Mr. Speaker, I appreciate the opportunity to speak on Bill C-12, as amended. It is legislation which Canadian workers, Canadian businesses and the Canadian economy so badly need.
Let me begin with a reminder. Bill C-12 introduces reforms that will remove some of the inequities of unemployment insurance and provide a more fair and balanced regime. However, while bearing in mind that employment insurance will provide temporary income for some 2.4 million unemployed workers this year, we should also remember that Bill C-12 has another aim, the fundamental aim of boosting job creation and economic growth.
It is designed to help people get back to work. It is designed to reinforce the social safety net by ensuring adequate income for those who are most in need, while at the same time reducing costs and meeting the government's budgetary requirements. It retains the structural objectives arising out of the Canada-wide consultations on the social security review. It strengthens work incentives and the insurance aspect of income support. It ensures fairness. It reduces and stabilizes premiums. It provides a simplified administration for employers. It will achieve a net savings of $1.2 billion by the year 2001-02.
The EI system is a vast improvement over the old unemployment insurance regime. Eligibility will be based on hours of work rather than weeks. Weeks are a poor measure of work, particularly for part time workers and those who hold down more than one job or those who work intensely for short periods.
There are higher entrance requirements for new entrants and re-entrants; a necessary provision to stop the cycle of dependency, particularly among young people, that the UI system tends to engender.
The maximum duration of benefits is reduced from 50 to 45 weeks. This is a realistic period since 67 per cent of all claimants find a job within the first 40 weeks of unemployment. Those who cannot find work within 45 weeks obviously need help that goes beyond income support, once again a need the EI system will be able to provide.
An increased clawback of benefits for high income claimants, particularly those who collect benefits on a regular basis, will make the system much fairer and will more accurately reflect the insurance aspects of the benefits.
The reduced maximum insurable earnings will be brought more into line with the average industrial wages. Premium reductions and an establishment of a reserve in the EI account will stimulate employment. Premium increases during the last recession were estimated to have killed more than 200,000 jobs in Canada.
Most important, $800 million of savings achieved by the EI will be reinvested in active re-employment benefits. It will change the system from a passive income support system to an active program for re-employment of Canadian workers most in need of assistance.
There are significant differences not only in the unemployment rate but in the labour market conditions from region to region in Canada. Bill C-12 is specifically designed to take these differences into account.
The situation in Atlantic Canada is a case in point. Employment insurance will help unemployed Atlantic Canadians get back to work. The system is the product of two years of consultation with Atlantic Canadians. Now it has been fine tuned by the Standing Committee on Human Resource Development to ensure regional sensitivity and adaptability.
The basis of the new system will help Atlantic Canada's workforce. The hours based system will make it easier for many to qualify for benefits because all hours worked are now insurable.
The fact is that in the Atlantic provinces 86 per cent of UI claimants already work 35 hours or more per week. They will find it at least as easy and more often easier to qualify under the new EI.
Seasonal workers, of whom there are many in Atlantic Canada, will benefit under the EI because of the fact that they tend to work long hours each week. Remember that it is the hours that count and not the weeks.
Part time workers will no longer be hampered by the artificial barrier of having to work a minimum of 15 hours per week before their work is insurable. We have all heard of employers who restrict their workers to less than 15 hours in order to avoid paying premiums under the current UI.
Multiple job holders too will benefit by having all their work insured regardless of how many or how few hours they put into each separate job. Atlantic Canadians will particularly benefit from changes which have been made to the legislation setting out how benefits will be determined.
Workers will be able to look back 26 weeks to find the earnings necessary to maximize their benefits. This will be particularly beneficial to workers in industries where there are breaks between the periods of employment. In a high unemployment region people can have 12 weeks of no earnings without reducing their benefit levels.
The average earnings calculation is done by looking at total earnings in the last 26 weeks and dividing that total by the factor or divisor. The minimum divisor applied is the equivalent of two weeks above the regional minimum entrance requirement or the number of weeks worked up to 26, whichever is greater. Weekly benefits are set at 55 per cent of the resulting average earnings.
The divisor rule is equitable and responsive to changes in employment conditions right across the country. It is designed to be particularly beneficial to workers in high unemployment regions.
For all EI claimants, work incentive is boosted by the intensity rule. Claimants with more than 20 weeks of benefits in the previous five years will have their benefit rate reduced by one percentage point for each 20 weeks of past benefits, to a maximum of the 50 per cent level. The intensity rule will not apply however to claimants who receive family income support. Also claimants who work while they are receiving EI benefits will be able to earn work credits to reduce the impact of the intensity rule.
About 42,000 EI claimants in Atlantic Canada receiving a family income supplement will be exempt from the intensity rule. In all, about 53,000 Atlantic Canada claimants in low income families earning less than $26,000 a year and with children will be eligible for a family income supplement. On average the supplement is worth some $800 per family. Of course, claimants will be able to earn $50 a week or 25 per cent of their EI benefit, whichever is greater, without affecting the benefit. As a result anyone receiving less than $200 in EI will be able to earn more without reducing their benefits at all.
Atlantic Canadians will benefit under EI in more ways than from the income support benefits. The reinvestment of $800 million of EI funds in employment benefits will greatly benefit Atlantic Canada. Distribution of reinvested funds will ensure a fair regional balance. EI will result in a reduction in total income support payments across the country. But these impacts will be reduced by a reinvestment in active measures which will be disproportionately allocated to provinces most affected by the changes to the insurance benefits. We must also take into account the three year $300 million transitional jobs fund which will create an estimated 15,000 new jobs in high unemployment regions across Canada.
Another fact is benefits will still exceed premium contributions in Atlantic Canada. More than 60 per cent of UI claimants in Atlantic Canada claim benefits regularly. Even when the EI reforms have been fully phased in in the year 2001-02, Atlantic Canadians will receive substantially more benefits than they pay in premiums. The benefits to contributions ratio for example in Newfoundland will be $2.73 to $1 compared to 76 cents to $1 for Ontario.
Finally we should bear in mind that the implementation of EI will be closely monitored and adjustments will be made where necessary. Some communities in Atlantic Canada will be selected for in depth studies of the effects of the new system. In all, Atlantic Canadians should welcome the advent of this fair, balanced and effective system to support them when needed and further to provide for their future employment.
