Human Resources Committee on Nov. 3rd, 2009

[Andrew Jackson]

As you know, the government did freeze the premium rate for 2009 and 2010 as part of the economic stimulus package, and we think appropriately so. They are paying for the cost of the extra five weeks of the benefits out of general revenues. But the EI fund is projected to run a deficit of about $10 billion over this fiscal year and the next fiscal year, and you're right, premiums will have to go up in 2011 to begin to address that accumulated deficit. One could imagine there will probably be several years when premiums will go up by 15% a year, if in fact it's not set at a higher rate.

I find it a bit curious that we ignore the fact that we had an accumulated surplus of $57 billion going into the deficit, which doesn't count, but the $10 billion incurred in the recession does count and has to be repaid. We'd hoped that the government, or the next government, or any government would reconsider that formula.

It may be that we're in a very weak recovery, with 2011 still with very high unemployment, so we've got a year and a bit to think about it, at least, before that happens.

[The Chair, Conservative, Dean Allison]

Thank you.

Monsieur Godin, the floor is yours for seven minutes.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Thank you, Mr. Chair.

I would like to welcome the witnesses and to commend Mrs. Hughes for tabling this bill respecting the 360-hour threshold.

I would like to continue along the same lines as Mr. Lessard. The government has talked about possibly increasing contributions in 2011. I think you already know how I feel about that, given my statements in the House each time the matter is raised. I have talked about the $57 billion that has been stolen from the EI fund. There is no justification for automatically increasing contributions to offset a shortfall in the EI account. The government has made no secret of the fact that it has taken money from the EI account and does not plan to return the funds.

Unless I'm mistaken, according to the Employment Insurance Act, the government should be paying interest on the money it took. We're not just talking about $57 billion, but about the interest on this amount.

Do you agree with me?

[Andrew Jackson]

My understanding is that the EI account still exists. It's integrated within the public accounts of Canada and there is interest credited to it. So it's true in that sense.

We know that most of the $57 billion in surplus was accumulated in the period from 1995 to 2002. To my mind, the best way would be to restate the public debt of Canada to show that it wasn't really reduced as shown in the overall government balance over that period, to free up the funds that way.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Yes. The previous government claimed to have reduced the debt by $92 billion, but it failed to mention that it took $57 billion out of the EI fund. That explains why there was a surplus of only $30 billion. That's precisely what happened.

With respect to the bill that would bring in a 360-hour threshold, several business representatives have argued that if the number of hours needed to qualify was lowered, people would be more inclined to opt for collecting EI, rather than to work. Even the government that preceded the Liberals held that view. It's not the first time that we've heard this. I'd like to hear from the mayor of Elliot Lake and I'd like to know whether in his opinion, his residents would prefer to collect EI instead of getting up and going to work every morning.

[Rick Hamilton]

Thank you for the question.

Quite frankly, I would be insulted with that comment if it were made to me. I was on EI and I went back to work after the mines closed.

EI is the kind of thing that's there for those who need it. I worked for 15 years without any apparent problems. I always had a job. But they closed the mine on me. Unfortunately, I was in difficult straits to find another job, and it took me some time, but I did. So that's what it's there for.

I find it quite appalling that somebody would suggest that someone like me, who is a good, hard-working person, is just looking for a handout so as not to work. I find that very difficult, because there are hard-working people, as I am, and I prefer to work; I don't prefer to be sitting on EI benefits or any other benefits.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

I would like to say something.

I lived in Elliot Lake for 27 years. My husband was laid off. Collecting EI was not our choice, but at least it was an available option until he could find another job. I find it rather surprising that people who need benefits are being told that there was money in the fund, but that there is no longer enough money because some of the funds were diverted for other purposes. These funds are a form of insurance. We need to think about that long and hard. A worker who loses his job needs to be able to access EI. That worker shouldn't have to accumulate 600 or 700 hours of employment in order to qualify.

I know of many people in my riding who worked in the forestry industry and who lost their job as a result of the economic crisis.

I guess you could call it the ripple effect.

In communities like Manitouwadge, Wawa and Smooth Rock Falls, people are at a loss as to what to do. They do not know where to turn. They need EI to continue building and reshaping their community.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

I'd like to come back to the 360-hour threshold, because it's important, to my way of thinking.

Ms. Byers, how does the CLC feel about the Liberals' position that the 360-hour threshold should apply only for the duration of the economic crisis? It's not a matter of politics, because this issue is being debated publicly. I for one believe that when workers lose their job, they are left to deal with a year-round economic crisis. Does the CLC side with the Liberals on this issue?

[Barbara Byers]

No, I think we've been very clear that uniform access should be a permanent measure and it should be for all points across the country.

When the change was made in the 1990s to, first of all, require employers whose employees worked more than 15 hours a week to pay into EI, because you'll recall that before that they didn't, we actually supported the change from weeks to hours because we thought this would actually open the door for a lot of people, for the people I talked about, women and young workers, who had periods of unemployment. Maybe the unemployment benefit wouldn't be huge, but at least they would get some small benefit.

What we didn't count on was that the hours threshold was going to be so high that people wouldn't get access. If you say we have a $57 billion surplus, that was created in part by people who have paid into a system for a long time now but have no hope of ever collecting the way the system is. Essentially the rules have to change to benefit the people who are actually paying into the system.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Godin and Ms. Byers.

I'll move to Mr. Komarnicki for seven minutes.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Thank you, Mr. Chair.

I certainly hear Mr. Hamilton. A mayor of any community that loses any jobs finds it devastating, not to say the huge amount that you experienced of 4,500. You mentioned that re-qualifying for EI was one of the aspects, but there were other stimuli injected. I'm not sure whether EI is the right mechanism. There may be programs to deal with mass layoffs like you experienced in your community.

This particular bill, as I understand it, shortens the upfront qualifying period, but it doesn't do anything in terms of extending the back end of the benefit. This bill may not have worked for your situation, in any event.

I notice there was a discussion about the $50 billion, plus or minus, that was in the EI account. As I recollect, my understanding is that back in the early 1990s, when unemployment was running at about 8.7%, the then Liberal government stripped a lot of benefits and increased the premiums, which resulted in that accumulation of dollars. It went into general revenues and was used for other projects.

Coming back to that variable entrance requirement that varied depending on hours worked--

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

A point of order.

I think I heard Mr. Komarnicki say that the premiums were increased. The premiums were decreased for 12 years in a row.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

I may stand to be corrected on that point, but the point of the matter was that benefits were reduced substantively, and that's why the accumulation was built. The benefits were not relevant to what was paid in, but that's not the main point.

The main point is that at this time they established the variable entrance requirement based on the unemployment rates in the various regions. As I understand Bill C-280, it would eliminate the existing regionally differentiated minimum qualification requirement, and you're talking about the 360. But it would retain the act's current benefit entitlement structure, which provides claimants residing in high unemployment regions with more weeks of benefits for a given number of hours of insurable employment.

What I'm saying is that you want to take away the regional differences on unemployment up front. Once you've qualified for the benefits, you would still retain the fact that those with the high unemployment rate would receive more benefits, or benefits for longer.

Am I correct in that or not? Perhaps Ms. Hughes can answer that.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

There are some technicalities. I'll try to explain some of it from my end, and I'm sure the Canadian Labour Congress will actually--

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Is it correct that the length of benefits would vary according to the unemployment rate in the different regions? Is that correct or not in this bill?

[Andrew Jackson]

I guess under this bill people would come in, but they would come into the grid. Yes, you're right, on the basis of this bill, duration would still vary with the local unemployment rate.

If I could just correct you on one point, in terms of the variable entrance requirement, that existed before we moved from weeks to hours. It was changed from weeks to hours, but we've long had a system in Canada of a regional unemployment rate determined in both entrance and duration.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Let's bring it to this bill. What this bill wants to do is eliminate that variableness in the entry side, but it's not eliminating it on the length of benefit side. If I am correct—and you seem to say I am—why is that? Can you explain that to me?

[Andrew Jackson]

I guess we made progress on different fronts.

[Barbara Byers]

Our position is that people, no matter where they live, should have access to up to 50 weeks of benefits. Quite clearly that has been our position.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

But in this bill you're still maintaining the length of benefits based on the unemployment rate as it is per region. Is that correct?

[Barbara Byers]

It would appear that the bill does.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

I wonder what the explanation for that is.

[Barbara Byers]

I just want to make one comment. We can sit in this room talking about what took place today, yesterday, 13 years ago, 15 years ago, or whatever, or what will take place tomorrow. There are 200,000 we've had in here in a year who we can say would be brought into the system, but quite frankly, right now they're being kept out of the system. It's a system that they and their employers are paying EI dollars into and they don't have any access.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Let's not get into the past. I'd still like an answer to the present question.

How is it that you've changed half the formula but not the other half? Why do you still want to rely in this bill on the different unemployment rates in the different regions with respect to length of benefits?

[Barbara Byers]

We wouldn't if we were drafting the bill, but nobody asked us to draft it.