Mr. Speaker, I am very pleased to speak on this bill which will help many Canadians help themselves. There are going to be very positive results.
When members speak about employment insurance, sometimes I do not think we tell enough. It is not just workers who will be affected by this new income support system. The business community will also be affected. From the testimony before the standing committee we know that for the most part business is quite supportive of employment insurance.
I would like to take a few minutes to explain to the hon. members some of the implications of EI for people in business. Employment insurance is one component of the government's job strategy. The government has made it abundantly clear that its number one priority is to create a positive economic climate in which the private sector can generate growth and create jobs.
There are a number of strategies to fulfil that commitment. Among them are some of the provisions in Bill C-12. Since it is the business community, especially small business, that creates jobs in this country, it is vital that EI measures enable business people to do just that.
The government has heard on more than one occasion that the effect of escalating UI premiums discourages job creation. Business has seen increased premiums as a tax on jobs, a tax the government imposes during a recession, which is obviously the worst time that this could happen. However, it has no choice. It is obligated by law to pay benefits when the UI account is running a deficit. That same obligation will apply with the passage of Bill C-12.
The answer is quite clear. When the economy is doing well a reserve will be built in the EI account. In that way funds will be available to pay for benefits during a downturn in the future and premiums will remain stable. Premiums will not have to rise when business can least afford them because there will be a cash reserve to draw on.
Some members opposite have criticized the government's plan to build a reserve in the EI account. They come up with bogus and misleading statements about how the government is going to use the reserve to pay down the deficit, which is not true because the reserve has no impact on the deficit over the long term. Insurance funds can only be used for purposes spelled out under the act: insurance benefits, employment benefits and their administration.
There are positive signs for the business community. When economic indicators are positive, business is better able to preserve jobs during tough economic times and create new jobs when there is an upswing in economic activity. In the future we must ensure that these fundamentals are always there.
I hope all members agree that we want a stable premium rate for the new EI program. Let us look at the implications of the proposed new rates which is down from $3 last year to $2.95 this year. With this rate, more than two-thirds of small firms will pay the same or less in premiums during 1996 compared to 1995.
While a decision is yet to be made, when EI brings in first dollar coverage in 1997, and premium rates are reduced further, the impact on small businesses will be even more beneficial.
While the Minister of Finance has assumed a $2.90 rate in 1997-I hope it is much less than that-for planning purposes in the last budget, the actual rate will be set at the end of this year.
As well, as stated by the Canadian Federation of Independent Business, about 30 per cent of their membership, small and medium sized businesses, will also benefit from the premium reductions associated with the reduction in the maximum insurable earnings.
The government has not forgotten these small business people who will experience some adverse affects because of this new legislation. These hard working men and women will be helped to adjust to EI through a two-year premium relief program. The program will begin in January 1997. It will coincide with the introduction of first dollar coverage and the calculation of MIE earnings on an annual basis. Here is how it will work.
An employer whose UI premiums in 1996 are less than $30,000 will be eligible for a premium rebate. Employers who face an increase of more than $500 can have up to 50 per cent of the increase rebated in 1997 and up to 25 per cent in 1998 to a maximum of $5,000 a year rebate. This measure will provide premium relief to about 30,000 small businesses. This year the reduced premium rate and the lower maximum insurable earnings will save business $730 million in premium payments.
As well, individual employers will pay $520 million less in premiums in 1996, enabling them to retain more of their income which also helps the business community. It gives people more spending power. Those are significant savings and members opposite should give them due consideration.
The business community is also pleased with the proposed employment insurance system because it goes a long way toward reducing the administrative burden of the current UI structure.
Beginning in 1997, premiums will be collected based on total earnings and total hours from the first dollar and the first hour. That means employers will no longer have to track weekly wages and hours and maintain very complex files in order to determine when, and how much, premiums are payable each week.
As well, business people describe the record of employment as an absolute nightmare to administer. I have spent many hours late at night filling out ROEs. I would probably make a small mistake on some line and whether I did or not, the government always seemed to be sending them back.
The present system has been a real nightmare. The one-page form comes with a 35-page instruction manual. The weekly reporting system often means that employers must report earnings differently than their own pay periods. It has been a jungle.
Under the EI, the record of employment will be more like an employer's payroll. Employers will only have to report an employee's first and last days of work, total earnings and total hours. As well, the ROE can be used for post-audit verification.
With the changes I have outlined, plus the other provisions of Bill C-12, it is estimated that once fully implemented, the new employment insurance system will reduce administrative costs for businesses by between $100 and $150 million annually. That is a lot of money that could be used to create sustainable employment.
I am absolutely certain that once people get through a period of adjustment, employment insurance will prove to be one of the most productive pieces of legislation that this House has ever passed. It will be good for business and, in turn, it will be good for Canadians who are striving to become self-reliant, contributing members of the community.
To close, I would like to quote Tim Reid, president of the Canadian Chamber of Commerce, during his appearance before the standing committee: "We are pleased to see that the government's overriding goal in revamping the unemployment insurance program is very much in line with the Canadian Chamber's business expansion and jobs for Canadians".
I encourage the opposition parties to quit misleading Canadians on the benefits of Bill C-12. I encourage them to get behind this progressive legislation.