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.