Bill C-56 (Historical)

Fairness for the Self-Employed Act

An Act to amend the Employment Insurance Act and to make consequential amendments to other Acts

This enactment amends the Employment Insurance Act and other Acts by establishing a scheme to provide for the payment of special benefits to self-employed persons who are not currently entitled to receive them.

[Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada]

Madam Chair and distinguished members of the Committee, we thank you for giving the Certified General Accountants Association of Canada the opportunity to add its voice to those of the many individuals and organizations in Canada that support Bill C-56, which provides for the payment of special Employment Insurance benefits to self-employed workers, that is, parental benefits and maternity, sickness and compassionate benefits.

Permit me to remind the committee members that CGA Canada represents 73,000 certified general accountants and students. You'll find our members and our students in industry, finance, government, and public practice. They are respected accounting and financial management professionals. CG Canada was founded over 100 years ago, and our role is to establish designations, certification requirements, and professional standards. We also offer professional development. We conduct research and advocacy and represent our members nationally and internationally.

Bill C-56 is an important piece of legislation for Canadians and for CGA Canada and its members. My colleague Madam Pohlmann has given an excellent description of the sector. We recognize the role that self-employed Canadians play in advancing investment, job creation, productivity, innovation, and expertise.

We know from the data that the numbers continue to increase. There are about 200,000 professional accountants in Canada, and approximately one in five is self-employed. Bill C-56 has a direct impact on this group of self-employed professionals, whether they're owners of accounting practices or other small businesses, consultants, tax advisers, management information technologists, or specialists in human resources.

In the past few years, CGA-Canada has seen a large increase in its membership, particularly women. Approximately 60% of graduates today are women. It is therefore perfectly natural from the standpoint of self-employed women, who face many challenges as mothers and in many cases the person responsible for taking care of their families, that our organization would take an interest in ways of improving the Employment Insurance regime and making EI benefits more accessible.

Our members were consulted a few years back, and the results showed that because they are not entitled to maternity benefits, self-employed women often wait to start a family because of their professional responsibilities. Others, meanwhile, wait until their children are grown to build their own career. And down the road, even though self-employed women cannot afford to take care of their aging parents, they have no choice.

Bill C-56 eliminates the difference between the families of employees and the self-employed, whereas everyone faces the same responsibilities and problems.

It is a question of equity. For the very first time, self-employed workers in Canada will have access to Employment Insurance and will have the option of contributing to the plan and receiving the same special benefits as those who are employed. This will enable them to meet their family responsibilities without having to make a choice.

CGA-Canada has long advocated on matters that are in the public's interest. Providing greater financial security and income protection to more individuals at this time is in the best interests of all Canadians.

We also believe that it's not just an issue of extending benefits to allow self-employed workers to opt into EI benefits; it's about making measurable improvements to the existing system so that these new entrants are brought into a strengthened EI system. But how do we accomplish this task? How do we improve the system and at the same time ensure that the framework is economically viable and does not place an undue burden on the government, employers, and employees who pay into the system? That is indeed a tall order.

CGA-Canada would be remiss if we did not offer a cautionary note. We understand that the government expects that the plan will be self-financing, although it can offer no guarantees since the program is voluntary and its sustainability depends on the uptake. In effect, this means that a deficit situation may be possible, or one that is less than break even. Some concerns have been expressed that this could put pressure on government finances and/or have a detrimental impact on EI premiums, where rates could increase.

Madame la présidente and members of the committee, thank you for your time this afternoon. We look forward to participating in the question-and-answer period.

[Corinne Pohlmann]

Thank you.

You should have those two documents I'll be walking you through.

On the first slide, you'll see a little bit about CFIB. We represent more than 105,000 independently owned small and medium-sized business owners across Canada, all of whom are self-employed. Our members come from every region of the country and every sector of the economy. While all 105,000 members are technically self-employed, about 12,000 actually have no paid help.

According to the most recent labour force survey, which you'll see on the next slide, from Statistics Canada, there were over 2.7 million self-employed Canadians, which represents about 16% of the current workforce. The numbers actually went up since September, partially offsetting some of the job losses in that same month. In fact, there has been an increase of more than 100,000 self-employed Canadians in the past 12 months, which is an increase of 3.9%. We see this as good news, as many of these Canadians have opted to go out on their own, and it is from these enterprising individuals that new ventures and jobs will be created.

In fact, Canada, if you look at the next slide, has seen significant growth in self-employment over the last couple of decades, especially among those who are incorporated. The chart on slide 4 is drawn from the 2006 census, which shows that while there was an 8.5% increase in employees between 2001 and 2006, there was an 18.6% increase in the incorporated self-employed during the same period.

Who are these people? Today, about two-thirds of self-employed are men, and about one-third are women. Growth in female self-employment grew dramatically during the 1980s and 1990s, far more quickly than among men, but this pace of growth seems to have slowed somewhat during the first half of this decade. It remains healthy, though, with the growth of 8.4% among female self-employed versus 6.5% growth for male self-employed during the same period. This is all outlined in much more detail in the document A Nation of Entrepreneurs.

As you can see on slide 5, the greatest growth of self-employed is among those in the age group 45 to 64 years. This is partly due to the demographic shift in the boomer population, and partly because successful business creation often requires significant technical and management skills, as well as good networks often gained through work experience. As a result, I would suggest that among the special benefits included in Bill C-56 there could be the option to access sickness benefits, which may be a greater attraction to the self-employed, given the age and demographics of this population and the difficulty for some of them to purchase private health care coverage.

So why do people do it? Slide 6 shows the results of a national public opinion poll of 900 small business owners and the reasons why they become self-employed. As you can see, the majority did it to take control of their own decisions. One-third did it for lifestyle choices, to better use their skills and knowledge, or as a path to financial freedom.

These results are not surprising when you couple them with the next slide, which shows that those who are self-employed tend to have the highest levels of job satisfaction. In fact, more than half said they found being self-employed to be very rewarding. Why am I sharing this with you? Because I want to make it clear that the vast majority of people becoming self-employed become self-employed because they want to, not because they have to. Recognizing this is important to understanding how they might approach the idea of accessing EI special benefits on a voluntary basis as proposed in Bill C-56.

We did in fact ask our members earlier this year about the concept of extending EI parental maternity benefits to the self-employed on a voluntary basis. Slide 8 outlines how the question was asked at the time, given how little we knew how about how this proposal would work. While the question focused only on parental maternity benefits, it did address the voluntary aspect of the bill, and therefore I believe it does provide a good indication of what Canada's self-employed may think about Bill C-56.

The next slide shows the results, which are based on more than 10,000 responses to this question. As you can see on the left-hand side, a small majority support the concept, 35% oppose it, 9% are undecided, and 3% have no interest in the issue. When we dissect the data further, we see strong support among female self-employed members, with 67% supporting the concept, and among the smallest business owners, with 60% of those with fewer than five employees also supporting it.

As a result of this member feedback, CFIB supports this bill and recognizes that it fills a gap among the self-employed to access EI special benefits when they choose to do so. However, it is essential that the program remain voluntary and that it meets its objective to be self-financed. These principles are key to CFIB's support of this bill.

It's very important for this program to pay for itself, as the general EI account is about to enter a period of steep premium increases come 2011. I do want to say that the current EI rate freeze, which is in effect until the end of 2010, has been a very welcome policy. It has allowed many business owners to hold onto their people during a difficult economic period. However, it has become clear that the government plans to charge back the two-year EI rate freeze to the EI account, which would require the new Canada Employment Insurance Financing Board to pay back an additional $10 to $13 billion to the government, with interest. The only way they can do that is through increasing EI premiums. As they are limited to annual increases of 15¢ for employees and 21¢ for employers, we foresee maximum premium increases for both employers and employees for many years to come, as illustrated on slide 10.

What makes this whole scenario even more frustrating is that there has been a $57-billion surplus accumulated in the EI account from 1994 to 2008. We would have no objection to the government's requiring the CEIFB to pay for the additional EI costs as a result of the current recession if they would repay the $57 billion surplus first. Instead, the new Canada Employment Insurance Financing Board was provided with $2 billion as an initial reserve that, given the scenario I just described, will be easily wiped out in the first year.

We strongly believe that the federal government has a moral obligation to pay back the surplus accumulated from employers and employees. To do this, the government should absorb additional costs and maintain a premium rate freeze until the $57 billion has been paid back over time.

Given this scenario, it would be unacceptable to add even more costs to the Canada Employment Insurance Financing Board by subsidizing Bill C-56 through the general EI account. Nor would it be acceptable for the self-employed to wind up subsidizing the general EI account, given the problems it currently faces. As a result, CFIB is calling for strong metrics and regular monitoring of the voluntary EI special benefits program for the self-employed, so that this does not happen. It should be accounted for separately from the general EI account, and premiums for the self-employed should be adjusted accordingly so that it remains self-financed.

In conclusion, the CFIB supports Bill C-56 as long as it remains voluntary and self-financed. There should be strong metrics attached to the program. This means that there should be regular reviews of its costs and revenues and that premiums should be adjusted accordingly, so as not to have it subsidizing the larger EI account and vice versa. We recommend that the bill be analyzed in the context of the skyrocketing EI rates that are coming in 2011.

Thank you.

[The Vice-Chair, Liberal, Raymonde Folco]

Welcome to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. This is Meeting No. 58 on Tuesday, November 24. On the agenda, in accordance with the Order of Reference of Thursday, November 5, 2009, is the study of Bill C-56, An Act to amend the Employment Insurance Act and to make consequential amendments to other Acts.

Before hearing our witnesses, however, I would like to extend a very warm welcome to the students from UQAM, where I taught courses a very long time ago.

Welcome to the House of Commons.

I would also like to commend our colleague, Tony Martin, for his presentation this morning and the motion that was agreed to by the other members.

Next, before we really start, let me ask you about a bit of business that we have to do. It won't take long. It has to do with the operational budget request. Actually, it concerns the people who are in front of us. They're here already, but we have to pay for their tickets.

I'm tabling the following motion before this committee:

That the proposed budget in the amount of $7,600 for Bill C-56, an act to amend the Employment Insurance Act and to make consequential amendments to other acts, be adopted.

The proposed budget is $7,600.

Is there any discussion?

Mr. Savage.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

But the chief actuary has given assurance to your numbers that this will at most be a $70-million cost to the EI fund. The reason it's important is that we have people who pay EI and have no choice but to do so—employers and employees.

There's a $2 billion fund in this new EI financing board, which is not a lot. The Canadian council of actuaries told us last year that it should be $10 billion to $15 billion. So there's already a draw on this and it seems inevitable that there are going to be rate increases for employers and employees as a result of Bill C-50. It appears there'll be further rate increases required because of Bill C-56, if there's a cost to this program of $70 million.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Thank you.

Our Conservative government knows that families are the foundation of this great country. And now self-employed Canadians will no longer have to choose between their family and work responsibilities. Like all workers, self-employed Canadians facing important life events need peace of mind regarding their financial security. This bill provides them with just that.

Madam Chair, let me briefly explain how the system would work.

Overall, special benefits for the self-employed would mirror those available to salaried employees under the EI system. Under the proposed legislation, self-employed Canadians who opt into the program would pay the same EI premium rate as salaried employees. For 2010, that premium rate would be $1.73 per $100 of insurable earnings. They would not be required to pay the employer portion of premiums as they would not have access to EI regular benefits. They would face similar benefit duration periods, income replacement rates, maximum insurable earnings, treatment of earnings, and waiting periods.

However, there would be some differences. Those who choose to take advantage of special benefits would be required to opt into the program at least one year prior to claiming benefits. They would also be responsible for making premium payments for the tax year in which they apply to the program. For example, someone registering in May 2010 would be able to claim benefits on May 1, 2011.

However, we are providing some room for the first year. Those who apply before April 1, 2010, would be able to collect benefits as early as January 1, 2011.

To access EI special benefits, self-employed individuals would need to earn a minimum of $6,000 during the preceding calendar year. As the self-employed do not report hours of work, this number has been arrived at by converting 600 hours on an earnings basis using a representative minimum wage of $10 an hour, since 600 hours is the number of hours required by salaried workers to access existing EI special benefits.

It's important to note that the self-employed could opt out of the program as long as they've never claimed benefits. If they've claimed benefits, however, they would need to continue to contribute on self-employed earnings for as long as they're self-employed. This treats the self-employed in the same way that the regular EI program treats paid employees. We think this is fair.

In the province of Quebec, our Conservative government is offering the self-employed that ability to take advantage of the sickness and compassionate care benefits for the first time in history. Currently, the only choice Quebeckers have if they need to take care of a gravely ill relative, or if they fall ill themselves, is private insurance which can be very expensive.

Our government is offering peace of mind with a more affordable option. This bill takes into account that, in Quebec, self-employed residents already have access to maternity and parental benefits through the Quebec Parental Insurance Plan.

Rates in Quebec have been adjusted to take into account the provincial maternity and parental benefit plan. Self-employed workers in Quebec who choose to take advantage of the program would pay the same EI premiums as other employees in the province. The 2010 EI premium rate in Quebec will be $1.36 per $100 of insurable earnings.

I want to reinforce that the decision to opt into the EI program is entirely voluntary. There is no obligation for the self-employed to take advantage of these new benefits.

This bill is yet another example of how our government is providing support and choice to Canadian families. Our government believes that self-employed Canadians should not have to choose between their families and their business responsibilities, and this bill will have a significant impact on their lives and their families.

Don't just take it from me: the response to this bill has been overwhelmingly positive. The Grain Growers of Canada, the Canadian Federation of Independent Business, the Coalition of BC Businesses, the Certified General Accountants Association of Canada, the Alliance of Canadian Cinema, Television and Radio Artists, and the Independent Contractors and Businesses Association are just some examples of organizations that represent self-employed Canadians and that support this important bill.

This is one of the most significant enhancements to the EI program in a decade. It is part of a series of timely enhancements that we've already made to ensure that the employment insurance program remains responsive to the needs of Canadians.

Our economic action plan is geared towards helping Canadian workers and their families get through this global economic downturn. We're providing a timely and unprecedented investment of $8.3 billion to strengthen EI benefits and enhance the availability of training, including outside EI.

In closing, Madam Chair, I'd like to thank the committee for its work on our last bill, Bill C-50, which recently passed. It provides between five and 20 additional weeks of EI to long-tenured workers who've worked hard and paid premiums for years, but who now need a hand up.

I urge all members of this committee to support self-employed Canadians and their families by supporting Bill C-56.

I'd now be pleased to answer your questions. Merci.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Thank you very much, Madam Chair.

It's with a great deal of pleasure that I appear today to discuss our government's latest initiative to help Canadian workers and their families, Bill C-56, the Fairness for the Self-Employed Act.

Prime Minister Harper committed in 2008 to extend maternity and parental benefits to the self-employed. He said then:

Self-employed Canadians--and those who one day hope to be--shouldn't have to choose between starting a family and starting a business because of government policy. They should be able to pursue their dreams--both as entrepreneurs and as parents.

After additional consultations and listening directly to self-employed Canadians, we recognize the need to go even further and extend access to all EI special benefits.

Currently, self-employed Canadians have little or no income protection to cope with major life events such as the birth or adoption of a child, a parent or a child falling gravely ill, or even falling ill themselves. The Fairness For the Self-Employed Act will provide all EI special benefits--maternity, parental, sickness, and compassionate care--to self-employed Canadians on a voluntary basis. We've not just met our commitment; we've exceeded it.

Public research reinforces that the majority of self-employed Canadians want access to EI special benefits. In fact, just the other week, I received a petition from almost 1,000 Canadians asking for access to EI special benefits.

Self-employed Canadians asked for this bill, and for the first time in Canadian history, we are giving them just that. It's the fair and right thing to do and it's also good family policy.

Self-employed Canadians total 2.6 million in Canada and form 15% of the total labour market, and this number is growing. They're an integral part of our economy and are key contributors to innovation, investment, and job creation. They are playing a vital role in our continued productivity and in our economic recovery.

The self-employed are a very diverse group. They include farmers, tradespeople, those who run home businesses, lawyers, architects, and people who run our corner stores, to name just a few.

Increasingly, the self-employed are women. The number of enterprises led by women is expected to top one million next year.

Access to these benefits is especially important for them: one-third of self-employed women in Canada are of child-bearing age. This bill will mean that women will no longer have to delay or forgo having children altogether for fear it would be impossible to handle both responsibilities at the same time. It will mean that self-employed Canadians will no longer have to miss their babies' first words or first steps.

And self-employed Canadians will now have the option to take care of an elderly parent or a child who has fallen gravely ill. Everyone in this room knows the importance of spending the last few weeks with a loved one and being able to care for them.

[Nicole Demers, Bloc, Laval, QC]

With your permission, Madam Chair, I'd like to point out that Bill C-56 concerns women who are self-employed, if I'm not mistaken. However, we have discussed the situation of these women and we came to the unanimous conclusion, I believe, that they should benefit from programs, maternity leave, employment insurance when they are sick, and so forth. This bill specifically addresses women in that situation. I think that this would be most welcome and that it would be beneficial.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

It seems to me we'd have a better idea of that on Thursday. I don't think we knew that we'd be doing Bill C-56 as quickly as we are. I wasn't aware the minister was even confirmed for Thursday until yesterday. I think we should see where we are, make sure we get the witnesses in over the next couple of days, and make a decision on that on Thursday.

[Nicole Demers, Bloc, Laval, QC]

Madam Chair, I'd like to propose a friendly amendment. If I understood correctly, Ms. Neville would like to have the committee hold a joint special session with the Standing Committee on Human Resources, but without it being part of our usual calendar. The objective of this meeting would be to learn about the provisions of Bill C-56 that could have an impact on the lives of women in terms of employment insurance. Did I understand that correctly?

[The Vice-Chair, Liberal, Raymonde Folco]

I will call the question.

This is what I think is going to happen.

I am going to call the question. If the vote for Mr. Savage's motion is not unanimous and if the motion is defeated, there will then be an informal meeting between Mr. Savage, Mr. Komarnicki and anyone else who wants to attend to discuss how we can study Bill C-56 unofficially by inviting the members of the Standing Committee on the Status of Women.

I call the question on Mr. Savage's motion.

(Motion negatived).

The next step is for those two gentlemen--and anyone else who wants to join us, as I take it the meeting is an open one--to get together after 5:30 and make some kind of proposition so that we can move forward.

It's my feeling that everybody wants to have members from both committees present, but we don't quite know how, so we'll let them thrash it out between the two of them and come back to us with a suggestion.

We have 20 minutes left. I'd like to discuss how we are going to tackle the three or possibly four days that remain to us for Bill C-56. I've been away for a little while, so I'm not altogether sure. I'd like to hear from the clerk exactly where we are and what he suggests to us.

[The Vice-Chair (Ms. Candice Hoeppner), Conservative, Candice Bergen]

Okay. We'll wait for everyone to get a copy.

The motion reads:

That, pursuant to Standing Order 108(2), the committee holds a joint meeting with the Standing Committee of Human Resources and Skills and Social Development and the Status of Persons with Disabilities to study the subject matter of Bill C-56, An Act to amend the Employment Insurance Act and to make consequential amendments to other Acts.

[The Vice-Chair, Liberal, Raymonde Folco]

Before we put the question, I have two things. One, I'm going to give Mr. Vellacott the chance to speak, and two—this is only a suggestion, and I know I have a motion in front of me—I would like to ask Mr. Savage to unofficially come back to us before Thursday with a newer proposal that takes into account what has happened at the status of women committee and, given the discussion that has taken place around this table, something that is more palatable to both sides of the table so that we can move forward.

I am very worried about the fact that we have three or four meetings coming up for Bill C-56, that we all want Bill C-56 to be tabled by November 27, and we have a very short timeline on this. At the same time, we have a motion that is interesting and important, so I don't want to take time away from any future meetings to once again discuss this motion for a length of time, because it's self-defeating. We can discuss whether we want the status of women committee with us, but then if we have no time to discuss the issue, what is the point? Do you see what I mean?

I'm going to give Mr. Vellacott the floor. I would rather not go to a vote. I would rather that we ask unofficially Mr. Savage to come back to us with a new and revised motion or suggestion.

Mr. Vellacott.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

We've agreed to meet next week and we can add more time if we need to. We've agreed to meet; we haven't agreed on the witnesses we're going to hear. We haven't indicated, and it hasn't been indicated to me, that this would take longer to do.

When I came up with the motion, we didn't know that Bill C-56 was going to be jammed through the committee like a sausage. We had assumed that there would be normal hearings and that some time would be taken. We're now trying to do our best to accommodate the needs of the government so that it gets into place before the end of the year.

I don't think there's anything sinister in this motion. I don't know if you're afraid of women; I'm not sure what the reason is that you don't want to do it. It's not going to take any more time and it's not going to cost any money. However, Madam Chair, if it works with the government, I am prepared to hold on to this and perhaps chat with Ed to see if we can come to an agreement.

I also want to hear what discussion has happened at the status of women committee to indicate their view of this. Perhaps we can work this out in a way that makes us all happy away from this table.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

If we take out the word “joint“, it does not mean the same thing at all because, at the moment, each party can replace one of its members. We can do that without passing a motion. So that aspect is removed.

I like Mr. Savage's motion because I think it would be interesting to have a working session using the experience of the Standing Committee on the Status of Women. Through their work, members of that committee have a perspective that we perhaps would not see when we come to study Bill C-56. Let us hold a working session like that, with all of us. The problem is not deciding who will be in the chair. That is simple; we could say that it would be the chair of the Standing Committee on the Status of Women for an hour and our chair for the other hour. It could be like that. That is simple. We have to decide whether it would be useful, and I think it would.

Second, can it be done? Again, I think it can. Do we have to do it in our present situation? I am less sure about that. We could perhaps decide that one or two representatives of each party on the Standing Committee on the Status of Women could come to meet with us, but I am not ruling out everyone being there. But I think that we have to find out the keys to their understanding of Bill C-56.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

I'll answer that.

If we're prepared to have all kinds of meetings next week for Bill C-56, I don't think anybody would object to 10 minutes to have a vote.