Human Resources Committee on April 26th, 2010

[Barbara Byers]

No. The reality is that it doesn't matter what social program we've looked at or what workplace or what parliament or legislature or business, there will be always a small proportion of people--very small--who will stretch the rules, if we can put--

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

And we have that in the rich people, too.

[Barbara Byers]

Well, but the vast majority of people do not. I was a social worker for 17 years in Saskatchewan. People don't want to be on welfare. They don't want to be on UI. They end up being on it because of life circumstances that they haven't had control over. I mean, take a look at it.

No, people don't want to be on UI if they can find something else.

[The Chair, Conservative, Candice Bergen]

Thank you very much, Ms. Byers.

We'll go to Mr. Komarnicki now, please.

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

Thank you, Madam Chair.

There's no question that many would like to see improvements to the employment insurance program, but it is an insurance program, and of course as you increase the benefits, as with any other program, the cost of increasing them has to be taken into account.

Certainly, for example, there's one portion of this bill that talks about eliminating the existing qualification requirement for regular unemployment benefits by replacing the regionally differentiated qualification requirement. I take it you were opposed to that regionally differentiated qualification--

[Barbara Byers]

Yes.

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

It would have a cost factor to it. Some have estimated that to be $1.148 billion; I think that was from the Parliamentary Budget Officer. I know that others have suggested, depending on how that ties into benefits, that it could be $4 billion per year.

It doesn't allow for the fact that this particular bill says that even though the qualification requirement for regular benefits would be a uniform 360 hours, the number of weeks of benefits would continue to vary with hours of insurable employment and the regional unemployment rate, as specified in a new schedule. Attached is the schedule, which says that everybody qualifies at 360 hours but not everybody gets the same amount of benefits, because they stagger them depending on hours and depending on the region they're in and the unemployment rate there.

So are you opposed to the way the benefits are calculated notwithstanding the 360-hour uniformity in terms of qualification? Also, do you have some idea of what it would cost if you did away with the regionally differentiated unemployment rates?

[Barbara Byers]

Before Sylvain deals with some of the technical issues, I just... You've said that this is an insurance program, which I think it's curious. The program has been robbed of $57 billion, right? So it was not considered an insurance program when it had a whole bunch of money that could be put to use at that time--and could be now--for workers. But now, suddenly, when we're saying, as we have said over the years, that this is what needs to be done and that people are getting crushed out there, people say, “Oh, it's an insurance program, so we have to make it pay for itself”.

Well, I have a good way to make it pay for itself: with the $57 billion that's owed to it.

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

Before we get back to Sylvain, my friend Mr. Godin indicated what happened with our Liberal colleagues, when they used a good portion of that for pet political projects. But we've put in an EI financing board that sets rates based on the general principle that rates and benefits, over time, must equalize. So in that sense, it makes sure that you can't use it for general revenues. It must be used for what it's meant for, and that's employment insurance. We've put a mechanism in place so that doesn't happen again.

Having said that, I'll go back to my question. Do you or do you not disagree with the bill when it tends to use the regionally differentiated unemployment rates and number of hours for the length of benefits? If you're opposed to that, what would the cost be to eliminate this, or have you done any costing on that?

[Sylvain Schetagne]

The CLC position has always been to reduce it to 360 hours to qualify, up to 50 weeks. That was our position and is still our position. This bill is improving access in terms of access to benefits by reducing it to 360 hours, but it doesn't provide for increasing it up to 50 weeks.

Now, in terms of costing up to 50 weeks, as I said earlier, in order to estimate how much it would cost, you need to factor in how much of that 50 weeks is going to be used. As we know, in order to do that calculation, you need to know how many have or will have exhausted their benefits, and we don't have that information. We know that not all Canadians will use those 50 weeks. Currently, we estimate the average is about 38 weeks, so if we do calculations based on that, we can come up with an estimate, but we don't have the factors, the information, that is required in order to make that estimate. That's one thing.

The second thing I would like to ask is on mechanisms. You said the system has been set in place so that over time it balances the account. But when does that start? Is it going to go retroactive to when that system was implemented? Is the $57 billion--

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

Well, the money has already been spent.

[Sylvain Schetagne]

--going to be factored in, in that calculation?

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

The money's already been spent.

I take it, then, that notwithstanding that the bill does make the qualifying period 360 hours, you take objection to the fact that it doesn't extend the benefits in the same way, but you don't know what the cost would be to eliminate that.

The other thing you talked about was raising the benefit rate from 55% to 60%. Again, the cost estimated by the library research team analysts, I believe, was $1.1 billion. When you add the $1.1 billion to the billion or so more for the 360 qualifying period, plus some billions more that you haven't costed... If you add all those together, would you agree with me that they would put upward pressure on any premiums that employers and employees would have to pay? Would you agree with that?

[Sylvain Schetagne]

No, I wouldn't agree with that. Despite the fact that there are parts of the information missing, when we factor in the level of contributions made over the last 10 years, before the crisis, with the accumulated $57 billion, we think that over time, with the stimulus it would bring to communities in creating jobs, it would contribute to reducing the unemployment rate and the usage of that system, providing jobs for workers to work at, not to collect unemployment insurance. Then, with that economic stimulus, it would provide good jobs for workers and would rebalance the books automatically.

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

Let me simply say that the reality is that the rates have been frozen so that they don't go up because of the effects of the recession and the effect it has had on the cost to the EI account, and when they're unfrozen, the legislation that is put in place ensures the benefits will generally be equal to the premiums.

If the EI account now is in a deficit position, you would have to agree with me that, if nothing changes, the premium rates would have to go up substantially to allow for what this bill would like to see happen, particularly for the improvements that you'd like to see happen. Wouldn't you agree with that?

[Sylvain Schetagne]

I wouldn't agree with that, actually, right now. If you take a look at what was paid into the system since 1996, and even factoring in the fact that we just went through one of the biggest economic recessions, the balance is still positive.

There are still surpluses even when you factor in the current cost of the crisis, considering the huge surplus that came out of this overpayment into the EI system. That's the first factor. If you add that to the current surplus, when you factor in the past accumulated money, we can afford what we're proposing.

[The Chair, Conservative, Candice Bergen]

Thank you very much.

Thanks, Mr. Komarnicki.

We'll begin our second round of questions. This is a five-minute round, beginning with Mr. Savage, please.

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

Thank you, Chair.

The average weekly payout under EI right now is somewhere in the range of $330 or $340.

[Barbara Byers]

It's $350.

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

It's $350 now?

[Sylvain Schetagne]

Yes.

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

The maximum is $440 or something like that, so we're not talking about an awful lot of money here.

I've been watching what's been happening in the United States. They've extended benefit periods in some areas. You're starting to hear some lawmakers making the kinds of comments we've heard on occasion here in Canada: that EI's becoming too lucrative and that you're paying people to stay at home and all that sort of stuff. I think the way that's often said is very offensive to people who are almost never on EI because they want to be, by and large, but because they have to be. They don't go there by choice.

It was suggested last year that if we went to a national standard of hours you would then have people who would want to go on EI, who would go out of their way to do it, which is a ridiculous thing when you take into account the first thing, which is that you have to be fired. You can't quit your job and collect benefits; that's just not the case. So to go on EI, to take advantage of what they would call a liberalization of EI, you would have to wait until you were fired to get a measly amount of benefits for a short period of time.

I want to ask you a tough question. I know that you don't like this question and I may have asked it of you before. If you're looking at employment insurance, there are a number of things you can do.

You can eliminate the two-week waiting period, which is not in this bill, but was in Monsieur Ouellet's bill, I think. Extending benefits is here. Increasing the rate is here. You can base it on the best 12 weeks, which isn't here.

Standardizing nationally, getting rid of the regional rates, eliminating distinctions between new entrants and re-entrants, increasing maximum yearly insurable earnings, and further increasing the amount of money somebody can make from EI without it being clawed back from their EI: there are a number of things we can do.

And there is a balance here between cost and benefit. Without me holding you to this, I'd like to know what the order would be in which you would make these changes if only so much money were available. Notwithstanding the $57 billion, I understand we're not going to go there--

[Barbara Byers]

Yes.

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

How would you prioritize these suggested changes?

[Barbara Byers]

I made it clear when we started, and I think we've made it clear every time we've appeared in front of this committee, that the three priorities are access--that's the 360 hours--and the benefit level and the benefit duration, which have to be raised. We want to make sure people can get into the system when they need to, that when they get there, there's at least some semblance of an income for the period of unemployment, and that they have some ability to have that benefit during extended periods of time when they need it again.

Just on the point you raised earlier about how some people say EI is paying people to stay at home, it's only paying people to stay at home if there are no jobs, if there's no place for them to get another job. So again, to go back to some of our positions, this country needs a national industrial employment and training strategy to make sure we're making the best use of people, both during the time they're working and when they're not working.

It would be interesting... If I ever get the time, I'm going to go back and dust off those 28 recommendations, because I'd be willing to bet those recommendations aren't much different from what we need now. But we still go back to the top three: access, benefit level, and benefit duration.