Mr. Speaker, I would like to thank the hon. member for Vancouver Island North for bringing forward Motion No. 300. The government always welcomes an opportunity to discuss the employment insurance program and seeks ways to improve it. I find it very interesting that the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques went on at great length but failed to address the debate on this motion.
I know that all members in the House appreciate the importance of employment insurance in providing a key element of Canada's social safety net for more than 60 years. The government is committed to ensuring that it will continue to be there for workers who need it and that it will continue to serve Canadian workers in the best way possible.
That is why in 1996, following extensive consultations with Canadians, the Government of Canada replaced unemployment insurance with employment insurance to reflect the changing needs of the economy, the labour market and workers. Further, the Employment Insurance Commission committed to monitoring the impacts of the program on people, communities and the economy.
As a result of this annual monitoring and assessment, the government has adjusted the program from time to time to make it even more responsive. This has involved the following actions: enhancing parental benefits; making small weeks a permanent and national feature of EI; repealing the intensity rule; modifying the clawback provisions; modifying the undeclared earnings rule; and just this year, introducing a new six week compassionate care EI benefit for eligible workers caring for a gravely ill or dying parent, child or spouse.
Overall, the employment insurance system works. It is there for the people for whom it was intended.
As the 2003 monitoring and assessment report found, EI continues to perform well with 88% of individuals in paid employment being potentially eligible for benefits if they were to lose their jobs. Eligibility rates for women and men in full time employment are identical at 96%. For part time workers, women have a 16% higher eligibility rate, 57% compared with men at 41%.
Clearly, the government has adjusted the EI program as required where evidence warrants adjustment. We want to ensure the program is fair and protects those who are most vulnerable. Let us look at the main idea put forward in Motion No. 300, which is to save premium payers money.
The government is all in favour of this principle and our actions on EI prove it. We have reduced EI premiums for the past 10 consecutive years, from $3.07 in 1994 to $1.98 in 2004. This reduction will result in savings for this year of as much as $6 billion for employers alone compared to the 1994 rate. And in fact, forecast premium revenue is expected to be balanced with forecast program costs as a result of these reductions.
As a responsible government, we must ensure that the program is sustainable. I know the employer community respects arguments that are based on sustainability and good economic sense.
This is why the Government of Canada is working closely with labour unions, employers, provinces, territories and sector councils to develop a workplace skills strategy. Key issues will be to examine and improve apprenticeships, literacy training and essential skills upgrading for workers and employer based training.
As an immediate measure, our recent budget pledged to support the workplace skills strategy by providing new resources for union-management training centres. A three year pilot project will address a growing need to replace outdated equipment and simulators. Through the pilot project, $15 million will be used in the first two years to match employer and union investments in new machinery and equipment in selected training centres.
The hon. member's motion may seem like an attractive proposition on the surface but I think we owe it to employers and workers to look deeper and to see what possible repercussions there could be if Motion No. 300 were adopted.
As I mentioned earlier, when we undertook EI reform, we carried out extensive consultations. We examined all the issues and one of our key findings was the importance of covering all paid employment from the first dollar earned.
Perhaps the member for Vancouver Island North forgets under the old system those who worked fewer than 15 hours a week and their employers did not pay premiums, nor, and this is extremely important, were these employees covered by the insurance system. The result was that the very people who were most likely to need EI support, part time workers, predominantly women, were not eligible for benefits.
Studies of the insurance system further indicated that some employers limited their employees' hours of work to avoid paying premiums. Thus, employees could be caught in a double bind. First they could not obtain more than 15 hours of work in any one job and were thus forced to hold multiple jobs. Even though they may have worked the equivalent of full time employment, they still were not eligible to pay premiums or obtain benefits since none of these jobs provided more than 15 hours of employment.
Since converting to first dollar coverage with the introduction of employment insurance, evidence indicates this obstacle has been eliminated. Employers are no longer inclined to limit hours of employment based solely on the employment insurance system. We now have a system that responds to the labour market.
If we were to adopt Motion No. 300 and exempt the payments of EI premiums on the first $3,000 of income earned by all individuals, we could reintroduce a problem that we have so successfully vanquished.
This motion would roll back some of the key labour market policy objectives addressed through the 1996 EI reform. One of these objectives was to increase coverage and access to the EI program. An additional 400,000 part time workers became eligible for EI for the first time with the shift to first dollar coverage. Who can argue with that?
In fact, on April 30, 2004 the C.D. Howe Institute released a paper written by David M. Gray entitled “Employment Insurance: What Reform Delivered?” What did the paper have to say about the hours based system? The report highlights that there has been extensive research and the findings suggest that the change from a weeks based system to an hours based system was warranted. The report also indicates that an hours based system eliminated the incentive to create jobs with very short employment spells and reduced inequalities on access to EI.
The present EI system is fair and balanced. This motion, as well intentioned as it might appear at first glance, would create some unintended problems. For example, this motion would put into question the fundamental principle embodied in the EI legislation, that claimants must have paid premiums during a recent attachment to the labour force to be eligible for benefits. Under this motion, claimants would not have paid premiums for work that may later be used to calculate benefits.
The present system, founded on the first dollar coverage and EI benefits based upon the value of wages earned in the most recent 26 weeks, encourages workers to find additional hours of employment. This system fosters workforce attachment. Findings in the recent C.D. Howe report support this, saying EI reform has indeed encouraged a greater degree of workforce attachment.
Many of the supporters of this motion have said in the past that a yearly basic exemption not only helps business, but also could help low income earners. What they fail to recognize is that this element is already addressed through the family supplement. This is a progressive feature of the EI benefit structure, which allows individuals in low income families with children to receive a maximum of up to 80% of their average weekly earnings, rather than the 55% received by all other claimants.
The government recognizes that some people are not able to work enough hours to qualify for EI benefits. That is why we provide premium refunds for people earning less than $2,000 annually.
I am not saying the premium rate structure is perfect. Right now we are in the process of a rate setting review. This process is designed to create a new permanent EI rate setting mechanism for 2005 and beyond. The system will be based on extensive consultations that have been conducted. However, Motion No. 300 represents a step backward. With EI reform, we now have a system that is responsive to the changing nature of work while providing a benefit structure that strengthens insurance principles and encourages participation in the labour market.
The government will continue to monitor and assess the EI program to ensure that it continues to respond to the needs of working Canadians.