Debates of April 21st, 1994

Business Of The House

[The Speaker]

So ordered.

(Motion agreed to.)

The House proceeded to the consideration of Bill C-6, an act to amend the Canada Oil and Gas Operations Act, the Canada Petroleum Resources Act and the National Energy Board Act and to make consequential amendments to other acts, as reported (without amendment) from the committee.

Canada Oil And Gas Operations Act

[Anne McLellan, Liberal, Minister of Natural Resources]

moved that the bill be concurred in.

(Motion agreed to.)

[The Acting Speaker (Mrs. Maheu)]

When shall the bill be read the third time? By leave, now?

[Some hon. members]

Agreed.

[Anne McLellan, Liberal, Edmonton Northwest, AB]

moved that the bill be read the third time and passed.

Madam Speaker, hon. members, I am pleased to have the opportunity to speak before this House today during third reading of Bill C-6, an act to amend the Canada Oil and Gas Operations Act, the Canada Petroleum Resources Act, and the National Energy Board Act.

The main purpose of Bill C-6 is to give the National Energy Board the authority to regulate frontier oil and gas activity. It will not however affect offshore Newfoundland and Nova Scotia where petroleum management is shared under federal-provincial accords. Bill C-6 will ensure that the frontier regulatory process is more transparent as decisions will be taken by an experienced independent organization.

Essentially the National Energy Board's main responsibilities will be: protection of worker safety; maximizing resource conservation by ensuring good oil field practices; and protection of the environment.

I am very sensitive to concerns regarding protection of the fragile environment of the north and other frontier areas. Consistent with efforts to better integrate environmental considerations in policy decisions, a review of the proposed legislative changes was conducted co-operatively by Natural Resources Canada and the National Energy Board. It concluded there

would be no adverse environmental impacts as a result of the proposed amendments.

The government is also committed to real and meaningful consultations with all key stakeholders and views this as a critical feature of the legislative process. Wide-ranging consultations with interested parties have been held at all stages of the development of this proposed legislation. These included both provincial and territorial governments, native groups, industry, and environmental organizations.

Let me turn to some of the issues that were raised during second reading and committee consideration of Bill C-6.

Concern was expressed by some members of this House regarding the impact Bill C-6 may have on provincial jurisdiction over frontier resources.

This bill will have no impact on jurisdiction over offshore regions of Quebec and other frontier areas. It merely transfers to the National Energy Board regulatory powers which already belong to the federal government, and it does not affect any offshore frontier areas.

Further, there is nothing in the bill which would prejudice the outcome of any discussions with the territorial governments on the delegation of onshore responsibilities, or impact on discussions with other coastal provinces regarding future shared management arrangements.

Some members also felt that in the exceptional circumstances of a future appeal the National Energy Board would somehow not be expert or independent enough to give industry a fair hearing. NEB decisions are not currently subject to outside review except by the courts and then only on questions of law or jurisdiction.

The oil and gas committee appeal process is being abolished under this legislation because the integrity of the NEB process, and therefore its independence and effectiveness, depends heavily on maintaining this principle.

The proposed amendments reflect our view that in the few instances this appeal function may be exercised it will be competently and objectively performed by the NEB.

The National Energy Board already has diverse regulatory responsibilities. These include the licensing of the export of oil, gas and electricity; the issuance of certificates for international pipelines; and the setting of just and reasonable tolls. The National Energy Board is well placed to take on the authority to regulate frontier oil and gas as proposed in the amendments.

I am fully confident that for all its responsibilities the board will continue its mandate to regulate in the Canadian public interest fairly and effectively, taking into consideration the views of all interested parties.

In conclusion, what the government of Canada wants to do with this bill is to give clear and specific operating rules to the industry.

Without these amendments the NEB will not be able to operate effectively and industry will continue to be faced with a time consuming approval process.

The National Energy Board was given additional staff and responsibilities for frontier oil and gas in 1991. Bill C-6 would finally give the board the legal authority to do its job.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Madam Speaker, the Bloc Quebecois will support Bill C-6. However, since this legislation will now give the National Energy Board the official power to hear appeals and to give advice to ministers, we truly hope that the National Energy Board will hear our own appeal today and make sure that it does indeed give advice to government ministers, because they badly need it.

In recent years, the federal government has agreed to provide financial support to major energy projects, or energy megaprojects, as they are called. Together, these agreements represent an initial commitment of over $3 billion. I must point out here, for the benefit of those who are listening to us, that one billion is a thousand millions. In the case of Hibernia, we are talking of 2,700 million dollars.

These projects require considerable public funds which the government, of course, gets from already overtaxed Canadians. As we know, the middle class is already on its knees because it is overtaxed. In fact, the Auditor General of Canada himself said that taxpayers have the right to expect public expenditures to be managed with caution.

Yet, what do we see? Again, the Auditor General had this to say: "We examined the energy megaprojects assisted and funded by the Department of Energy, Mines and Resources. Our observations on the Hibernia, Lloydminster Bi-Provincial Upgrader and Regina NewGrade Upgrader projects point to some fundamental weaknesses."

Let me mention five weaknesses noted by the Auditor General. First, the lack of a comprehensive set of clear and measurable objectives. Second, an inadequate co-ordination of benefit monitoring. Third, deficiencies in monitoring environmental

assessment recommendations and commitments. Fourth, continuing gaps in effectiveness measurement. That brings me to the fifth and final point, although we could have listed many others, but we will stop at five. The fifth point is limited and poor reporting to Parliament and the public in Part III of the Main Estimates.

The Auditor General adds:

Another key problem we noted in the Hibernia and Bi-Provincial Upgrader agreements was the lack of a connection between performance and payment. Federal payments are based on project expenditures, and not on construction milestones or achievement of certain intended economic benefits that have been specifically identified with these projects. Even if the Department determined through its monitoring efforts that certain intended benefits were not being achieved, it would have no legal basis to stop payments to the projects.

Then, the Auditor General stresses that:

Without a direct connection between performance and payment, the payment is in the nature of a grant.

We are talking about billions of dollars that were given to companies involved in the Hibernia project and which are in fact grants. In other words, the Auditor General is telling us that the thousands of millions of dollars, all taxpayers' money, which were invested in these projects, supposedly to create jobs and create all kinds of industrial benefits, are meaningless since the government has no legal basis to guarantee the intended benefits.

Of course, following this statement by the Auditor General, the department took the following commitment:

The Department is devoting additional resources to the monitoring function, particularly with respect to industrial and employment benefits.

Jobs, jobs, jobs. This government was elected on the promise to create jobs. Therefore the least we should expect is that the taxpayers' hard-earned money which is invested in big projects helps create jobs at home. But such is not the case. In spite of all the promises made by the department I just mentioned, an Act to repeal the requirements concerning Canadian participation was enacted only a few months ago.

According to a document coming directly from the Minister of Natural Resources, this is what this bill does essentially:

The highlights of this bill are the elimination of the minimum 50 per cent Canadian participation as a condition to grant a licence for oil and gas production in frontier areas; the elimination of the need to obtain the minister's approval to transfer, in whole or in part, ownership rights under a licence contract to produce oil and gas in frontier areas; and the repeal of the present regulation under which certain individuals may hold production licences and of related requirements regarding the place of residence.

In short, not only is the federal government unable to legally guarantee definite spin-offs for the billions of dollars of taxpayers' money it invests in such ventures, it deliberately lifts the minimum requirements imposed on companies to which it gives money so that they can create jobs in Canada.

We recognize that, in the last few months, some improvements have been made regarding the management of this project, but they have not been as far-reaching as we would have liked. An in-depth assessment of the project should have taken place before work began, not after.

Where is all this leading us? The government goes and takes billions of dollars from already overtaxed Canadians and Quebecers. It gives money to big companies over which, as the Auditor General said, it has hardly any control. It allows them to create jobs elsewhere. Jobs, jobs, jobs for Korea, not for us. In the meantime, we can be sure that, no matter what we do, our horrendous $500 billion debt will grow to $600 billion in three years, if everything goes well, because otherwise it could be a lot worse. The truth is, as things stand today, we are on the verge on bankruptcy.

We can also be sure that unemployment rates will remain exactly the same and that young people will have no jobs. The only solution this government could find was to cut unemployment benefits and old age pensions; such was its choice.

Of course, the unemployed, the people of modest means, those without voice or clout, would not accept this situation if they were not, first of all, made to feel guilty, to feel that they are the real problem in Canada.

The statements by the Prime Minister, last night on television and this morning in the newspapers, show that this policy is actively pursued.

I would like to quote today's Le Droit which carries a headline that reads: Loafers cost $500 billion: their attitude must be broken'', which I hasten to say were perhaps not the words used by the Prime Minister. He said, according to the article:Canadians have to break that mentality, because the country is $500 billion in the hole. We cannot keep people sitting at home drinking beer''.

I object to what the Prime Minister said today. I consider that a frightful statement. I remind the Prime Minister that the former Hyundai employees who lost their jobs are not beer-drinking loafers. They are out looking for work.

The fishers of Gaspé who can no longer go out and fish are not beer-drinking loafers, they are looking for work. The former employees of the CNR, the CPR or MIL Davie in Lauzon, that

cannot get government contracts to build ferries, are not sitting at home drinking beer and watching TV. They are looking for work.

Young people, among whom unemployment is sky high, who come out of school with two university degrees and go bankrupt even before they start their productive life are not beer drinkers and television addicts, they are looking for work.

I urge the prime minister to come and visit my riding of Anjou-Rivière-des-Prairies on Monday morning and meet the people who come to me, hoping I can find them some work. I do not know what he would tell them, but if he were to tell them that they are beer-drinking loafers, I am sure they would have something to say to him.

It is known that Quebec provides almost 25 per cent of federal tax revenues in Canada and that, in most Canadian job creating reinvestments, benefits that Quebec is getting are not equal to the revenues that it provides, whether it is in research and development, in federal acquisitions, in army spending or in funds for agriculture and megaprojects.

In the case of Hibernia, although Quebecers will pay approximately $800 million in federal taxes for that project, over and above the grants that will have to be given for each barrel of oil coming out of Hibernia if the international price is not high enough, the future of the MIL shipyards in Lauzon remains bleak and lay-offs are predicted for 1994.

Although Lauzon's shipyards are in fact the only one to have built drilling platforms in Canada, including 13 for Texas in the early 1980's, the federal government has stuffed the province of Newfoundland with contracts awarded without any bidding: the building of concrete bases, the building of the five super-modules. The other contracts were awarded to foreign firms, after the federal government had abolished the 25 per cent tariff on the importation of oil platforms that had been in place since 1983. And that is one of the fundamental reasons why things are going badly in this country, because billion of dollars are invested in the creation of jobs somewhere else, and the unemployed of this country, that have been created by the government, are being called beer drinkers and lazy bums who just watch television.

There was also the building of a large-capacity shipyard in Bull's Arm, which was paid for with a regional development fund of $300 million. They agreed to go ahead with the modernization of the Marystown shipyard and a vast manpower training program for Newfoundland.

Therefore, if the Bloc Quebecois approves the passage of Bill C-6 at third reading, it becomes the duty of all members of this House to make sure that megaprojects like Hibernia really generate the spin-off benefits promised both by this government and its predecessor, because taxpayers of Quebec and Canada are entitled to expect such benefits.

As for the outrageous statements of Canada's Prime Minister, he may be sure that Quebecers will remember them during the next provincial election and the referendum which will surely be held in the months to come.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Madam Speaker, I will be the only speaker for the Reform Party on this matter and I shall be brief.

Bill C-6 is mostly housekeeping. As we stated earlier in the House, we will endorse its basic thrust which is to transfer regulatory authority over frontier oil and gas development from the political arena to an independent body, the National Energy Board. We believe that this action is also endorsed by most of the industry stakeholders.

This bill does have one glaring weakness which we were unable to remedy in committee. It gives the National Energy Board unlimited power to determine what is or is not a significant discovery or a commercial discovery and to make unilateral decisions affecting certain technical operations.

Aggrieved parties will be able to appeal a board decision only to the board itself so that a single quasi-judicial body becomes in effect judge, jury and executioner. Questions of law of course could be further appealed to the courts by any party willing to accept the cost and long delay of such actions. But questions of fact, technical decisions, could not be challenged.

Industry representatives have indicated to us that the National Energy Board as presently constituted functions well, has knowledgeable personnel and has a good track record.

Our concern is that we are looking at the board in a snapshot in time. We do not know what it will be like 10 or 15 years from now. Bill C-6 nevertheless gives it an extraordinary amount of power with no checks or balances.

Laws are like contracts. They should be written to deal with worst case scenarios, not under the assumption that all concerned parties will be forever noble, rational and fair.

In committee we attempted to rectify this problem with amendments to allow final appeals of board decisions to a second independent body, the oil and gas committee as defined in the Canada Oil and Gas Operations Act. Having failed to win this safeguard in committee, the Reform Party will not vexatiously continue to pursue a cause which is already lost.

Most of the bill and its intent are acceptable to us. We therefore support it, albeit somewhat grudgingly.

[The Acting Speaker (Mrs. Maheu)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mrs. Maheu)]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

On division.

(Motion agreed to, bill read the third time and passed.)

[Alfonso Gagliano, Liberal, Saint-Léonard, QC]

Madam Speaker, I think you would find that there is unanimous consent to suspend the sitting of the House until 4.30 p.m. at which time we would proceed with Private Members' Business.

[The Acting Speaker (Mrs. Maheu)]

Is there unanimous consent?

[Some hon. members]

Agreed.

[The Acting Speaker (Mrs. Maheu)]

The House is suspended until 4.30 p.m.

(The sitting of the House was suspended at 3.34 p.m.)

The House resumed at 4:30 p.m.

[The Speaker]

The House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Unemployment Insurance Act

[Pierrette Venne, Bloc, Saint-Hubert, QC]

moved that Bill C-218, An Act to amend the Unemployment Insurance Act (excepted employment), be read the second time and referred to committee.

Mr. Speaker, I wish to thank all the hon. members who have expressed support for this bill. Unfortunately, they could not all be listed in the Order Paper because there are too many of them. As we know, pursuant to our Standing Orders, no more than 20 names may appear on the list of seconders published in the Order Paper. Allow me then to extend my thanks in this House to those members whose names are on the list as well as to all the others who, without being listed, support me nonetheless.

Bill C-218 is a bill to repeal paragraph 3(2)(c) of the Unemployment Insurance Act. It may sound technical but in fact, I am simply asking this House to repair a serious injustice done to nearly one million Canadians, of whom 650,000 are women.

We all remember the omnibus reform of the unemployment insurance system. We are now starting to appreciate the extent of its social effects, some of which are plainly discriminatory.

The former Unemployment Insurance Act clearly excluded from entitlement to benefits any person working for his or her spouse or a company controlled by his or her spouse. The legislation was clear and simple, and openly discriminatory. No one would ever want of such a system today. In those days, a woman working for her husband was automatically excluded from contributing to the plan and receiving benefits. It was clearly stated in the act and regulations.

This act was challenged before the courts and tested under the Charter of Rights and Freedoms. Predictably enough, the courts moved to restore the entitlement. Because the Act applied only to spouses, and not to all people operating at arm's length, former paragraphs 3(2)(c) and 4(3)(d) of the Act were ruled invalid and ill-founded by the Human Rights Tribunal of the Federal Court-Appeal Division, the Tax Court of Canada and the Supreme Court of Canada.

The present Act was enacted on October 23, 1990, and paragraph 3(2)(c) was amended to reflect the judicial decisions regarding its unconstitutionality. The Conservatives found a way to get round the problem in their legislation. From then on, women working for their husband were no longer the only ones excluded from benefits under the Act.

From now on, everyone not dealing at arm's length with their employer is excluded from benefits. In this way, legally, the law no longer seems discriminatory. Any employees not dealing at arm's length with their employer are no longer automatically entitled to benefits. Apparently, the employer's son, brother or junior partner, as well as the woman working for her husband, are now on an equal footing. They must all show a Revenue Canada official that they are "clean" because it is up to that official to determine if the employee is cheating or not.

The law is clear: if someone worked for an employer with whom he was not dealing at arm's length, he will have to prove that the job would have been given to an outsider under the same conditions.

Just read paragraph 3(2)(c) to convince yourself at first glance of the different way the Conservatives treated employees who were "guilty" of working for a relative or a spouse.

No other category of unemployed person has to prove to the satisfaction of the Minister of National Revenue that he is not trying to defraud unemployment insurance, but the law requires relatives and spouses to prove it.

At first, it may seem normal to pay particular attention to the cases of people whose job might give rise to obvious collusion by the employer.

In some quarters, people might think that fathers and sons, husbands and wives, brothers and sisters are potential cheaters. For many people, it is not a real job if the employer is a spouse or a relative. It is only a step from this view of the labour market to the conviction that people not dealing at arm's length are out to cheat the government, a step which the Conservatives gladly took by passing the new Unemployment Insurance Act.

Before, the law applied only to spouses. But no matter, since it was discriminatory, they had to go one better. By submerging the category of spouses in the whole category of those not dealing at arm's length with an employer, they thought that they had really solved the problem.

Since spouses were no longer the only ones excluded, the law was no longer discriminatory. It was not discriminatory because it automatically excluded from benefits anyone whom the Income Tax Act considered not to be dealing at arm's length, not just spouses.

The presumption of honesty in all these cases is now replaced with a presumption of fraud. It is now up to the employee to prove to the discretionary satisfaction of the income tax official that the labour contract has all the features of a job that the employer would have given to someone completely unrelated to him.

In reviewing the claim, the official can conduct every investigation he deems appropriate at the employer's place of business. He can, in particular, check financial records, approach clients and suppliers, look at bank statements, examine work flow in the plant or office, and interview third parties. In short, the official can pursue his investigation as far as he considers necessary to form an opinion. In fact, that is exactly the way things are done.

These thugs' only goal is to demean recipients. The smallest doubt can lead to exclusion. They do not try to determine eligibility but to prove that a fraud has been committed.

I stress that investigations are conducted by the Source Deductions Division of Revenue Canada, Taxation. After the investigation is completed, Revenue Canada gives its opinion to the unemployment insurance people who then decide whether to pay or withhold benefits.

Withholding benefits triggers off a series of administrative and judicial appeals. First, a review application is filed with the Appeals Division of Revenue Canada. If the decision is upheld, a final appeal can be made to the Tax Court of Canada. Then, if the unemployed person still has strength, resources and a good deal of optimism, he or she may go to the Federal Court of Appeal as a last resort. The minister or the taxpayer can still appeal to the Supreme Court against the Federal Court's decision.

Meanwhile, the unemployed person-usually a woman-lives off her hopes while trying to understand why she is being singled out by the system.

Why is the employer's spouse or relative being penalized? How do we justify such actions? Why do we assume that a certain class of employees are cheaters? Why are we more distrustful of relatives than of strangers? Is it easier to cheat between relatives than between residents of a small village where they all know each other so well that they feel like family?

It is unacceptable for legislators to use distrust to enforce the law. That is exactly the effect of the current paragraph 3(2)(c).

Under the act, spouses and relatives are considered as suspects. The government tells them they are not like other citizens because they worked for a spouse or a relative. It then asks them to prove their honesty.

What democratically minded Canadian citizen can accept such an attack on fundamental values? Mr. Speaker, it may be that employees and employers who are married or related to each other cheat the UI system, just as perfect strangers may and do commit fraud, perhaps with even greater ease than within a family. But the criminal provisions of the act are explicit and punitive enough to cover all fraudulent claims.

What is objectionable in this case is that it is up to the unemployed to prove as soon as they file the claim that they did not commit fraud. No other class of beneficiaries must bear such a burden of proof. Not only could this person be liable to prosecution, to criminal prosecution, for breaking the law, but it would be assumed that from the outset of the application process, the person intended to commit fraud.

I would be just as stunned, but perhaps less motivated to ask for the repeal of paragraph 3(2)( c) , if it applied to a wide range of wage earners. But, in point of fact, the legislation targets a clearly identifiable group. In my view, the primary effect of the legislation, whether intended or whether the result of social circumstances, is the systematic exclusion of women who work for their spouse.

There are 650,000 women in this situation, Mr. Speaker. If they were to lose their job, these wage earners who work in a business managed by their spouses, who work "in partnership" with them, so to speak, would currently be excluded because of

their status from receiving unconditional unemployment insurance benefits.

Women who fall into this particular category of wage earner account for the vast majority of excepted employment cases provided for in paragraph 3(2)( c) . Furthermore, when we look at the persons designated by the cumulative provisions of the Income Tax Act and the Unemployment Insurance Act, we see that the group that is excluded the most is women who work with their spouses. There is no point denying this fact. The current law denies women the right to equality in the area of unemployment insurance.

Some will say to me that if the law is so discriminatory, then the courts will tear it to shreds as soon as the opportunity arises. Let the courts do their jobs then, they will tell me. My answer to them would be that it is incumbent upon legislators to amend their laws. The courts intervene only as a last resort to correct any injustices that may flow from the legislation. And, until such time as a final court of appeal rules on a fundamental issue, how many cases will have been abandoned for lack of resources or hope? To leave it up to the courts to make the law is to abdicate our own political and social responsibilities.

I would also say to these people that even if the courts did not find the legislation to be discriminatory from a legal standpoint, we should still intervene to point out the unfair aspects of the law from a human and political standpoint. And finally, unfortunately, even though the legislation institutionalizes this injustice, I do not think that the Canadian courts, using modern-day criteria, would find it discriminatory. Technically speaking, it is not discriminatory. However, given our social and demographic reality, the ramifications of the legislation would indeed be discriminatory. It is the main reason why we must act now and act fast. The courts will not do it.

In its 1990 reform, the now defunct Conservative government had managed to get around the gains made before the courts by women who work in partnership with their spouse. Indeed, several decisions had sent very clear messages to law-makers. The old act was invalid because it discriminated against spouses engaged in a working relationship. As a result of these decisions, women working for their spouse were entitled, albeit for a very short period of time, to premiums and benefits. But that was before the Tories' social conscience got the upper hand.

The break was short-lived. Through its 1990 amendments, the Mulroney government caught up with these women and sent them back to square one. It was done under the cover of an extremely confusing piece of legislation in which the amendment went nearly unnoticed. By putting spouses in a seemingly larger group, those in a non-arm's length situation, the new legislation is probably true to the Charter of Rights and Freedoms. I believe that, as in a recent case the Supreme Court ruled on, the courts would be very reluctant to find paragraph 3(2)(c) invalid. I am referring to the Symes case on which the Supreme Court rendered its decision in December 1993.

It involved a lawyer who wanted to claim her child care expenses as operating expenses. We know that under the Income Tax Act, the maximum allowed for child care expenses is $1,000. She wanted to claim the whole amount of her child care expenses, just as it can be done for entertainment expenses. After all, if golfing expenses are deductible, why should people not be allowed to claim child care expenses incurred as a result of their work?

Madam Justice L'Heureux-Dubé of the Supreme Court found that the legislation had to be analyzed according to its concrete results in today's context. Finding that it had been proved that child care expenses were nearly always borne by women, she concluded that in today's social context, the Income Tax Act must be interpreted and enforced in the light of the Charter. She ruled in favour of the lawyer because, in her case, the law would have discriminatory effects.

I share this opinion based on a progressive and context-sensitive approach to the legislation.

I agree with Justice L'Heureux-Dubé, who said that when issues are examined in context, it becomes clear that certain so-called objective truths may apply only to the circumstances of a particular group in society, while the process may be entirely inadequate in the case of other groups.

Unfortunately, that was not the majority opinion in the Symes case. The courts are not likely to introduce contextual analysis of the law very soon. They will continue to abide strictly by the letter of the law, as they did in this case.

The Supreme Court therefore refused to examine the constitutional aspects of the appeal, after concluding briefly that the Income Tax Act contained its own system of reference. For tax purposes, the law treats all taxpayers the same.

In fact, any individual may deduct child care expenses, although in most cases today, these expenses are paid by women. I am convinced that the courts would react similarly when asked to rule on paragraph 3(2)( c ) of the Unemployment Insurance Act.

I think it is useless to wait for a final decision from the Supreme Court and that we should act immediately to provide for fair treatment of women employed by their spouses and, in fact, for all Canadians employed by a family member.

Women who work in partnership with their spouses, and who often contribute to our GDP while giving up a substantial share of their remuneration, should be treated with the respect they deserve as active members of the labour force.

Thank you, Mr. Speaker, and I do not need the additional minute.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I wish to speak against this bill.

As I understand the bill presented by the hon. member the changes proposed to the Unemployment Insurance Act would revoke the arm's length provision that is used by unemployment insurance adjudicators to determine if spouses employed by their spouses are in fact in a true employer-employee relationship and therefore insurable and eligible to collect UI benefits should they be laid off. This is the intent of this bill.

Therefore, the net effect of the bill would be to allow all spouses employed by their spouses to become eligible to collect UI benefits without giving the government any means of determining if it is an employer-employee relationship and whether that relationship is in fact legitimate.

Unemployment insurance officials predict that this change would result in at least 2,000 illegitimate claims for unemployment insurance each year. Considering that the average benefit paid to each claimant in 1992 was $6,613, we are talking about a minimum annual increase in UI payouts of about $13 million.

If we used the figures from the hon. member's own office the payout could exceed $26 million a year. If we consider the increase in UI claims from spouses when everyone finds out that the government has no means to investigate and control the possible abuse in the system, the number of claims will increase and the number of dollars paid out to illegitimate claimants will also increase.

That is the main point I am trying to make. If we approve this the number of claimants will dramatically increase because spouses will be able to put their own husband or wife on UI and we find this totally unacceptable. Not only will the costs be $13 million or $26 million, they will go way beyond that.

We oppose this bill because it opens up the Unemployment Insurance Act to more abuse and the wasting of more taxpayers' dollars when we should be tightening up the loopholes and saving employer and employee UI premiums for legitimate UI claims.

It would be helpful for everyone to have a bit of a history lesson on how this issue has developed.

Prior to August 1988 all those employed by their spouses were not insurable under the UI act. In August 1988 the Federal Court of Appeal confirmed a decision by the Canadian Human Rights Tribunal that this section of the UI act was discriminatory on the grounds of family status.

In order to provide a test to ensure the validity of the employer-employee relationship the government included in Bill C-21 an arm's length relationship clause. Pursuant to section 3(2)(c) the employment of a person that is not at arm's length is not insurable employment unless the terms and conditions of employment are substantially similar to a non-arm's length employment contract. We feel that is sufficient. The possibility is there that if the claimant wishes to insure his or her spouse, they have the availability to do so.

Unemployment insurance relies on Revenue Canada to make the determination of the arm's length relationships between employers and their employee spouses. Between 80 per cent and 90 per cent of Revenue Canada's decisions rule that an arm's length relationship does exist.

This favours the husband, wife, or spouse relationship and the spouse is therefore insurable in most cases. It would seem to be a very reasonable approach to handling these cases. Senior officials at the unemployment insurance office agree with this.

It is clear to all of us if this bill is approved it would result in the federal government having no control over UI claims filed by spouses. That control would virtually disappear. It would open up a loophole so wide that thousands of people could walk through it.

The likelihood is that when the general public realized the last element of benefit control had been removed from the UI act in regard to spousal employment, the number of illegitimate UI claims would increase. That is the point I am trying to make. Probably they would increase dramatically.

The potential for abuse is a greater concern for Canadian taxpayers than any other consideration. We are constantly receiving complaints about the raid on the public purse by UI abusers and fraud artists.

We believe the unemployment insurance program should be returned to a true insurance program based on sound financial principles. This private member's bill does nothing to move in this direction.

A broader concern we would like to raise is whether there can ever be a true arm's length working relationship between husbands and wives.

An employer who employs their spouse already has an added tax benefit because the income of the business is split by two wage earners living in the same household. Should an employer

also be allowed to lay off their spouse whenever they want and then have that spouse collect unemployment insurance? We think not. I think it is obvious as to why that would not work.

We believe we should be looking for ways of tightening up the system rather than opening it up for more abuse.

The hon. member makes the point that this is discriminatory against women. I would like to remind the House that a spouse can be either a man or a woman.

Canadians want the UI system to be fair. The current system of having Revenue Canada determine if employers and their employee spouses are legitimate employer-employee relationships is fair. This section of the UI act is more than fair and for this reason we oppose it.

[Maurizio Bevilacqua, Liberal, Parliamentary Secretary to Minister of Human Resources Development]

Mr. Speaker, I appreciate the opportunity to speak on this bill introduced by my hon. colleague.

The proposal invites us to consider a topic most important to this House and indeed to the whole country: the financial integrity of the unemployment insurance program.

Every member of this House knows the vital importance of small business. Every member personally knows of families in their ridings who work long hours to be independent, to achieve family goals, to contribute to their community. Every one of us is very much aware how difficult, demanding and rewarding a family business can be.

The unemployment insurance program has been extremely important to thousands of family businesses across this country. In thousands of offices, stores and plants when the business has run into a temporary slow period, revenue cannot support the employment of a family member and the person has been laid off, unemployment insurance has been there.

The family employee who has contributed along with the other employees of the company to the unemployment insurance account and qualifies for a claim has received temporary income from the unemployment insurance program. Many family business members have been able to receive help for training, help in searching for a job with another firm, help in seeking work elsewhere.

Along with millions of other Canadians, people who have been employed in a family firm have obtained their rightful benefits. Thousands of Canadians have also worked for small business corporations with which they have had close relationships. These men and women have also benefited from the unemployment insurance program.

Throughout Canada these two groups have received regularly their rightful benefits which they have earned as legitimate employees of legitimate enterprises. They confirm that they are genuine participants in our unemployment insurance program and they obtain the temporary income while they seek new employment.

For hundreds of thousands of these Canadians the present Unemployment Insurance Act has been there in their time of need. That is the intent of the act.

My hon. friend who has introduced Bill C-218 is rightly concerned about the unemployment needs of family small businesses. Every member in this House I am sure shares her concern.

Every one of us knows family enterprises in our ridings which have experienced difficulties in recent years. A father, mother, sister, brother has faced unemployment when business has turned down. Regrettably there are too many families who have served the community for 10, 25 and even 50 years and suddenly are no longer in business.

The record shows that these families have been well served by the unemployment insurance program. For example, in the fiscal year 1992-93 family businesses filed tens of thousands of claims for unemployment insurance benefits. Of those, 15,000 cases were reviewed and 75 per cent were confirmed as qualifying for benefits.

This position of the vast majority of claims by employees of family businesses has been most satisfactory, from the viewpoint of the employer and employee who finance the program, and from the viewpoint of the administrators who have the fiduciary responsibility to collect and to disperse the funds.

All members of the House who are familiar with the purpose of the unemployment insurance fund understand that a balanced and fair approach must be maintained. They know that funds are to be dispersed to respond to lack of income because of temporary and involuntary unemployment and to expedite return to employment by claimants. This is the mandate of Human Resources Development Canada.

These are funds collected from employers and employees to alleviate temporary lack of employment by those who have contributed. Any other treatment of these premiums collected for specific purposes does not come within the scope of the Unemployment Insurance Act.

The government has a responsibility to manage these funds with prudence and fairness, ensuring that to the greatest possible extent for those who have contributed, the misfortune of unemployment is alleviated. To act otherwise is to risk the integrity of the entire unemployment insurance program, to go beyond the bounds of responsibility, competence and the financial stability of the fund.

This is not to say the Unemployment Insurance Act does not require examination, review and revision by the House. As the Minister of Human Resources Development has clearly pointed out, all our social programs do indeed require reform. This view has the support of Canadians. They require a comprehensive, forward looking, perhaps sweeping reform to ensure they all meet the needs of Canadians as they enter the 21st century.

Therefore, I feel it would be premature to look into the application of unemployment insurance to the isolated situations where the employer and the employee are not dealing with each other at arm's length.

We all share the concern of the member who has introduced this bill. Each one of us has in our own riding family businesses that have been in difficulty. We know employees of family businesses who have needed and obtained the benefits for which they have paid.

I suggest that this bill for all its intent of responding to the difficulties of family businesses is not quite what this House would consider an appropriate contribution to our legislation at this time.

I suggest that this question would be better considered as part of our general review and reform of our social programs which is now under way. I can assure the hon. member it will be.

[Monique Guay, Bloc, Laurentides, QC]

Mr. Speaker, once again today I appreciate the opportunity of commenting, this time on unemployment insurance in support of Bill C-218, introduced by the hon. member for Saint-Hubert.

The purpose of this bill is to exclude from the definition of excepted employment, employment where the employer and employee are not dealing with each other at arm's length. That this bill was tabled shows that we on this side of the House are very much aware of what is happening in our ridings.

Every day, unemployment insurance claimants knock on the doors of our riding offices and ask for our help because they feel they are not being treated fairly by federal unemployment insurance authorities. In fact, these people are fed up with the way they are being treated.

They often feel powerless before the legislation and the almighty bureaucracy. The problems with unemployment insurance are many and complex. Unreasonable delays, erroneous decisions and unwarranted investigations often haunt the lives of claimants and make a mockery of their rights.

I am sure members opposite also see many people in their offices with problems concerning unemployment insurance. If they really want to stand up for the interests of these people, they certainly should support this bill.

Since this government came to power, however, the Liberals have chosen to forget the people at the bottom of the ladder. The break with the grass roots has been very quick and very obvious. The government's decisions and actions are a clear indication of this development.

We should realize that the purpose of the unemployment insurance system is to provide support, during a specific period, for claimants who are out of work. The objective is quite clear but unfortunately, the legislation, the way it is administered and the whole bureaucracy around it often obscure the actual purpose of this program. It is the applicants who suffer the consequences.

Of course, the main problem of all these people is the lack of work. If our economy produced enough long-term jobs, all these problems with unemployment insurance would be less or go away, but such is not the case. In my riding, Laurentides, the unemployment rate is 18 per cent. If we add to this large percentage all those who are no longer looking because they are discouraged by the non-existent job market and all those who must rely on welfare, we come up with a frightful jobless rate of 30 per cent. I am very worried about this.

All these people are also very worried. The unemployed face great tension and uncertainty. Imagine that you are the head of a household with children and suddenly you lose your job. You now receive only 57 per cent of your former income, soon a mere 55 per cent, as the callous Liberals decided, to support your family. It is a great worry and concern for people who unwillingly become unemployed.

Unfortunately, some say that one gets used to unemployment and others will even say that for some it is a way of life. Far be it from me to make such tendentious allegations. No one in our society wants to collect unemployment insurance. No one gets up some fine morning and says, "Well, this morning I want to lose my job and become a paid unemployed person." No one sincerely or voluntarily desires such a situation. On the contrary, people do want to work. They want lasting, well-paid jobs. I do not think that receiving a reduced cheque every week, looking for work day after day and finding none is paradise for the unemployed people in my riding.

The people opposite do not understand what is going on out there and they stupidly bury their heads in the sand, unable to deliver the goods they promised so much during the election campaign. Their promises are turning into crumbs. Crumbs from the infrastructure program that will only create or maintain some 45,000 jobs to meet the needs of 1.5 million unemployed. A real joke, a real farce from the clowns opposite who increasingly arouse laughter and scepticism from everyone.

In my riding, this miraculous Liberal program will solve nothing. It is a drop in the bucket, providing only insecure short-term jobs. That is what we get from the conjurers opposite.

What are you waiting for to come up with a real employment policy? What are you waiting for to create and establish new, intelligent, promising programs? What are you waiting for to give technical and financial aid and support to companies and to individuals who want to create new businesses? What are you waiting for to invest massively in research and development? Nothing, you are waiting, you are in neutral and, I even believe, in reverse in many respects.

But what is even more disappointing and heartbreaking from the Liberals is that not only have they forgotten about jobs, they are cutting unemployment insurance. They are taking from people whom they offer nothing, whom they are not giving a chance. The conjurers opposite reason backwards.

This whole everyday reality of the unemployed creates definite problems for them. One of these problems is related to the Unemployment Insurance Act and Bill C-218 would eliminate it by recognizing a 1989 Supreme Court decision that excluding spouses from unemployment insurance is discriminatory. Unfortunately, the insensitive Conservative government in 1990 made life more difficult for spouses. I can tell you that in my riding, where many people hire their spouses to meet the needs of the tourist season, we have hundreds of these problem cases due to paragraph 3(2)(c) of the Act. These spouses, mostly women, go through a real nightmare when they apply for benefits. To collect benefits, employees related by blood, marriage or adoption must convince the officer that their job is justified and that they are not cheating.

So this employee carries the burden of proof, with all the inquiries that this provision implies. These inquiries have become almost systematic and impose unacceptable delays for people who often badly need these unemployment benefits.

Furthermore, since the burden of proof is theirs, we generally consider these people abusers of the system. Such an attitude is unacceptable in a democracy, a free world where everyone is presumed innocent until proven otherwise. Once again the main victims of that provision are women. We women can take a lot. Approximately 650,000 women would be in that category.

I therefore ask the members from the other side to approve this bill, I ask the women of this House to bring these facts to the attention of their male colleagues in order that we may redress this injustice done against women by repealing this provision of the legislation.

We must trust in ourselves, trust in others if we want them to trust us and the system.

[Charlie Penson, Reform, Peace River, AB]

Mr. Speaker, I appreciate the opportunity to rise on such an important occasion to speak about unemployment insurance.

I recently spent two weeks in my riding. People are concerned about the high cost of unemployment insurance to Canada, not only to employees and employers but to the taxpayer. They are concerned about abuse of the system. I have seen some of that abuse firsthand.

Abuse of the UI system results in higher costs for employees, employers and our entire tax system. It results in higher costs of goods and services. Removing the safeguard that is in place regarding spouses paying each other has the potential for a tremendous abuse problem in the future. I see it rising very greatly if we remove this safeguard.

I recognize that if spouses are not allowed to collect benefits on an arm's length transaction they should not be expected to pay premiums either. We do have a problem here that needs to be addressed but let us address it directly and not try to do an end run on the problem. There are other people who have to pay premiums. Although I am a farmer I worked off the farm for some time. I had to pay premiums and never could collect. That needs to be addressed.

If spouses are not allowed to collect because they do not qualify under the arm's length test, let us introduce a bill to deal directly with the problem. This discriminatory practice should not be continued.

The government has promised to bring in a review of the entire unemployment insurance program. It is a welcome review, one for which the people of Canada have been waiting for a long time. Let us listen to what Canadians have to say in these hearings on this issue as well as others. I believe they are going to be telling us that they want to stop abuse of the system.

We have young people in Canada who have never seen either parent bring home a pay cheque or hold a real job other than one through unemployment insurance. I say that is a tragedy. A program that was started with very good intentions, to provide help for people in time of temporary crisis, has become a way of life for a lot of people. We see it continuing from generation to generation.

This practice has to be stopped not just for the taxpayers but for those very young people who are going to fall into that same cycle. It is not conducive to good self-worth and the sooner we end that practice, the better. I am concerned that by removing the safeguard that has been put in place to stop abuse in the case of spouses employing each other will just add to that further abuse. Therefore, I cannot support this bill. I encourage members in this House to vote it down. A new bill should be

introduced to deal with the problem where spouses have to pay premiums when they are not allowed to collect.

I believe there is good intent here but it is misdirected. I certainly do not want to encourage any more abuse of our unemployment insurance system than we have now. Let us have a good thorough airing of this problem and the hearings that are going to be conducted throughout the country through the unemployment insurance review. I suggest we wait for that to happen.

[John Finlay, Liberal, Oxford, ON]

Mr. Speaker, the bill before us today addresses a concern of every person who knows, understands and values the family business today.

The Unemployment Insurance Act stipulates that workers who are related to their employer are covered by unemployment insurance if they qualify as do other workers. They work under the same sort of employment contract as other workers who are not related to the employer. Their employment is insured and they pay premiums.

This means that if they become unemployed they will also be able to claim any benefits for which they are qualified. Factors such as rate of pay, conditions of employment, length, type and importance of their work will determine whether or not their employment is insurable. Clearly the basic question of providing equal coverage to family businesses has been dealt with in the existing legislation and the guidelines for administration of unemployment insurance provisions are set out.

In the last four years how have family businesses fared in participating in the benefits provided to alleviate involuntary temporary unemployment?

I am confident that a brief survey of the situation in the typical riding will reveal this scenario. Family businesses which have paid into the unemployment insurance account found they needed the benefits. They filed their claims for the husband, daughter, mother or son who had to be laid off. They demonstrated the legitimacy of the claims and they received the benefits to which they were entitled. The benefits for which they may qualify include a broad range of services designed to help them end their temporary involuntary unemployment.

Special benefits particularly relevant to a family business include the following: 15 weeks of maternity benefits in the period surrounding the birth of a child; 10 weeks of parental benefits available to natural or adoptive parents, either mother or father, or shared between them as they deem appropriate; and a flexible combination of regular, sickness, maternity, and parental benefits. More than one type of special benefit can be claimed within the same benefit period up to 30 weeks. In addition claimants may receive special benefits in combination with regular benefits.

We can well imagine the situation where a mother and father are operating a business together. One of them becomes ill. This immediately threatens the entire future of that business. Under unemployment insurance provisions today the person who is ill may claim benefits which can help maintain the income of that person and help to keep the family business alive.

Tens of thousands of legitimate businesses with legitimate claims for benefits for which the employer and the employee have paid are receiving those benefits. The responsible competent management of the unemployment insurance fund has produced billions of dollars in benefits. These benefits have helped to ensure the financial survival of countless numbers of families who are operating their own businesses.

Then there is the case of a family business experiencing a slowdown and which must let go perhaps a daughter or son who is an employee. For many of those persons unemployment insurance has provided benefits while starting a new business to meet a new need in the marketplace.

This is just one example of how flexible and versatile the Unemployment Insurance Act can be to provide real solutions to real problems.

I suggest that each of us inquire among families we know that have benefited from the present act and learn their opinion. I believe that people who know the breadth and depth of the Unemployment Insurance Act will tell us that this act does serve well legitimate family business with a legitimate claim.

The anomalies which can eventually appear in any act are best dealt with in a comprehensive way in the context of all the social programs which the federal government provides.

I believe that in spite of the intentions of the hon. member who introduced this bill this proposal is not in the best interest of family businesses, of any people who participate in our unemployment insurance program or of all Canadians.

During the Easter recess I had the opportunity of holding three meetings in my riding in connection with the social security review. I had good attendance at these meetings and I had people from across the county and people who were involved in providing support services to our citizens. I can say that the recommendations I received were wide ranging and will add to the national debate that is occurring on this matter in Canada now.

I believe all of us as members of Parliament should consult our ridings to pass on their concerns to the minister. I and my staff have prepared a report of my meetings to pass on to the hon. Minister of Human Resources Development for his consideration in this process. After I have given the report to the minister I would be happy to share it with any interested members who

would like to conduct such meetings on this very important review.

I believe the bill before us should also be considered within the social policy review. It is best for us to consult the people of Canada on this crucial issue, for it is their money we are working with.

There was discussion on unemployment insurance and how it might be improved. The general feeling is since it is an insurance plan perhaps those who are most likely to become uninsured should pay a higher premium than those who are employed in a more secure occupation, a sort of pay as much as you are likely to need plan.

There is also a great deal of concern, as the hon. member across the House pointed out, for abuses within the system. There are people who spend most of their time collecting unemployment benefits and not contributing to the plan. I do not suggest that family businesses are necessarily one of those.

Another thing that I have learned in my brief five months as an MP is that to a lot of our constituents we can fix anything. We are supposed to know everything and we are supposed to be able to fix anything that goes wrong. As you would know from your experience, Mr. Speaker, they do not always distinguish between federal plans, provincial plans, municipal plans or even private plans.

I have had many requests about problems with internal revenue, about problems with UI, about problems with the Canada pension plan and about problems with any number of other plans and services and benefits that I knew nothing about. I can honestly say the problem purported to be so serious and to which this amendment relates is one that is entirely new to me. No one has complained in this regard yet and I am sure there are lots of family businesses in the riding of Oxford as there are in other places.

I congratulate the member for bringing this bill forward, but I would ask her to bring it forward in the social policy review and be looked at along with other recommendations of concerned Canadians.