Human Resources Committee on Nov. 19th, 2009

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

Are you talking about regular benefits?

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

Yes.

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

We decided to offer special benefits, such as maternity and parental benefits.

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

My question is why you chose to not include regular benefits as well.

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

We did not promise to do that. Moreover, we realized that it is almost impossible to determine when a self-employed worker has laid himself off. It's quite difficult because there are people who work part-time or even people who do not work hard enough to continue to succeed. How can we determine, objectively speaking, that the person is no longer employed, that he or she is unemployed?

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

I see, the difficulty is at that level. I understand your answer.

To continue in the same vein as my predecessor, I understand that there were a certain number of calculations done with the Chief Actuary. Through these calculations, were you able to isolate the cost of each of these programs, of these coverages: compassionate care leave, long-term sick leave, and parental leave? Was this broken down and were you able to identify the cost of each one? If yes, what were they?

[Frank Vermaeten]

Thank you for your question. I will answer in English.

To some degree, we can isolate this into two separate programs. But for the rest of Canada you have to consider that people are potentially benefiting from the maternity/parental benefits and the sickness and compassionate benefits. You never know how that person will benefit or what kind of claim they'll make. In the case of Quebec, of course, they'll only have the sickness and compassionate available because they already have, through QPIP, the parental and maternity care.

So you cannot completely separate the two, but you can go through a conceptual exercise to say there'll be one group that primarily will want to benefit from this and the other will primarily benefit from that. Basically that's how we've done most of our calculations in terms of how we do the simulation.

We do have one group that is going to be primarily interested in the maternity/parental benefits. We estimate how many people we think will join for that and we have a very good sense of how many claims are going to be made. I think those numbers are driven primarily from the QPIP model already, so we've a very good sense of that.

So we know how many people will join, how many claims will be made, and the premiums. Then we have a second calculation for those people who will join primarily for the sickness and compassionate care benefits. Of course, that's their primary motivation, but they can benefit from all special benefits.

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

If you can't estimate the cost of the new program for self-employed workers, you can nevertheless identify the real cost for each of these coverages currently.

I believe I understood that 30% of the cost of employment insurance is currently dedicated to these three types of coverage: compassionate care leave, sick leave, and parental leave. Can these three be broken down currently? In other words, how much do compassionate care leave, sickness leave, and parental leave cost at this time?

[Frank Vermaeten]

We can certainly use the current program as an indicator of what costs might be, but you have to remember that this is a different system, to some extent. The biggest driver here is—

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

That doesn't answer my question. I want to know the costs at this time, and not the extrapolation, since you say that you cannot extrapolate. How is this 30% allocated? What part is allocated to compassionate leave, sick leave and parental leave respectively? You certainly must have data. My idea is not to ask for extrapolation. Afterwards, we can have a look at how this is dealt with.

[Frank Vermaeten]

I think, if I understand your question correctly, that in the present case we can certainly look at the 2008 report, the monitoring and assessment report. We can look at benefits paid and we can see exactly how many benefits were paid for sickness, compassion, and maternity and parental. We can certainly decide what share of total costs went towards that and what share exactly went to regular benefits.

So there is no problem there. Where we do need to make the connection, as I was talking about earlier, is what premiums went to what? When somebody pays the current rate of $1.73, we don't say, okay, this share is going for that and this share is going for that. When you're making projections on the other system, you can't earmark one piece for this and one for that.

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

I want us to understand each other, Madam Chair.

[The Vice-Chair, Liberal, Raymonde Folco]

I wonder if we could get back to this question during the second round.

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

I still haven't obtained an answer to my question. And yet I was told that my question was understood and that it was clear.

[The Vice-Chair, Liberal, Raymonde Folco]

Mr. Lessard, I have to interrupt you because your time is up.

I now give the floor to Mr. Martin.

Mr. Martin, you have the floor.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Thank you very much, Chair.

Thank you for being here today.

We are indicating at the outset that as a caucus we'll support this. However, for us it's just a start. In fact, just to put it in context, it's something we've been talking about for quite some time.

I don't know if you're aware or not, but my colleague from Bathurst, Mr. Godin, tabled a report in the House of Commons in 1999. He spoke about the changing labour market out there at that time, and talked about more and more people becoming self-employed. He suggested at that time that the government look at finding ways to have so-called self-employed workers contribute to and benefit from the EI system; of course, then it was the UI system.

This is the report that he tabled. I think it would be worth looking at and understanding some of the dynamic behind his thinking.

As well, when I was a member of a provincial parliament, recognizing the fragility of being a self-employed small business person, and looking at franchising at that time, I led a charge to actually regulate that industry so that they would have something to hang onto should they be dealt with unfairly.

Today, then, we're happy that we're here discussing this. We think it extends a benefit--which, actually, we believe should be broader and wider--to a group of people out there who are working very hard, trying to make a living, and finding themselves sometimes stuck in a place where life becomes very difficult.

What was the government's logic in limiting the coverage of self-employed to special benefits?

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

It was really quite simple. The Prime Minister's original promise was simply to provide maternity and parental benefits. In talking with and listening to the self-employed, we realized that they wanted more. They were even more interested in the other special benefits. Actuarially it made sense, so that's the path we pursued.

As I was explaining to Monsieur Lessard, it is very difficult to contemplate how to bring in regular EI benefits for the self-employed. How does one determine if the self-employed person has laid himself or herself off? How do you have an objective measurement that the business has indeed ceased to operate for a period of time, and it's not just that the operator wants to take some time off for an extended vacation?

The life events that are covered by the special benefits are readily documented--a birth, an adoption, a gravely ill family member, their own extended illness or work injury. These are all things that can be objectively documented.

We've looked around the world, and so far no one has been able to come up with a reliable mechanism of income supports in the event of a person laying themselves off, so to speak.

[Tony Martin, NDP, Sault Ste. Marie, ON]

I appreciate that, and I know that this is a step in the right direction. Actually, it's an opportunity for us to explore the possibility of even extending it further.

I would suggest to you that if you look at the workplace out there now, and the nature of work, a lot of the self-employed are actually employed by, in some instances, the people who had laid them off in the first place. They bring them back as self-employed. Self-employed people often work for big corporations and other people, and they do, in fact, lose their jobs. In a time such as we're in now, with a difficult economy, they have a hard time finding work in the area that they specialize in.

Would that not give you some food for thought? Would there be any interest in going back and taking a look at this again, given the nature of the workplace now? As I indicated earlier, many self-employed people are in fact employed and do lose their jobs quite readily, because they're easily let go.

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

Well, we are aware of.... As I mentioned in my opening remarks, the self-employed are a very diverse group of people. There are indeed people like those you're talking about, who have lost their jobs and have then been hired back as consultants or on a contract basis for sometimes a fixed period of time and sometimes not. There are rules about deemed employment in those cases.

But there are also others, many of whom I've heard from, who say, “For heaven's sake, please don't bring in regular EI benefits for the self-employed, we don't want them--it's an insult”. It defies their very entrepreneurial nature. They are self-employed. When things don't go well, they work harder for their own success, and they don't want anybody taking that away from them. That's the reason they left the corporate world, for example. It was because they wanted that sense of self-reliance, to be their own self-motivators. They view obstacles not as obstacles but rather as challenges to be overcome and they say that having a regular EI system would undermine the very essence of who they are.

[Tony Martin, NDP, Sault Ste. Marie, ON]

I'm sure you know this, too, from being an MP who represents a constituency. I have people coming into my office on a fairly regular basis, particularly since the downturn in the economy, who were self-employed and working for somebody but who have now lost their jobs. They're looking for any help at all that they might qualify for. Some of them end up on welfare, which is a much worse place, given their pride of person and entrepreneurial spirit, than actually being able to qualify for EI.

What you're talking about is how to put in place a vehicle that would stop people from actually abusing this, so I guess that's a question I have for you. Even in this limited offering, have you put anything in place to make sure people don't game the system?

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

There are several checks and balances in the system we're proposing in this legislation. One, the amount of benefits people can claim will depend on the premiums they've paid, which are based on their earnings of the previous year as they've submitted them to the Canada Revenue Agency, the CRA. If they understate their income in year one, they will have underpaid their premiums and they won't be able to collect as many benefits. Do you follow me?

[Tony Martin, NDP, Sault Ste. Marie, ON]

Yes, I do.

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

So there's actually an incentive for people to report maximum earnings and to pay the maximum premiums.

For illness, you need to have a doctor's note. You can define the birth of a baby, but there must be documentation, just as there is for EI for salaried employees. Those are objectively defined life events and we require the same thing of regular employees.

[Tony Martin, NDP, Sault Ste. Marie, ON]

Good.

Thank you.

[The Vice-Chair, Liberal, Raymonde Folco]

We'll go on now to Mr. Lobb.