HRPD Committee Meeting

STANDING COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITIES

COMITÉ PERMANENT DU DÉVELOPPEMENT DES RESSOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 10, 1998

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[English]

The Chairman (Mr. Reg Alcock (Winnipeg South, Lib.)): Let us come to order.

Before I turn to our agenda for today, I'd simply like to say, for the information of members, you will recall in the last meeting we had given people a deadline on Bill C-19, the labour bill. We had asked people to submit their lists of witnesses by Wednesday of last week. That has been done. We've been through the list and have been organizing it, given the desire on the part of the committee that we have some balance in the representation. So I want to thank people who have submitted lists.

I think we're going to be able to meet the test. It's quite a long list, so we're going to have some long sittings and some late nights, but I think it's going to be a very interesting debate. All we await now is the emergence of Bill C-19 from the House, and we all look forward to that eagerly.

• 1110

Now to today's business. I'd like to welcome the deputy minister, Mr. Cappe, and friends—I'll let you introduce everybody, Mel, although I think we know everybody here, with possibly one exception—to a meeting on the first monitoring and assessment report for the EI program.

There's been a lot of interest in this, Mr. Cappe, as I'm sure you're aware, and we look forward to this morning's meeting. I'll turn it over to you and let you start. Perhaps you can introduce the people you brought with you.

Mr. Mel Cappe (Deputy Minister, Human Resources Development Canada; Chair, Canada Employment Insurance Commission): Thank you, Mr. Chair. It's a pleasure to be here with the committee again.

I'll introduce Norine Smith, who is the assistant deputy minister of insurance; Diane Carroll, who is the associate director general of labour market policy; and Mr. Ken Kerr, who is the director of employment program policy.

We would be pleased to answer questions, but perhaps I could spend about 10 or 15 minutes and just give members a sense of the report.

[Translation]

For me, this is a rather important report because it's the first one required by legislation and also requiring the presence of the department and the Commission. I'm here as Chair of the Employment Insurance Commission. Moreover, this is the first of five reports that will be tabled in the House of Commons.

The new employment insurance regime represents the greatest overhaul of the unemployment insurance program in the last 25 years. That's why the government of Canada has made the legislative commitment to monitor and evaluate three things provided for in the legislation: first, how the people, the community and the economy adapt to the reforms that have been implemented; secondly, whether there are any savings for the employment insurance account; and, third, the efficacity of the benefits and measures offered. So those three criteria are major, and required by the legislation.

As I was saying, this report is the first of a series of five and I'm anxious to see the next one because this one is not based on a lot of data. Unfortunately, we haven't had a lot of data on which we could base our analysis, but there are still a lot of important and interesting analyses in the report.

[English]

Therefore, if this is such a fundamental reform and the government is committed to monitor this, many of the effects of the reform won't take effect or show their behavioural change in the public for another three or four years. Therefore the reform over the five-year period will take time to come into effect.

Although some of the provisions came into force only in January 1997, we did not have a full year of impact on things such as the hours base of the reform. Other elements, such as the intensity rule and the strengthened clawback, will gradually take effect as individuals establish a history of benefits collected since July 1996.

A complete picture of a claimant's benefits is only available with a really significant time lag. Therefore, many of these measures won't take effect until the tax system is imposed on their income over the course of the next four or five years.

In the first year of implementation, the new employment benefits were being phased in at the same time that a major restructuring was taking place in Human Resources Development Canada. The delivery network of the department was being changed and we were using new arrangements to deliver the employment benefits with the agreements with the provinces, and we're still in the process of implementing that.

• 1115

As a transitional measure, this report compares information for the first year of the new EI system—that is, from July 1996 to June 1997—with information for the 12 months prior to that. So we're looking at July 1995 to June 1996 as compared with the 12 months thereafter. We're using a basis of analysis that is comparable to the public accounts of Canada.

The context of the reform is outlined in chapter one of the report. It begins on page four in both English and French versions of the report.

The report has to be evaluated in a broader context. We must remember...and I know, having talked with many of the members of this committee, that the labour market is changing. As the labour market changes naturally in response to technological change and globalization, the efficacy of the Employment Insurance Act has a differential effect on those people being affected by the changing labour market. As well, our relationship with the provinces is changing and more partnerships are developing. That's having an effect on how the system is working as well.

In terms of the changing labour market we see that there's a need for continuously improved skill levels and a changing pattern of work, where more people are self-employed now than ever before. As well, there is a greater focus in this legislation on active employment measures. Those active interventions are having a significant effect on individuals, and there are more individuals affected than ever before.

As the report notes, the beneficiary-to-unemployed ratio is probably the most interesting, and in some ways unsettling, element of the report. This is on page seven in the English report

[Translation]

and on page eight of the French version.

[English]

Since the early 1990s the proportion of unemployed individuals in receipt of EI income benefits has been declining. We have to remember that these are two measures that are measured differently. That is, the beneficiaries are measured on a different base from those people who claim to be unemployed. Labour Force Survey of Statistics Canada asks, “Did you look for work this week?” Many people will say yes, even though they have a job. When they are then asked if they have a job, they are otherwise disqualified. So people will be looking for work and may or may not be qualified for employment insurance.

It's a very important element that we recognize that these are really incompatible, or non-comparable, measures. So the beneficiaries is a measure that is done on a totally different basis from the unemployment rate.

That's why the department is now undertaking an in-depth analysis of this decline in the beneficiary-to-unemployed ratio. We hope to have a separate report ready in the late fall or winter, certainly in time for the second annual report, where we can provide a bit more of an analytical assessment on why the B-U ratio is falling and why it's different so significantly in different regions of the country. I think the differential is also in itself quite significant, as the report points out.

The next element is the new relationship with the provinces. This is in chapter three of the report, on page 19 in the English version

[Translation]

and on page 22 of the French text.

[English]

For many years the federal and provincial and territorial governments have been actively involved in labour market development. This has been for the purpose of increasing the employability of Canadians and promoting economic growth and social cohesion.

More recently, the growing convergence of federal and provincial and territorial policy objectives and our actions in the labour market have drawn attention to the need for new ways to manage the involvement of different levels of government and the partnerships with the private sector and non-governmental organizations. Both orders of government recognize the importance of providing employment programs and services that work and that produce clear and tangible results. The results-based focus is really evident in the legislation and in the agreements we've signed with the provinces.

The new EI system has facilitated the establishment of new, positive partnerships with the provinces. We've signed agreements with 11 provinces and territories now. We have also begun preliminary discussions, but not yet negotiations, with the Province of Ontario, the one province we have not yet embarked on negotiations with.

[Translation]

In the government of Canada's 1995 budget, the employment insurance program was tasked to decrease its costs by at least 10%. This 1995 budget was a rather important event.

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The reform also represented a fundamental restructuring of the program. The main objectives of the reform were as follows: to ensure that the system reacted to the reality of today's labour market and do away with the system's inequalities and deterrence factors. These were very important objectives because they indicate a change in philosophy: the responsibility was being transferred to the shoulders of the individual.

For those reasons, employment insurance was conceived as an integrated system of revenue and employment benefits. It still provides temporary revenue support for those men and women who have lost their jobs because of external circumstances. It emphasizes active help for re-employment to help Canadian unemployed find, create and keep a job. Third, it does away with the deterrence factors while protecting people in need. Finally, it streamlines the administrative process.

The two key elements of the new employment insurance system are as follows: first, the income benefits under Part I include a new eligibility plan based on the number of hours worked; second, the employment benefits and the support measures under Part II support individuals trying to find a job, or find a new one.

There are two factors to be taken into account in examining the 1997 report on employment insurance. As I mentioned before, some of the reform elements have been in place for at least a year and the report is thus based on very preliminary data and analyses. Also, the changes observed don't stem solely from the employment insurance reform. Many factors come into play including an expanding economy, movements in unemployment rates, job losses and job duration.

[English]

Let me give, just briefly, a few of the key findings relating to income benefits. The findings concerning income benefits can be found in chapter four, on page 27 of the English version

[Translation]

and on page 31 of the French version.

[English]

Regular part I income benefits declined by 8.4%. The number of initial claimants declined from 2.13 million to 1.82 million, a drop of 15%. Average weekly EI benefits declined slightly, but less than expected. The decline in benefits and the drop in number of claims is due at least in part to the improvement in the economy. For example, in Alberta, where the economy is booming, benefits declined more than 22%. So there has been a differential impact in the decline in benefits across the country.

There is some evidence that adjustment and behavioural change could be occurring, particularly in Atlantic Canada, where some people, more than ever before, appear to be finding the additional two weeks of work they need to maintain their benefit levels.

We turn to the employment benefits and support measures described in chapter five, on page 36 of the English version

[Translation]

and on page 43 of the French version.

[English]

The number of clients participating in employment benefits and support measures increased from 230,000 to 305,000. That's an increase of 33%. It's quite significant in terms of the number of people we've been touching and helping get back to work. There was an increase in short-term interventions and a stable level of participation in longer-term ones. The average cost per participant fell from $7,300 to $3,900. So our costs were lower but we were touching more people.

There was a slight increase in the participation of women, while the participation rate of persons with disabilities remained constant.

I turn now to chapter seven. Savings were expected from reduced income benefits and increased penalties for fraud and enhanced claimant assistance. Regular income benefits declined by 8.4%. Preliminary evaluation data indicate that about 55% of the participants in the employment benefits and measures initiative were employed for at least three months following these interventions.

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To resume then and to sum up, and I know you want to have questions more than you want to hear from me,

[Translation]

the first year of the reform led to important transitions, including new systems to determine benefit level eligibility and new requirements in report production. The program will henceforth emphasize results-based employment benefits, greater local flexibility and the establishment of new partnerships between the government of Canada and the provinces and territories.

At the same time, economic expansion gave rise to an increase in employment and a substantial decrease in the number of job losses. However, in certain regions, unemployment remains high and in some cases even increased because of the arrival of new people on the job market. We've only been able to conduct limited analyses at this stage.

[English]

During 1998 a key focus will be the implementation of the new labour market agreements, and we hope to report on results in the next report. There will be an ongoing assessment, as I indicated earlier, of the B-to-U ratio, the beneficiaries-to-unemployed ratio. We're working on a separate paper with Statistics Canada to do that analysis.

I've indicated what our next report looks like. We're interested in the committee's assessment of this report and in the issues you'd like to see us address in the next report. I've indicated a few that we think are really critical.

A report of this nature necessarily contains a lot of numbers and statistics, but I really urge the committee to recognize—and I know that members of Parliament see this in your ridings—that there are real people behind these statistics. We recognize in the department that this is not something in which one can just deal with the aggregates. At a very personal level, these are people who are touched by their particular circumstances.

The employment insurance reform has seen a decline in the number of beneficiaries and a decline in benefits, but these are not necessarily bad things. Part of that decline is a result of more people finding jobs. Part of the decline is a more robust economy.

Nevertheless, for those people who find themselves in these circumstances of unemployment, we've tried to put in place programs that can help them to get back to active employment. I think the system has worked relatively well. As you see from the report, we've tried to be as candid and open as possible. We've given what we think is some good news, but we've been candid about the bad news.

We look forward to the committee's comments, and we're prepared to answer questions.

Thank you, Mr. Chair.

The Chairman: Thank you very much, Mr. Cappe.

We'll begin with Mr. Anders.

Mr. Rob Anders (Calgary West, Ref.): Thank you very much.

I know that many, many times we've dealt with the issue of employment in this committee. One of the questions I have is what your opinion is of how big the EI fund should be.

Mr. Mel Cappe: Well, Mr. Chair, I'm a bureaucrat and I don't have an opinion, but I will offer a response to Mr. Anders' question. I can tell you that there is actually a formal technical response to the question, so you don't have to worry about my opinion.

In the chief actuary's report, which was published in October or November 1997, the chief actuary indicated on page 13 that a reserve of $10 billion to $15 billion would seem to be enough to cover the higher costs expected during a recession. However, stabilization also involves dealing with the risks of setting up the reserve too quickly or at too high a level, which is a concern when it reaches or exceeds approximately $10 billion. He went on to talk about the risks and the need for the two elements of balance that are required in the statute.

As I said earlier, I'm here as chair of the commission. The commission is exhorted in section 66 to take into account and consider to the extent possible...that we should ensure there will be enough revenue over a business cycle to pay the amounts authorized to be charged to the employment insurance account and to maintain relatively stable rate levels throughout the business cycle.

Mr. Rob Anders: I think I have everything I need there.

What is it sitting at right now?

Mr. Mel Cappe: I don't have a daily number, but we'd be approaching $14 billion.

Mr. Rob Anders: About $14 billion. So we're on the way-high end even of the chief actuary's recommendations.

Mr. Mel Cappe: We're in the middle, yes. We have about $13 billion to $14 billion.

Mr. Rob Anders: I have two more questions, if you'll indulge me, Mr. Chairman.

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Just for the point of curiosity, do you know or would you happen to have the number of how much money Alberta pays into the EI fund?

Mr. Mel Cappe: I can talk about what the provincial numbers are, and I would expect that....

One has to look at this over a longer period of time, because it's important to recognize that the EI fund is there to take account of both the ups and the downs. Many provinces have been net contributors at some point in time and net beneficiaries at another.

Premiums from Alberta are about $1.9 billion.

Mr. Rob Anders: Out of curiosity, what does Alberta receive?

Mr. Mel Cappe: I have 1995 figures, and Alberta received in 1995 a little over $1 billion. So about $883 million is the net transfer from Albertans.

Mr. Rob Anders: That's pretty sizeable. Thank you.

The Chairman: That's it, Rob?

Mr. Rob Anders: That's it for me for now.

The Chairman: Mr. Crête.

[Translation]

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): I'm very pleased to see that we're examining this report today. I think this is an important issue. What struck me most throughout your presentation is the fact that this affects people.

I'm not criticizing the value of the people who did the work, but in reading this report, it seems to be quite disappointing. You've explained that to some extent. You stated that you only examined the first year, that you don't have a lot of numbers and that you are unable to make very specific comments. That's more or less what you said verbatim.

First of all, I would like you to tell me whether it would be possible to gain access to the assessments that you must have done on the state of the situation at the time the reform took effect and studies that you've obtained since that time, which would allow us to see the effect of previous reforms. You can't examine this reform without bearing in mind those that were implemented in 1989, 1993 and 1994. All these reforms are part of the same line of thinking. Could we obtain all the documentation available to have a genuine assessment of the overall impact of all this?

Mr. Mel Cappe: Indeed, you're quite right, Mr. Crête. The latest reforms have had a major cumulative effect. The last reform may not have been the most significant one.

The 1990 reform dealt with those that were called "voluntary quitters". This affected quite a few people and the effect of the reform increased since that time. Therefore, one has to examine all the latest reforms.

I think that the most significant effect for the future is the change in behaviour that the latest reform will bring about. The incentive to find a job, to keep it and to find as many hours of work as possible are very significant. Increased personal responsibility is very important even though up until now we have not observed that this has had a major effect.

Mr. Paul Crête: Along the same lines, yesterday the newspapers were discussing a report by an academic, Mr. Fortin, who in his research conducted a very valid analysis in the decrease in the number of people who receive employment insurance benefits. I would like to reiterate the question I asked earlier, but this time in a more specific way.

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Could we have access to studies that your department has conducted and that may be useful in analyzing the situation?

Last week, in Rivière-du-Loup, the Minister said, and I quote:

I don't think it's appropriate that we are only at 42% and I have ordered a close examination of the measures to be taken to redress the situation because you have an insurance system that doesn't cover half its members and is not adequate. This certainly has to be improved and reinforced.

The Minister said that, and Mr. Fortin made his study public. Shouldn't this report have contained something—and data had been available for a long time—on the systematic decrease? There is a significant observation here. At the end of your presentation, you stated that you don't exactly know what positive or negative effects there will be, but we've gone from 82% to 42%.

Mr. Fortin's study demonstrates quite clearly that when people go from unemployment insurance to welfare, it's then much more difficult for them to rejoin the labour force. If they manage to obtain sufficient benefits to stay in the labour force, they have far more chances of finding a job than if they're forced to go on welfare. At that point, they enter a network that is completely different from unemployment insurance.

Mr. Mel Cappe: Allow me to answer your questions one by one.

With respect to Professor Fortin's study, I read it last night for the first time, but one of our economists reviewed his report and his study and gave him suggestions and comments, and critiqued the work.

I think that Professor Fortin would agree that this is a very simple econometric study. He took 18 snapshots over the past 18 years with two indicative parameters: first, the trend, which is an explanatory variable, and, second, a variable for the generosity of the system. It is a very simple analysis.

But also, as you indicated, he looked at the three previous reforms, in 1990, 1994 and 1996. It is therefore difficult to attribute results to each of these reforms. This highlights the importance of my remark earlier on the accumulation of impacts.

We have not had the opportunity to verify the analysis. Last night we tried to reproduce it. We used a different generosity variable from the one he used. Our result was quite different, that is lower, but the trend was the same. Obviously, we have put more people on welfare, but he assumes that everyone not receiving employment insurance benefits is on welfare. That is not true, because many people are second-income earners. Those things must therefore be checked very carefully.

With respect to the other studies, when the Act was revised in the last Parliament, Mr. Young tabled studies that had been done to explain the anticipated impact. Those studies were tabled and can be provided to you if you like.

However, we are waiting for the analysis of the impact of C-17, the bill that was tabled in 1994. An assessment will have to be published in the next few months, and you will have another opportunity then to study the impact of those changes.

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Mr. Paul Crête: But have there not been any studies prepared at the request of the department between the two reforms, that is between the studies tabled by Mr. Young and the one that is being prepared, studies that would be helpful to us in assessing things such as the drop in the number of beneficiaries and other impacts of the Act?

Mr. Mel Cappe: All the analyses that we have done are described in the monitoring and assessment report. We based those reports on...

[English]

In English, it's called the “Canada Out-of-Employment Panel” survey, which is done by Statistics Canada and us, and the labour force survey of Statistics Canada. We used an outside consultant to take 14 communities,

[Translation]

or rather Prince Edward Island as a whole and 14 other communities.

[English]

We have a coverage survey done by Statistics Canada which looked at who has been covered and who has not. We have an evaluation under way on the labour market development agreements with the provinces, and we're working with 12 Canadian universities to do a study of an evaluation of part I income benefits.

[Translation]

There are a number of initiatives to assess these impacts, and we have reported on all the impacts that we have already found.

Mr. Paul Crête: I am going to ask you some questions that are somewhat more specific. Here is a concrete example from the Act, which I find a bit absurd.

You say that you are going to do studies in 14 regions. In Quebec, the two regions chosen are Montreal-Centre and Repentigny. In my opinion, this choice was a deliberate one from the outset. All regions with a high concentration of seasonal jobs were excluded, and it will certainly not be possible to get results that will make it possible to assess the impact that the reforms might have in the entire eastern section of Quebec, on the North Shore or in the Lac-Saint-Jean region, which are areas where there are a lot of seasonal industries.

How were these 14 places chosen? Do they seem appropriate to you given the main aims of the reform, especially with respect to seasonal workers? Might one not get the impression that the choice was done deliberately from the outset so as not to accurately portray the impact?

Mr. Mel Cappe: I will ask Ms. Carroll to answer your question more specifically. We tried to find places where we could test the impact in different settings. We wanted to see the differences between rural and urban areas, between places where work was seasonal and those with full-time jobs, etc., not only in each province but across Canada.

[English]

Diane can respond in more detail.

Ms. Diane Carroll (Director, Employment Insurance Policy Directorate, Department of Human Resources Development): With the 14 communities, just exactly as Mr. Cappe said, we were trying to make sure that we were capturing all types of communities, such as seasonal communities or towns that were more reliant on one industry or where you had a high proportion of women in the labour force and a high proportion of the sort of service sector, so throughout.... Although in every province we certainly didn't capture each of those elements through the 14 communities across the country, that's what we tried to do. We were selecting them to make sure they were representing urban areas, rural areas, and all the different types of communities.

It looks at those communities individually, but it also eventually brings that information together and asks if there are common elements in different types of communities across the country.

[Translation]

Mr. Paul Crête: Madam, do you think that the two regions chosen in Quebec will enable you to assess the impact of the reform on Quebec, given that labour force mobility is quite different in Quebec than in the rest of Canada? Does the fact that you did not choose a region of Quebec with seasonal jobs make it possible for you to really assess the reform?

[English]

Ms. Diane Carroll: Certainly the intent of the analysis of the 14 communities was not to do the full analysis of the impact of the reform. It is only one of the elements. So we certainly are looking...we're doing broader evaluation studies that will look at Quebec more specifically.

The idea in selecting these communities was to select a few communities to look at in comprehensive detail, but through the Canada out-of-employment study we will know a lot more about what the reform has done to individuals in Quebec. It's just one element. The analysis of the 14 communities is only one component of the overall monitoring and assessment, which feeds into the rest of the data, the information and the evaluations.

The Chairman: Thank you, Mrs. Carroll.

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Mr. Crête, I'm always fascinated by your questions, so I have let you go on rather longer than perhaps I should have on the first round. But I think we'll have time for a second round.

Madam Bradshaw.

[Translation]

Mr. Paul Crête: We can come back another day.

[English]

The Chairman: Help me.

A voice: Come back another day.

A voice: He's quite willing to come back another day and another day and another day—

The Chairman: Oh, I see. Thank you.

A voice: We can't afford to keep Mel here for too many days.

The Chairman: Or that surplus will be gone.

Some hon. members: Oh, oh.

[Translation]

Ms. Claudette Bradshaw (Moncton, Lib.): Mr. Cappe, it is true that the reform is a major one. I am pleased that we are looking at employment.

I have just spent a week in my own riding of Moncton, and I must tell you that the people coming into MPs' offices are desperate. They have been everywhere. If I have understood the Minister correctly, the reform means that you are open to changes. You are going to provide us with studies, and you are telling us that you are open to recommendations and changes. This is a large-scale change because we are modifying the system that has been in place for 25 years.

[English]

I have worked with systems a lot. Normally when a sheet comes out the people in the regional offices go by that sheet as if God had written it. And since you've made the reforms, I haven't seen you change that sheet. And when we look at why we have fewer people on EI, it seems to be an issue, but for us who see the people, or for me.... I work with poverty, and I can give you several reasons why not as many people are eligible for EI. For now, I'll touch on one, which is your magic word on that sheet that says “quit”. I know why you did that. Fewer people can apply now because of that, but it also encourages abuse, and we need to seriously look at this.

Monsieur Cappe said it when he first spoke and said “EI reform is people”. And your report needs to be factual and affiliated to the people who have worked, who have paid into the system. And if you're telling us that it's an EI system, which means “employment” insurance system, and you want to encourage them to go to work, then you have to make sure as a system that you're there for those people so they'll believe you when you say that it's “employment” insurance.

I don't want to go on about this, but I wonder if you're doing something within your system to change the separation sheet.

Maybe, Mr. Chair, that's something our committee could certainly work on. Your separation sheet, when you have to apply, and your little boxes—

A voice: Yes.

Mrs. Claudette Bradshaw: If you formed a committee to look at that I'd be interested in sitting on it, because I think that's one of your major problems.

Also, what you have written on the back is a major problem, and I'm willing to sit down with you or work on the committee for that. I don't want to go on and on about that one, but I just wondered if your plan to reform things is also going to include reforming that darned separation sheet.

Mr. Mel Cappe: This is an important administrative question, Mr. Chairman, so I'd like to follow up with Ms. Bradshaw afterwards. We're always interested in improving the administration of this, within the existing law, and if there's a way of capturing information that is more user-friendly and provides better service to the individual, we're very open to doing that; we don't have to wait for a reform process to do it. I'd be pleased to follow up on that.

Mrs. Claudette Bradshaw: And I'd be pleased to meet with you.

Mr. Mel Cappe: I could tell.

Voices: Oh, oh.

[Translation]

Ms. Claudette Bradshaw: Mr. Chairman, this is perhaps something that our committee could look into.

[English]

The only other thing that I want to speak about, and I'll be brief,

[Translation]

is the appeal process. The committee never hears about the appeal process. We never talk about that with you. When people are refused benefits, they appeal.

I would like to know how much flexibility those hearing the appeals have. How many people go to the appeal process and manage to get the initial decision overturned? How do people launch an appeal?

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I would like to recommend that the chairman of the appeal boards from various regions in Canada be invited so we can find out what they do and how they do it. Personally, I would like to know who the appeal process is intended to benefit. Is it there to protect the people or the system? I have other things to say, but I will stop there. Thank you.

[English]

Mr. Mel Cappe: Mr. Chair, this is an interesting issue. I was looking for...

[Translation]

I do not have the titles of those positions in French and so I will answer in English.

[English]

We have a system where there's a board of referees and there's the umpire. I wasn't sure which appeal process Ms. Bradshaw was referring to. In any case, I don't have those figures here, but we can indeed get those kinds of statistics.

An individual who feels that the agent who's dealt with them has not treated them fairly does have a capacity to go to the board of referees. On the board of referees there is a three-person panel to review it. Then, if they are not satisfied with that decision, they can go to the umpire. The umpire is a federal court judge. We can get the statistics for that and provide it to the committee.

[Translation]

Ms. Claudette Bradshaw: Thank you.

[English]

The Chairman: Mr. Nault, did you want to come in on that particular question?

Mr. Robert Nault (Kenora—Rainy River, Lib.): No. I wanted to use up our ten minutes, though. You don't tap two minutes over here and then go hang out over there for an hour. I don't think that's fair.

The Chairman: As long as there are questions, Mr. Nault, I'm prepared—

Mr. Robert Nault: I want to ask a few questions of my own.

The Chairman: Mr. Nault, this is your opportunity and you have as much time as you need. We're not constrained at this point.

Mr. Robert Nault: Thank you, Mr. Chairman. I understand that some members over there are interested in questions, but since I've been here since the beginning of these changes I may have some questions of my own relating to the implementation of those, being that we were sitting here for months and months last term on this particular file.

I wanted to talk specifically about an issue that I think most people on the other side won't touch because it relates to the provinces, and that is the labour market negotiations under part II of the EI Act, which very few people focus on but which is probably the most significant change we've made in the Employment Insurance system.

There are a number of issues. I wanted to touch on one in particular. This is the first analysis and monitoring process and the data is not significant. What I'd like to know in general is whether, under the monitoring system in the second analysis and third analysis, we will we be getting the statistical information under part II.

For example, let's take the Province of Quebec. We have just transferred a significant amount of money from the EI account to the Province of Quebec and the Province of Quebec has the right to structure the five tools in the way they see is most relevant to their particular region. In the analysis, will we be able to see specifically how the different provinces are meeting the needs of the clients as they relate to training and education?

In fact, one of the most fundamental shifts is that under part II there was supposed to be a recognition that there would be a seamless, one-window approach to individuals who are unemployed, whether they be a welfare recipient or whether they be an EI recipient. Therefore when a person came in the door and they were under this new system of this labour market agreement, they would not have to go to a federal agency over here to talk about EI and training and go to the social services side if they were on welfare. In fact they would go through one door and say I need some education or I need some training because I'd like to get a job.

Will we be able to monitor that, Mr. Cappe? I think that is a very important part and an extremely difficult issue for a lot of federalists who would like to know whether in fact transferring this amount of money to individual provinces is going to improve the system.

Mr. Mel Cappe: Yes, it's true that each of the agreements there is an annex which requires the province to provide information and data to the Government of Canada on how many clients they've treated, how many clients they've returned to work. They have specific results targets that are tailored to each province in each of those agreements, and they will have to report on how they've used the money.

• 1155

One of the things we did in the negotiations with each of the provinces, even those where we have a co-management arrangement, is remind everyone that this is an act of the Parliament of Canada and that the accountabilities are on the Minister of Human Resources Development to report to Parliament. So in each of those provinces we have an understanding in the agreement itself, an obligation, for the province to provide data, and that data is to be reported to Parliament and then sent to the committee.

The issue of seamlessness is really an important one, and we have varied results. With the Government of Alberta and the Government of New Brunswick, which were the first two agreements we signed and which were transfer agreements, we have been working towards a single front end, a single-window approach. We have a number of examples in Alberta of Canada-Alberta service centres, where the client doesn't know whether the staff person who's treating them works for the federal government or the provincial government. We have many of those examples in Ontario as well, even though we don't have an agreement with Ontario, where we're trying to improve service to the client. As you say, the client doesn't really care who they're dealing with; they want to get good service. So we've tried to do that.

There are a number of provinces where we have not made progress on this, but we have tried, and we're still open to doing so.

One of the things that's critical in the legislation—and it's expressly identified in the amendments or in the new act—is the obligation of the federal government to work in concert with governments of each province in which employment benefits and support measures are to be implemented, in designing, etc. There's an obligation at subsection 57(2) for us to work in concert with the provinces, and we do whatever we can to implement that.

Mr. Robert Nault: The long and the short of this is I really wanted to be assured that when I receive the report as it relates to the individual provinces and the labour market agreements, based on the accountability and the results-based systems that we've put in place, I'll be able to monitor the constituents of my particular region as to what kinds of programs they are being given and what kinds are being implemented.

As you know, for a number of federalists, there's a concern that when you transfer money to the provinces, they don't always use it where they're supposed to. Now of course, under the EI Act, that's against the law, but that doesn't mean there won't be some fancy way to create a new program that diverts funds to areas where it may not be appropriate for our constituents.

Will this report be done in such a way that we'll be able to analyse, from northern Ontario's perspective, just what is being implemented in that particular region? I know northern Ontario is not a good example today, because we have no labour market agreement with Ontario yet, but let's assume we will someday. If we do, I want to make sure the Government of Ontario, which is not of my political stripe, does the right thing by the individuals who are paying into the EI system.

Mr. Mel Cappe: The answer is that by province, yes, you will be able to see how well they do. I just don't know the answer as to whether it will be by region within a province. That degree of detail is something we would hope each provincial government would be prepared to deal with.

Mr. Robert Nault: Another question I wanted to ask you relates to the fact that we're doing individual studies with these 14 communities. According to the report, there has been a significant change in the behavioural patterns in those communities, and you've done a lot more specific analysis of those 14 communities than you have of the overall system.

It says in the report the largest relative increase in insured weeks of work was observed in the three Atlantic communities of Clarenville, Prince Edward Island, and the Miramichi. In fact there was an increase in 12 out of the 14. It seems to me that is a somewhat interesting analysis at this early stage, that people can find more work if they're pushed a little bit. I know there's a point where that can't be done, but the Miramichi is a good example. I'd like to be able to see the analysis of the Miramichi specifically.

Will we be able to see these reports once they're done, the breakdown and specifics? Of course there are some members of Parliament who suggest that that can't be done in the Miramichi or other places. I'd like to be able to see them specifically, to see how you arrived at that particular change.

• 1200

The other issue is the very social-policy-oriented decision that this government made to exempt low-income claimants. When we did that, of course, low-income Canadians had the most difficulty finding extra work.

Are you doing a comparison between the more middle-income claimants and the low-income claimants to see whether that behavioural pattern exists for those who are being pushed to change their behaviour and those who have been exempt from having to change their behaviour at all? I think the analysis can easily be done, because we have purposely exempted low-income claimants from having to go out and get those extra weeks and time.

Mr. Chairman, I suspect that would be enough for now.

The Chairman: Thank you very much, Mr. Nault. That will occupy your space adequately.

Mr. Mel Cappe: Mr. Chairman, I will ask Diane to respond on the Miramichi and on the low-income claimants.

Ms. Diane Carroll: In terms of the community data, yes, the intent over time is that this is what you will be able to do within each of those individual communities. What this first year does is just provide the baseline data of what the situation is in those communities. As we track them over the five-year period, you will actually be able to see what is occurring. That's why we have selected 14 communities, so that you can look at a detailed assessment of what behavioural change and what economic change is happening in the community—not just from the individual level but also from the employer level. Yes, over time you will be able to look in more detail at each of those communities. You should certainly see this year's report as sort of setting your baseline, and then you'll watch over time how things do shift.

You always have the challenge of trying to separate out what changes are happening are actually due to something you've changed in the program versus what's happening in the local economy. You can never scientifically separate those two totally, but by asking the right questions and doing the right kinds of surveys and evaluations, you can come down to getting a sense of how much the program changes have affected that.

Mr. Robert Nault: The reason I ask the question is because there were some focus groups. Three rounds were held in each community and more than 1,500 individuals participated. In the Atlantic provinces it was suggested by the focus groups that the employers were changing the way they do business to allow individuals to get more weeks. It suggests to me there's a whole behavioural process in Atlantic Canada, very different from western Canada, as to how people deal with the EI Act itself.

I'm trying to get a sense of just how far that goes before we get to the real nuts and bolts of structural unemployment and whether in fact they may get a couple of extra weeks through the employers changing their position on how they lay people off and keep them working. There has to be a line there somewhere. After that we get into the whole issue that there are just no jobs.

The Chairman: Thank you, Mr. Nault.

Perhaps we can go to someone from Atlantic Canada, along with Madam Bradshaw, and continue that line of inquiry.

[Translation]

Mr. Yvon Godin (Acadie—Bathurst, NDP): I would like to say good day to Mr. Cappe and to Ms. Smith, whom I was not able to meet the day I was to come to Ottawa, when everyone was in a tizzy because the press was supposed to be there. I would also like to say hello to Ms. Carroll and Mr. Kerr. I would almost like to say thank you to you for the mess you have been involved in. You may not be the people who created it, but you have put people in this mess.

Excuse me for taking this time, but I am talking about human beings who have been affected by employment insurance.

Now studies are being done and there has not been enough time to study the impact of it on human beings. Incredible! It is not difficult to study. You just have to come to our region and see what is going on. That is what I was saying yesterday in the House. The system is rotten. I will not mince words. That is what I feel, on behalf of the people who took the trouble to kick out the Minister who was involved in this. You know where I am from.

I have specific questions about the pilot project that was mentioned. I was to come to Ottawa to meet with you, Ms. Smith, but you decided not to show up because the press was going to be there.

Mr. Mel Cappe: Yes.

Mr. Yvon Godin: Do you remember that?

Mr. Mel Cappe: Yes, I remember.

Mr. Yvon Godin: There is this pilot project, then, on small weeks.

• 1205

Are you planning to make this project final? Short weeks do not encourage people to go out and work. I would like to give you an example today, because I didn't have a chance to give it to you the other day.

I'll give you the example of peat bogs. People work for the entire peat cutting season, but once fall comes, they get called in for maybe one day a week to load the goods destined for Japan. That makes short weeks for them that were counted in the denominator. Or let's say a contractor would call people in to work because there had been a snow storm. As soon as someone worked one, two or three hours, that counted as one week. So, a pilot project was organized. You know what I'm talking about.

Is the government planning to implement the pilot project on an ongoing basis? We know that a pilot project can't last forever. Is something going to be implemented?

Mr. Mel Cappe: Under the Act, we are allowed to implement these pilot projects. A few months ago, we implemented them in 29 different economic regions throughout Canada. The pilot projects will continue until November of this year. We will have to evaluate these pilot projects so as to determine what will have to be done after November. So, over the summer, we will have to review the results we get very carefully. We have some idea of how things are going to be, but the results are not specific or properly founded on fact at this time. So, we are waiting for the evaluation.

Mr. Yvon Godin: Mr. Cappe, I just wanted to say that the pilot project had solved the problem of short weeks. I can certainly say that. The short weeks had created a problem in our region, and the pilot project solved the problem. You haven't heard us complaining about that. That means it was fine.

Then you were talking about Doug Young's reports on the second reform. You mentioned Mr. Young. You said that you could give us a copy of the reports. Is that so?

Mr. Mel Cappe: The reports were tabled with the old committee.

Mr. Yvon Godin: I would like to get a copy of them. They certainly aren't the effects that he was talking about earlier, when he was in opposition. He said that the reforms would be disastrous for New Brunswick.

Mr. Mel Cappe: Those reports could show the results that were expected, but I must point out that they were based on the bill that was tabled in the House and then amended by the committee. So, they don't talk about the gap problem, a change that was made by the committee. The pilot project for short weeks solved the gap problem. We solved the gapper problem, but we created a problem with short weeks. That's why we didn't provide for the problem of short weeks in the studies that I will be giving you.

Mr. Yvon Godin: Fine. But that concerns me. The gapper problem will always exist. You say that the companies are going to change. They will give people more weeks and so on and so forth, according to you. I don't think that's going to happen, particularly in my region. I don't know about the other regions. I can't talk about the other regions unless I have a study done on them. For example, in my region, the crab fishermen put in 15 weeks.

Everyone in the crab industry—and a lot of people in Acadia work in this industry—had a chance to work more weeks than usual. If they subtract the 15 weeks, we will automatically have a problem. This problem was solved artificially, because they were just make-work projects. It wasn't real work. People were just doing these projects.

Mr. Mel Cappe: Projects that employers were willing to pay for.

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Mr. Yvon Godin: Yes, employers were willing to pay, but it seems that they no longer want to pay.

It seems that this year, instead of looking after the black hole or gap, the government has taken $5 million and given them to the province of New Brunswick saying that it washed its hands of the matter and that the province should deal with it. Yes, $5 million. They can use these $5 million to solve the gap problem. That's how it is, and I know it.

So $5 million have been given, but the criteria have changed. Last year, every person who experienced a gap was entitled to assistance—that was what was called the $165 project—to make ends meet until he or she could resume working. But New Brunswick has now changed the criteria. The province has said that people who did not participate in the gap project last year are not eligible this year. Is this how you're going to eliminate the gap?

Mr. Mel Cappe: If I understand the summer gap problem, it occurs because of the need to qualify to obtain benefits. This is an ongoing problem, that people cannot always find enough work in the spring because there is not enough seasonal employment. We are thinking about what employers as well as employees could do to solve this problem.

Mr. Yvon Godin: Mr. Cappe, you are not answering my question. The question was clear. Last year, all of those who were in the black hole could qualify even if they were short of weeks. This year, you gave the money to the province and it wants to give it only to those who were in the gap last year. Here is my question: is this how you are going to eliminate the gap? The gap will always exist.

Mr. Mel Cappe: I believe I understand.

Mr. Yvon Godin: Excuse me. I'm not trying to be difficult, but this is important. This committee is really important. You have a responsibility, and I want you to answer because it is important to me. This is not the House, where the Minister can beat about the bush.

[English]

Mr. Mel Cappe: I'd like to ask Mr. Kerr to respond to Mr. Godin's question.

[Translation]

Mr. Ken Kerr (Director, Policy and Development, Labour Market Branch, Department of Human Resources Development): We have noted that the number of people who need help is decreasing each year. That is an observation. As was said in the general report, this is partially because people are finding the additional hours of work that are all taken into account, because of the changes. Seasonal workers have gained because all the work they do during the season counts to establish their benefits.

But as you have pointed out, this year the province will offer a program for workers who still have a gap problem. This partially reflects our co-operation with the province, but it also is somewhat related to the fact that our ability to offer programs has decreased because we have transferred some of our resources to the province, namely, $5 million.

However, the eligibility criteria for this type of initiative have not changed since the beginning. In the two years that we have managed this initiative, eligibility has been based on participation in the previous year.

Mr. Mel Cappe: If I understood your question clearly, you want to know if the province is going to be using the same criteria as before. Mr. Kerr has said yes, if you have any other information, we would be willing to discuss the matter with the province. The issue of eligibility is obviously an important one.

Mr. Yvon Godin: The human resources people in my area—and these are credible people whom you pay as directors—told me that everyone was eligible. Okay? That's what they told me. But the province says that they have not received enough money and not everyone can qualify. You, a mandarin, here, in Ottawa, are telling us that these are not the correct criteria. For heaven's sake, there are real people out there! Do you know that? It can't be that difficult to know the criteria.

• 1215

As I have said, I'm not trying to give you a hard time, but there are people who are hungry.

I will conclude with a question, but I could go on about this all day long, Mr. Chairman. We are at a crucial time in Canada, in a system that has changed and is hurting people. The system was based upon contributions by the government, companies and employees. Since the last Paul Martin budget, the employees are practically the only contributors to the system. They have just exempted all employers who will hire youths between 18 and 24 years of age. Can you imagine where this system is going?

Look at the program itself. You are talking about money and about agreements with the provinces. Are they providing employment? I'm sorry to have to say this, but the government has missed the boat. Do you know what they are doing with it? Pettigrew told me that it wasn't true, and they weren't doing that. Finally, I found a newspaper article, and I showed it to him to prove that it was true. There are some people working, but the figures are not perhaps the same as yours. That is why I am asking you to come into our region and see what is happening.

I will prove it to you. Take the example of someone who works in a fish plant. The man was working for $7 an hour; the woman was working for $7 an hour. Between them, they made $14 an hour: when the plant closed, both lost their jobs and could receive EI.

But if they did not work in the same fish plant, if there is one who is not eligible now, they could not qualify because programs are such that somebody who is two or three weeks short of work does not qualify. The way the programs are administered, the province is only giving projects to people who are on social assistance. I will swear on the Bible that this is true.

Last week, in my riding, I had a telephone call from a woman who is 75 years old. She said that she was trying to deal with the system. I say that I disagree with how this is being done, and that money is not really being spent on people who paid EI and who are missing two weeks. Are these figures lost in the system? Are they not being calculated?

Mr. Mel Cappe: No, the figures are being calculated, but you have to look at the eligibility criteria. The legislation sets out the eligibility, and the reach-back clients, as they are called, have been EI clients for the previous three years. Therefore, former clients and new clients could qualify for benefits and measures payments.

Mr. Yvon Godin: They have to be receiving social assistance.

[English]

The Chairman: Thank you, Mr. Godin. I believe I heard an offer by Mr. Cappe that if you can bring him some information on how the province is not...they will look at that.

I appreciate that offer, Mr. Cappe.

Ms. Brown.

Ms. Bonnie Brown (Oakville, Lib.): Thank you, Mr. Chairman.

Thank you very much for coming. This is such a complex subject, not just for the average recipient. I'm interested in the changeover in arrangements from say 1993 to what has happened today. I know it took a period of time and it still is not finished.

Being from Ontario, of course, I'm very interested in what is happening, or rather not happening there. I don't expect you to predict when assigning might take place. What I would like to find out is the situation around the money. I'm trying to remember which was the first province to sign. Was it New Brunswick?

Mr. Mel Cappe: Alberta.

Ms. Bonnie Brown: Alberta signed very soon after we had the big cutbacks in HRDC budgets in 1995, is that right?

Mr. Mel Cappe: Alberta signed in about December 1996.

Ms. Bonnie Brown: So about a year after the 1995 budget. In any case, it was the first one to sign.

Mr. Mel Cappe: We were in the middle of the downsizing, that's certainly true.

Ms. Bonnie Brown: So they would have had certain programs federally funded that were coming towards the end of their funding. They signed an agreement, we transferred responsibility, and I assume we transferred money. They may have chosen to carry on with some of the programs that essentially we had funded previously or they may have created new ones. Is that correct?

• 1220

Mr. Mel Cappe: No. I mean, there's an element in what you say that is right, but I want to be very precise. We were not experiencing a significant reduction in part two programming. The part two programming was still in the range of $2 billion across the country. What we were doing was essentially following that exhortation to work in concert with the provinces and work towards agreements with the provinces.

We were in the process of delivering that programming. We had just created, in effect, new programs—the five measures identified in section 59 of the act, I think. In fact, I think Mr. Kerr was involved in that. We created the delivery mechanism within the department. Then we were transferring the money and the resources to deliver that to the province.

Alberta received—I'd better not guess at the money, because I forget, frankly—lots of it, and lots of staff went over to the province with it. The staff transfers to deliver that have recently been completed.

So they took our programs, with our money, and delivered them. The only requirement in the act and in the agreements is that the programs are similar to the programs identified in the act. So in each province they may look differently. They may adapt to the local province, they may use them in a different way, but they're basically the programs in here.

Ms. Bonnie Brown: What I'm thinking is this. Alberta signed in December 1996. In January of last year, let's say, they got a big cheque. They have been getting staff all year and still are, and have picked up the responsibility. You say we haven't cut that budget; we've either kept spending it or we've transferred it.

Are we still spending the same amount in 1998 in Ontario as we spent, say, in 1995 in part two measures? Because I don't think so.

Mr. Mel Cappe: I don't have the exact numbers.

Ms. Bonnie Brown: I don't think so.

Mr. Mel Cappe: I think it's more.

Ms. Bonnie Brown: People at CECs and at my regional office and at the downtown Toronto office tell me that the budget has been cut way back and they don't have the money to fund training programs.

Mr. Mel Cappe: I want to make a distinction between the active benefits and measures in part two and what we were doing, purchasing training. The way we used to purchase training was...and that budget has been reduced. We are withdrawing from training. So 1999 will be the last year we do any purchase of training.

The way it worked was that outside of part II of the act, we were paying the province for the purchase of seats in blocks in their colleges and schools.

Ms. Bonnie Brown: That's the money I want to track.

Mr. Mel Cappe: That's the money that's been reduced significantly.

Ms. Bonnie Brown: That's the money that's been cut. Did Alberta get money to do that?

Mr. Mel Cappe: None of that money.

Ms. Bonnie Brown: So all that money has been cut across the country.

Mr. Mel Cappe: The provinces had said that training was their responsibility and they wanted the federal government out. The Prime Minister made the commitment to do that. We are in the process of withdrawing from training.

Ms. Bonnie Brown: But when we withdraw from training do we not hand over the money we used to spend?

Mr. Mel Cappe: No.

Ken, do you want to elaborate?

Mr. Ken Kerr:

[Editor's Note: Inaudible]...to the provinces provided the budget that we had for active measures to the provinces, minus an allocation for some pan-Canadian responsibilities. With the federal withdrawal from training, provinces must either provide the support directly to the individuals to access training opportunities or use it in other active measures. The actual size of the allocation going to provinces is increasing with the reinvestment.

So we are withdrawing from training, but the size of the allocation is growing as reinvestment comes on stream.

Mr. Mel Cappe: I want to pick up on your point, though, because—

Ms. Bonnie Brown: Let me ask you what I really want to know.

Mr. Mel Cappe: Okay.

Ms. Bonnie Brown: How much is it costing the people of Ontario in lack of transfer of federal moneys for their government not to have signed? In other words, if one did it in 1996 and it's now 1998, what did we do with the money that was supposed to be for Ontario? Is it earning interest for Ontarians or is it being used in other places?

Mr. Mel Cappe: We're delivering the programs through HRDC. What we've done is that as we cut back on the training money, that money is going into the active measures, and we, HRDC, are delivering that programming to Ontarians.

• 1225

Ms. Bonnie Brown: So they're still getting them?

Mr. Mel Cappe: We're not purchasing seats the way we were, but the money is being spent in Ontario as it had been. We will continue to do that.

I can use examples in other provinces, but either we transfer the money and they carry out the programs; we work collaboratively with the province, as with Nova Scotia or Newfoundland, and we continue to deliver but they help us design and target; or, as in Ontario, we do it and they've told us until recently that they didn't want to talk to us. It's only recently that they've said they wanted to talk. In the meantime we're continuing to deliver the program.

Ms. Bonnie Brown: You're saying active measures do not include training programs that we used to have.

Mr. Mel Cappe: Not the same way. We have a provision for skills, loans, and grants in one of the five active benefits and measures and there is an element of training in that where we help people get skills acquisitions. It isn't the way we used to do it, which was that we would buy 500 seats in a community college and then send people into it. We're not doing that the way we used to or we're reducing our intensity of that.

Ms. Bonnie Brown: The problem for me is that my people understood that. If they lost their job they went to EI, they applied for a seat at the community college or some place, and they saw that as what the federal government did for them to help them get back to work. To them that was an active measure.

Mr. Mel Cappe: Absolutely.

Ms. Bonnie Brown: The whole idea of skills, loans, and grants is not out there. All they know is that where they used to go to get retrained is not available.

Mr. Mel Cappe: But what is out there is a counsellor in an HRDC office in Ontario who will help an individual and tailor a program for them. The individual will now have to choose the training program, if you will, and we'll help fund that.

Ms. Bonnie Brown: By giving the money to the individual?

Mr. Mel Cappe: There's a comparable program. It's basically flowing through the individual instead of going directly to the province. The ability of the individual to get that seat and get the skills upgrading is still there. It's going to be a tailored program.

Ms. Bonnie Brown: It's a parlour trick too because they closed the offices or the people who worked there are all now behind a wall and there's one little lady at the front, who is not a counsellor, to say there's the computer, go over there.

There used to be counsellors in my town and a community college and two school boards, with everybody participating and working together. We have done this thing of bringing the welfare office and the CEC together in the same building. We've done all those steps to supposedly get ready, but to the community what used to happen isn't happening there and they don't understand that. They have to drive to Mississauga or something.

Mr. Mel Cappe: There has been a rationalization of the network that is providing that kind of service. In Ontario it's still a very large network and there's still a lot of capacity for people to have the counselling and the programming that goes with it. In Alberta, for example, that work is being done now by a provincial officer giving them federal money to do it. In Ontario it's still a federal employee who's treating the client.

The purpose of the co-location is to allow the client to get the full range of service. You might have an unemployed person who is on welfare receiving Employment Insurance—and if they aren't on welfare they may be close to it—and they can get all kinds of social services from the province as well as counselling and employment advice from a federal employee. They get that from one location.

I visited the Halton office, for instance, and I was very impressed with the way the integration worked. The client was being treated as a whole rather than going to one office to get counselling on employment and to another office to get counselling on social services. They could get it all in one place.

I think for every bad example I can come up with one good example. I think people are travelling more, and 95% of Canadians are within a 30-minute drive of one of our offices.

The Chairman: Madame Gagnon.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): Good morning. I am pleased to be able to speak with you today. The report whets our appetite and it does not provide all the information we would have liked to receive. It says that the data are not conclusive; however, in our opinion, the reality is quite obvious.

In my riding, there are areas where unemployment is at 15%. The objective of the reform was to provide people who are employed with greater stability. At the present time, when employment is generally precarious, I am not sure that we can deal with the real problems. In any case, the report does not reflect the daily experience of job seekers.

• 1230

I would like to ask you two or three questions, because I have the impression that you are drawing conclusions a little too quickly, specifically with regard to women. You said that there were fewer claims because the maternity rate had dropped. I think it is because the reforms have reduced the entitlement of pregnant women to EI benefits and has created new eligibility criteria. I think that linking the decrease in EI beneficiaries to the special benefits category is a very hastily drawn conclusion.

In any case, we do not think that your report is sufficiently detailed, and hope to find, in the second report, data based upon more specific research.

A little while ago, you told my colleague, Mr. Crête, that you were not going into certain regions of Quebec because you would carry out other studies and analyses later. I think that a second report should contain many more facts. For example, you have reached very hasty conclusions on youth employment. You have said that there are fewer EI claims because of all these criteria. However, young people have not been finding more full-time jobs, nor greater job security.

I personally know some young people whose employers demand an exceptionally high level of performance and quality of work before giving them permanent status. I can assure you that such high standards would not have been set for us in the 1970s. Their record has to be absolutely spotless. If they make the slightest error, they are told that they will be reassessed in a month. One month later, if they don't qualify, they can be laid off because there may be another more dedicated candidate.

One of the objectives of your reform was precisely to provide some job stability. I don't think that the reform will achieve this objective.

In any case, in our opinion, the report is rather disappointing, even very disappointing. The impact is real. If it is clearly obvious that there has been a 40% decrease in eligibility for EI, this means that people are living with the consequences, and it is not true that they have full-time employment.

There is unemployment even in the Quebec riding, which is at the centre of the capital of Quebec. People are on social assistance, and that means that they will no longer get jobs. I will get back to this in my second question in a little while.

But first, I would like you to explain to me how you came to the conclusion that special benefits for pregnant women had decreased because of a decrease in the maternity rate.

Mr. Mel Cappe: With respect to the data, as you noted, we didn't have enough to report to the committee; however, we will try to include more in-depth and complete research results in our next report to you. Obviously, this was the first report, and it does not have sufficient information.

As for maternity benefits,

[English]

Diane, do you have that?

Ms. Diane Carroll: In terms of the maternity benefits, there was a very slight decline in the number of beneficiaries over the one-year period, but it was quite small. All we're trying to suggest in here is it's not necessarily because of the program changes; it could also be due to changes that are happening elsewhere.

One big factor in determining the number of maternity claimants is the birth rate. The reason we can't do that kind of analysis at this point in time is we simply don't have the most recent information on the birth rate. So you have to look at that. Really the birth rate among women who are in the labour force partially determines how many will collect benefits and how long they will collect for.

Overall, there was a fairly slight, very small decline in maternity. The big drop in the actual special benefits case was in the case of sickness benefits. There was quite a substantial drop in sickness, but in maternity it was a slight drop of about 2% in the number of claimants, so it wasn't enormous.

What we need to do, and continue to do, is try to look at whether the change to the hours-based system has helped to bring some people in or helped to exclude some people, but also we need to look at what is happening in terms of the birth rate. It also depends on the wage rates of women in the labour force and all of those kinds of factors. You need that information in the future to try to separate out the causes.

• 1235

[Translation]

Ms. Christiane Gagnon: I would merely like to comment on your answer. In my opinion, drawing conclusions too quickly minimizes the impact of the reform.

You have also come to another conclusion related to seasonal work, the black hole and the two additional weeks. You came to a conclusion, but at the same time questions have been raised. Is this not another form of work distribution? Did people work two weeks longer? There has been some accommodation, and some companies have figured out how to get around this. No, you are jumping to conclusions too quickly, and, finally, your are minimizing the impact of the reform.

Mr. Mel Cappe: We did not wish to minimize the impact. However, as you have pointed out, this first report does not describe all the consequences. Therefore, we want to show this in the second report and in subsequent reports. It does not appear in the general data, but, as you have stated, one could find examples of people who have been hurt by the reform.

We did in this report provide examples of behavioural changes that have resulted in people finding work, to show their

[English]

attachment to the labour force.

[Translation]

Ms. Christiane Gagnon: I would like to ask a second question. As I was saying, the reform was intended to achieve a 40% saving. We know that the saving has been greater, more than was expected. We were told that these savings would be applied to the active measures set out in Part II. Why was this not done?

One of our committee research reports stated that there had been an overall decrease in spending on active measures, from 1.7 billion dollars to 1.2 billion dollars. If you really want to help, you don't cut spending on active measures. The government promised a transfer of money.

My question maybe out of line, but I will ask it anyway, since that is what we are here for. Was this transfer also not made? By reducing the funds for active measures while, according to the federal-provincial agreements, this money went to the provinces, the government could keep a bigger share, and when surpluses occur, it could come up with ideas such as the Millennium Scholarships. In fact, the department would have more money under Part I.

Mr. Mel Cappe: No, the amounts transferred to the province of Quebec were exactly the same as last year, or, rather, they were higher than the figures for last year. The figures are set out in the agreements. We have stated how much will be transferred to the provinces in the next three years. This comes from the EI account. So it is being well managed and properly handled.

Ms. Christiane Gagnon: Why are you now saying that there was a decrease in spending on active measures in 1996 and 1995? This was before the agreement, but the clawback in these cases had begun.

Mr. Mel Cappe: During the reform, the minister at the time increased the funds available by an amount that Mr. Kerr mentioned, and which was viewed as a type of reinvestment. Therefore, I think we added...

[English]

$380 million in that year and then it grows to $800 million.

The Chairman: Thank you, Madame Gagnon.

Perhaps I could just interpose a small follow-up question. With the amounts that are transferred, the three-year projections we see in the appendix, if unemployment in the meantime drops substantially in a given region, is that a ceiling that you transfer up to or is that an amount that you transfer irrespective?

Mr. Mel Cappe: No, that's an amount that will actually be transferred. The agreements don't have that limit; they don't expire. The agreements continue forever.

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We have agreements that last five years. We have amounts of money that are committed for three years. The amounts of money will be transferred. The further amounts of money in future years is to be determined, and we made a commitment to all the provinces and territories to review the appropriate amounts.

We have a formula for repartitioning the funds across each jurisdiction. It's a very complex formula, which takes account of the degree of scholastic achievement. It's a very complex thing, but it's under review.

The Chairman: Thank you very much, Mr. Cappe.

I will allow Mr. Anders a small follow-up question. Mr. Crête, if he wishes, can have one too.

Mr. Rob Anders: Just out of curiosity, was the $883 million that Alberta over-contributed in 1995 relative to what Alberta received?

I'm messing with some numbers in my own head. I think we have roughly 2.5 million people in Alberta. I'm guessing the number of actual contributors would be about a million people, which would work out to about $883 that each of them over-contributed to the EI fund in that given year. Am I roughly right in those numbers? Do we have about one million people in the workforce? How many contributors do we have in Alberta?

Mr. Mel Cappe: I don't know the answer to that.

Mr. Rob Anders: Is it a pretty rough ballpark figure?

Mr. Mel Cappe: I don't know. We can probably find out. Statistics Canada would have it, but I don't know.

Since Mr. Anders reopened the question, let me reopen my response. I alluded to the point that the different provinces have gone through different periods of being in balance or not, and I would point out that there were periods when the oil patch went into a deep recession. I shouldn't even open this up, because I don't know the answer, but I know it came close to being in balance, if not going the other way. The purpose of the fund is an insurance fund.

I would point out that in different provinces it goes in different periods and you have to look at it over the longer—

The Chairman: Thank you.

Mr. Rob Anders: The plan was there, that's the point.

The Chairman: On that note, just because we buy fire insurance, we don't hope to have a fire.

[Translation]

Mr. Crête, a short question, please.

Mr. Paul Crête: In the report, I did not find data—and I think it is very important to know what you have on this at the present time—on the number of people covered by the program, since it is based on hours rather than weeks, and the number of people who will become eligible to receive benefits. We have heard repeatedly that more and more people are covered by the plan; however, it is one thing to pay premiums and another thing to receive benefits.

Therefore, do you have any data that would enable us to know how many people will pay premiums but will, in fact, be unable to receive EI?

Mr. Mel Cappe: We do not have these figures at the present time, but we want to get them. It is important to know how many people will be entitled to EI benefits because of the change from weeks to hours. This is the increase that we mean when we talk about an increase in eligibility. We are not talking about an increase in the number of people who will subscribe to the plan. We are trying to get these figures and would like to have them in the coming months. I hope to be able to have them in our next report.

[English]

The Chairman: Thank you, Mr. Crête. Mrs. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): I apologize for having been detained in the health committee, but I couldn't wait to come in and put in my small commercial. One of the things about maternity leave is that it seems still a bit unfair that adopting parents don't get to claim it. What will it take to get that changed in a hurry?

The second thing is that the people who don't seem to be able to claim are our increasing number of entrepreneurs and self-employed people. I would hope from this document we would look forward to innovative and creative ways of actually dealing with what the workforce will look like in the next millennium.

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The third piece of that, looking forward, would be if people are going to change jobs four times in their life, or perhaps even careers, is there a way we could use UI in anticipating job loss so that people could in a part-time way be retraining while they're still in the job force? If they know they work in a mine that probably will be closed, could we be training them at the same time as we can see changes in the job in a way that actually is proactive and looks forward to the realities?

Mr. Mel Cappe: I'll answer the last question and I'll ask Ms. Carroll to respond to the first two.

On the point about anticipating, if you look at the changes in the last budget, there is a real lifelong learning approach to this. Being able to use your RRSP for educational purposes and things like that, even though you'd have to pay them back, is getting at that issue of anticipating what the future needs are. It's getting at being able to invest in your own future with the government helping you invest in your future, in effect.

There is a capacity there. If you look at the changes in the RESP that were announced in the last budget, there's a potential there, although it only applies to young people under 18. It becomes the basis on which you can turn to something where you can actually invest in your own future and the government helps you along the way.

So, again, the seeds have been sown towards moving towards a lifelong learning approach to this. And, indeed, we are doing some work. I know the minister and his staff are quite interested in this. There are ways of looking at the account and what one can do. In fact, arguably, you could minimize the draw on the account by allowing people to use the benefits in an anticipatory way, rather than waiting until they become an employee.

So, yes, we are thinking about that.

Diane.

Ms. Diane Carroll: In terms of the adoptive parents, they can access the 10 weeks of parental benefits, but they don't have access to the 15 weeks of maternity benefits.

There was actually just recently a court decision. Adoptive parents challenged that part of the Employment Insurance Act. They were basically looking for access to the maternity provisions as well, the additional 15 weeks, but the Supreme Court rejected their appeal. It basically concluded, similar to a Supreme Court decision a few years ago, that maternity benefits are there for the physiological needs of the biological mother; they are not there for parental care. That's why we have the additional 10 weeks for parental benefits.

In addition to that, there was a rule where an individual can actually get an extra five weeks of parental benefits if you have a child who has special needs, be they physical, psychological, or emotional. Right now there is a restriction in the act that says the child has to be at least six months of age when he or she arrives in the home in order to be eligible for that five weeks. The court struck that down, and effective June 1998 that provision is actually being removed from the act. So adoptive parents, then, regardless of the age of the child, would now in most cases have access to 15 weeks versus the 10 weeks before. It put a limit on that the child had to be over six months of age. If you adopted a very young child, you could not have access to that additional five weeks. As of June 1998—I can't remember the exact date—that gets removed from the requirements of the act.

Ms. Carolyn Bennett: So all the adopting parents will have—

Ms. Diane Carroll: The vast majority would have the additional five weeks because in most cases they can probably argue the child has special needs because of being—

Ms. Carolyn Bennett: Shouldn't we just open it up to everybody?

Ms. Diane Carroll: Well, it is open.

Ms. Carolyn Bennett: They shouldn't have to go and prove.... Because any kid who has come from a foster home or comes from.... I can't imagine any adopted child not having special needs. So why do we have rules that mean you have to go through some hoop in order to prove that it's a special needs case when technically all adopted children have special needs, I would say?

Ms. Diane Carroll: It's not very onerous. I think all they need is a letter from the adoption agency stating that.

Ms. Carolyn Bennett: It's one more letter coming to government that we don't need, isn't it?

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Mr. Mel Cappe: I want to challenge that a bit, if I may. If we did that, I'm sure a number of people would come along and say that's great for most people, but I have special needs, and I need more time. You have to be able to deal with that allegation.

Ms. Carolyn Bennett: I would submit that the special needs of taking on an adopted child who's come from a foster home or from a difficult situation is special needs, and beyond 15 weeks.

Mr. Mel Cappe: I don't dispute that. All I'm saying is there are some who are going to be disabled and there are some who are going to have other special needs, who you'll want to provide more time to. So this provides some more time to those.

Ms. Carolyn Bennett: But beyond the 15 weeks, right?

The Chairman: Thank you, Ms. Bennett. It also might be an interesting question to pose to the person responsible for the policy in the department, when he appears before us. In the meantime, we'll go to his representative, Mr. Nault.

Mr. Robert Nault: Thank you, Mr. Chairman.

I have one very fundamental question that deals with the shift to the hours-based system. I come from very much a resource-based part of the country. There are a lot of seasonal employees. My interest in this, of course, is that it's my belief that going to an hours-based system is going to be of significant benefit to seasonal employees. Are you tracking that to show that they can in fact qualify for EI much earlier than they did under the old system?

Now, it's very simple. It's not hard to understand. If you're working construction or you're working in the mine or whatever and you work more than eight hours a day, when you add that up over time it's going to be a lot quicker, if you're working in the summertime, when the weather's nice, and you're working 16-hour days, the way I used to on the pipeline when I was in university, to add these all up than the other way around, under the weekly system.

I'd like to be able to see some statistics in the next go-around as to how that shift is affecting seasonal employees. Because it seems to me that this would be a benefit to seasonal employees, not a detriment. That's not the argument that's being made by some.

So I'd like to see how quickly they qualify for EI, because in fact you can get your 10 or 12 or 16 weeks in a big hurry if you're working 16 hours a day in the summertime. I'd like to see some stats on that, although I know it's a little early.

The other thing I wanted to ask you is more of a general question—that is, what are you going to do with all this information? What is the commitment of the government, as you know it, as to when we take a look at the fundamental shifts this is supposed to bring?

The arguments have been made by economists within the government, within the Department of Human Resources Development, that there will be behavioural changes. What is the intention of the department if in fact some of those do occur and some of them don't, and what would you see us doing after you have done a significant amount of analysis with this?

Mr. Mel Cappe: We are indeed tracking the behavioural change of seasonal workers—in particular, the response to the hours-based system. So we will be able to report on that.

I would never tell a parliamentary committee what they should do, so I will certainly defer to the committee. Having said that, I do think it is our intention in the department to continue all of the analyses we've described, and the reports themselves.

It's been very helpful for us in the department to hear the preoccupations of members of Parliament. As we work on the next round of reports we'll be able to deal with some of the concerns you've raised. These are, in fact, the tip of the iceberg, because behind this there's a lot of analysis, as Mr. Nault points out. So I would hope that we would be in a position to continue with that, because frankly, a lot of these effects are going to take place over ten years, not just over the five years of the obligation to report.

Having said that, I would think that in the next couple of years—and I don't know what the right time is, but in the next couple of years—we will probably be presenting to the committee a number of reactions of the public that will interest you and intrigue you and will tempt you to want to make proposals to government, and the government will want to consider making proposals to Parliament.

I would think that this is an evolving process. Let me go back to the small weeks as an example. I think there, members of Parliament and people in the public in those areas that were affected made it clear to us that there was an issue there, and we had to deal with it.

The pilot projects I spoke of earlier, in responding to Mr. Godin, were an example of how the government was trying to respond and be flexible. I think we want to be able to be responsive. We also want to be able to respect the way Parliament has passed the legislation. We want to bring problems here and let you see them and see if you can't give us suggestions on how to change.

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The Chairman: Mr. Cappe, because I'm a nice guy I'm going to allow Mr. Godin one very, very brief question.

[Translation]

Mr. Yvon Godin: We are told that 40% of people qualified, as opposed to 87% previously. Does the 910-hour quota have a major impact on the number of people who find a job, particularly seasonal employment, since this is where the problem lies? I think that this is what is important when we talk about seasonal employment and people who are lucky enough to find work. I'm not thinking about miners or pulp and paper workers. Normally, such people work sufficient hours. When we talk about seasonal employment, we think about people who pick blueberries, harvest peat, or fishers.

In your studies, did you really take into account the effect of the requirement for 910 hours for people in the Atlantic provinces?

Mr. Mel Cappe: We are going to do that.

Ms. Christiane Gagnon: We will devour the second report when it's ready.

[English]

The Chairman: Thank you, Madame Gagnon.

Thank you very much, Mr. Kerr, Ms. Carroll, Ms. Smith, and Mr. Cappe. I appreciate the time you chose to spend with us. We will look forward to seeing you back here many times.

Mr. Mel Cappe: It's always a pleasure.

The Chairman: Thank you.

Mr. Crête, you have a comment to make.

[Translation]

Mr. Paul Crête: Mr. Chairman, I think that there could be unanimous consent—because those are our rules—among members of the committee to decide that given the interest in this report, the committee will, at its next meeting, look at evaluating this report and at tabling this evaluation in the House.

If there is unanimous consent, we could make that decision right now. At the next meeting, we could prepare a report for the House. That would be in line with the comments we've heard, among others, those made by Mr. Cappe, who has committed to taking into account our suggestions. For example, a report like this tabled in the House could contain a number of suggestions on what should be included in the second report.

[English]

The Chairman: Thank you.

If I understand the request to the rest of the committee, because we have the rule about motions, rather than making a motion for a vote, he's asking if there's unanimous consent for the committee to report formally to the House.

Mr. Robert Nault: No.

The Chairman: No.

So that ends the discussion on that, Mr. Crête. If you wish to put it—

[Translation]

Mr. Paul Crête: Our procedure requires that I submit a letter stating that I want this to be taken into consideration. So I am submitting it to you.

[English]

The Chairman: Thank you, Mr. Crête, and thank you to the rest of the committee. Thank you, everybody.

We're adjourned.