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.