Finance Committee on May 9th, 2017

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for being here.

I would like to speak quickly about salary adjustments based on the average weekly earnings index for all economic activities. Can you tell us what the percentage of that index has been in the last few years? What does that mean? Is it 0.1% or 2.3%? How many does this index revolve around?

[Anna Dekker]

The most recent indexation was on April 1, 2017, and that was 0.4%. The salaries would have increased by 0.4%.

I do have the numbers for recent years. For example, in 2016 it was 1.8%. Going back, it was 2.6%, 1.8%, 2.5%, 2.5%, and 3.6%. It has ranged in the last several years, from a high of 3.9% to a low of 0.4%, which was the most recent.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I know it's in the Judges Act and that it may not be in Bill C-44. But do you use this index and not another?

[Anna Dekker]

The IAI, the industrial aggregate index, has been in place since 1981. The issue was that in order to ensure independence and financial security, there had to be some kind of way to guard against erosion of salaries on the basis of inflation. The IAI was chosen because at the time it was the same one that MPs' salaries were indexed against.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

So you're saying that the decision to use this index instead of the consumer price index, which is more common, was made to protect independence.

[Anna Dekker]

I can't speak to what was debated at the time, but they're protecting against erosion. That would have been one option, I'm sure.

Maybe Adair has greater historical memory of this.

[Adair Crosby]

Unfortunately, I do.

The IAI was picked at the time because it actually reflected wages. It was an attempt to provide an indicator that roughly approximated increases in wage levels. As this index is based on salary, it was simple as that.

At the most recent commission, the government did attempt to assert that CPI would be a more appropriate guard against inflation than the IAI. The commission recommended against that, and recommended that IAI be preserved. There has been a rough relationship over a number of years between the IAI and the CPI. Some years it's higher, some years it's lower, but if you look at the graph over time, it's roughly approximate. This year it was a loss, for sure. The CPI exceeded the IAI.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you. That answers my question.

[The Chair, Liberal, Wayne Easter]

Okay.

Thank you very much for your presentation, Ms. Dekker and Ms. Crosby. You're released.

We'll turn to part 4, division 11, “Support for Families: Benefits and Leaves”.

From Economic and Social Development Canada, we have Ms. Astravas, who's the director, special benefits, employment insurance policy; Mr. Brown, who's the executive director, employment insurance policy; and Ms. Hill, who's senior director, strategic policy and legislative reform, labour program.

Mr. Brown, the floor is yours.

[Andrew Brown, Executive Director, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development]

Thank you, Chair, for the introduction.

I'll get right into my opening remarks.

I will address the proposed amendments to the Employment Insurance Act to provide more flexibility for parents and more inclusive benefits for caregivers.

Employment insurance is Canada's largest labour market program. The program provides temporary income support when workers lose their job through no fault of their own, known as regular benefits, and in specific situations that may occur over the course of one's working career, known as EI special benefits.

EI special benefits play an important role when helping individuals balance work-life responsibilities. They include maternity, parental, and caregiving benefits as well as sickness benefits. First introduced in 1971, the special benefits have evolved and expanded over time. In 2015-16, over 379,000 Canadians received maternity, parental, and caregiving benefits representing a total of $3.8 billion.

Budget 2017 introduces a number of changes to provide additional flexibility and support for families, which I'll briefly outline.

First, the bill introduces a new 15-week EI caregiving benefit. Eligible caregivers would be family members who are away from work to provide care for a critically ill adult, such as someone recovering from a serious accident or illness. In the unfortunate event that a family member's condition gets worse and deteriorates to an end-of-life situation, caregivers would be able to combine this new benefit with the existing compassionate care benefit.

Second, the bill provides more flexibility for families by allowing any family member who is eligible for EI—as opposed to only parents—to access the existing 35 weeks of EI support to provide care for a critically ill child.

Third, in order to enhance access to all EI caregiving benefits, medical doctors and nurse practitioners would be allowed to issue the required medical certificates. This measure would enhance access for Canadians, especially those living in rural or remote regions. These measures related to caregiving are expected to benefit up to 24,000 families annually.

The bill also introduces changes to EI parental and maternity benefits in order to offer both biological and adoptive parents more choice and flexibility according to their family needs.

Fourth, the bill proposes new flexibility for parents welcoming a newborn or a newly adopted child. Parents will have a choice to receive standard-duration parental benefits as are currently provided, up to 35 weeks paid at 55% of average weekly insurable income over a 12-month period, or to choose the extended-duration parental benefits over 18 months. Those would be paid for up to 61 weeks at a lower benefit rate of 33%.

Fifth, women would also have more flexibility to access EI maternity benefits as early as 12 weeks before the expected week of birth, as opposed to the current eight weeks prior to the expected week of birth. Providing earlier access to maternity benefits would allow pregnant workers to better take into account their particular health and workplace circumstances.

Taken together, these changes will have a positive impact on women in particular and offer them more choices. Indeed, in 2015, among recent mothers with insurable employment, 87% received maternity or parental benefits across Canada.

The bill ensures that the same changes that apply to insured workers would also apply to self-employed workers who voluntarily participate in the EI program by paying premiums.

The bill also adapts existing EI rules to clarify when and how EI special benefits can be combined together and over what period of time.

The proposed changes will have no direct impact on Quebec residents because the province currently offers maternity and adoption benefits and parental benefits through the Quebec parental insurance plan.

The proposed amendments for more flexible EI parental and more inclusive EI caregiving benefits represent an incremental cost of $886 million over five years and $205 million per year thereafter.

As per the Employment Insurance Act, these costs will be charged to the EI operating account and recovered through EI premiums. All of these amendments would come into effect on the same day, later in the 2017-18 fiscal year. The exact timing is to be confirmed and the date would be fixed by an order of the Governor in Council.

I will now give the floor to my colleague, Margaret Hill, who will speak to you about the changes to the Canada Labour Code.

[Margaret Hill, Senior Director, Strategic Policy and Legislative Reform, Department of Employment and Social Development]

Thanks, Andrew.

I'll speak briefly to the amendments proposed in the bill, to part III of the Canada Labour Code. Part III of the code, as you may know, establishes minimum working conditions in federally regulated sectors such as hours of work, annual vacations, and statutory leaves. Federally regulated sectors include about 6% of all Canadian employees in industries such as banking, transportation, federal crown corporations, and certain activities on first nations reserves. Part III does not apply to the federal public service.

In general, when amendments are made to the EI special benefits, corresponding amendments are made to leaves under the Canada Labour Code. This is done to ensure that federally regulated employees have the right to take unpaid leave while they access the EI special benefits, without fear of losing their jobs.

Amendments are therefore being proposed in the bill to ensure that existing leave provisions under part III, specifically those related to maternity leave, parental leave, compassionate care leave, and leave related to critical illness are fully aligned with the proposed changes to the EI special benefits.

The overall cost to the labour program to implement the proposed changes to the code is expected to be modest, about $400,000. This would cover things such as training, labour program inspectors, the production of educational materials for employers and employees, the development of supporting regulations, and the monitoring of the impacts of the changes.

Costs to employees are expected to be minimal and will depend on the duration of the leaves that are taken and whether employees need to pay overtime or hire replacement workers. Stakeholder reaction is expected to be very minimal to the changes to the code.

I'd be pleased to address any questions that you have.

[The Vice-Chair, Conservative, Ron Liepert]

Ms. O'Connell.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

I wanted to first ask about the definition of the term “family member” in regard to compassionate care benefits. How will that be determined? How is “family member” defined in these changes?

[Rutha Astravas, Director, Special Benefits, Employment Insurance Policy, Department of Employment and Social Development]

When we talk about a family member in the EI Act, it's currently limited to the immediate family as well as extended family members. It is a long list including grandparents, aunts, and uncles.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Could it include a niece or nephew, if we're talking about a younger person perhaps taking care of an elderly member of their family?

[Rutha Astravas]

If the person is an EI-eligible person and meets the definition, yes, they could be taking care of an older family member.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

How would somebody know, though? Would there be an application process to determine whether or not they're eligible?

[Rutha Astravas]

In terms of EI eligibility, to qualify for all these special benefits—maternity, parental, compassionate care, sickness—you need to have a minimum of 600 hours in the past year, or you could be a self-employed person who has voluntarily opted into the EI program with minimum income. If you did not have these hours and you were to apply, your claim would be rejected. If you had the hours, and you were to apply for the particular benefit and meet other requirements, then yes, you would be eligible.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

In relation to the maternity leave component, two issues have recently come up—at least in my riding, and I suspect I'm not alone—regarding the change through this legislation of allowing up to 12 weeks for maternity leave prior to giving birth. However, some of the concerns we hear about are around the eligibility. I'm assuming that those other conditions have not changed, or have not loosened. I'll give my two specific examples.

A resident who is pregnant goes on maternity leave. When she is set to return to work, she's laid off, but because she's been off on maternity leave, she hasn't had her 52 weeks prior to being laid off. Therefore, she's ineligible for EI, yet her male colleagues who were also laid off are eligible.

The other situation is where a person was pregnant, took her maternity leave, returned to work, quickly got pregnant again, and was shy by a few hours of being able to qualify once again. No accommodation could be made with her employer to make up those hours in order to be eligible.

Does anything in this act start to address these flexibility issues around benefits when someone is either on or off maternity leave and these types of situations need to kick in, for example someone being laid off or needing to access maternity leave benefits once again?

[Andrew Brown]

As you may know, the Employment Insurance Act is a very complex piece of legislation.

Now, in terms of the changes that are being proposed in budget 2017, there is specifically the new caregiving benefit, as well as flexibility with respect to the maternity and parental benefit. There are no changes specifically aimed at increasing eligibility for EI in these provisions, or to address the situation you have identified there, of a person who has completed one EI claim and who subsequently experiences another insurable event—whether it is job loss, maternity, or a compassionate care situation—and is unable to requalify. If they are short hours, this doesn't do anything for them.

Similarly, if it is a woman who has been off on maternity and parental, and she returns to work only to lose her job, this doesn't address that situation.

There are some adaptations we've made to the rules for combining EI benefits, which provide flexibility so that if somebody has recently lost their job and would still like to take maternity and parental, they are able to access the longer duration option. It does not increase the total number of benefits they would have access to.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

Knowing, Mr. Chair, that we are sticking to this bill, I understand that there is another committee—I think the human resources committee is looking at this overall approach—so I will leave follow-up questions should that ever come forward.

Thank you.

[The Vice-Chair, Conservative, Ron Liepert]

Good. Thank you very much.

Before we move to Mr. Dusseault, technically our meeting was to adjourn at 5:30. I think we have general agreement that we will go until about five or 10 minutes before the bells, so to approximately 6:15.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

I think an important issue has been raised here. We say that currently six out of 10 Canadian workers are not eligible for EI. This is currently one of the fundamental problems of the program. The subject of today's discussion, however, concerns changes to certain programs under the Employment Insurance Act. It's not necessarily about eligibility, as you said earlier.

My question is about some changes to parental leave. You said that people could now choose between two types of leave, regular leave or extended leave.

I would like to know, for the benefit of the Canadians listening to us, when parents must make their choices and if the choice is reversible.

For example, if while on leave, the parent finds out that he or she is in good health and wants to return to work, can he or she be unable to do so because the choice is irreversible?

[Rutha Astravas]

Thank you for your question.

Concerning the choice of parental leave, particularly parental benefits, it is done at the beginning when applying for benefits. Parents must choose one or the other option. Both must choose the same option to qualify for the same total number of weeks. The choice is irreversible once the first dollar of parental benefits is paid. However, if parental benefits have not started, parents can call Service Canada to change their choice.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Once a dollar is paid, they can no longer change their minds. Is that it?