for getting this bill as far as it has gone so far. There's a lot of good stuff in this bill.

Employment insurance is a huge issue to large parts of the country. It's big where I come from in Atlantic Canada. You've mentioned your own riding and, in general, the province of Quebec and areas of high employment. I'm not sure it's an issue that's understood by people who aren't directly affected—people whose communities aren't directly affected by high unemployment and by seasonal work—but it's a very important issue.

Much of the bill I like. I like the elimination of the two-week waiting period. In fact, quite often when people lose a job through no fault of their own, they end up waiting a lot longer before they get their first cheque, and I think it's a bit of an insult to have to wait the two weeks.

I support the five-week covering of what we call the “black hole”.

We have some amendments that we're going to put forward, especially in terms of new entrants and the number of hours required, but I do believe it's time to do some reforms in employment insurance.

There were reforms in the 1990s. Back then, in fact, we had a deficit on EI for many years, until a strong economy led to a surplus, although there is no EI surplus; it's not a carry-forward amount of money, but a notional surplus. Premiums have gone down, but I think it's time to recognize that we need to do something on the other end, so I congratulate you on that.

I will ask the obvious question: what is the cost of this bill to the treasury?

3:50 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

With the help of the members of this committee, we have identified the costs associated with Bill C-269. Those costs total $1.7 billion at this time, while the fund is generating surpluses of more than $2.2 billion a year.

Thanks to those surpluses, we feel very comfortable about the requirements of Bill C-269, the costs of which will not exceed $1.7 billion.

3:50 p.m.

Liberal

Michael Savage Liberal Dartmouth—Cole Harbour, NS

The employment insurance program was reformed again in 2004 when the Liberal government said it didn't make sense to have a lot more going in than coming out. So each year it's actuarially determined as well as possible to identify what might be paid out, and make sure it matches what's going in.

Pilot projects have been in place in different parts of the country—I'm sure you're aware of them—and I wonder if you can tell us how this bill compares with the pilot projects that have been designed for areas of high unemployment.

3:50 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

Thank you for the question.

I would like to take this opportunity to turn a spotlight on my riding. Currently, in the northern part of my riding, Laurentides—Labelle, which is located north of Montreal from Saint-Sauveur to Mont-Laurier, the economy is based on the tourism, agriculture and forestry industries. There is a small RCM north of my riding that is facing a crisis right now, as I indicated during my testimony. The forestry industry accounts for 80% of its economy. At this time, 80% of the forestry industry is shut down or in slowdown mode. There are seven lumber mills in the area. Four have closed down for an indefinite period, one is closed permanently, and at the other two mills, operations have been cut back. This has caused the loss of 1,450 jobs in the past six months.

The people in the RCM had access to a program that allowed them to increase the period from 45 to 50 weeks. However, under the current conditions, few people qualify for the program, based on the requirements of the system. This is financially disastrous for these people.

That RCM is a single-industry community. There is no other industry or alternative to offer those workers. If the system were set up to pay back the money those people have paid in over their years of work, they could benefit from the employment insurance they have bought for themselves. This is not the case right now.

3:50 p.m.

Liberal

Michael Savage Liberal Dartmouth—Cole Harbour, NS

Thank you.

3:50 p.m.

Conservative

The Chair Conservative Dean Allison

Thank you, Ms. Deschamps.

Mr. Lessard, please.

3:50 p.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

Thank you, Mr. Chair.

I would first like to congratulate my colleague and tell her that it has been an honour for me to work with her on preparing this bill.

Obviously, this bill is complicated for all of us here today. It is complicated because an enormous amount of work is needed to correct the employment insurance system. While this might at first seem like a lot of measures, it is clear after a closer look that they are all necessary, given the needs of unemployed Canadians. I would like to give full credit to my colleague.

As my colleague pointed out, and rightly so, in the early and mid 1990s, the Liberal government took steps to balance the employment insurance fund. Those measures were probably needed at that time. Perhaps we would have made different choices. Those measures were so draconian that, over the years, they have generated surpluses that have accumulated on the backs of unemployed Canadians. These measures have not been justified since 1996 and 1997.

What pleases me today, and has pleased me over the past few days, is listening to members of the Liberal Party also acknowledge that we must take action to change this. Our colleague, Mr. Savage, did so earlier. I think this gives us reason to hope that the situation can be corrected. I should also be pleased that some of the 28 recommendations that were made are backed by the Conservative government. I should not get excited too soon, however, since the Conservatives have been known to flip-flop. I will wait and see.

I have a question for my colleague. In addition to her excellent work in the House of Commons, I know she is also doing exceptional work in her riding. I would like her to tell us a little bit more about the impact of EI cuts on families. What happens to these people when they run out of employment insurance and run out of money?

3:55 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

You are familiar with the system currently in place in Quebec, which falls under the Ministère de l’Emploi et de la Solidarité sociale. It provides people with very minimal social assistance. It is known as last resort assistance. People who are ineligible and cannot receive employment insurance benefits—Those who are eligible are already very much affected. They once had an average income but now must live temporarily on EI benefits which amount to less than they were earning, knowing that when their benefits run out, they will probably still be unemployed, because the factories are closed. Their only recourse is social assistance.

Social assistance does not allow the recipient to have any assets, that is, property of any value. In order to be eligible for that kind of assistance, people must sell their assets. I think that anyone who wants to make their way and benefit from services within our society finds this aspect very disagreeable and demeaning.

3:55 p.m.

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

In your work, you focused on the fiscal imbalance, on the additional burden placed on the Quebec government, due to the fact that Ottawa is holding on to money that belongs to the workers and employers. Can you tell us a little more about that?

3:55 p.m.

Conservative

The Chair Conservative Dean Allison

You have about 30 seconds left.

3:55 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

The burden was passed from a federal system onto a provincial system. The people who paid in, those who contributed to the system and who are ineligible or cannot benefit, are turning to what is in place and what is provided by the provincial government. For these people, social assistance is provided by funds that come directly from the provincial government. Thus, they pay into a system at one level, the federal level, but are forced to turn to the coffers of the provincial government, which provides this program with its own money.

3:55 p.m.

Conservative

The Chair Conservative Dean Allison

Thank you, Mr. Lessard.

The next five minutes will go to Mr. Godin.

Mr. Godin, welcome back to the committee; it's been a while.

3:55 p.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

Thank you very much.

Hello from me, as well. Every time the subject of employment insurance comes up, we meet again. I care very much about this file.

I would like to thank Ms. Deschamps for her presentation. Both you and Mr. Lessard of the Bloc Québécois have explained the importance of the employment insurance program, and your colleague praised your excellent work. I think we are on the same page here, since, for many years, we proposed bills or amendments to employment insurance, or initiatives to help workers directly.

I do not have much to say in praise of the Liberals, because they said they had to solve the EI deficit or the country's deficit. They did so on the backs of our workers. They are the ones who ruined employment insurance for our workers. When EI premiums rose to $3.07, there was a surplus of $7 billion. There were plenty of surpluses. The Liberal government of the day, when Paul Martin was finance minister, liked to pat itself on the back. It boasted that it had balanced the budget, had reached a zero deficit and had a $7 billion surplus. At the same time, look at what was in the consolidated revenue fund. There was $7 billion in the EI fund. They are saying themselves that this does not exist. Of course, they took it.

Now we are told there is a $2 billion surplus. The Minister of Human Resources said that this is minimal. Do you really believe that this is minimal, when there are people who still need EI benefits? The bill will cost some $1.7 billion to implement. I would say that that amount is minimal, if we want to help workers and families. Some 800,000 workers—the research officer can correct me if I'm wrong—pay EI premiums and yet are ineligible for benefits. And this is precisely why we have 1.2 billion hungry children in Canada. As you said, Madam, if these people are ineligible for employment insurance, they are forced to turn to social assistance and the burden falls to the provinces.

We now have a government... When in opposition, the Conservatives supported only eight of the 28 recommendations, including one for an independent fund—but I fear that, with them, this means privatization—and another involving lowering EI premiums. We now see that the surplus has been reduced from $7 billion to $2 billion. The premiums were cut back at the same time as the measures intended to help those men and women who get up and go to work every day, yet lose their jobs. Do you agree with me?

4 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

I agree entirely, Mr. Godin. Perhaps you hadn't arrived yet, but I paid you a compliment during my testimony when I referred to your Bill C-255.

4 p.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

I was not here, but I saw that.

4 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

We are working on the assumption that, at this time, only employees and employers pay into the fund in order to allow workers to enjoy benefits if they lose their job or at the end of a seasonal contract. It is entirely reasonable that these people should receive the insurance they have paid for. With the new contribution rate, the fund is currently generating surpluses of approximately $2.2 billion. It is entirely reasonable to assume that it can pay for itself.

4 p.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

The Auditor General said that the fund should have some $15 billion. I find it strange to hear the Liberals and the Conservatives saying that there is no more money. There is a surplus of $51 billion hidden away somewhere, which belongs to someone, and now they are saying that we cannot make any changes to employment insurance because there is next to no surplus. Is this not disingenuous or misleading?

4 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

No, I agree with you entirely. My colleague Yves Lessard and I travelled throughout Quebec when we were working on Bill C-269.

4 p.m.

Conservative

The Chair Conservative Dean Allison

There are 30 seconds left.

4 p.m.

Bloc

Johanne Deschamps Bloc Laurentides—Labelle, QC

We met with workers, associations that defend the rights of the unemployed, and with employers. In many areas of Quebec, workers and employers told us that they are prepared to pay higher premiums, if that would help ensure justice, so that any worker in need will be eligible to receive EI benefits.

4 p.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

Thank you.

4 p.m.

Conservative

The Chair Conservative Dean Allison

Thank you very much, Mr. Godin.

We're now going to move to the last questioner of this round. Mr. Lake, five minutes please.