Mr. Speaker, the bill is a key element in a much larger process. Canadians told us they wanted a government that treated jobs as a priority. We have taken action on job creation through the infrastructure program and measures in the budget.
The government has begun to address fundamental issues facing our social security system. We agree we need a system that encourages participation and gives people incentives to contribute to Canadian society.
The current patchwork of programs no longer addresses the needs of Canadians. The bill underscores our commitment to Canadians that in two years we will be at the threshold of a new system. New ideas in social programs are being developed everywhere as part of the reform process. We have set aside funds to start work on some projects. The budget provides $800
million for two years for joint strategic initiatives with provincial and territorial governments.
The same search for innovation has shaped the design of the program we are establishing to assist people affected by the closure of the Atlantic fishery. The bill provides $1.7 billion of new money over the next five years through an Atlantic groundfish industry renewal and adjustment strategy to be developed in consultation with the public and private sectors.
We are discussing with our partners the development of a number of new jobs through such initiatives as expansion of the eco-tourism industry and aquaculture industry and development of new energy sources or the development of rural amenities.
Our changes to unemployment insurance are good examples of real effort to find balance and create jobs. We have proposed four areas of change to the UI act.
First, we will drop the 1995 premium rate to $3 and freeze or lower it for 1996, which businesses have assured us will create jobs. This premium rate will be 10 per cent lower than the $3.30 rate that would otherwise be required under the UI act. Second, we will strengthen the link between work history and UI benefits. Third, we will increase benefits payable to low income beneficiaries with dependants. Fourth, we will improve the fairness of the UI program by amending and clarifying how the voluntary quit and misconduct measures are applied.
Small business told us that any real effort to encourage job creation must look at the impact of payroll taxes such as UI. By reducing premiums we reduce the cost of employing people. For example, our premium cut and the subsequent freeze will save a business with 50 employees $15,000 during 1995 and 1996.
How will we improve the linkages between work history and UI benefits? One would be by increasing the value we place on long term attachment to work and the other by raising the minimum entrance requirement to 12 from 10. The new rules recognize that no one has really gained from a system in which UI became a regular part of income instead of temporary support during unavoidable job losses.
Leaders in Atlantic Canada have told us the 10-42 system has done more harm than good for their economies. With their help our social security reform will create a more effective system.
It is not just in Atlantic Canada where this attitude of UI as a regular income is considered a problem. We have received letters from across the country telling us that UI should be available to help those in difficult situations and not be a way of life. We need something to break the cycle.
I also take this opportunity to ensure that adequate support will be available to those most in need. The changes to UI increase the level of support for those with low income and dependants.
As we begin to shift from our current set of programs to something more comprehensive, we have decided to reintroduce a principle that was part of UI for 30 years. To help reduce the incidence of 1.2 million children living in poverty we have established a benefit rate at 60 per cent for those with both low income and dependants. For other claimants the rate will be set at 55 per cent. Those with low insured earnings of $390 per week or less in 1994 and who have dependants will qualify for the 60 per cent benefit rate.
We have also taken action to reintroduce an element of fairness that was lost in changes regarding suspensions, leaves of absence and when a person quits shortly before a known layoff.
First, if a worker is suspended from a job for more than a week the worker is considered to have been fired for misconduct. As a result the time worked before the suspension is not counted if the worker has to apply for UI benefits any time after the suspension is over.
Second, if a worker takes a leave of absence from work the leave is considered to be voluntary separation from employment. As a result if the worker is subsequently laid off after returning to work he or she may have to requalify to receive UI benefits.
Third, if a worker quits a job one or two weeks before it would have ended anyway then the worker may be denied all UI benefits. These measures are unfair.
We proposed that a period of suspension should not be treated as a loss of employment owing to misconduct. We propose that rules for leaves of absence be clarified so that workers who return to the workplace are not penalized.
We propose that legislation be amended to provide greater flexibility in the rules for workers who leave a job that would have ended anyway.
Another concern about the Unemployment Insurance Act is that too much pressure is placed on the worker claiming benefits to prove just cause for leaving employment. We propose that in cases in which information from both parties, the employer and the employee, is equally balanced that the legislation be amended to give the claimant the benefit of the doubt.
Overall these changes to the UI program will be reducing program expenditures by $2.4 billion per year once phased in. This reduction is necessary to offset the loss in premium revenue as a result of rolling back the premium rate of $3. The changes also begin the process of reform.
The bill provides the legislative flexibility needed to undertake a number of pilot projects aimed at improving the administrative efficiency of the UI program. The UI program contains several provisions introduced in the 1970s that arguably no longer fulfil the original purpose and only impose a heavy paper burden on employers and clients.
The complexity of the current system has effects on employers, claimants and the government in the areas of cost, accuracy and levels of service. These pilot projects will test alternative methodologies to demonstrate that costs could be decreased, accuracy increased and service improved.
There will be effects on UI claimants. This is a significant package of changes. Even now fully three-quarters of UI claimants return to work before their claims run out. The minister, members of the government and I want to work with the provinces to develop a common understanding of the implication of UI changes for provincial social assistance programs.
Preliminary estimates of the potential effects for provincial social assistance costs are small but we are proposing that officials from both levels of government meet to refine these estimates.
We would use some of the funds that have been made available for the joint strategic initiatives to help address the potential effect of the changes to the UI program. The government remains committed to preserving an unemployment insurance system that provides protection for Canadians who have lost their jobs and are seeking work, one that operates with financial integrity.
Any substantial change to UI as part of the social security reform will happen only after Canadians have had a chance to think about their priorities. We recognize the concerns Canadians may have about our decisions but we have pursued a balanced approach to interim change. Canadians understand that unemployment insurance must evolve in concert with the rest of the social security system. However, UI is only one aspect of that system.
To stabilize planning for both levels of government we have taken measures in this bill for other elements of the system, the Canada assistance plan and established programs financing. The cap on EPF for post-secondary education represents an important piece of the intergovernmental social policy framework. This bill stabilizes the planning framework for provinces and territories while we build a new system. CAP transfers will grow by about 5.4 per cent in 1994-95 and remain at that level until a new system is in place.
The joint strategic initiatives I discussed earlier will contribute additional funding to help provinces and territories to get started on testing new approaches and social security ideas.
EPF is a core of federal support that benefits Canada's youth through the slightly more than $6 billion per year we provide for post-secondary education. The budget provides for modest growth in our transfers under this program.
Funding for post-secondary education is only one aspect of our support for youth. We will pursue new approaches to internship, innovative alternatives that help young people with the transition from school to work. We are launching Youth Service Canada and will have program participants contributing to their communities and helping to protect our environment by this autumn.
Mutual responsibility is a key principle driving our discussions about social security reform. The government will invest in people, but people must also make a contribution to society.
Let me conclude by saying the government is committed to the issue of jobs and hope for Canada. It was our number one objective during the election and has been ever since. With this bill we have taken action. We have dropped payroll taxes to create a climate for job creation. At the same time we have created a stable planning framework for the period of change that lies ahead.
During that time we will build a system which helps Canadians find jobs, skills and the sense of dignity they have so clearly requested.