Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Issue 7 - Evidence
OTTAWA, Monday, June 10, 1996
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill C-12, respecting employment insurance in Canada, met this day at 5:15 p.m. to give consideration to the bill.
Senator Mabel M. DeWare (Chair) in the Chair.
[English]
The Chair: Senators, we are dealing with Bill C-12. We have with us tonight Rick Clarke, who is the President of the Nova Scotia Federation of Labour.
Welcome, Mr. Clarke. Please proceed.
Mr. Rick Clarke, President, Nova Scotia Federation of Labour: Madam Chair, I will simply summarize our brief, which is basically the same brief as we tabled with the standing committee of the House of Commons.
I should like to thank you for adjusting your schedule to accommodate our appearance. At the same time, it is unfortunate that certain others will not have the opportunity to appear here, but I understand that the Senate committee does not have the same budget as the Commons committee had. There are many organizations and communities throughout Atlantic Canada that would love to have the opportunity to voice their concerns with respect to Bill C-12.
I want to talk about some of the concerns we have with specific areas of the legislation and the impact these cuts will have. I also wish to speak about the growing anger we see in the province and the region and our fear that as the impact of Bill C-12 unfolds, there will be even more concern and anger throughout the region and probably across the country.
At a meeting in September with the executive of the Atlantic Liberal caucus, the executive of the Atlantic federations of labour expressed that fear. As a labour leader and an activist, when I speak to groups, I am very cautious about how I address these issues because I have a very legitimate fear of the anger which exists. Unfortunately, the executive of the Atlantic Liberal caucus took that concern as a threat rather than a legitimate fear.
Another concern about this legislation is that there been no impact study done on what this will mean to the region, the province or the people. The office of the Minister of Human Resources Development could confirm that approximately 20 communities or municipalities in the province of Nova Scotia alone have written to the minister voicing concern about this legislation because it will have such a negative impact on the municipal economy and the people of those municipalities.
We initially have to question why the changes are being made. I know that other groups who have appeared here have asked the same thing. I want to touch on only two points in this regard. First, in the 1995 budget, the Minister of Finance said that there had to be a 10 per cent reduction in expenditures from the UI fund. That was achieved by the cuts levied in 1993. If that were the sole goal, there is no need to proceed with the proposed cuts in Bill C-12.
The second point is that the minister has been quoted several times saying that he wants to go after the abusers of the system. For the record, we do not support people who abuse the system. However, we believe that that is a smoke screen to hide another agenda, because only a very small percentage of people abuse the system. I am sure that the figure is not more than 1 or 2 per cent, yet this legislation will impact hundreds of thousands of people.
The rhetoric which is being used to promote this legislation causes me, as a Canadian, much concern. It is pitting individual against individual and province against province. It is singling out our region of the country. At a time when we talk of the need for national unity, this does not seem to be a way to build pride and strength. Rather, we fear that this will tear the regions apart.
People in the Atlantic region do not see UI as an opportunity to lay back and watch TV. People want to work. I believe the records will show that Atlantic Canadians are going down the road in numbers not seen since the late sixties or early seventies. As a result of the recent announcement of the closure of the Devco mine, for example, a number of miners have already gone to Alberta to work in the mining industry there. Thousands of people lined up at job fairs for part-time work in casinos. In Cape Breton, people are lining up by the hundreds for part-time work.
The rhetoric used to promote this legislation, that people do not want to work and would sooner draw UI, could not be further from the truth. From our perspective, the real problem in this country is not the UI system; the real problem is the unemployment crisis. That is a major area of concern.
We are getting away from the basic purpose of unemployment insurance - now employment insurance under Bill C-12; that is, to ease the impact of job loss on an individual, their family and their community. This has been completely thrown out the window with this legislation. In addition, it leads people to believe that workers set their hours of work, the amount of money they receive and how long they work at a given job. Nothing is further from the truth.
I had the opportunity of participating in a debate with a couple of MPs who said that people work only long enough to draw unemployment. That is misleading; workers can no longer do that or they are completely cut off from UI.
Some of our major concerns are in the area of intensity. Much of the employment in our region is seasonal, in areas such as fisheries, agriculture, forestry, school boards, shipbuilding and construction, just to name a few.
We also have concerns with respect to the new qualifying structure because of the part-time nature of our industry. I would point out that the fastest growth in employment in Nova Scotia right now is in the area of part-time work. In that regard, we went from 75,000 part-time workers in October, to 78,000 in December, to 84,000 in January of this year. It is unfortunate that we are getting into a part-time economy. At the same time, we are getting a piece of legislation which will hamper tens of thousands of workers.
We are told that this measure will benefit more part-time workers. Some 97 per cent of the part-time workers under the current UI system in the province of Nova Scotia qualify for UI or are eligible for UI with a 15-hour week. We anticipate that that number will be undermined greatly as a result of the new qualifying periods.
I want to give a couple of examples of that, in terms of the fear we have with respect to going to first-hour coverage. The labour movement has long thought that the first hour should be insured. However, we have never thought, nor agreed with the fact, that we should be more than doubling the qualifying period. It sounds nice when you talk fast and say that it is 12 weeks to 20 weeks and 420 hours to 700 hours in order to qualify. However, if you look at that with respect to the current requirement of a 15-hour week, it means that by going to a 35-hour week you will need 28 weeks to 46 weeks to qualify, depending on the UI area. At 20 hours a week, you will need 21 weeks to 35 weeks to qualify. A large number of people in our province do not make that number of hours. In terms of part-time work, that is a major negative impact on working women in the province of Nova Scotia. Unfortunately, it is working women and single parents who are in the part-time jobs. They are the ones who will be forced onto welfare.
The other concern we have with respect to qualifying is in regard to new entrants. This is unfair. First, 910 hours are needed, regardless of where you live. The official unemployment level for Cape Breton, for example, is 19 per cent. We have communities down there where the unemployment figure exceeds 50 per cent. We had a public forum in Port Hawkesbury at which a representative of one of the aboriginal communities informed us that the unemployment level in their community is 75 per cent. New entrants into this program, or those who are re-entering the field, will now have to have 910 hours. It matters not if they live in Cape Breton, where the unemployment rate is 19 per cent, or if they live in Hamilton, where the rate is 7 per cent. If you look at the degree of part-time and seasonal work that we have, this provision will make it impossible for people to qualify with 910 hours.
I have a copy of a piece of correspondence from the office of the Minister of Human Resources Development. The response from his office was kind of nonchalant, to the effect that, "Yeah, but that is only the first year. In the second year, they would be able to qualify with 490 hours." I suggest that it will be difficult for people to qualify with 490 hours when you look at the changes with respect to qualifying.
On page 7 of our brief, we talk about the value of UI to our economy. It is unfortunate that we have not developed the economy. One of the concerns we have is that the system being proposed under Bill C-12 will penalize seasonal workers because of frequency. However, it does not penalize the employer of those seasonal workers. The worker will be receiving lower benefits; but the employer who employs seasonal people and lays them off is not faced with a penalty. That comes back to the premise that workers set their own time to work. They do not. They are laid off by their employer; yet, we are penalized.
We should also look at the fact that a frequent claimant is a frequent worker. It is someone who is off from a job and then goes out to look for another job. If people are fortunate enough to qualify, then some of these new initiatives could be counterproductive. I say that because if we get into the zero-week period, someone may decide that they are now qualified and, perhaps, they will not take a job two or three weeks down the road because they will have two weeks which will amount to zero earnings. In fact, that will lower their benefit rate.
We have statistics which indicate that the changes in 1993 have taken about $189 million out of the pockets of UI recipients in the province of Nova Scotia. That is $189 million out of small business, out of our communities and totally out of our economy. People on UI who are making 55 per cent of their earnings do not have a whole lot to bank. Generally, the money comes in and then goes back out again. That is a major drain on our local and municipal economies.
On page 7 of our brief, we point out that one of the government's own reports on UI states that unemployment insurance has a stabilizing effect, preventing between 11 per cent and 14 per cent of job losses during a recession. A similar study found that the UI program saved about 35,000 jobs between 1981-85 and 25,000 jobs between 1990-93. This supports our concern about taking money out of the economy.
Some material prepared by our department of community services points out that in Nova Scotia, communities will lose approximately $39 million of income in 1997-98. That figure will rise to $54 million by the year 2001-02. Cutting the benefit period from 50 weeks to 45 weeks will affect 16,000 Nova Scotians.
The department of community services has done an impact study on this legislation and estimates that there will be a major increase on the welfare system in our province because people will be disqualified.
Some 9,000 Nova Scotians will receive less than 55 per cent of their earnings because they have less than 29 weeks of work. Others will receive 25 per cent of their earnings. In some regions, nearly one-half of the claimants would receive benefits below 35 per cent of their earnings because of the cuts and having had previous claims. As well, in Nova Scotia, some 38,000 UI claimants have received less than 20 weeks in 1993, the last year for which we have statistics.
Someone at home dubbed the budget that announced these cuts - not wanting to make a commercial plug - as a "Contact-C budget": the impact will be time-released.
In terms of passing on training to the provinces, we have two major areas of concern. Recently, we saw a cutback of $8.6 million to our education system which resulted in the closure of five campuses, a loss of 800 training seats and the loss of 100 staff. Unlike some of the other regions, it seems that we are having some difficulty getting the local labour force development board to recognize this fact. The board is intended to help the provinces develop a training program. I have to be honest - we are a bit sceptical as to where the training is going or what will happen to it.
According to the last statistics for 1993, over 50,000 claimants had a claim in the previous five years. Since 40,000 Nova Scotians worked less than 20 weeks and 50,000 claimants had claims in the previous five years, we project that we will see benefits reduced to somewhere between 27 and 35 per cent.
I wish to give you one other example of the fear that people have. At the CEC Centre on Goddington Street in the Halifax Metro area, approximately 100 community activists and labour people have been occupying an office for 76 days as at today. This office was established 30 years ago and provides a service to the region of Metro that has the lowest average income and the highest unemployment rate. They are working predominantly with young people in the region to counsel them on training programs and to get them off the street and into the job market. They have helped the community greatly in dealing with racism in hiring practices and discrimination because of education in class, if you will. They are fearful of losing that service to the community. For 76 days, people have been sitting in that office. I have been down to that office, and it is not necessarily a comfortable area in which to be sitting for 76 days.
My final point infringes on another one of the Senate committees. We are concerned that we are not addressing the unemployment crisis. Cape Breton probably has the highest level of unemployment in the province. The region is suffering greatly because of the crisis in our fisheries and will probably suffer as much or more than any other area of the province because of the intensity and frequency rule, along with the new qualifying rules. We are also closing down or substantially reducing one of the major employers, not only for Cape Breton Island, but also for the province of Nova Scotia, Devco, at a time when we are in a crisis as it is. That in itself is putting a lot of strain and concern onto the municipalities. It is very poor timing for this to be happening.
I could go through other parts of the written brief, but I would stress that we must somehow impress on the government, hopefully through your committee, that we are talking about people. They ought to be doing an impact study on this legislation. There is no justification whatsoever for the cuts when one considers that the UI fund will be in a surplus. The fund is totally funded by employers and employees.
There has been very little consultation. I have had this debate with almost every MP in the province of Nova Scotia. They had a few public meetings on the general social safety net, but no actual consultation on what is being proposed under Bill C-12. For that reason alone, this bill ought to be hoisted. We are not opposed to change, and I must make that very clear for the record. However, it should be changed in close consultation with those who are paying the freight, and that is the employers and the employee organizations that are willing to sit down and talk about what should be done for this UI system.
Senator Cohen: Mr. Clarke, thank you for appearing tonight. You certainly covered the waterfront. You made us very aware of the fears and the frustrations that we are all experiencing in Canada. We know that Canadians want to work. We know that the unemployed are not responsible for their unemployment. In the midst of this unemployment crisis, the changes to this EI program cannot be justified in terms of cost.
You did not touch on one thing on which I wish to get your opinion. When the executive board of the building and the construction trades met with us, they were interested in pursuing the banking of hours or the carrying forward of hours in the labour and construction field. Have you any comment on that point? They felt that it would encourage people to go back to work, even if they would get one hour of work, because they could add those hours up and use them over a period of a year.
Mr. Clarke: I mentioned that we are not opposed to insuring the first hour. We believe that every hour of work should be insured. Our concern is they have taken that concept and expanded it from the 420 to the 700 hours. If you work, you should get credit for it, and it should be held until the qualifying period.
Senator Cohen: I wanted to clarify that. I am not sure that I did.
Mr. Clarke: We have been considering that. The labour movement must take a role. A number of people are saying that we should look at how we schedule our work time today. Sometimes, employers automatically throw their hands up and say, "Here we go for the 35-hour week." I do not see anything wrong with that. Maybe that is utopia, and maybe it is time that we reverted to a 35-hour week. It has been suggested within the labour movement that we put a cap on overtime. We ought to be finding ways to employ more people. Perhaps it could be something along the lines of only working so much overtime and getting more shift work going. In that way, we would be contributing towards providing job opportunities. With this new system, people will be in such a rush to get their hours in right away that we will never make inroads to trying to reduce the overtime.
Senator Bryden: I come from New Brunswick. For a good part of my working life, I worked as a labour lawyer. I made a very good living since there was no one else representing the labour side in New Brunswick. I represented labour in New Brunswick most of the time, and I had the opportunity to work on behalf of UI claimants. I also live in a fishing community where most of my neighbours are either fishermen or work in fish processing plants.
It is a very considerable concern to me as a citizen, as a professional and as a member of Parliament that we try to provide the benefits of the Canadian economy to as many Canadians as possible, no matter where they live. You indicated that there is anger out there, and I do not disagree with that.
However, I am also concerned about an anger that is larger than the one that you and I see in our communities. For a long time in this country there has been a very considerable effort by very influential groups and politicians, in some instances, to dramatically reform the unemployment insurance system.
It is my belief that it will be reformed. Many of the people who oppose this bill are doing so not because it does not provide enough benefits or does not support seasonal workers or the unemployed as much as it should, but because it does not go far enough in its restrictions.
This bill has been considerably amended as a result of the House of Commons committee hearings to make improvements such as looking after people whose incomes fall under the $26,000 limit.
There is a concern which perhaps has not yet been expressed: If this bill as amended is defeated, leaving us with the current system unchanged, I believe that that system will stay in place for a very short period of time. The next twist of this crank will not be a Bill C-21; it will not be a Bill C-12; it will not be a Bill C-12 as amended. It will likely be a much tougher and more onerous type of legislation.
Have you and your federation addressed that concern?
I put my question that way because this is not a choice between Bill C-12 as amended and paradise. It is a choice between Bill C-12 as amended, perhaps as amended by this committee, and something else. Have you thought about what that "something else" might be, for example, after the next election if there is a coalition or in that type of situation?
Mr. Clarke: I suggested that the bill should be hoisted. I say this in all sincerity. I understand that the CLC has already appeared before you, as have others in the movement. I do not know if they said this to you when they were before the committee, but I suggest we bring the stakeholders together. The question being begged today is this: Who is calling the shots?
I have been very fortunate since starting as a helper in the Halifax shipyards in 1969 to have had continuous employment. I did not put my hand up and say, "Take 5 cents off my premium." One side is being heard, but the other stakeholder is not.
All we are asking is that you sit down and talk to us. We are willing to look at modifications and improvements to make the system fit today's new work environment, but we are always left in a reactionary position. Legislation comes out and we are left in the position of fighting it. I do not think that that is fair.
Many people are not in touch with what is happening out there today. The people who are saying that this does not go far enough are not the ones who are getting frustrated. I have suggested that history may record this period of time as being harder on people than even the Great Depression because the banks and the financial institutions, in their kindness, have lent us lots of money. We are up to here in debt. People are losing their homes. Their children are losing educational opportunities. They will not sit by and allow it to happen.
The only thing keeping this country going without a whole lot more problems is its caring attitude. Why are we taking this all away? Is this where we want to go with our programs, to cut back on universality and cut back on helping our neighbours? Maybe this should be an issue for an election: Is this the kind of Canada we want?
I would volunteer through the labour movement that we can, if this bill were to be set aside, sit down and decide just what kind of system we want for Canada. I would volunteer immediately to work in that effort, but the stakeholders must be involved.
Senator Bryden: I do not consider myself an expert on this, but it is my understanding that since about 1994, a discussion paper on reforms has been circulated. There were consultations at either a white paper level or a green paper level. I do not know whether you participated in it or not.
Hearings were held by the Commons committee. Some House of Commons members sat in people's kitchens, went to town hall meetings, and discussed this with their constituents. Many of those MPs are from Atlantic Canada, be it New Brunswick or Nova Scotia or Newfoundland, where many people rely on UI.
You ask about the stakeholders. I put it to you that the stakeholders are well represented by Members of Parliament of whatever stripe elected by the citizens of my province and yours. Those MPs have met and consulted their constituents and made substantial revisions through their committee process by amending Bill C-12.
There is a time for consultation. We can consult and consult forever. However, there comes a time when the Parliament, the duly elected House of Commons and the Senate, must take the best action they can. I take it that that is what is happening here. In your position, you say we should pause or start all over again. Is that what you are saying?
Mr. Clarke: I must ask, what is the crisis today? If the UI fund were in a deficit situation, I would probably still sit here and argue about these sorts of changes. If that were the situation, the government could probably more easily justify drastic action because the money would need to come out of general revenue to balance off the expenditures of the fund.
That is not the case. We are in a surplus situation. There are no crises. It is anticipated that we could hit a $10 billion surplus by the end of this fiscal year. If this is true, then what is the rush? Why not sit down and talk with people?
You mentioned the Commons committee. I can tell you what it was like to go before that committee. I feel more comfortable here because I sense that at least we are looking for change. I appeared before the Commons committee by video hookup, and the minister was bellowing across the wires that there would not by any changes to this legislation.
People are not comfortable with a process which makes it appear that we are just going on a fool's errand. I was very pleased when I heard that this committee would take briefs. At least it gives us the opportunity to be heard. There will always be people opposing legislation. How many times do you hear the phrase, "Abolish the Senate." There is always someone out there giving their opinion.
However, there must be justification for changes and I see no justification for what the government is doing today. Rather than cause such turmoil in the country, why not sit down and talk to people? I have tried. There are only 11 MPs in the province of Nova Scotia. I participated in the discussion on the white paper. I participated when the committee chaired by MP Francis LeBlanc, then in opposition, travelled the country. There has never been a report on the recommendations of that committee or the overwhelming view heard by that committee.
People are being asked to participate in something that is not sincere and legitimate and that is causing a whole lot of concern and hurt.
Senator Bryden: You raised the issue of the fund being in surplus. Are you aware that people take two basic approaches to this program? One is that it is an insurance program and it acts the way that any insurance program does - that is, you pay in and you get out basically what you pay into it. The other approach is that it is more than that, that it involves some sort of evening out of benefits across the way.
There are those who say that you can fix the surplus by simply returning the premiums that you have charged to people who are rarely unemployed, if ever, since they do not use the insurance, and have the Atlantic Canadians, the Northern Manitobans - and I do not want to pick on just us - and people from Northern Ontario who are in a seasonal business. If they contribute only $90 a year in premiums to UI, then that is the basis upon which they should draw. These people will tell you that we can eliminate the surplus very rapidly by simply returning the premiums to those people who never use them.
Mr. Clarke: I hope I did not lead you to the thought that I wanted to eliminate the surplus.
The Chair: I realize that there will be a reduction to all the provinces because of the reduction of UI payments, but the minister assured us when he was here that it would be offset by the amount of money that would be forwarded to the provinces for work sharing, job creation, self-employment assistance and wage subsidies. He said that it would balance itself out because of the amount of money that would be returned to the provinces to create full-time jobs.
I have been sitting on these committees for almost six years now. When witnesses come forward and express to us the fact that a particular bill is not acceptable to them, we appreciate it when they also come forward with amendments for us to consider, to make the bill more attractive or more acceptable. However, that does not happen very often. I should like to put on the record that we are able to accept those suggestions to the committee and we appreciate it when it happens.
I should like your comment on the minister's statement about the influx of money into the system.
Mr. Clarke: Our department of community services has taken that into consideration and they still see a net loss to the province. Those are not our figures; those are the province's figures and its projection. I believe there will be a net loss.
I have been working with people from one end of the province to the other, breaking it down to see how it would apply to each of their scenarios. I do not think anyone really has a good grasp on how severe this will cut. That is my concern. There has not been a full impact review.
With respect to your point about amendments, I could not agree more. It is unfortunate that we are in a crisis situation, in that we only had from June 6 until tomorrow to come before the Senate committee. Our office, including myself, is a three-person office. We have been trying to work with people to explain this bill to them. We have been invited by many communities to do so. It is very difficult for us to sit down with them.
This comes back to my point about consultation. I know that we can find a system with which both employers and employees can live, but it must be legitimate.
I have a concern with the premium. I do not want people to think that I am asking to do away with the surplus. We are hearing that the private sector obtained a 5-cent premium reduction to create jobs. We see no evidence that that is happening. That is the crisis. We probably would not be sitting here talking today if we did not have an unemployment crisis. Large corporations are recording obscene levels of profits today, banks being a prime example, while people are being laid off. In fact, 2,500 to 2,800 people were laid off in 1995.
Senator Murray: First, concerning the reduction in benefits in Nova Scotia, the Department of Human Resource Development has put out these statistics and the impact under Bill C-12 with the amendments. There will be a reduction in benefits in Nova Scotia of $37 million next year, but it rises to $63 million in 2001-02. Your numbers were a little high for next year, but a little low for the year 2001-02, at least compared to the numbers put out by the department.
Concerning the net loss or the net gain, that is quite impossible to calculate. The minister has said that of the $2.1 billion savings, $800 million will go back into so-called "employability" measures. I do not know what that will amount to in Nova Scotia, although I confess that in the last day or two - and I am sure you have seen it also - I have read some speculation in the Halifax Chronicle Herald that approximately $250 million will be used for job creation. However, I am not sure whether or not that was part of the $800 million that was supposedly redirected from the UI fund.
Does the thought of $800 million nationally - that is, with Nova Scotia getting its proportionate share for "employability" measures - fill you with some, any or much hope in terms of attacking the unemployment problem in that province?
Second, you have said - as has Bob White and others: "We would be willing to cooperate had we been asked, and we would still be willing to cooperate in redesigning or improving the unemployment insurance system in this country."
What do you identify as the problems that need to be solved?
I will make a comment on that now, because I heard our friend Senator Bryden talking about some of these matters. I have been trying to get at the policy rationale for this bill since day one - that is, since the day the minister came here - to find out whether there is a policy rationale, other than the fiscal one, namely, cutting back. It is very difficult to say. I look at what is being done for part-time workers. From hour one, while everyone is being brought into the system, in the sense that they will pay premiums, most of those folks who are working between 1 and 15 hours a week are not likely to be able to take advantage of the system at all or to get benefits from it. Those working between 15 and 34 hours a week appear to be losers. Similarly, seasonal workers appear to be losers.
I pointed out a couple of studies in this committee the other day, which were done on behalf of the department itself, on the whole question of whether UI weakens one's attachment to work or weakens the intensity of one's job search. The studies seem to indicate that UI is not the problem. What is the problem? The seasonal people are victimized by what is proposed here. Is there a mobility problem? The people from the construction industry who were here the other night said, "Yes, there is." There are times when labour market construction is very tight in Ontario and yet there was a surplus in New Brunswick, or Nova Scotia, or wherever. I am not sure that UI is the block to mobility in that case or whether it really is a mobility problem.
Anecdotally, you and I know from travelling this country that everywhere we go, we see nothing but former Newfoundlanders, Nova Scotians and New Brunswickers.
What about collusion? There is some suggestion that there may be a fair bit of collusion among employers and employees in taking advantage of the system, timing layoffs to fit in with the UI regime. Perhaps there is. However, is the government attacking that problem the right way in this bill? Why do they not go after the employers? Why do they just go after the employees in this way?
Senator Murray: As to the employability measures, some portion of $800 million will be going to Nova Scotia. Perhaps it is $250 million. That does not sound unreasonable.
In terms of your offer of cooperation and redesigning the UI scheme, what are the problems you see, as distinct from the problems that government or employers see, that need to be fixed?
Mr. Clarke: The first problem is that we have not been providing or allowing the banking of hours for people to be insured for first hour's work.
The second point is a major area of concern. Even though the government stopped making contributions to the fund, they have still been using the fund for developmental uses, and that is wrong.
Senator Murray: Yes.
Mr. Clarke: That is what led to much of the drain on the fund.
Those are a couple of areas right off the top that we could begin work on to get a focus on where we are going.
If we are talking training, for example, we should be doing it. I mentioned labour force development boards. They have business, labour and equity groups sitting down together. The concept is to ensure that there are people ready for jobs that may be coming up. I think we can do great things in that area.
However, I have a concern if the $250 million they are talking about is to be coming out of the fund. That comes back to my concern that developmental uses are coming out of a fund that was not intended for that purpose.
Senator Murray: Would you go back to an insurance fund and do away with the developmental uses completely?
Mr. Clarke: The way we have had it, yes. It has been universal, it has been across the province. If the money comes out another way, should we not be part of that? Senator Bryden mentioned the people who have never drawn UI. If I may use myself as an example, I do not mind paying the premiums for someone who is not fortunate enough to have a job.
The Chair: Mr. Clarke, I know there is much to discuss tonight, but we exceeded our time. We have other witnesses waiting. We appreciate your attendance before this committee. We could talk about this all evening, as you know.
Senator Murray: We will, but with other witnesses.
The Chair: Honourable senators, the next group of witnesses are representatives from the Greater Moncton Chamber of Commerce. We have with us Michel Desjardins, the executive director, and Jeff Kelly.
Please proceed.
[Translation]
Mr. Michel Desjardins, Executive Director, Greater Moncton Chamber of Commerce: Honourable Senators, I'm very pleased to see that New Brunswick is well represented around this table. Mr. Kelly will make the initial presentation of our brief in English. Afterwards, we would be very pleased to answer your questions in French or in English.
[English]
Mr. Jeff Kelly, Entrepreneur, Greater Moncton Chamber of Commerce: Madam Chair, honourable senators, it is a real honour to be here on behalf of the Greater Moncton Chamber of Commerce. Thank you very much for this opportunity. I know this group has spent a lot of time and effort on this very important legislation regarding employment insurance.
By way of introduction, the City of Moncton is situated in southeastern New Brunswick, along the Petitcodiac River. Across the river is the town of Riverview, and bordering to the immediate east of Moncton is the neighbouring town of Dieppe. Combined, these three communities make up the Greater Moncton area with a total population of 110,000 residents.
Having relied heavily on the railway industry during most of the 1900s, Greater Moncton is emerging today as a forerunner in the new economy. Over the past few years, economic development efforts have focused on new technologies, business services and the retail sectors. The unemployment rate in the region in June, 1995 was 9 per cent.
The Greater Moncton Chamber of Commerce represents close to 700 employers in the area and is the main voice of business in Greater Moncton. The Greater Moncton Chamber welcomes the opportunity to present its views on Bill C-12. Our brief speaks mostly in support of the proposed legislation.
Although the Greater Moncton Chamber of Commerce has not been actively involved in the debate on social security reform and the unemployment insurance reform thus far, our organization has nonetheless monitored the intervention of affiliates like the Canadian Chamber of Commerce, the Atlantic Provinces Chamber of Commerce, and the Bouctouche Chamber of Commerce in their efforts to improve our system.
Like our sister organizations, the chamber believes that a good employment insurance system should embody several key features. Among those key features is an effective and equitable system. The new employment insurance system should be responsive to the different job markets across Canada. The Greater Moncton Chamber of Commerce accepts the position that a qualification requirement based on total earnings and hours worked, instead of weeks with a weekly minimum and maximum insurance coverage, is better tailored to today's work patterns. The hours-based system values work, creates positive incentives and simplifies administration.
Another feature under Bill C-12 is that a claimant will maximize his or her employment insurance benefits by working at least two weeks more than the regional minimum entrance requirements. In other words, the benefit level would be calculated by taking a claimants's total earnings within the preceding 26-week period and dividing by the numbers of weeks worked, or the minimum divisor, whichever is higher. This should provide an incentive for work as more work will clearly mean a higher weekly benefit level.
In an attempt to provide even more incentive, the Bouctouche Chamber of Commerce recently recommended to the Standing Committee on Human Resources Development that the divider climb as the hours climb, but at a slower rate, to a 1,500-hour cap. As was stated during the Bouctouche Chamber of Commerce's presentation, what that would do is encourage people to work as much as they can because it would make their insurable earnings a bit bigger every hour they add on between 420, which is the minimum in high-unemployment areas, and 1,500 hours. We recommend the adoption of an enhanced divider rule as proposed by the Bouctouche Chamber of Commerce.
Bill C-12 does take into account specific circumstances of three types of claimants - namely, frequent users of the system, high-income earners, and low-income families - and has tailored benefits received accordingly. The intensity rule, for example, which gradually reduces the benefits received according to the number of weeks an individual has collected insurance benefits in the previous five-year period, is a step in the right direction. We believe, however, that the maximum reduction of 5 per cent of benefits alone may not be an effective deterrent. We submit that this feature should be combined with higher premiums for those individuals who frequently use the system. This proposal would have the advantage of bringing the program more in line with the concept of an insurance plan; for example, premiums and coverage received vary according to risk. The return to a true insurance plan, rather than a system more akin to income support, has been advocated by the Canadian Chamber and the Atlantic Provinces Chamber in their submissions to the federal government's Standing Committee on Human Resource Development.
Bill C-12 also introduces a new rule for high-income earners, whereby claimants who have higher incomes and have received benefits in the past five years will have to repay a portion of their benefits through the tax system. The Greater Moncton Chamber of Commerce welcomes this new rule, as it is a simple matter of equity and justice.
We are also pleased to see provisions in Bill C-12 which provide for supplementary benefits for low income earners, as was highlighted in a recent brief by the Canadian Chamber of Commerce to the Commons Standing Committee on Human Resource Development. The brief stated that this will direct additional resources to those people who most need it in order to get back into the employed labour force.
Affordability is another key feature of a good employment insurance plan. The Canadian Chamber of Commerce and the Atlantic Provinces Chamber of Commerce have already indicated their support for the creation of a reserve in the employment insurance account. Both have stated, however, that a $5 billion surplus in the EI account is a reasonable cushion. Any surplus in excess of this amount should be remitted to those who have contributed to it - employers and employees - in the form of lower premiums. The Greater Moncton Chamber of Commerce supports this position.
The position of the Greater Moncton Chamber of Commerce, and indeed the whole Canadian business community, on the issue of payroll taxes is clear and unequivocal: payroll taxes hinder job creation. We are, therefore, encouraged by the reduction in 1996 of the premium rate for employees from $4.20 to $4.13 for every $100 of the worker's insurable earnings. Similarly, we welcome the provisions in the bill which reduce and subsequently freeze the maximum insurable earnings. We believe that these features, along with a cap on the amount of the surplus in the EI account, will offer employers and employees a reasonable reduction in payroll taxes. This will stimulate job creation, increase income tax revenue for the government and encourage self-sufficiency for Canadians.
The transition from a system based on weeks of work to one based on hours will have an impact on small business. Small business will now have to pay EI premiums on all hours worked, regardless of the fact that an employee works less than 15 hours per week. Small business is a key economic engine in Greater Moncton. We note that Bill C-12 provides for a temporary, partial premium refund for businesses with fewer than 25 employees that experience an increase in their premium payments of over $500. The Greater Moncton Chamber of Commerce believes that this is a very modest relief for small business. We recommend that the $500 threshold be eliminated and that small business be eligible for a premium refund for the first dollar of premium increase over the 1996 premium.
Flexibility is the final feature that we believe is important to good employment insurance. The government has committed itself to monitoring the impact of reform on the various job markets in the country. It will be particularly important to assess the fallout the reform has on seasonal economies and to adjust public policy accordingly. The Greater Moncton Chamber of Commerce is pleased to read that by the year 2001-02, $800 million of savings will be reinvested in employment benefits and that funding will be distributed in such a way as to offset the effects of EI reform. This provision, designed to equalize the impact of EI reform nationally, should emphasize the need to help Atlantic Canadians adjust to a new system.
Of the five benefits identified in Part II of the bill, we are particularly pleased to see that resources will be available for targeted earnings supplement. This should encourage seasonal workers in the Greater Moncton area to take available work during the slow period.
In conclusion, the Greater Moncton Chamber of Commerce believes that unemployment insurance reform is necessary if Canada is to prosper in the global economy. We are also of the opinion that a good employment insurance program should be effective, equitable, affordable and flexible. For the most part, Bill C-12 offers those features. However, some aspects of the bill could be improved; namely, the new devisor rule, the intensity rule and the rule on premium refund for small business.
[Translation]
Senator Losier-Cool: Thank you for your presentation to our committee. Welcome to the people from New Brunswick! My question is very simple. At the bottom of page 2 of your brief, you talk about "enhanced divider," a suggestion made by the Bouctouche Chamber of Commerce. I know there are a lot of seasonal workers in that region.
Would the managers of those seasonal workers agree with what you call "enhanced divider"? Would they support that idea?
Mr. Desjardins: You mean unions?
Senator Losier-Cool: There are unions and groups that represent all the coalitions of seasonal workers. You often see them on television. Their lobbying is focussed on the intensity rule, really, and the divider. How would they react to this suggestion?
Mr. Desjardins: This recommendation was put forward by the Bouctouche Chamber of Commerce, a group that represents employers. How did employee groups react to the proposal?
To my knowledge, they may not have had the opportunity to react. But the purpose of this proposal is to give people more incentives to work.
After a certain number of weeks, workers can then get into the system. The longer people work, the higher their benefits. So it is an additional incentive for them to work.
[English]
Senator Murray: You have told us that the unemployment rate in Moncton is 9 per cent. That is lower than the average in the province as a whole, is it not?
Mr. Kelly: That is correct.
Senator Murray: Do you know what the rate of unemployment is on the Miramichi, for example?
Mr. Kelly: It would be much higher.
Senator Murray: Yes. And on the Acadian Peninsula?
Mr. Kelly: We are very sensitive to -
Senator Murray: I do not think you are very sensitive. You state, on page 3 of your brief, that the intensity rule, which has been protested by everyone who knows much about seasonal employment, particularly in the Atlantic provinces, is not strong enough. You say that "the maximum reduction of five per cent of benefits alone may not be an effective deterrent."
As you correctly point out, the intensity rule gradually reduces the benefits received according to the number of weeks an individual has collected insurance benefits in the previous five-year period. Under this bill, a person could be penalized for a long siege of unemployment four or five years ago.
Mr. Kelly: If they have collected over 20 weeks of unemployment, they are penalized by 1 per cent. However, we believe that the intensity rule is more acceptable because it does not apply to people earning $26,000.
Senator Murray: I beg your pardon. I have not heard a witness before this committee say that. Premier Savage from Nova Scotia appeared before another committee the other day and spoke very positively of the three important amendments which have been made to this bill in the House of Commons. I suppose that was one of them. However, I have not heard a soul before this committee - and colleagues can correct me if I am wrong - say that the special arrangement for those making less than $26,000 a year is really significant improvement in terms of the intensity rule.
I find it quite extraordinary that you would come here suggesting that the intensity rule is not strong enough.
Mr. Kelly: Inasmuch as the intensity rule will only start kicking in two years from now, we believe that it is an incentive for people to start thinking of repositioning.
Senator Murray: People doing seasonal work, be it cutting trees, processing fish or whatever, do the job for as long as it lasts. We know that. Where do they turn for alternative employment? The reality is that in most of those places there is not much alternative.
Mr. Kelly: The Greater Moncton community is very dependent on those workers and the unemployment insurance that comes into the economy from it. We recognize that our economy is very much dependent on seasonal jobs.
However, we see other things like the areas in which hours instead of weeks is used. Perhaps these same people can find other work in other areas and be motivated to move into other areas and to try other types of work. That is what we see as some offsetting benefits.
Senator Murray: In your brief on page 4 and 5, you state:
It will be particularly important to assess the fallout of the reform on seasonal economies and to adjust public policy accordingly.
I think the government and we, who are charged with voting on this bill, ought to consider the very likely fallout of the reform, not only on seasonal economies but also on people who make seasonal economies work - that is, the seasonal employees.
Senator Bryden: There was a reference to the 15 hours that used to exist and that insurability from the first hour will affect small business. Have you heard the 15-hour exemption that exists under the present system referred to as the "glass ceiling"?
Mr. Kelly: No, I have not, sir.
Senator Bryden: Those who refer to it as a glass ceiling mean that employers hire part-time employees for 14 hours a week, after which they hire another part-timer for 14 hours a week. They do that, at least in some instances, to avoid having these employees work 15 hours a week, at which point the employer has to make payroll deductions. One of the alleged benefits of this bill is that it breaks that glass ceiling; it would prevent those employers who use it from using it and from it being a benefit.
My next point is somewhat in reply to what Senator Murray raised with the last witness. I know, as probably everyone in this room knows, that many people who work on a part-time basis work for many employers. I have a good friend who raised his family by working three or four jobs every week. Theoretically, he could work 44 hours a week for five different employers and never qualify under the old system, whereas at least under this system he will qualify because he gets his 44 hours. Is that fair?
Mr. Kelly: Senator, we are not against that change. All we are saying is that it will impact on small business.
Senator Bryden: Senator Murray mentioned the $26,000 floor. It is my understanding that that has a significant impact on many lower-income and seasonal-work communities in New Brunswick where the family income in many instances is less than $26,000. I do not have the figures with me. However, I have seen them; hopefully, I can provide them to the committee.
Is it the case that in addition to the $800 million that will be reinvested by the year 2001, there is a further $300 million for the Atlantic provinces?
Mr. Kelly: There is a transitional fund of $300 million. I do not know if that is for Atlantic Canada.
Senator Phillips: It does not say to what area it will apply.
Senator Bryden: Senator Murray mentioned something about there being collusion between employers and employees. I do not know about the existing system; however, I am familiar with the system as it was a number of years ago. There was such collusion then. Employees would receive their paycheques on Friday, endorse them over to the employer and then get their UI. When they had achieved whatever number of weeks was required, the exchange was made and someone else would do the same thing. That does not happen any more, but it certainly did.
Senator Murray: I was not thinking of anything quite as grave as that.
Senator Bryden: I have sat at the table with eminent people in government. I do not know whether this could be termed "collusion" or not, but it was certainly using the system. Some of us here could give good examples of that. For example, if your seasonal industry was hard hit and you only had 10 weeks when you needed 12, you knew that those families would not be able to collect UI next winter; they would have to be on social assistance, which is a provincial responsibility. Therefore, some governments were known to find work weeks which allowed employees to clear bushes for two weeks, or to clean up parks for two weeks in order to qualify for unemployment insurance.
I do not know, Senator Murray, whether that was collusion or just a smart manipulation of the system. However, I believe many people have learned the system well. I refer not only to governments, but also to individuals and families, some of whom are my good friends, who have been able to use the system for more than one generation. A revision is required for a more legitimate use of the system.
I agree with Senator Murray. I think you are a bit Draconian in your approach to the intensity rule. Most people prefer to work; if given the opportunity, they would do that.
Senator Cohen: Last week, we heard from the Canadian Federation of Independent Business, which represents 87,000 medium- and small-sized businesses. Although they support many of the proposals in the current UI system, they said that if the current proposal to move to an hours-based system, or first-dollar coverage, is not amended to ensure that UI costs do not increase on small businesses, then they are opposed to the bill.
Would you comment on that, please? I do not think that was in line with your thinking.
Mr. Kelly: No, it was not.
Senator Cohen: We have heard from small restaurant owners and the small shops which are in very competitive positions. Gasoline stations take a lot of their profit. However, they have fixed costs. Once they have to pay these premiums, they cannot get them back from the customer because that would put them out of business.
I wanted to hear your thinking in that regard. Being a chamber of commerce, I thought that you might have thought about small business in that area.
Mr. Kelly: We realize that that will be an additional cost for small business. We would like that to be reflected in the bill. However, the Greater Moncton Chamber of Commerce is not opposed to that change in the reform of the unemployment insurance system.
Mr. Desjardins: Our recommendation is aimed at providing more relief for small businesses in the context of this reform. We are talking about the $500 threshold here.
We say that it should be eliminated so that small business be eligible for a premium refund on the first dollar of premium increase over the 1996 premium.
Senator Cohen: I bring the committee's attention to an article citing the Royal Bank of Canada's forecast that the Atlantic provinces would be hard hit by cuts, and included in the areas that would make it difficult for us are reductions in unemployment insurance. I wished to mention that because we are trying to make this a better bill. We must hear both sides of the story, and we also must take into consideration these other areas.
Senator Murray: Senator Bryden, the number you were looking for is that in New Brunswick, there would be 18,000 people receiving the family income supplement. That would be 18 per cent of all claimants. Of those 18,000, 14,000 would have been affected by the intensity rule. They are made whole in terms of the family income supplement, but you should not assume that the family income supplement is necessarily an improvement over the present provision for low-income claimants with dependents. The testimony is quite mixed on that.
Senator Bryden: I appreciate that. I will do more work.
Senator Phillips: My question is a follow-up to one asked by Senator Murray concerning the intensity rule.
How many members of your Chamber of Commerce employ seasonal workers when they have finished, whether it is logging or fish plants? For what term do you employ them, and at what salary?
Mr. Kelly: Senator, I would not have the answer to your question. As Senator Murray indicated, the unemployment rate in Moncton is much lower than in the outlying areas. There would be by far fewer seasonal workers employed in the Moncton area than the rest of the province. We will certainly take the feedback we have received from Senator Murray and Senator Bryden and send a subcommittee back to the chamber. We appreciate the chance to be here.
Senator Phillips: Your testimony would have been much more credible had you stated that you were willing to hire a certain number of employees who were laid off.
Mr. Kelly: I think that is what we are approaching, as mentioned on the last page, when we refer to a targeted earnings supplement. We believe that that is the best part of the new amendments for the Greater Moncton area. In our area, we could use seasonal workers by using that targeted earnings supplement. We do believe that we could take on some seasonal workers in our economy because seasonal workers are very important for our economy.
The Chair: Thank you very much. We appreciate your presentation before the committee.
Our next witnesses are from the Canadian Conference of the Arts. We have with us tonight Keith Kelly, the National Director, and Phillipa Borgal, Policy Analyst. We are looking forward to your presentation. Several senators have indicated that they are interested in hearing what the arts had to say about the EI bill.
Mr. Keith Kelly, National Director, Canadian Conference of the Arts: It is very good of you to make time for us on this very important matter.
The entire effort to reform the unemployment legislation is to try to, as we understand it, adapt the program to the changing realities of the Canadian labour force. In our view, it does not entirely succeed in that regard.
The Canadian cultural sector, according to Statistics Canada, employs 670,000 people in all disciplines: dance, music, theatre, film, sound recording, book publishing, writing. Over 50 per cent of those people are self-employed. Many of those people hold, on average, 1.6 jobs at any given time to try to earn a livelihood.
For us, this not only creates revenue, but also creates some problems because some of the mixes of employment that artists and cultural workers have to resort to. Some of these people may be involved in employer-employee relationships; others may be self-employed. As an employee, they are paying into the unemployment insurance program. When their work as an employee ends, they cannot then apply for benefits, for which they have been paying as an employee, because they are self-employed.
This is not a hypothetical problem. Artists from all parts of the country have been caught in this trap. In one case, a playwright in Vancouver was reassessed as a result of reporting income as a self-employed person. He was being asked to pay back, I believe, $30,000 worth of benefits that he had received under the program because he admitted to being self-employed as well as an employee. For us, this is a very real problem.
With all of that employment - that is, 1.6 jobs per cultural worker - we certainly do not see the handsome returns in terms of annual revenue. The average income for people in the cultural sector is $27,000 a year. Visual artists earn about $7,800 a year. There are artists and creators who, on average, earn about $11,500 a year. This is, you can see, not the kind of profession where being penalized by paying for benefits which you cannot receive contributes to the financial stability of a household.
The other aspect of our sector which is perhaps unique is that the artists who work in theatre companies, dance companies, symphony orchestras are employed for a season, and the seasons vary in length. A season could be 24 weeks or 32 weeks. Once that season is over, there is no steady source of income. The intensity rule, as proposed, would very seriously affect people for whom seasonal work is a reality. It is not a preference, it is a reality. We have formulated some recommendations about how the intensity rule may affect the arts sector.
If we were really interested in designing a program that began to respond to the changes in the Canadian work force, and if we are serious about calling it employment insurance, then I think that anyone who is prepared to pay the premiums should be allowed to participate in the program. So that if a self-employed person, certainly, outside of the arts - this is not special treatment we are looking for - wanted to make the contribution for both the employer and employee and could respect the other rules of the program, we see no reason why that person should not be able to participate in the program.
Self-employment is one area of the labour force that is growing quite rapidly. We know that it is already high in the cultural sector. But we also know that outside of the cultural sector, it is a form of livelihood that is becoming more and more popular, especially as companies downsize, as governments downsize, and create a whole new pool of consultants. We know that there are people out there whose numbers are growing, and we should really try to find some solution for them within this legislation.
It is our hope that we are not going to reopen the employment insurance program for scrutiny every two years; and I am sure that after surviving these hearings, it is your hope as well. However, that only increases the importance of making sure that we build a program that really meets the changing needs of the Canadian labour force and one that is as inclusive as possible.
We certainly recognize that there are some components in the package the government has put forward that will be of assistance in the transition to self-employment. However, survival is more than just the transition period, and I think there should be some protection given to these workers.
I should acknowledge that the cultural human resource department has been working with the cultural human resource council to provide services to some self-employed artists and cultural workers. Our organizations have really begun to respond to these realities. One can think of the dancer transition resource centre which is there to help dancers at the end of their career find another career.
I can tell you that for the ten years the centre has been working, it has been a real challenge for them to find a durable, stable partnership with any government department because, once again, they are dealing largely with self-employed people. So while the rhetoric may be there that there are opportunities to work with self-employed people, the reality has not completely sunk into the government culture.
One of our organizations in Quebec said in a letter to minister Young:
[Translation]
If this reform is implemented, it will lead to increased poverty, worse socio-economic conditions for performers and those who work in the cultural sector, instability for cultural organizations, and eventually a loss of artistic competence, which would hurt society.
[English]
Mr. Kelly: I do not think anyone would really like to see that happen. Therefore, we are requesting this committee to propose amendments to the legislation that will ensure that the new employment insurance program is as visionary, as flexible and as inclusive as possible, because I am afraid we are going to have to live with it for some time.
The Chair: Thank you very much. I see that you have recommendations attached to your brief. I was interested to read that on page 4, you say that people do not realize that employment in cultural industries is more than six times greater than the employment in fisheries.
Mr. Kelly: The last round of statistics from StatsCanada, which were gathered in 1993, I believe, indicate that 670,000 people earn their livelihood in the arts and cultural industries. New data, which is about to be released by Statistics Canada, moves that number up over a million. Therefore, it is a very significant number of people in the Canadian labour force.
The Chair: Could you gave us an example, a scenario, of a person who is both an employee and an employer; just an example of time worked, and so on?
Mr. Kelly: One good example is a writer of fiction or non-fiction who has a contract with a publishing agent. That is a contract of self-employment. However, at the same time, they are teaching literature at a university. They are trying to do two things at the same time.
When the school year ends in April, that writer will turn his full-time attention to his writing. If there is no writing project, if there is no contract, he cannot benefit from the credits that he has accrued in terms of unemployment insurance premiums from his time of employment because he describes himself, quite frankly, as being both self-employed and employed. So the ingenuity and resourcefulness of Canadian artists, unfortunately, is not easily accommodated within the strictures of the current program.
Senator Rompkey: My son is an actor. I do not know where he falls between $11,000 and $27,000. He certainly does not make $27,000 a year. So I want to confess that conflict of interest. I want to build upon your last point about the growth of the industry in Canada.
I think we see this in the Atlantic, among other places, and perhaps more so in the Atlantic. Senator Petten will remember that last year, for example, he helped to sponsor and promote a group called Folk of the Sea. These were all unemployed fishers or fish plant workers, much like Men of the Deep from the Cape Breton area. That is a group, but I know of individuals who have become singers or actors or whatever. The point is that there are possibilities there for people, and cultural alternatives are real alternatives for those people who are unemployed.
The question is how do we deal with it. I wanted to ask you particularly about your Recommendation V. For years, many of us have known about the special provisions for fishermen - now called fishers or fisherpersons, or however we want to designate them. That has been in effect in the unemployment insurance system.
Have you looked at that as a model? Is it possible, for example, that when an actor sells services to a group or an institution, or whatever, that that could be the employer for legislative purposes? Have you looked at that possibility?
Mr. Kelly: Yes. As a matter of fact, this is something that we have been looking at for almost 15 years as a result of Canada signing the Belgrade recommendation on the status of the artist. It is a UNESCO document. The status of the artist task force report recommended that the system be amended to give the same recognition to artists as farmers and fishermen received at that time. So that is certainly one of the things that we would propose. If we cannot do it, I guess we will have to figure out a way to turn artists into fishermen in off-season, but that stretches the limits of the system.
Senator Rompkey: They are artists in the sense that they draw unemployment insurance.
Mr. Kelly: That is true. I wonder if we could satisfy the UI people about that. We have asked for a very broad resolution to this problem. One of the recommendations that we have been making consistently for a number of years is that we develop a system of so-called dual status, so that a self-employed person retains their status for taxation purposes, but can also participate on a paying basis in some of the social safety net programs if they choose. We know that they can already do that with CPP, and we would hope to be able to see that broadened to include the employment insurance provisions as well.
Senator Rompkey: What use have you made of collectives? Is there any room for any creativity in helping individuals to access the unemployment insurance system? I know in the case of copyright, for example, that collectives have been used, I suppose to good effect, as far as I know. Is there any way that that sort of thing can be done on unemployment insurance?
Mr. Kelly: First of all, I should say that I can think of a couple of instances where we have been enormously successful in terms of collectives that provide some measure of social benefits to artists. I am thinking particularly of the ACTRA Fraternal Benefit Society. This is open to ACTRA members and in the last six or seven years has been open to other groups such as the Directors Guild and any organization that wants to contribute.
What happens is that as a result of a contract with a producer or an engager, there is a mandatory contribution into the fund from the producer. That fund is managed collectively, and I think right now it is probably sitting at about $140 million. It provides for retirement income and some medical insurance above the minimum. They have also been able to subsidize some professional development training on the part of the fund participants.
So that certainly has been very successful. But there is also a limit to the ability of a fund like that to maintain itself and to meet the incredible growth, not only in the labour force, but also in need, that we see developing. We also have collectives, as you quite correctly noted, in the copyright area. For example, CANCOPY brings together writers, publishers and librarians, and redistributes the reprography right back to individual writers and publishers. All of those revenue sources from the copyright collectives are part of that income that we see in the very unimpressive annual income levels that most artists see.
Therefore, I am not sure that we could use a collective approach to solve problems of periodic and, quite frankly, persistent unemployment within the cultural sector as effectively as a national program like employment insurance could accomplish.
Senator Rompkey: Of the five recommendations that you have made, what would you put at the top of your list? For example, would we be better off pursuing the model of the fishery, or would there be another recommendation that has priority?
Mr. Kelly: If we pursue the model of the fishery, I am not sure that we are building on very solid ground. Certainly, I think that the kind of exceptions that are already in the system are under very close scrutiny and the government is trying to simplify its approach. I would much rather see recommendation No. II, which is the dual status one, be the core of your efforts. For us, it would solve quite a number of problems in a single effort, not only in terms of access to programs like employment insurance, but also it would also clarify, once and for all, with Revenue Canada some of the difficulties they have in assessing the annual returns of artists. For example, if an artist did receive employment insurance and the revenue return said that he or she was self-employed, in the minds of most Revenue Canada auditors those two concepts are incompatible.
So if we were able to affirm the principle of dual status, not only for artists, but also for all self-employed people, I think we will have stretched the program to the point where it covers more comprehensively the changing needs in the labour force. It will also, potentially, mean an increase in revenues into the program from people who are currently not participating. They would be paying both the employer and the employee share.
Senator Murray: When you are critical of the intensity rule, you say that many of those in the cultural sector, both employees and self-employed, work on a seasonal basis; for example, actors, musicians and dancers employed by companies whose seasons run from October through to May, or only during the summer. These folks are covered. When they work, they pay unemployment insurance premiums, one assumes. You are protesting the intensity rule, so you are talking about people who are covered when they work.
Mr. Kelly: There are some who do participate in the program; there is no question about it.
Senator Murray: If you are an actor or a musician or a dancer working for a company, you will have to be covered from the first hour you work, will you not, under this new bill?
Mr. Kelly: That is true of employees, but not of self-employed.
Senator Murray: But surely these people of whom you speak - I am trying to understand this now.
Mr. Kelly: It is not easy.
Senator Murray: This group, the actors, musicians and dancers employed from October to May, or some of them just during the summer - we are all familiar with summer festivals and all the rest of it - those people are working for somebody who is paying them a wage. Now, if not at this moment, then as soon as this bill gets Royal Assent I would think these folks will be paying premiums on the first hour that they work and their employers, be it Acadia University or whomever it is -
Mr. Kelly: It depends largely on the nature of the contract they have with the engager. They can have a contract where they retain their self-employed status during that period, and if they are -
The Chair: Would you call that contract training, or contract work?
Mr. Kelly: Contract work, yes, that is right. There are some people who are straight employees, you are quite right. When the season ends, they go out and pursue self-employed opportunities, and that is when they lose their benefits.
Senator Murray: That is when they stop paying premiums. Under this bill, I do not think they would necessarily lose the benefits if they paid in for the required number of weeks.
Mr. Kelly: If they identified, senator, their status - for example, if they were an employee of a theatre company for 26 weeks, and after the season, as a self-employed actor, got a two-week gig doing a film, again self-employed, if they file for unemployment insurance and report their income from that two-week gig, they are out of the game right there. The program does not recognize the ability to be both an employee and self-employed at the same time.
Senator Murray: What is the tax advantage of being self-employed?
Mr. Kelly: There are marginal benefits to being self-employed. You can deduct some of the costs associated with the pursuit of your livelihood; for example, costumes, theatrical make-up, and especially musicians, who have to maintain very expensive instruments and insurance on them. All of these are recognized in the tax system.
Senator Cohen: Mr. Kelly, I must confess that I did not conceive of cultural actors and musicians being seasonal workers. We always think of seasonal workers in terms of forestry and fishing. In Recommendation V, you ask that we consider an amendment to Bill C-12 recognizing the special status. What would you have us say in the amendment?
Mr. Kelly: Do we have any wording?
Ms Borgal: No, we do not.
Mr. Kelly: Essentially, to recognize the unique circumstances around employment in the cultural sector that would admit professional artists to the same treatment as is currently available to fishermen. That is obviously inappropriate language for legislation, but that is the effect we are looking for. However, I really think recommendation No. II accomplishes the same, not only for the cultural sector - this a problem that goes beyond the cultural sector and might make for a far more comprehensive solution in terms of improving the bill.
The Chair: Since a self-employed person can influence directly part of his or her employment, do you not see where the government would be concerned about that, and do you recognize - I hate to use the word abuse - the possibility of that system being abused, and that could be one of the reasons why you have not been taken into consideration under those circumstances?
Mr. Kelly: We have certainly heard this argument over the years. For example, if a scriptwriter has four weeks of writer's block, is he employed or unemployed? We say, definitely employed but probably in the wrong field.
The Chair: He goes to his summer place to reflect.
Mr. Kelly: That is right. So I think there are tests against which you can measure abuse. For example, there are contracts of one sort or another; there are letters indicating that a relationship exists. I think that for every problem there are solutions. Identifying solutions to those problems is going to be relatively easy once we have dealt with the very serious problem of making the bill more inclusive.
The Chair: I suppose they could also take a measurement over a certain number of years of income, and so on, and that would show the status of the employment as well.
Mr. Kelly: That is right.
Senator Losier-Cool: It is very interesting to have an important sector of the Canadian workplace. Thanks for presenting your brief.
I want to come back to this self-employed question because you said that recommendation No. II is a very important one. That means that a self-employed person could have the benefit of and could be covered by unemployment insurance. Does it happen somewhere in the world, do you know?
Mr. Kelly: There are places such as Ireland and The Netherlands that provide very comprehensive benefits to the artistic community, full access to social programs, a guaranteed annual income, that sort of thing.
We have certainly looked at some of those models. At one point, we were actually proposing that the government seriously consider a guaranteed annual income program which rolled in employment insurance, Canada Pension Plan, the disability component of Canada Pension Plan, the social assistance program, so that we could streamline the entire delivery mechanism and everybody would know where they stood, and it would probably take a lot fewer hearings to maintain the legislation.
Nonetheless, given the fact that the government has indicated that this is the direction that they are taking, this is the kind of approach we are recommending at this time. However, there certainly are other examples around the world where governments have been able to adapt programs to better meet the ongoing needs of artists and cultural workers.
Senator Losier-Cool: Of the artist.
Mr. Kelly: Of the artist, yes.
Senator Losier-Cool: For example, it could go, again, to self-employed contractors in the construction field.
Mr. Kelly: There are lots of other people, professional athletes, real estate salespersons, who face the same kind of problems of self-employment, who could certainly benefit from a dual status role. As I say, we always look at the negative side of the ledger. It has the possibility of generating a lot of premium and income that you currently cannot get.
I am not saying that the demand on one side will fit the flow of premiums into the system, but it certainly taps into a whole new class of worker who up until now is not making any payment into the unemployment insurance system.
Senator Losier-Cool: In view of what you have said, maybe we should start with recommendation No. I, where you say that we have to clearly define the rules and look closely at all the self-employed.
Senator Murray: Maybe a better way to do it is through the tax system, rather than trying to find a way of designing something in the UI program. Perhaps the tax system, as it treats self-employed persons, would be a better vehicle for what you have in mind.
Mr. Kelly: It could be. However, as I say, there are very profound cultural problems - and I do not mean artistic cultural; I mean corporate cultural problems - within Revenue Canada that really would not allow, for example, the recapture of premiums paid to people who are not eligible to receive the benefits of the program. It is certainly something; it is an avenue. Nonetheless, again, I think what we are trying to do, if I understand the process correctly, is look at the employment insurance process in a way that makes it as inclusive as possible, instead of creating different mechanisms of delivery of benefits within the federal system.
Senator Murray: The economy is changing, as you point out. We were discussing the other night the fact that more and more people are working part time; there is multiple employment, self-employment, all the rest of it. There are problems that governments are going to face; for example, collecting income tax, so much of which hitherto has been collected at source from people who work 52 weeks a year, whatever, for a given firm and have their income tax deducted that way.
Government, in its own interest, is going to have to figure out how to come to terms with all these changes. Certainly, you are hardly alone, in the artistic community, in seeing that the question of benefits and income security is very important to a lot of people, to an increasing number of people who are not covered, who have no benefits or job security.
Mr. Kelly: Who has job security? Oh, excuse me; I briefly forgot.
I think that we certainly have to find a way to meet these needs. I am less concerned about the government's ability to collect taxes from a growing pool of self-employed people. In the 1996 federal budget, one of the few major areas of increase was to allow Revenue Canada to hire auditors to look at the returns of self-employed income earners. I can tell you that, for a fact, because our phone has been ringing off the hook with artists who have been reassessed, who have been told that there is no such profession as an artist, that there is no reasonable expectation of profit as an artist. It is perhaps a point of theology, but we still have to say there is.
So we understand that this is not a problem only with employment insurance. As I say, the tax system is having a very difficult time coming to terms with the treatment of the returns of self-employed people. At the moment, it seems like an inordinate number of them are artists and cultural workers.
Senator Rompkey: So you are saying that, first of all, we have to reform Revenue Canada.
Senator Murray: I think so.
Senator Rompkey: Good luck. What was the experience of Ireland and The Netherlands? You say that they gave a special rate. Do we have any information on what their experience was?
Mr. Kelly: Basically, Ireland has opted for a tax-based approach, whereas The Netherlands has rather universal programs that are open to all Dutch citizens. There were a few very specific programs targeting artists. Some of those have been cut back, like everywhere, as government looks to trim its expenses.
The Chair: Mr. Kelly, you might want to pursue getting someone to put in a private member's bill to give artists a status. Did you go before the House of Commons committee?
Mr. Kelly: No, we did not. The cultural human resource council appeared before the House of Commons committee on this bill. They are the organization charged with looking at labour market issues. They are in a period of transition right now. They felt that they could not come to the Senate, and therefore we were very happy to step in and make this representation.
The Chair: Did they get any encouragement from the committee that this was an area that would need to have some more work done on it?
Mr. Kelly: There was certainly an acknowledgement by the committee that the problems raised by the council were quite legitimate. Unfortunately, those did not translate into any amendments that have survived to this day.
Senator Bosa: I read that 76 per cent of the individuals who classify themselves as artists are currently covered by unemployment insurance. This information comes from our departmental resource people. What percentage of the group that you represent would have the advantage by changing to recommendation No. II, the dual status?
Mr. Kelly: Fifty per cent.
Senator Bosa: Fifty per cent would qualify for both self-employed and -
Mr. Kelly: That is right. So at the low number, that is about 335,000 people who are currently not receiving or covered by the benefits who would be admitted to the program.
Senator Bosa: Would it not represent an enormous difficulty to establish those who are self-employed at a certain period of the year and then who are employed by an employer, and then there is a gap between the time they make a claim? I feel that this would probably be very difficult to keep tabs on.
Mr. Kelly: It must be fairly simple, because Revenue Canada is still collecting income tax from all of those people, and they have apparently very little difficulty in determining periods of employment and income for any given year. It might well be, instead of on an employment period, as the other senator recommended, that you base it on the previous year's work history, so that you adapt the benefits to reflect past history on an individual basis.
I am not denying that there are complexities in terms of the administration of this provision, but I certainly have sufficient faith in the resourcefulness of government officials to be able to come up with a program.
Senator Bosa: Much better than I do. Is there an average income in the artist industry?
Mr. Kelly: The overall average income is $27,000 a year. The median incomes for artists and creators, like composers and writers, is $11,500 a year; visual artists, $7,800 a year. Dancers, I believe, are just around that mark.
Senator Bosa: What about the musicians, the bar bands?
Mr. Kelly: One of the problems with the data right now is that the bar bands are not included in the numbers, so we are talking about musicians who perform for symphonies and as back-up for musical theatre, dance, and what have you. It would be very interesting to have a more comprehensive number and see how the income levels change. The overall incomes have really not changed one way or the other too much over the last 15 years.
Senator Bosa: It is a labour of love; it is not for the money?
Mr. Kelly: No. They would like to be able to have a perfect marriage of love and income, and of course this is what we continuously strive for. However, for now, we are sustained largely by love.
The Chair: I would like to thank you very much for appearing before the committee. You have brought to us a perspective with which we were not familiar.
We have with us now the Conseil economique du Nouveau-Brunswick. We would ask you to present your brief.
[Translation]
Ms Anne E. Bertrand, President, Economic Council of New Brunswick Inc.: Thank you, Madam Chair, for giving us this opportunity to present our brief. In March 1996, as part of its plan to reform social security in Canada, the federal government tabled Bill C-12, which creates a new employment insurance system. The ECNB strongly supports this initiative and recognizes the essential nature of this reform.
With nearly 1000 members, mostly private-sector businesses located in most of the French-speaking regions of New Brunswick, the ECNB sees itself as a significant partner in the economy. The ECNB considers it important to take part in the debate on this reform because of its impact on the quality of Canadians' lives. This impact is particulary marked in New Brunswick because of the seasonal nature of many of its industries, including fishing, tourism, farming and forestry.
Below are statements that were strongly supported by ECNB members in a recent internal survey: the unemployment insurance system must be an insurance system, not an income support system; governments should offer incentives to businesses wanting to train their own workers; the amount of benefits received should depend on beneficiaries' annual family income; the new system should have two options: a two-tier system, or reduced benefits; benefits should depend on actual seasonal work, not the present arrangement of 12 weeks of work for 42 weeks of benefits; the existence of labour problems for some businesses at certain times of the year should be taken into account; productivity is reduced when workers are about to become eligible for unemployment insurance premiums. That is a very important point.
The ECNB supported the recent initiatives to reform social security in Canada and is very favourable to the new employment insurance system. It is time that unemployment insurance became actual insurance to offset shortcomings in the labour market. This system must provide insurance against disaster, not against discomfort.
With annual expenditures of nearly $20 billion, the unemployment insurance system has long been the most important thread in the federal government's social safety net. Canada has remained practically the only industrialized country to provide an unemployment insurance system that resembles income support more than temporary income replacement after job loss.
Although it met needs when it was created, over the years the unemployment insurance system has gradually become outdated, to the point of creating chronic dependence for many workers and even entire regions. New Brunswick workers account for 2.7 per cent of Canada's labour force but 4.3 per cent of unemployment insurance beneficiaries. In New Brunswick, 18 per cent of beneficiaries received benefits after having worked the minimum number of weeks required to become eligible for benefits; the national average is only 5 per cent.
While the ECNB recognizes that just and humanitarian measures are appropriate, it considers it important to create a system that encourages effort and discourages idleness, so as to provide greater stimulus for economic activity. The ECNB considers it wise to restructure benefits on the basis of accumulated hours, not weeks, in order to place value on work.
In support of our position that this restructuring is appropriate, we refer to the 1986 report by the Royal Commission of Inquiry on Unemployment and Employment in Newfoundland, which showed how the unemployment insurance system undermined the intrinsic value of work, chipped away at habits of work and self-discipline, devalued the importance of sound training, discouraged individual initiative, and encouraged abuse of the system.
ECNB members consider it of the utmost importance to set a ceiling on benefits. One week of work must be worth one week of benefits. We cannot understand or accept that some people, by combining salary and benefits, sometimes live more than comfortably and even better than others who work steadily year-round. However, although ECNB members favour a family benefit ceiling, they hope that it will be applied in a way that does not unduly penalize women.
In the opinion of ECNB members, the resources allocated to the employment insurance system must help break the vicious cycle in which many persons find themselves, and encourage them to become productive members of the labour force. We agree that this goal can be reached through training. Placing value on work means placing value on occupational training and retraining. Individual training must form the very basis of appropriate reform of the employment insurance system. In 1990, only 12 per cent of New Brunswick's adult population took advantage of training programs, as compared with 17 per cent of all Canadians and 22 per cent of Albertans. We can break this vicious cycle of unemployment insurance by helping individuals develop their skills and discover new possibilities for themselves.
In this regard, ECNB members also recognize that proactive behaviour as an underlying principle of a new social safety net is not solely the responsibility of either beneficiaries or governments. We believe that the private sector can become more involved, particularly in the technical and occupational training of its own workers.
A training program directly related to the work would be more motivating and stimulating than some program essentially aimed at accumulating weeks of work. The ECNB therefore calls for incentives for businesses wishing to train their own workers.
Given the importance of unemployment insurance benefits in many economic activities, particularly in rural communities, the ECNB wants the changes to the unemployment insurance system to be phased in. We are apprehensive about the negative effects of sudden reform. An adjustment period is imperative. We must recognize that the short-term economic contribution of unemployment insurance benefits is vital to the economies of most regions in New Brunswick.
The ECNB applauds the decision to create a task force specifically to address the issue of seasonal workers. Although the ECNB recognizes seasonal workers' special situation and greater vulnerability to reform of the unemployment insurance system, it also recognizes the importance of better defining seasonal workers as persons who work for the duration of the season, not just for the minimum eligibility period. In fact, it appear that businesses have a sometimes acute labour availability problem at the end of the season. This labour availability problem has a direct impact on businesses' productivity.
The ECNB is of the opinion that reform of the unemployment insurance system must go hand in hand with further efforts toward regional economic development. It is imperative to pursue efforts toward economic diversification in regions that are heavily dependent on primary industries and thus affected by the seasonal nature of these industries. Overall, regional economic development programs have made a much better contribution to the economy than have passive unemployment insurance benefits. The ECNB is opposed to any reform that might negatively affect or even jeopardize the economic growth of New Brunswick's rural communities.
[English]
Senator Rompkey: You referred to a Newfoundland study of 1986. Which study are you referring to? Is that the House report on employment and unemployment?
Ms Bertrand: I believe so, senator.
Senator Rompkey: The House of Commons report?
Ms Bertrand: Yes.
[Translation]
Senator Murray: I am surprised to see you here, with such a presentation, speaking on behalf of New Brunswick's francophone regions, where there is widespread seasonal work.
For example, you say idleness should be discouraged. I am not sure what you mean by that, but if you use that type of language, it seems to me you are merely reenforcing the prejudices that already exist in many regions of Canada against your region.
As for the recent survey conducted by your organization, you say, first of all, and I quote:
The unemployment insurance system must be an insurance system, not an income support system.
And your third point was, and I quote:
The amount of benefits received should depend on beneficiary's annual family income.
You can't have it both ways. Either you want an insurance system rather than an income support system, or you want a system where the benefits will be based on the beneficiary's annual family income. Which system do you want?
Ms Bertrand: We think those two statements mean the same thing, Senator Murray. We want to tell this committee that we do indeed support a system that will encourage people to work, rather than the opposite. After serving our members who are entrepreneurs and employers, we noticed that if you have a system based on the number of weeks to be eligible for benefits, there is a drop in energy, effort and attitude toward work.
People start thinking of working toward benefits rather than working to get benefits if they really need them, in case of emergency or temporary job loss.
What we are saying in our third point is very close to what Bill C-12 says.
Senator Murray: It will no longer be an insurance system if benefits are based on annual family income.
Ms Bertrand: I think we're talking about semantics here. The message is the same. There will be a formula used to calculate family income. Obviously, the annual family income will have to be taken into account when determining the benefits. That goes without saying. Bill C-12, in fact, says there will be a very detailed analysis to determine what the maximum will be. That will also be based on annual family income, and assistance to single parent families and women who work part-time. So it is the same idea. We want benefits that will really serve as insurance during times of unemployment. We don't want a system where people just work a certain number of weeks to get unemployment insurance.
Senator Murray: You say the council supports the decision to establish a task force to study the case of seasonal workers.
You have obviously jumped to the conclusion that the current system is based on 4-42. And further on, in your brief, you say that 18 per cent of beneficiaries receive benefits after having worked the minimum number of weeks required to become eligible for benefits, whereas the national average is only 5 per cent.
Does this 18 per cent seem excessive, given the seasonal nature of your economies?
Ms Bertrand: You are asking us whether that percentage is an aberration?
Senator Murray: You say that 18 per cent of New Brunswick beneficiaries receive their benefits after having worked the minimum number of weeks required to become eligible for benefits, and further on in your brief, you say there must be a better definition of seasonal worker, namely someone who works for the entire season, and not just the minimum number of weeks required to become eligible.
How long is the tourist season in Acadia, for example?
Ms Bertrand: Senator Murray, we are not necessarily making a distinction between seasonal work and non-seasonal work. We are saying that in some parts of New Brunswick, the unemployment rate is higher because there is no definition of seasonal worker. It can mean any type of work where the employee leaves the job after working the minimum number of weeks required to receive benefits.
We are not talking about work in sectors which are traditionally seasonal, such as forestry, fishing, et cetera. We have found that in some regions any job could be seasonal, because the employee stops working after having reached the minimum number of weeks required to become eligible for unemployment insurance. We want a definition of seasonal work, and we are working on that.
Senator Murray: Ms Bertrand, we are talking about seasonal employment. Let's take the tourism industry as an example. How long is the tourist season in your region of New Brunswick? Twelve weeks perhaps? Two months?
Ms Bertrand: Possibly.
Mr. Jean-Paul Desjardins, Executive Director, Economic Council of New Brunswick: Seventy-five percent of the time, it is a maximum of two months.
Senator Murray: Surely during the tourist season, no one works just enough to reach the minimum number of weeks. The tourist season is not very long in New Brunswick.
Ms Bertrand: Those aren't the ones we are targeting. That's fine. When someone has a seasonal job, he works the corresponding number of weeks. We have no problem with that. What we are saying is that there have been major problems with the definition of seasonal work.
I agree with what you said about the tourism industry. But there are other industries where the work is not necessarily just for one season, where people work from September to October. Let's say someone works as a plumber. After accumulating the number of weeks to become eligible for unemployment insurance, the job ends. So we are not trying to hurt the tourism industry, nor seasonal jobs which are very important in New Brunswick.
Senator Murray: Your brief does not seem to indicate that at all. You know your region better than I do.
Ms Bertrand: No doubt.
Senator Murray: I see that tomorrow at 6:45 p.m., we will be hearing from Ms Mathilda Blanchard from the Syndicat acadien des travailleuses affiliées des pêches. I am sure Ms Blanchard will give us a totally different perspective on things.
Ms Bertrand: I am sure she will because Ms Blanchard's views are totally different from ours.
Senator Simard: Madam Chair, Mr. Desjardins, Ms Bertrand, I cannot find the words to say how disappointed I am with your brief. If Minister Young had hired a firm to extol the virtues of Bill C-12, I think he could have given the job to the Conseil économique du Nouveau-Brunswick.
I often supported the Economic Council of New Brunswick. However, you must admit it is an organization, a group of individuals that can have its weaknesses. I think it is a weakness on my part. It's awful! You deplore the system. You praise Bill C-12. You feel it is part of Canada's social security reform. I can assure you that Bill C-12 is not at all part of that social security reform.
You make that statement in the first sentences of your brief, and you say Bill C-12 is part of the social security reform. You deplore the system that has existed for too long, and then you refer to a survey you did of your members. You still support industrial assistance programs.
You attack all the weaknesses of a long-standing program that will continue to exist, if employers are not responsible. You deplore the fact that at the end of a given period, when employees feel they have worked long enough, they stop working as hard. But what about the employer's responsibility?
Ms Bertrand: Perhaps to give you a better idea of who we are to be giving you this bad news...
Senator Simard: I know who you are.
Ms Bertrand: We represent a group or an association of francophone entrepreneurs from the province, approximately 1,000 members.
Senator Simard: That's right.
Ms Bertrand: Who represent approximately 20,000 workers.
Senator Simard: You are not speaking on behalf of the 20,000 empployees today. You are speaking on behalf of the 1,000 employers.
Ms Bertrand: Exactly; I gave you some figures, and 94 per cent of our members strongly supported the reform.
Senator Simard: The employer members.
Ms Bertrand: The employer members, yes.
Senator Simard: Yes.
Ms Bertrand: We are here to represent that group. That is why we want to relate their wishes to the committee; to give the support which we feel is healthy, enlightened support.
Senator Simard: Massive support, Ms Bertrand. That's what you are saying.
Ms Bertrand: That's what is written.
Senator Simard: Senator Murray pointed out at least one contradiction in your brief when he reffered to the benefits being based on family income. When you spoke of incentives, job creation and industrial assistance, I didn't see anything in your brief about rates.
Mr. Desjardins, did you know that by the end of this year, in 1996 alone, the fund will have accumulated a $5 billion surplus, without this bill? In the past two years, it accumulated $7 billion dollars.
Don't you see you could have helped employers and employees by asking that premiums be reduced by 10, 15 or 20 per cent?
Mr. Desjardins: Senator Simard, we are saying that investing money in passive benefits is a bad idea and the money would be better spent if it were invested in economic development. That's what we are saying.
Senator Simard: Where do you see that? You talk about exorbitant rates that should be reduced to 20 or 25 per cent, according to several economists?
Mr. Desjardins: The last paragraph refers to that.
Senator Simard: Where do you see that?
Mr. Desjardins: The last paragraph on page 5.
Senator Simard: Yes, but I do not have the same document.
Mr. Desjardins: Then I will quote it:
The Economic Council of New Brunswick is of the opinion that reform of the unemployment insurance system must go hand-in-hand with further efforts toward regional economic development. It is imperative to pursue efforts toward economic diversification in regions that are heavily dependent on primary industries and thus affected by the seasonal nature of these industries. Overall, regional economic development programs have made a much better contribution to the economy than have passive unemployment insurance benefits.
Senator Simard: I have pleaded for that. I do so every week. We are dealing with Bill C-12, which is a bad bill. It is an incomplete reform that will penalize employers and employees. Your members strongly support that; 92 and 94 per cent.
Don't you think it's time to go beyond generalities and talk about potential incentives to encourage regional development, just as you did?
You should be pleading for an immediate reduction, an amendment to this bill. Employers' costs could have been reduced by two or three billion dollars. What do you have to say about that? You could have asked for lower employee contributions.
Do you have anything to add? You say you support the reform. I also support the idea of a social safety net reform. I do not support this bill. Bill C-12 will complicate the lives of those we want to protect, namely employers and employees. It is a bad bill. I am thinking of Ms Mathilda Blanchard and the other -
Mr. Desjardins: We are here to speak on behalf of our members. Our members were consulted through a survey. If our members think the reform will improve their situation, I think we should be reflecting their views.
I don't see how you can criticize an employer who supports this reform if indeed he supports this bill. He is familiar with the old Unemployment Insurance Act. He wants a change.
Senator Simard: He might be familiar with the old Act, but Bill C-12 is not going to improve the situation. First of all, the government missed a brilliant opportunity to reduce premium rates. You say, and we believe you, that 94 per cent of your members supported your brief.
In answer to the first question, you say that the unemployment insurance program must be an insurance program rather than an income support system.
I certainly want an insurance system. Did you know that besides the surplus I just mentioned for 1996 alone, five billion dollars, there is still money left over for manpower training. Some people think manpower training should not come out of the unemployment insurance fund. What is your opinion on that?
[English]
The Chair: Senator Simard, could you let them answer the question. We have one more questioner, and our time is limited.
[Translation]
Ms Bertrand: I will briefly answer your other question. Obviously, Senator Simard, you do not feel the same way as most of our members. That is unfortunate, but it's a fact.
Senator Simard: I do not see this as an unemployment insurance reform, as you do, at least the way you presented it to us.
Ms Bertrand: That's fine, Senator Simard, that is your opinion. Our members have studied the matter. Our members massively support Bill C-12. They are the ones who will really pay for this new bill. They are ready to do so. They know what happened in the past, they want changes, they want the new system.
Senator Simard: They want to continue paying direct taxes, to the tune of four or five billion dollars extra per year. That's fine.
[English]
Senator Rompkey: I just wanted to give the witness more time to answer Senator Simard's questions. I wondered if you wanted to take some time to give answers to the questions that were asked, because I would like to hear the answers.
Ms Bertrand: I was wondering who was making the presentation here.
The Chair: I wish to thank you very much for your presentation to the committee.
Honourable senators, our next witness represents the Fish, Food and Allied Workers from Newfoundland. Do you represent Newfoundland, Mr. McCurdy?
Mr. Earle McCurdy, President, Fish, Food and Allied Workers: Yes, I do. And Labrador.
The Chair: We welcome you here this evening. We would ask you to make your presentation to the committee, please.
Mr. McCurdy: I appreciate the opportunity to appear before your committee, which is better than I fared with the House of Commons committee. I will just briefly describe our organization so that you understand who we represent.
Our union has membership in approximately 500 communities in the province of Newfoundland and Labrador. It includes roughly 20,000, equally divided between inshore fishermen and women and fish plant workers. The bill that is before you and the regulations governing inshore fishing that will follow will have a big impact on our members, and we have a great deal of interest, obviously, in the proceedings.
First of all, I suppose to ask about the details of regulations under the bill is a bit like asking somebody who does not believe in capital punishment whether they favour the noose or the electric chair. I do not think the case has been made in the country at all for lowering the boom on unemployed Canadians.
When you look at the surplus position of the UI fund, it is clearly being done for reasons other than the health of the program. The people of our province, in the midst of a lot of other economic difficulties, will lose approximately $105 million in UI benefits, or a 15-per-cent cut, the largest for any region in the country. It is clear that the legislation is not about improving unemployment insurance, but really about making life more difficult for thousands of Canadians who find themselves unemployed. Essentially, it blames the unemployed for being out of work. At the same time, it provides a windfall to the business community by returning hundreds of millions of dollars to businesses in the form of lower premiums and wage subsidies.
I would like to briefly touch on the issue and the claim that is made in some quarters that somehow these payroll taxes are a job killer and that reducing them will create jobs. I suppose, first of all, if it were that simple, we would reduce the premium to zero, create a million and a half jobs, and we would not have to worry about unemployed Canadians.
I think the example of General Motors suffices. General Motors, last year, had an all-time record profit for any corporation in the country, and they are now in the process of out-sourcing thousands of jobs.
The fact of leaving more money in the hands of the corporations does not necessarily create jobs at all. They either create or do not create jobs based on the needs of their business, not based on some minor refund or reduction in their UI premiums.
We accept neither the merit nor the necessity for a multi-tiered system, which is what we have, and we take strong offence to the singling out of so-called frequent claimants as if they were some sort of repeat offenders. I think what is most repugnant about this bill is the fact that it is based on a false foundation. It is built on the assumption that if people would pull themselves up by their bootstraps, there would be no need for them to be drawing unemployment insurance, no need for them to be unemployed.
There was a headline in our paper only a couple of weeks ago, which read: "Get used to high jobless rates says the P.M." The fact of the matter is that it is accepted in this country that there will be a national rate of unemployment in the order of 8 to 10 per cent. They even have a name for it; they call it NAIRU - who is the fellow I learned about when I was a youngster that used to be the prime minister of India. It is Non-Accelerating Inflationary Rate of Unemployment, the rate below which the demon inflation takes over and ruins our economy. Therefore, as a matter of national policy, supported by the Department of Finance and the Bank of Canada, we will have 8 or 9 or 10 per cent unemployment in this country, which, for our province, means in the order of 18 or 20 per cent, the range we are at presently.
We have that, as a matter of national policy, on the one hand; on the other is the logical corollary of that, which would be to say that at least we should try to make life bearable for the poor souls who are among the million and a half Canadians for whom there is no job.
I read a startling letter from the Minister of Finance which talked about wanting to avoid the costs of going back to what happened in the eighties when unemployment fell below 8 per cent. God forbid that we should see unemployment drop below 8 per cent! So, clearly, there is a target and a range set by the people who make the decisions on interest rates, and so on, in the country, and they have decided that inflation control is the No. 1 target and the most important issue. That brings with it a level of unemployment that is a matter of national policy; the only thing they argue over is whether it is 8, 8.5, 9 or 9.25 per cent.
At the same time, public policy is hammering the people who are unemployed. Under that policy, in terms of the likelihood of getting out of that state, the most that will happen to an individual is that he or she might find a job, but that will bump somebody else down the line because the 8.5, 9 per cent unemployment rate is there for the foreseeable future.
Effectively, Bill C-12 turns up the treadmill against which working Canadians will have to sprint to try to stand still; just when they seem to be holding their place in line, somebody will crank it up a little and they will have to run a bit faster. I guess the problem with a rat race is that even if you win, you are still a rat. It is very difficult for people to be constantly trying to make progress against the current.
A particularly appalling aspect of this legislation is the attack it makes on seasonal workers. The previous Minister of Human Resources Development said in the other place a few months ago that with the changes that were made to the legislation, the two-tier system has gone. That is just not correct, and Canadians should not be mislead. Actually, it is a multi-tiered system now, so in a sense, I suppose he is right. We do no have a two-class system presently; we have about a five- or six-class system. Ultimately, the people in seasonal industries will lose, through the intensity rule alone, roughly 9 to 9.5 per cent of the benefits they now receive based on the same work experience. That does not include the impact of the divisor rule.
I read a lot of the analysis that was put out from the central agencies in Ottawa that supported the bill. With respect to the way it dealt with seasonal industries, or with industries generally, I think, if I were an economics professor, I would struggle to give whoever wrote it a D. The analysis purported to analyze the sectors of the economy in terms of which ones were the net contributors and which ones were the net drawers from the system; in other words, which industries and which provinces paid more into the system in premiums than they drew out in benefits, and vice versa.
The "bad guy" industries, under their assessment, or according to their documents, were fishing, farming, logging, trapping and construction. With the exception of construction, which I guess literally built the nation, the others were the industries which really developed the country back in the early days, really provided the foundation for our country.
Fishing, farming, logging and trapping are basic industries in this country, industries that were around in the 1500s and 1600s, and they are the "bad guy" industries. The analysis then went into the "good guy" industries. They are banking, commerce, education and health, and two or three more like that.
Senator Murray: Information industries.
Mr. McCurdy: Information service industries, yes. However, in a report that was very thick and required a lot of concentration to wade through, not one single line was devoted to the simple and, I would have thought, obvious fact that the bad guy industries are all - with the exception of construction, which is unique; it is tough to pour a concrete foundation in the Yukon territories in January, you must admit - primary industries that bring new dollars into the country and contribute positively to the balance of payments, balance of trade.
The industry that I come from, for example, the fishery, enables us to populate the coast line that faces the rest of the world. The people who are employed in those good guy industries have their jobs because somebody else is down the shaft of a mine, or in the woods, or tossing around the Grand Banks for what few fish are left, or out on a farm somewhere doing the basic, primary work that creates economic activity and provides a need for jobs.
So we have the ironic situation whereby a logger is deemed to be a drain on the system - ways have to be found to target that person, to reduce their benefits - while the person who happens to have a year-round job manufacturing chain saws for the logger to carry out his duties is in a good guy industry and should be left alone and be unaffected by any cuts. It was really a very shallow excuse for analysis, I thought.
Factors such as climate, weather and availability of product often determine when a person gets called to work; generally speaking, factors that are out of the control of workers. A myth that still prevails, which surely should be dismissed by now, is that we have an exceptionally generous unemployment insurance program.
Well, the OECD, the Organization for Economic Cooperation and Development, rates these programs among different countries, insofar as you can compare them, because obviously the rules are not identical and some value judgments have to be made. However, whereas Canada's program once rated fifth amongst the top 20 in the world, it is now fourth from the bottom in that group. This rating preceded the legislation that is before this committee, but followed the biggest cuts in the history of the UI program, which were implemented by the present government less than two years ago.
An aspect which has yet to be made public is the regulations governing self-employed fishermen. It will be dealt with by regulation, and we do not know the details of what those regulations will be. What we do know is that the combination of changes which have been made will reduce benefits to fishermen. Some fishermen already have lost in the vicinity of 16 or 17 per cent of their coverage, without any adverse impact from regulations yet to be created. That is just on the impact of the intensity rule, which I believe measures the intensity of the determination up here to crack down on seasonal workers, and the reduction in the maximum insurable earnings, which was a windfall for employers and did not save the fund a cent; but it will have an impact on some people.
The combination of the intensity rule and the divisor is going to impact profoundly the people we represent. The reality in many areas of the country is that work is very difficult to come by, and what is there is frequently seasonal, unpredictable and of short duration. What was highlighted as a positive feature of the bill was the claim that every hour worked would count towards eligibility for UI; unfortunately, the reality does not bear that out.
I had an unusual experience early in my career. It goes back almost 20 years. I went to a meeting at which a fish plant worker, a middle-aged woman, who had to go to work the next day asked me in the course of the meeting if she could go to work and not get paid for it. You can imagine that I did a bit of a double-take because that was not exactly a question you would expect to be asked; you would expect to be asked if they could get more money, or something like that.
Her objection was not to working. I spoke to her and discovered that had she worked the next day, it would have been her second day worked in that week. The next day was a Friday. It would have given her a low stamp, as they call it, insurable week, which would have brought down her average weekly earnings and reduced her benefit. She would actually have been paid, in those days, probably $40, and it might have cost her $5 a week all winter off her UI, or whatever it came out to. She would have been out of pocket for having gone to work.
When I learned that every hour will count, I thought that perhaps that would be fixed. However, if anything, in some ways, that phenomenon is actually aggravated by the present legislation. A week that is low in terms of numbers of hours and numbers of dollars earned, if it is late enough, if it is in the last few weeks before a claim is filed, will effectively bring down someone's average earnings. Even though they may have had high earnings earlier, it will not help them at all.
It is hard to imagine that someone actually tried to do it right and did such a poor job of it. I am not quite sure what instructions were to the people who wrote the bill, but clearly it will have the impact of being a disincentive to work. I thought the ethic that we are all hearing about these days is the incentive to work, and stuff like that. They have done a very poor job of that.
On the issue of the conversion from weeks to hours, while in principle there can be some advantages to that if it is done right, they have put the level unreasonably high for a great many Canadians. I see that Senator Rompkey is here, and I am pleased to see him. I know the district he represented in Labrador. The standards that have been set for qualifying will be exceptionally difficult for Labradorians to meet, given the opportunities, such as they are, that are available to them.
Some people will respond by saying that the answer is to relocate. In London, Ontario, people were upset when 15 Cape Bretoners were sent there by HRD to try to find a job. There was a big uproar over it. Even the mayor got into it, saying that while Londoners had nothing against you easterners, there were no jobs for them; that London had its own problems with unemployment.
There are no opportunities in Labrador or in Cape Breton; opportunities are very limited. If London, Ontario, with one of the lowest unemployment rates of any Canadian city, does not want them, then who does? If the policy of the Bank of Canada and the Department of Finance is to have a set unemployment rate - or else we will fan the flames of inflation and devastate our poor economy, which has been the mantra in this city for a long time now - then what is it that people are supposed to do? Where is it that they are wanted in the economy?
These are pretty serious questions, ones which I do not think have been satisfactorily addressed by the drafters of this bill. It was done for other reasons, a combination of a sort of punitive puritanism, or whatever you might call it, plus ruthless cost- cutting at the expense of a handy target.
There are a couple of documents that deal with UI that have had some very positive and worthwhile things to say. One is the special task force that went across the country, commissioned by Mr. Axworthy, the then minister, a little over a year ago, I think, maybe a year and a half ago. They did a very extensive job. I was part of a discussion group that met for three or three-and-a-half hours. That discussion group had similar meetings across the country and wrote an excellent brief, in which they described and analyzed the nature of seasonal industries in the country, the role they play in the economy, the impact they have, the jobs that they create, many of which are year-round jobs in the service sector such as I described earlier.
There must have been people in the Department of Finance and the Department of Human Resources Development who were horrified at the first sight of the finished document, because it has been consigned to the dustbin ever since. It has not been seen or heard of since it was published; it received only a couple of days of attention.
A second document which puts forward a real blueprint for change in the fisherman's UI, and also makes suggestions for taking out some of the disincentives as they apply to fish plant workers, is the task force on incomes and adjustments in the Atlantic fishery. It was a federal task force. I believe it must be close to two-and-a-half years ago now; again, it has been primarily gathering dust.
Quite frankly, I am horrified by the way this has been played. Our forefathers, under more difficult times than we live in today, built programs in this country, and it had to be a real matter of national will to attempt to put these programs in place. Quite frankly, I think some of these people would be absolutely horrified to see what is happening in the country now and how we have let all of that go to become more American.
I believe that the spirit of tolerance and sharing on which our country was built is really what made us distinct from our southern neighbours. I do not think our generation has any right to discard what the previous generations of Canadians struggled to build under much more difficult times than we now live in.
I guess what I am asking is that the Senate act where our elected representatives failed us, by making recommendations to reduce the undue hardship the bill, as presently written, will impose on Canadians and that it recommend these changes and refer them back to the House of Commons, to put a bit of a human face on this bill, because that is singularly lacking at the moment.
Senator Rompkey: I want to welcome Mr. McCurdy and thank him for his presentation. Just let me start with setting the bar at a high level, particularly in certain areas.
Senator Phillips has raised this from time to time, too: the plight of the rural Canadian community with a single industry that has very few alternatives. I think that is something that we have to examine. I think you are quite right in saying there are communities which are in that situation, and we are not sure what the impact of the legislation is going to be on them, and perhaps the minister and the department should do some special monitoring or examination to examine that, as of now, to see what the impact is going to be. Perhaps one thing we could do as a committee is to call on the minister to make an examination of the plight in that kind of community, where people cannot find alternatives, through no fault of their own.
I wanted to ask you about the 15 per cent cut in Newfoundland and Labrador. This, I assume, would be before the reinvestment of the money. Newfoundland will get its share of the $800 million reinvestment, plus its share of the $350 million transitional fund. That would bring the 15 per cent cut down to 5 per cent, as I understand it. We are not sure what the impact of this is going to be, although your claim is that it will be negative.
Let me ask you about that reinvestment, the money to be reinvested in wage supplements and training and self-employment. I remember being in Germany 15 years ago or more, and the German system had that kind of reallocation of funds at that time. Is that not a positive move, and will it not have some positive effects?
Mr. McCurdy: First of all, the question that should be asked is: As a country, do we want Labrador to be populated? Do we want people to live and work in the Northwest Territories, in the Yukon, in Cape Breton, and in parts of northern Ontario and Quebec which are more isolated, where the work is more seasonal, where the industries that built these areas are seasonal by nature? Do we want that or not? If not, then instead of bringing in a bill and trying to sugar-coat it, we should say that we are fed up with having to support people living in places like the coast of Labrador.
On the issue of training issue, if you start with younger people and provide them that opportunity - I will tell you a story about a 62-year-old - obviously the individual with the education and training is better placed and has a better chance than the individual who does not have it. I think that is clear. We had the experience of a 62-year-old man, who had been out of school since he had been 14, or so, being called in to see a job counsellor to develop a career plan. I assume that was a foolish anomaly by somebody who really was not thinking.
However, what the training discussion does not address is the fact, that fundamental problem in the country, that the Prime Minister told us, in a moment of candour, to get used to unemployment at the present rate.
Senator Murray: After the election.
Mr. McCurdy: Yes, after the election. So, I mean, that is a reality.
Senator Rompkey: But is that not simply recognizing a worldwide phenomenon? Is it honest to recognize a worldwide phenomenon?
Mr. McCurdy: What I think is, if not dishonest, highly misleading is to tell people that with training, the world will be their oyster. There are people who have been trained to the eyeballs; they have 25 PhDs. If everybody in Canada had 25 PhDs - there are 1.5 million Canadians with multiple PhDs who will not have jobs because the economy does not want them. The Minister of Finance has said that he does not want a reoccurrence of that drastic situation of the 1980s where the rate of unemployment slipped below 8 per cent. God forbid!
While individuals may better themselves, perhaps being better informed and better educated might make them all the more frustrated; I do not know. The fact is that we do not want 1.5 million of them in the economy. On top of that, we now have a bill which drastically undermines the viability of another roughly 1 million seasonal jobs in the country.
It will get to the point where, for example, seasonal fish plants will become, in the long run, a place for people to get a summer job. There will be no ongoing viability to that kind of a job; and then, of course, with that, quality control will suffer.
As to the job fund, the best I can tell - I might be mistaken - is that I have heard nothing so far that would differentiate it from the kind of make-work projects, in one form or another, that we have seen over the years. Quite frankly, I think make-work is a lot better than having somebody doing nothing. I am not someone who is going to criticize jobs funds. I think the infrastructure program was a good one; anything that gives people work. However, all of that is at odds with the fundamental national premise that we cannot go below 8, 8.5 or 9 per cent unemployment.
Senator Rompkey: The union has taken good advantage of training funds and had its own training program. Father McGrath, who is another St. Francis Xavier graduate, has been more involved in that than anybody else, I guess. Can you give us an assessment of how that training has gone?
Mr. McCurdy: It has been mixed. The training within the industry, the upgrading, as we call it, the professionalization of fishermen, which has been sort of grabbed onto by the task force I mentioned on incomes and adjustments, has been really a part of getting a handle on fishermen's UI. It is a very positive element. The training to leave the fishery and go elsewhere has had its limitations, by virtue of the dearth of opportunities.
Some individuals have gone through that. We have organized a number of different kinds of training, for example, former trawlermen working on cable ships, where they are doing quite well. However, you can number those successes in the dozens, unfortunately, and the numbers of people looking, in the thousands.
Senator Phillips: My first question is based on your statement that it was impossible to get an interpretation of the regulations concerning fishermen becoming unemployed individuals. This concerns me. In Prince Edward Island, most of our fishermen own their lobster boat and have one or two people working with them. The only interpretation I could get is that in cases where the wife of the fisherman used to claim half the catch, she now has to prove that she owns half the boat, too. Would you tell us a bit more about your inquiries in this regard?
Mr. McCurdy: We have been advised that the regulations for fishermen and women will only be brought forward after the bill is passed into law. A letter from a senior official in HRD said that the intent of the regulations is that fishermen will experience approximately the same impact as other people under the legislation. This hardly filled me with any comfort, I can tell you.
What we have been told is that they will come forward with that after the Bill C-12 is passed. However, we know already that there has been very significant negative impact with respect to the measures that are either already in the legislation or, in the case of the maximum insurable earnings, have already been passed into law. So we are quite concerned about the impact. It is a bit like the mailman who went to the same house on Monday, Tuesday, Wednesday and Thursday, only to be bitten each day by a dog. One hardly wonders why, on Friday, he was a bit apprehensive. To me, the people who are going to be drafting the regulations for fishermen are basically the same dog. We have been truly and frequently bitten, and we are not looking forward with great anticipation to delivering the mail on Friday.
Senator Phillips: It is a point that I do not think the fishermen, as boat owners, have realized yet.
My second question deals with the 26 weeks prior to the opening of a UI claim. This is not the first time that we have heard that when an individual works a few hours a week, it reduces their benefits; it then becomes a disincentive rather than an incentive to work those extra days. At the end of the lobster season in P.E.I., quite often the fish workers are called in for three hours for three days. The trade unions have mentioned the same problem.
I know that the House of Commons had good intentions when they amended the legislation, but I do not think they met the problem. Do you have any suggestions as to amendments that we could make to fully address the problem? A suggestion that was made by the construction trades was that any week less than 15 hours not be counted unless it was needed to reach the number of hours required. I was wondering what you thought of an amendment of that nature.
Mr. McCurdy: That would certainly be an improvement, for sure, over what is there presently. The problem for the woman in Bay Bulls who I talked to you about, the woman who asked me if she could not get paid tomorrow, was that it was the second day in the week, under the rules at that time; now, even if you are called in for three hours, your benefits will be watered down substantially.
That would be one way of doing it. Another would be to allow people to drop weeks that are not helpful to them. If somebody gets called in for a day, keeping in mind the phenomenon that you described, what we call the shoulders of the season when the work is very spotty, they could agree to go in and do the work, be paid for it, but not count that week - some version of that. In that way, you do not force somebody to lose money by going to work. Surely, the perversity of the bill is that it flies against the basic notion of giving people incentives and rewarding work.
Senator Phillips: What about banking those hours for the following year? For example, if you have the necessary number of weeks to qualify and are called in for one day in the shoulder season, and you really do not need that day, bank it for next year. Would that be acceptable?
Mr. McCurdy: Again, I think that would have merit. It really depends, I guess, on what is seen as the primary purpose of the legislation. At one time, the legislation seemed to have as part of its purpose, among other things, a recognition that there are seasonal industries in the country and, as such, helped to ensure the viability and the contribution that those people can make to the economy.
If the objective is to punish people in those situations, to regard them somehow as offenders and to take action accordingly, then that changes the perspective entirely.
The best I can tell, the objective of this bill is to be quite punitive - and there is a specific target, namely, seasonal workers.
Senator Murray: Mr. McCurdy is the regime that applies to self-employed persons engaged in fishing presently set out by regulation or is it in the act?
Mr. McCurdy: There is a reference in the act which says, more or less says, that the Lieutenant Governor in Council may make regulations governing unemployment insurance for self-employed fish harvesters. There are some aspects of the act where they automatically fold into some of the particular tables, and so on, but most of the fishermen's special regulations are contained in regulations, not in the body of the legislation.
Senator Murray: So there is authority in the legislation and regulations passed by the Governor General in Council. I am looking at Part VIII of the bill that we have before us. You were sure, for example, that the intensity rule and the lowering of maximum insurable earnings, to name two provisions of this bill, automatically applied to self-employed fishermen.
Mr. McCurdy: I suppose theoretically they could - well, I do not know if they could; as I understand it, they are part of the bill as a whole.
Senator Murray: I will give you a layman's opinion on that; you should see your lawyer to get a better one. It reads:
Notwithstanding anything in this Act, the Commission may, with the approval of the Governor in Council, make such regulations...for self-employed persons engaged in fishing.
Then, after some examples as to what may be included - and you can tell me whether this is also in the present act - it says:
The scheme established by the regulations may, with respect to any matter, be different from the provisions of this Act relating to that matter.
I am trying to fill you with comfort. I think you have got a free run even after this bill gets Royal Assent. At least on behalf of the self-employed fishermen whom you represent, you have a free run at a regulatory regime which can be quite different from the other provisions of this act including, I would say, the intensity rule and the maximum insurable earnings, or anything else, as I read it.
Mr. McCurdy: The maximum insurable earnings that applied to fishermen in the past have always been the same as they are in the legislation. On the matter of the intensity rule, or generally on what you say, that may be correct technically. Nevertheless, if you could assure us that it will be a different dog sitting under the mailbox, I would feel a lot better about it.
Senator Murray: However, I am telling you that they put in there, "with respect to any matter"; it must mean something. It is up to you to explore it to its fullest. How many people self-employed fishermen in your organization are we talking about?
Mr. McCurdy: We have about 10,000. That would include crew members, all of whom have various sharing arrangements. A few of them are on direct salary. Most of them have arranged a percentage share of the catch. So it is a combination of self-employed and those who are under the direction of the owner-operator.
Senator Murray: I just wonder whether, for example, when the department - I am not asking you this question; I put it on the record so that somebody can give me the information - did its calculations as to the reduction in benefits under C-12, they included full application of this bill to self-employed fishermen in Newfoundland in arriving at the number. It is $63 million next year, reduction in benefits; $105 million in 2001 and 2002. It would be interesting to know whether they calculated the reductions to self-employed fishermen in those numbers.
Senator Bosa: I would like to thank Mr. McCurdy for appearing before for us. Did you appear before the House of Commons committee and did you testify?
Mr. McCurdy: Actually, I had two dates confirmed. One was before the House broke, and then the committee had to be reconstituted, whatever the technical details are. I then had a second date set for after March, which was cancelled - an appearance time of nine o'clock on a Monday morning, cancelled at four o'clock on Friday afternoon. I tried to get rescheduled, but I did not get an opportunity.
Senator Bosa: Mr. McCurdy, in your presentation, you suggest that this legislation is an attack on workers in seasonal industries. However, from my understanding of the bill and what has been explained to me, it would appear that more workers will qualify under this legislation and they will qualify for benefits for a longer time.
It brings in a new group of people who are not covered under the present legislation. In fact, there are - from figures that I have before me here - 45,000 seasonal workers who are ineligible under the UI system, and some 270,000 workers will get about three more weeks of benefits. How can you possibly justify making such a statement?
Mr. McCurdy: First of all, I think the spin doctors were working overtime on some of the promotional material that accompanied this bill. These people are going to be new. They talk about people in some of the service sectors who have a week of less than 15 hours, which never helped you at all. All of a sudden, you have a chance to get in with that.
Well, how many fifteens does it take to make 910? You now need 910 hours to qualify. If it has this benefit of picking up people with fewer than 15 hours in a week, that sounds like 60 weeks or thereabouts to -
Senator Bosa: However, that can be counted over a period of two years.
Mr. McCurdy: Only if you happen to strike at least 490 in the first year; and then you have at least 420 in the second year. It is not 910 spread, as you will, over two years. You have to have 490, and then in excess, or close to that, in the second year.
I do not know where all these people are. I can think of very few people in our part of the country who would have that kind of a work schedule. There might be a few. There are some people who permanently get 15 hours, or less, a week. If you are at it permanently, I suppose, then the UI may not be of much relevance.
Senator Bosa: I suppose students could do that.
Mr. McCurdy: There may be some who would qualify as a result, but I would not see it being large numbers. Quite frankly, I do not have a great deal of confidence in the estimates that come forward. The changes in 1994 had estimates which have been significantly exceeded. It depends on the point you want to make.
People were captives of the people who sit there, the bean counters who make those estimates. We had a bill in 1994 that was supposed to accomplish certain objectives. We have the same people making the estimates. I think there has been a real public relations job.
Senator Bosa: The department has put forward some hard figures. They have said that 45,000 additional seasonal workers will qualify for benefits and 270,000 workers will get about three more weeks of benefits. They have the data in the bank and they can make projections.
Mr. McCurdy: Well, I hope it was not the same people, the same branch that did the estimates, the assessments on the tax program.
The Chair: Mr. McCurdy, I thank you for making a presentation before the committee.
The committee adjourned.