Mr. Speaker, I am pleased to take part in the report stage debate on the employment insurance legislation, Bill C-12, which will surely have a positive impact on all communities of Canada, including my riding of Lambtom-Middlesex.
It should be mentioned from the outset that the old Unemployment Insurance Act has not been revamped for 25 years. The technological revolution that has been sweeping over the economy during this period of time has also been a force in reshaping, reconfiguring and redesigning our jobs.
Let us be clear. Changing technology does not mean there are no jobs. It does mean there are different jobs often in different places and often requiring different skills. The result is that people today change jobs more frequently not only within the company or industry but crossing into new industries and occupations as whole industries are reshaped and new ones spring up.
This new economic renewal has its positive side. It has brought new opportunities, new growth, new jobs, over 600,000 new jobs since the government was elected two and one-half years ago. An innovative economy also requires innovative social policies and I strongly believe Bill C-12 delivers.
Today I will address two key structural changes which are important features of the bill. The first is the switch from using weeks of work at UI covered jobs to using hours of covered work as the main unit of account for the new employment insurance program. The second is the new intensity rule whereby the replacement rate for insured earnings would fall with increased use of the program over the previous five years. I strongly support both of these innovations. Each is a made in Canada solution to important problems with our present unemployment insurance program.
The first of these two key proposed changes, the shift to using hours of work as the main unit of account, is a forward looking provision that will greatly affect program coverage in years to come. We currently have a program that excludes jobs offering less than 15 hours of work per week from UI coverage. Part time employment is on the increase for many reasons. However, as part time employment continues to grow, the portion of total employment in our economy that is UI or EI covered would also continue to fall.
Unemployment insurance programs in Canada and in other developed countries have been in place long enough that most of us have come to take for granted the important economic stabilization functions of these programs. For example, when any country slips into an economic recession, those who are laid off must cut back on their expenditures far more severely if they are ineligible to collect earnings from insurance benefits. In addition to the damage to them and their families, the large decreases in expenditures also translate into lower levels of sales and even more layoffs.
This circular spiral of layoffs leading to sales decreases which lead to more layoffs can potentially result in deep economic depression. I believe this is every bit as possible now as it was back in the 1930s without powerful economic stabilizers like our UI program that push up the standard of living of those who have this coverage. Thus, the value of UI or EI programs as an automatic stabilizer depends on the broadest coverage possible.
The proposed move to an hourly as opposed to a weekly unit of account will, I believe, reverse the erosion of our present UI program due to the increasing numbers of part time jobs that are ineligible for coverage under the present program rules. This will definitely help to preserve the important economic stabilization rule of this program.
The change will lead to greater equity of treatment for part time versus full time workers. This is increasingly important in an economy where growing numbers of people can only find employment in part time jobs though they may be working full time when their hours of work and all jobs are counted.
Before offering my comments on the proposed intensity rule in Bill C-12, it is worth mentioning that the 1971 changes to the UI Act set our UI program on a course toward becoming an income transfer rather than a social insurance program, characterized by an unwieldy mix of regional equalization and federal welfare transfers in a social insurance program format. I am convinced that the intensity rule would help re-establish UI or EI as a true social insurance program.
I use the term social insurance to mean a program that provides insurance coverage against specified perils, with those paying for the program receiving fair personal value for their money. True insurance coverage is not the same as having individual rainy day accounts that eventually can be used by individuals for other purposes if the insurance peril does not occur, in other words, if what was paid in is not fully used to cover peril related damages for the individual.
True insurance means that those who are covered by the program, who are unlucky and suffer the insured peril, whether it be fire, theft or unemployment, can draw out more than they paid in according to stated rules. On the other hand, those who are lucky and never do suffer the peril they are insured against must be satisfied with having enjoyed the peace of mind of knowing they were insured.
All true insurance programs involve some sort of experience rating or other risk related adjustment of the premium payments versus the coverage levels. There are essentially two forms of experience rating in most insurance programs. Those in higher risk groups either must pay higher premiums for the same coverage levels as is common for automobile collision insurance or get less coverage for the same premium rates.
The proposed intensity rule in C-12 adopts the latter approach. That is, all claimants with more than 20 weeks of regular benefits in the previous five years would have their benefit rate gradually reduced. It would decline by one percentage point for each 20 weeks of past benefits collected to a floor of 50 per cent of insurable earnings.
The maximum benefit rate under Bill C-12 would be 55 per cent of insurable earnings. I believe this is more than fair. This is true to the experience rating adjustment of any real insurance program. It is also worth mentioning that everyone would start EI with a clean slate. Previous use of UI benefits before July 1, 1996 will not count.
Our present UI program is not means tested and is not paid for out of general tax revenues. It is entirely funded by payroll taxes on those covered by the program and their employers. Yet it is not experience rated either and is thus not really an insurance program. In fact, all those covered by the program are taxed according to the same schedule.
Those at greater risk of becoming unemployed because they live in regions with higher unemployment rates are given more rather than less coverage. Those in high unemployment regions become eligible to collect UI benefits with fewer weeks of insured benefits and can continue to collect benefits for more weeks.
At present the use of our UI program is constrained by neither experience rating nor means testing. The intensity rule addresses this by introducing a mild degree of general experience rating in the UI program.
Rather than largely excluding seasonal workers such as those engaged in the construction trades, as was the case prior to the 1971 changes to the UI program, Bill C-12 will provide high risk workers with coverage. However the degree of coverage would diminish with increased claims over the previous five years. In this way broad coverage would still be maintained without risking a runaway growth of program costs.
I am convinced that the intensity rule would successfully change the current UI system by transforming it into a real and much fairer insurance program. Of course many of those in intermittent employment truly cannot find other work.
Canadians have demonstrated time and again that they are willing to make personal sacrifices to provide financial assistance to others who are in real need. That is why Bill C-12 contains a number of provisions to address this reality. For up to three years those who have exhausted their benefits will have access to target employment benefits such as wage subsidies, earning supplements, self-employment incentives, and skills and loans grants.
Experts have looked at all aspects of how the old UI system operated. They know it can affect the behaviour of employers and employees in ways that Canadians simply do not accept any more. Bill C-12 is a good piece of legislation that successfully addresses some of the more current aspects of our system.
After 25 years of the status quo, it is time Canadians had an employment insurance system that better reflects the realities of the 1990s and beyond.