HUMA 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]

Wednesday, February 28, 2001

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[Translation]

The Vice-Chair (Ms. Diane St-Jacques (Shefford, Lib.)): Good morning, everyone. Good morning, colleagues. I would like to remind you that the meeting is being televised from beginning to end, and that we have convened for hearings concerning Bill C-2, an Act to amend the Employment Insurance Act and the Employment Insurance (Fishing) Regulations.

I would like to welcome our guests today: Mr. Fred McMahon of the Fraser Institute, Mr. Marc Van Audenrode from Laval University, Mr. Rick Audas from the University of New Brunswick and Mr. Pierre Fortin from the Université du Québec à Montréal. I thank you for being here today despite the rather short notice. I know that we are pressed for time.

In order to remind you of our procedure, I will ask you to each give a presentation, approximately five minutes long if possible, and afterwards each member from both sides of the House will have five minutes for questions and answers, the answer being included in the five minutes, more or less. We will try to abide by this insofar as it is possible.

Therefore, if you don't mind, we will begin immediately with Mr. Fred McMahon.

[English]

Mr. Fred McMahon (Economist, Fraser Institute): Thank you for inviting me.

I realize that most people here view this as a matter of policy, good or bad, and if the press reports are right, even a large number of Liberal cabinet ministers and MPs realize this is bad policy, but I look at this as a matter of human tragedy.

I grew up in Atlantic Canada when unemployment insurance was being regionally extended. When I was graduating from high school and going on to university and entering the job market, my friends talked about how to find 10 weeks of make-work to collect 42 weeks of UI. When you're young, 42 weeks of partying for 10 weeks of work looks pretty good, and a number of my friends got trapped in that cycle. It's fun when you're young, but when you get into your forties and your hair begins to go grey or you lose it, you find yourself in a pretty horrible life. A number of my friends with real talent got bribed into the UI system and lost their opportunities.

This is a case where you shouldn't blame the victims, because government is offering huge bribes to young people to enter this trap. This is, as Tom Courchene would say, a rational response to an irrational policy. If the UI merry-go-round was that tempting to me and my friends in an urban centre, it is even more tempting to young people in rural centres who have fewer opportunities than we did, but not as few as you would think.

Nonetheless, over the course of several decades of a working life, government is offering young people something close to a $1 million subsidy in government money to leave the education stream, not to find full-time work but to work a few weeks of the year in a dead-end, seasonal industry and collect unemployment insurance, now employment insurance, for the rest of the year.

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The only conditions the government places on taking this money, if you reverse this bill, are that as a young person, you do not further your education; you do not seek full-time employment; you do not gather the skills needed to get full-time employment; and you devote your life to short-term, seasonal work.

People forget that before unemployment insurance was regionally extended in 1971—and this is tremendously important—the unemployment rate in the old maritime provinces had converged with the national level. In fact, for at least one year, Nova Scotia, New Brunswick, and P.E.I. each dipped below the national level of unemployment. As soon as UI was regionally extended and these bribes put in place, the unemployment rate in Atlantic Canada soared immediately, and before the oil crisis, which some people try to blame it on.

It's worse than that. In some months twice as many people were collecting unemployment insurance as were officially unemployed. Typically, over the course of the year a third more people collected unemployment insurance than were officially unemployed. That means the regional unemployment rate soared into the double digits.

In many communities the real unemployment rate was 20% to 25%. Now, listen to this next piece of information. At the same time the real unemployment rate in Atlantic Canada was 20% to 25%, Statistics Canada and the Atlantic Provinces Economic Council were reporting shortages of workers throughout Atlantic Canada, including shortages of unskilled workers. Employers couldn't find employees because the government bribe that was being offered to people who took short-term, high-paying, seasonal work and then left the employment system for the rest of the year was too great. Employers, as I say, were reporting that they couldn't find employees. You can find examples up until it was reformed again in the 1990s.

This is an awful merry-go-round that people get on. We have to treat generously the people who have been trapped in this, who gave up their opportunities to find full-time work and to further their skills and education. But we must not, as you plan to do, trap another generation in this cycle. My message is often unpopular in Atlantic Canada, but whenever I say we must not trap the next generation in this cycle, people understand and I actually get applause, even if the rest of the speech is booed.

This is even worse from another angle, because you are taking money out of often lowly paid workers' pockets in the rest of the country—people who under the new system have very little chance of ever collecting employment insurance, so it's no insurance program for them—and sending it down to a perverse program that bribes people not to carry on their education. This is a horrible policy. You're going to trap people.

Don't believe that Atlantic Canada and small communities can't generate jobs and growth. They were doing so before this system was implemented.

A rational response to this irrational policy drove up the unemployment rate and created shortages of workers when there was double-digit unemployment and when in some months there were twice as many people collecting unemployment insurance as there were officially unemployed. A recent study by the human resources department showed that people in Atlantic Canada who are on unemployment insurance don't consider themselves to be unemployed and aren't looking for work.

You can't trap another generation. You have to treat generously the people who have already been trapped, but that's no excuse for returning to a perverse policy that creates real human tragedy.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. McMahon. We will now move on to Mr. Van Audenrode.

Prof. Marc Van Audenrode (Professor of Economics, Laval University): Thank you, Madam Chair. Thank you for having invited us today. My colleague and I must apologize for not having brought a brief: we were only given notice on Monday; it was therefore rather short notice.

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[English]

I want to start by saying that I'm sure everyone here shares the same goal to ensure we make employment insurance or unemployment insurance a good employment insurance system, a system that has minimal space for abuse and misuse, and provides all workers with the right incentives to get back to a job as quickly as possible.

The reason my colleague Pierre and I are here today is because we have done this study on behalf of Human Resources Canada, where we basically evaluated the impact of the intensity rule during its first year of application.

The intensity rule was a very interesting innovation in the Employment Insurance Act. It was original. Nobody else in the world uses a rule like that for its employment insurance system. The U.S. has some experience rating the employers, but not the workers. Since we were going into this area where basically no one else had gone before, we thought it was interesting to see and evaluate the impact of that rule on the people it affected.

Let me state one thing before I go any further into the study. The reason we want to change the rules in the employment insurance system, and the reason the intensity rule was introduced, is because some people believed that the unemployed workers would be unable to change their behaviour and adopt the behaviour that would better fit the objectives of the general system and the unemployment compensation system.

The key issue is did we see this behaviour or change among the unemployed workers who suffered or were likely to suffer from the intensity rule? That's the subject and topic of the study. Basically the conclusion of the study is very simple. We see some behavioural change. We see some workers speeding up their return to work whenever they're affected, or could be affected, by the intensity rule. The reality is that this impact is extremely small. The only interpretation of the intensity rule at this point is that it is hurting a lot of people to get very little impact on the behaviour of the unemployed workers.

We could spend hours to try to answer the question of why these people don't change their behaviour more in the direction that we want them to as a response to that rule. But that's probably beyond the point at this stage. At this stage, we can say that the rule, as it is now, doesn't achieve its goals and hurts a lot of people. In that respect, it's a very good idea to get rid of it or change it.

Thank you.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you very much, Mr. Van Audenrode. We will now move on to Mr. Audas.

[English]

Professor Rick Audas (University of New Brunswick): Thank you very much for the opportunity to come and talk to the committee today.

My comments are based on a study that David Murrell of the University of New Brunswick and I conducted last summer. Our approach was a little different. To a large extent, we feel that the people who are currently in the system and unemployed have a very difficult time adjusting. Basically their lot in the labour market is to a large extent determined. To look for adjustments, our feeling was you were going to find the changes to be relatively minor. Our focus was really to look more at what the effect has been on young people because we feel these are the people who have the most to gain from this policy.

There are a couple of important points I'd like to point out. The first is that EI is extremely important in Atlantic Canada. It has had a number of positive effects in the sense that it supplies income support to a lot of people in need. I don't think we should ever lose sight of that. However, we also have to keep in mind that the effects also have been negative in a number of ways, in the sense that it has become an institutional feature in many communities in the region. Changing EI rules are going to have a significant impact in Atlantic Canada. Our concerns chiefly lie with the clawback and the intensity provisions of Bill C-2.

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We certainly realize there are some methodological problems with what we've done. With a lack of discussion and of greater evidence, we feel this is actually quite important information. We've used a Statistics Canada survey of consumer finance data from 1987 and 1997. These are roughly in the same phase of the business cycle, although they are 10 years apart. This is the chief problem with our study: it's difficult to extract the extent to which the effects we observe in the labour market are due to policy reform and the extent to which they're due to cyclical change.

As I say, young people are the focal point of this study, as they have the greatest potential to adjust and will suffer the most if they get caught in a cycle of seasonal work and EI. Historically, Atlantic Canada has been far too reliant on seasonal industries, and to a significant extent this has impeded economic renewal in the region.

We draw a number of conclusions. The reforms of the 1990s, the 1994 reform and the 1996 reform, in concert resulted in a considerable increase in the length of time young Canadians, aged 18 to 29, work in a year. The greatest increase in the length of time worked has been in rural Atlantic Canada, where people in 1997 work almost four weeks longer than in 1987. The percentage of young Canadians in both urban and rural areas receiving EI has dropped dramatically. In rural Atlantic Canada it has dropped by 18 percentage points, from 43% to 24%.

Young Canadians have substantially increased their level of education participation. In Atlantic Canada urban young people's participation rates went from 20.9% to 32.7%, which is actually now above the national average. Rural young people in Atlantic Canada have increased from 16.1% to 24.5% participation in education.

Young Atlantic Canadians are increasingly choosing occupations that have stronger futures. We believe this is tied directly to the policy reforms of 1996, and this is why we feel undoing them now is potentially serious. They are more likely to move into managerial occupations, natural sciences, and sales occupations, as opposed to mining, construction, farming, and forestry. Despite these improvements, young Atlantic Canadians continue to go into seasonal occupations at a rate significantly higher than the national average. One of the aims of the UI-EI reforms was to make these occupations, which tend to rely heavily on EI and income supplement, sufficiently unattractive that they do not appeal to young people.

We have a number of concerns that remain as a result of the 1996 reforms. The proportion of high-income Atlantic Canadians receiving EI... And when I say high income, I mean higher than $45,000, and I feel comfortable saying that's high income, because it's more than the starting salary for UNB professors. In terms of the amount of benefits received, Atlantic Canadians consistently receive twice the national average. Low-income individuals have had a much more difficult time getting EI. That again is one of the equity concerns with the reform, that EI is becoming increasingly concentrated amongst a smaller group of individuals.

The proportion of Atlantic Canadians receiving EI has dropped in the last decade, but it remains considerably higher than average, with one-third of males and one-fifth of females drawing at least some portion of their income from EI. However, we feel that in light of these concerns, doing away with the clawback and the intensity provisions, as proposed in Bill C-2, does little to alleviate these problems. It serves to make seasonal employment and other forms of work that systematically rely on EI more attractive. Thus we can expect to see increasing numbers of young people, those who most need to adjust, moving into these industries and occupations, and failing to break the cycle of dependency.

In addition, it's going to perpetuate inequality amongst the unemployed, with some unemployed individuals working in relatively lucrative occupations, then qualifying for benefits, and a growing number of individuals who don't qualify for EI and so face real hardship.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. Audas. We will now move on to Mr. Fortin. You have the floor, Mr. Fortin.

Prof. Pierre Fortin (Professor of Economics, Université du Québec (Montréal)): Thank you very much, Madam Chair. I would just like to add two comments to what my colleagues have said: the first is a general comment and the second is more specific, concerning the intensity rule that Marc Van Audenrode and I have worked on.

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My general comment is that the Canadian employment insurance program is not, in the year 2001, what it was in 1989. From 1990 to 1996, we have seen a series of amendments that were numerous and that had significant repercussions on the behaviour of the labour market and also on the unemployed themselves. We could say that today, the Canadian employment insurance system has reached an overall level of generosity or openness that strongly resembles that of the average American states. The system is, in effect, very close to the average system that we see in American states, that is to say there are certain American states that are more generous than we are, others that are less so. Obviously, because of the different rules that exist here in Canada, we could say the same thing about the various provinces.

There is a simple way to explain this phenomenon. In Canada, before 1990, the number of people collecting employment insurance represented approximately 75% of the number of unemployed. Today, that percentage has gone from 75%, 12 years ago, to approximately 35%. This tallies almost exactly with the overall ratio that we see in the United States: employment insurance beneficiaries represent approximately 35% of the overall number of unemployed.

Because of this general observation, I would certainly not be tempted, at the outset, to impose more restrictions on the system that would affect all of Canada. There are perhaps some amendments and adjustments to be made with respect to the various regions of Canada, but overall, I believe that the Canadian government has done its duty with respect to the changes made to employment insurance.

The specific comment that I wish to add concerns the intensity rule which was changed in the 1996 legislation. What we have realized, in short, is that the intensity rule, which progressively reduces benefits from 55% to 50% according to the number of weeks of benefits received over the last five years, has in effect encouraged a certain number of people who, if I can put it this way, “play” the employment insurance system to work more and to be unemployed less. On the other hand, for the great majority of beneficiaries, the statistical results obtained show rather that the rule hurts people who have no choice in being unemployed and from whom we are essentially taking money.

Overall, the unemployed are usually people who, when they work, earn $8 an hour, work 30 hours per week, and therefore probably earn $240 per week. Whey they receive employment insurance, they would receive $132 per week in benefits. The most we could take away from them would be $12, which is certainly unlikely to have any significant effect on these people's behaviour. As we have clearly seen, statistically—and I think this is unavoidable—the effect was relatively weak, and we should have expected it because the measure is not very significant in terms of its impact. To move from 55 to 50% is not a very big change.

In light of this, the government would have had to choose between two things. It could have further emphasized the penalty, which might perhaps have caused some people, who are able to choose whether or not they will be unemployed and who are perhaps having a bit of fun with the system, to work a little more, but according to our statistical data, even if the percentage was reduced from 55 to 40 rather than to 50%, there would be little additional effect on the incentive to remain employed. Furthermore, most of the unemployed, who have no choice in the number of weeks that they will be unemployed, would be hard hit.

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The other possibility is quite simply to remove this measure because we can see that to go any further would cause a lot of damage and would have few advantages. What we have done up until now has at the most barely touched on a problem that is mainly due to the lack of jobs in the regions hardest hit by unemployment.

Finally, I believe that the Canadian government's main social policy must seek to use any means possible to carry out measures that will cause unemployment to decline across Canada. Therefore, the best social policy for Canada would be to maintain the lowest possible rate of unemployment in every region. Making minor adjustments to a measure such as this one, making it tougher, will not result in significant impact.

This is why my colleague and I completely support the proposed amendment, that is to do away with the intensity rule.

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. Fortin, as well as all of our witnesses.

We will now start the first round of questions. I remind you that you are allowed five minutes, which includes both questions and answers. The first speaker will be Val Meredith. Afterwards I will give the floor to Joe McGuire, Paul Crête, Raymonde Folco, Yvon Godin and John Godfrey.

[English]

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Madam Chair. I have two questions, one for Mr. McMahon.

I was quite taken aback by your comments on the position of Atlantic Canada before EI regional extensions were put in. Is it possible for Atlantic Canada to improve its economic situation back to the time when it was the Canadian national average for unemployment, and the one year when it was below the average ?

After Mr. McMahon replies, I'd like to ask a question of Mr. Fortin. You say a lot of these individuals have no choice. I want to quote from an article in the National Post:

Jobless people in Newfoundland are turning down work at a telemarketing centre in favour of keeping employment insurance benefits. The fear of losing EI benefits has proved too great for potential workers, who are shunning the $7-an-hour jobs at the Gander call centre for Hospitality Marketing Concepts Inc.

This is a 40-hour week, $7-an-hour job that would gross $280 a week. So I'd like to ask, do you really feel that people have no choice?

Mr. McMahon, if you could expand on my...

Mr. Fred McMahon: Sure. By the way, let me give you another quick example.

Everybody in this room will remember when workers in Cape Breton burned down a building being built by non-unionized labour. A couple of months later, the president of the Royal Bank in Sydney wanted his roof repaired and was willing to hire unionized labour at any cost. He couldn't find anyone in Cape Breton, where the trade union had an unemployment rate of 80%; so he had to hire a group from Halifax to repair his roof. That's because for workers, part-time work wasn't worth it. You went off UI to repair the roof, and then went back on. It's a horrible distortion of the labour market.

To answer your question, yes, Atlantic Canada can improve its economic situation. The rate of convergence among lagging regions in the advanced world is about 2% of catch-up a year. Atlantic Canada was doing that prior to UI and these other programs. You see it in the United States, in Europe, even in lagging regions of Japan.

The presentations you've heard here today are all of one cloth. It is very difficult for people who were trapped in this merry-go-round years ago, two generations ago, to go out and find work. They gave up their chances to further their educations, further their skills.

What you see from Rick's testimony is that when you remove these perverse incentives from the system, people do go back to school, they do improve their skills. The labour market does begin to return to normal.

There's quite literally a world of experience. When Ireland turned its economic policy around, it had an unemployment rate near 20%. Now it's importing people. At one point, the Dutch had one million of their seven million workers on disability insurance—their version of UI. They've turned that around.

Atlantic Canada can turn around too, as long as we take these perverse incentives out of the system and stop giving subsidies for people to leave the education stream and not to take full-time work.

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We're destroying employment opportunities throughout Atlantic Canada, because employers can't find workers, can't expand. And even when they can find workers, they have to compete with these government subsidies. That puts the wages out of whack.

The Vice-Chair (Ms. Diane St-Jacques): Monsieur Fortin.

[Translation]

Prof. Pierre Fortin: I am particularly familiar with the situation in Eastern Quebec, which is very similar to that in the Atlantic, because I lived there for quite a while. There is always a way for the majority of the unemployed in the Atlantic region to find small jobs here and there, that can cause the unemployment rate to decrease by a few tenths of a percentage point. However, when people have been living in these regions for generations and then, overnight, you savagely cut back employment insurance benefits with the specific intention of creating new incentives to work, the consequences will quite simply be... What I am trying to say is that these jobs will certainly not be created out of thin air. There will not be more jobs in these regions.

If there are many new jobs in Holland and in Ireland, for example, as Mr. McMahon has so aptly pointed out, it is not because employment insurance was cut back. It is quite simply because there was a strong demand and that social covenants were created between labour and management. They agreed to accept modest salary increases, and because of this, labour became available. This is very profitable for businesses. Therefore, the progress in these countries comes from the fact that there was a very strong demand on the part of the employers and not because of decreases in employment insurance.

If you decrease employment insurance in Eastern Quebec or in the Atlantic region, the result will be that these people will have to move to another part of the country. Because we are not generally talking about people who have particular skills, who have been educated and have acquired skills that would allow them to find much better jobs, even the incentive to move remains very weak. What will happen is that we will simply be transferring these people to welfare.

At that time of course, the federal budget will have less of a burden but the provincial budgets will find themselves with a heavier burden. Therefore there would be a shift from employment insurance to welfare, and perhaps, in part, a migration of people to downtown Montreal or Toronto, without there being many more jobs.

The Vice-Chair (Ms. Diane St-Jacques): I'm sorry, but your time has expired Ms. Meredith. If you wish, you may have the floor again during the next round of questions.

[English]

Ms. Val Meredith: I was just going to say that...

The Vice-Chair (Ms. Diane St-Jacques): You will come back?

[Translation]

We will move on to the next round of questions. Joe McGuire, Paul Crête, Raymonde Folco, Yvon Godin and John Godfrey.

[English]

Mr. Joe McGuire (Egmont, Lib.): Thank you very much, Madam Chair.

I just want to say that I am from Atlantic Canada, and my recollection of the economic conditions in Atlantic Canada is not as utopian as Mr. McMahon's. In the rural area where I lived, entire farms were vacant along most rural roads in P.E.I. Fishermen were basically living from hand to mouth—they got nothing for their product. In a lot of cases, especially in provinces like Newfoundland, they had nothing to live on between seasons except the charity of the communities they lived in.

When the EI regional benefit was introduced, it gave the Atlantic Canadians who remained in these seasonal enterprises at least a little bit of respect—and some of the worldly goods other people were enjoying.

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I think that if we had the same treatment as the Irish Republic has had in this last 30 years in the European Union, with the investments from the United States and Germany especially, and the billions that were in there, and with the economic arrangements they had, we'd be in pretty good shape too. But we don't have those investments. Every ten years, 70,000 Atlantic Canadians leave, but that's probably fewer than were leaving before EI came along. Some people like to stay in Atlantic Canada. We can't all leave for someplace else.

The choice in a lot of cases in the seasonal industry would be welfare if there wasn't EI, as Mr. Fortin said. So on this statement that you're killing us with kindness, I don't think it really holds water too much.

Val brought up the $7 an hour. Well, what would she do if she were in Newfoundland and were offered $7 an hour for $280 a week and she was making $360 on EI? She would stay on EI. So why wouldn't the company that was offering $7 an hour pay a living wage, rather than $7 an hour? How in the hell do you expect anybody to live on $7 an hour? If they want to set up in Atlantic Canada and pay those kinds of wages, I'd say stay where you are.

On these types of things, what is the economic answer? What is your plan to create full-time jobs in Atlantic Canada? Picking on EI is not the solution.

Rick, your study was from 1987-97, which really didn't take in the years in which the changes really had an effect on youth, like the 910 hours, etc. If there was a positive change before 1997, there was a much more positive change after 1997, because it became much more difficult for young people to qualify for EI for the first time under the new changes than was the case previously.

Maybe Mr. McMahon wants to respond here.

The Vice-Chair (Ms. Diane St-Jacques): Mr. McMahon, you have half a minute.

Mr. Fred McMahon: First off, you're quite right. A whole range of sensible economic policies is needed to spark growth. In Ireland they slashed taxes and had an agreement with the unions, employers, and the government to keep wage growth moderate. The unions talked about keeping wages down and improving profits in Ireland. That created a great flood of jobs into there.

EU subsidies into Ireland are a small fraction of the amount of money the federal government has pumped into Atlantic Canada, and Ireland did have a problem with its unemployment. We could put in sensible policies in Atlantic Canada, cut taxes and work on reasonable wages so that you could attract investment.

In Ireland they also did have a problem with their unemployment insurance, like in Atlantic Canada. During their worst days of bad economic policy, they had more people collecting their version of UI than they had officially unemployed. I remember talking to a union leader who was saying they had created pockets in their cities where there were two generations without any experience of work and they had to do something about that. He recognized the problem. One of the reforms they did in Ireland was in fact to work on their unemployment insurance system. But you're quite right: broader and more comprehensive reforms to make the place a reasonable place to do business are what's needed to create jobs.

As I say on the statistics, if you look at them through the 1960s until the time when unemployment insurance was regionally extended—I'm sure there were hardships, and I'm not saying it was heaven on earth—until that point, Atlantic Canada on a per capita basis was growing considerably faster—faster!—than the rest of the country. Its unemployment, including P.E.I., had converged to the national average. Then we started subsidizing seasonal industries through this program.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Do you have any observations Mr. McGuire?

[English]

Mr. Joe McGuire: Well, I don't know where these people went to. On the rural road that I lived on, there were operating farms from one end of the road to the other, and basically everybody left. It's now being farmed again, and people intend to farm it, but in the sixties and seventies there was nobody left. This was good agricultural land. Maybe it was a bigger problem than just EI. There were other economic conditions, but—

Mr. Fred McMahon: There's a real adjustment from rural to urban.

Mr. Joe McGuire: —there are an awful lot... Atlantic Canadians are the most mobile people in Canada. Since Confederation, we've always gone someplace else, whether it was to the Boston States, to Montreal, Toronto, or to Calgary. I think the people who remain should be able to participate in some of this country's wealth.

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Prof. Rick Audas: Without question.

The Vice-Chair (Ms. Diane St-Jacques): Maybe we could come back, because we now have to go to another questioner.

[Translation]

Now I'll give the floor to Paul Crête, and then to Raymonde Folco, Yvon Godin and John Godfrey.

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Thank you, Madam Chair.

Mr. McMahon, I have some sympathy for you because I have not experienced bad years as you have. When I was young people my age wanted to work and there were not that many who tried to cheat the system or benefit from it. As a rule, people were trying to make a living.

The other comment I would like to make is that you don't need to worry about young people; as they have to work 910 hours in order to qualify, they are unable to do so anymore. There are only 25% who qualify and there are 75% who don't. They will never be affected by the intensity rule because they don't receive unemployment insurance benefits. Therefore this will not necessarily have any effect on them.

I would like to ask you a question and try to use the language of an economist. Someone who earns $500 per week would receive benefits of $275, if we use the 55% calculation. If we calculate 50%, they would receive $250. If they earned $600 per week, it would be $330 or $300. If they earned $700 per week, they would receive $385 or $350.

Do you seriously believe that someone who is unemployed and receiving $275 would suddenly prefer to return to work because they were only going to receive $250 as a result of the intensity rule? Do you know what it means to try and support a family with $250 a week, while unemployed, whereas one could earn $25,000 per year while employed? Have you ever tried to live on $250 a week with a family? Have you ever tried to do that?

A person who would be affected by this $25 decrease would look to the other side of the coin and see that the system has generated a 28-billion surplus. That person would tell himself that he has seen his benefits reduced by $25 per week because he- or she- is considered to be voluntarily unemployed, as someone who does not want to work, whereas on the other hand, we have accumulated a 28 billion-dollar surplus.

Where is the fairness in that, Mr. McMahon? Do you truly believe that people who have lost 5% of their benefits would remain unemployed for a shorter time or less deliberately than if we had left them this 5%? It is not a big enough amount to have a real effect. Its only effect is impoverishment.

[English]

Mr. Fred McMahon: I agree with what my colleagues have said, that the rules are not going to affect very much those who have already been trapped in the system. I have said, and will repeat, that we have to treat generously people who were trapped in the system, who didn't further their education and become entrepreneurs, professors, doctors, or skilled engineers. Those people have to be treated generously. What we have to do is avoid trapping the next generation.

[Translation]

Mr. Paul Crête: Mr. McMahon, the next generation cannot get into the system because it's not eligible under the rules of the system. When we have given young people access to the system again, when we allow them to become eligible, in a satisfactory manner, we will be able to ask ourselves the question you are asking us now. When only 25% can qualify, how do you expect the intensity rule to apply to them? They cannot even qualify for the system. They pay premiums but they can not become eligible.

Today young people who are well-educated have a job. They find jobs and they live well. But there are others who are unemployed and who do not qualify for the right to receive benefits under the system. It's not the intensity rule that will make them want to work; they do not receive benefits, and a result will not feel the negative effects of the intensity rule.

[English]

Mr. Fred McMahon: There are two factors here. Because of the job destruction that UI-EI created in Atlantic Canada, it's going to take a while to regenerate jobs, which is another reason I say we have to be generous to the people already trapped in the system.

One of the inequalities of the current EI system is that in some parts of the country, as you point out, EI is just about impossible to collect, whereas in other pockets it's virtually a right and a way of life. Rick might be able to address that better than I can. It's horrible that you can say that in Alberta, parts of Quebec, and so on it's almost impossible to collect employment insurance and it's no insurance scheme for you at all, whereas in parts of Atlantic Canada in certain industries people modify their whole lives and work patterns in order to qualify.

Did you want to make a comment?

Prof. Rick Audas: Yes. The evidence—

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[Translation]

Mr. Paul Crête: I have a question Mr. McMahon. Have you ever tried to cut down trees in a forest during the month of February? I would like you to answer this question. On the other hand, you might try going ocean fishing during the winter... And in plants, what are we to do when there is no more fish to filet? And what do we do with these people during these times? Are they supposed to move out West?

[English]

Prof. Rick Audas: The fact is that these people—actually, a lot of them, particularly in the fishery—earn a lot of money in the weeks that they can work. Our studies show that we have a lot of cases in Atlantic Canada of individuals earning more than $80,000 per year and collecting EI. There are lots and lots of documented cases of people in seasonal industries who earn good incomes. I think what we want to see is these seasonal industries stretched out so that people aren't working 10 weeks, they're working 20 weeks or 30 weeks and are earning an income that approximates a full-time income over the course of the year. I think that's the key point.

Another key point that we need to focus on is a changing of attitudes. Basically, the focus of our study was to say let's get young people to not look at this as being a viable way of life. They need to look at moving into year-round occupations and at moving away from this trap. I think we're creating an enormous injustice if we can see this problem happening, if we can see this unfolding before us, and we don't do anything about it.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): A comment?

Mr. Paul Crête: Yes, Madam Chair. I have no problem with that, but we would like the committee to travel in order to visit the regions. I think actually that the committee and the witnesses should travel in order to visit the people and see what's really happening on the ground.

[English]

Prof. Rick Audas: I'm from the region. I grew up in rural Nova Scotia.

[Translation]

Mr. Paul Crête: I'm laughing, but it's really not funny at all, because your view of young people and of seasonal workers is that these people are doing this voluntarily, and that is totally unacceptable.

The Vice-Chair (Ms. Diane St-Jacques): Thank you Paul. We may come back to other comments later on. Now, we will hear from Raymonde Folco, Yvon Godin, John Godfrey and Carol Skelton.

Ms. Raymonde Folco (Laval West, Lib.): Thank you, Madam Chair. I was also going to say that even if the committee does not travel, we learn many things within the committee when we receive witnesses such as those present.

When I hear remarks where language such as

[English]

“bribing” and “the government trap”

[Translation]

is used in connection with employment insurance, I find these are words that are, how can I put this politely, unrealistic. I don't want to say that they're out of place but that they are unrealistic in connection with this situation. I also lived in Newfoundland for some time, and in the north of New Brunswick, and I saw what working conditions were. Thank God, I went during the summer therefore it was relatively easy. There is also one part of my riding where people face chronic unemployment.

We live in a country that has taken on its responsibilities vis-à-vis its citizens, and I am very proud to be able to say that I am among those who believe that the government has a role to play for that part of the population that has experienced difficult times. And I do believe, in the context of employment insurance, that it is the government's responsibility to not allow market forces to dictate who will or will not work; we cannot simply let the market decide how this will happen here in Canada.

Someone compared our country to the United States. The comparison is perhaps appropriate from certain points of view, but there is one aspect that does not correspond very well: it is that we are responsible for our citizens, which is something that we see a little less in the United States.

Someone who testified yesterday was telling us that because of employment insurance, people are not concerned with working, in spite of the fact that businesses need employees. It is true that everywhere we travel, where I travel, posters say in black and white: “We need employees, we are hiring”. I think one of the biggest problems we are facing is that people are perhaps not sufficiently educated to meet the requirements of businesses. It seems to me therefore that there is a training problem with a certain percentage of the population in order for them to be hired. It is a significant problem.

The system or the concept of employment insurance is a system within a bigger system, within a broader context, that is that the Canadian government is a government that comes to the assistance of people who want to stay home and take care of their young children. I'm referring here to maternity leave or to parental leave, which also helps our society in the long term.

• 1615

Therefore, I would like to hear from Mr. Fortin because I have heard some very interesting things from him. I would like to have him tell us how he imagines this new legislation on employment insurance, taking into account the much broader context of the other goals that the government has.

Prof. Pierre Fortin: Should I answer right away?

The Vice-Chair (Ms. Diane St-Jacques): Yes.

Prof. Pierre Fortin: What do you mean when you ask me how I imagine employment insurance within the context of other objectives? What are they?

Ms. Raymonde Folco: Well, yesterday someone denied before the committee what the figures seemed to indicate, that is that the elimination of the intensity rule means that fewer people will come to ask for benefits, and so forth.

You seem to have figures. You gave us some today. I think that Mr. Van Audenrode has some as well and you have referred to them. These figures have quite rightly caused us to want to review the 1996 legislation. I'd like for you to tell me, not only about the impact of the elimination of the intensity rule, but also what this might mean for the regions, not only as concerns employment insurance, but also in connection with other programs of our government. I don't know if you are able to do so.

Prof. Pierre Fortin: Do you want to discuss the interaction between the unemployment insurance program and the provincial social assistance programs?

Ms. Raymonde Folco: That could be the case, yes, if you wish.

Prof. Pierre Fortin: Insofar as provincial programs are concerned, I observed in a study that I carried out three years ago that there was in fact to a certain extent, a backward surge of unemployed people who could no longer qualify for employment insurance benefits towards provincial social assistance programs.

To be perfectly honest, even if I was on the whole in favour of the amendments that were proposed at the time, let's say that I was somewhat worried about them. That is why we must be very careful as regards the demands of people who want to continue reducing employment insurance. In fact, if a person receives employment insurance benefits, they are enjoying a government program which at least demands that they have worked beforehand in order to qualify, whereas if they are catapulted—if you'll pardon the expression—into a social assistance program, they are no longer subject to any requirements in order to have access to government benefits, provincial in this case.

Therefore, when changes shift people from a program that requires that they work in order to be eligible to a program that does not require any work, I think there is a certain regression from the perspective of the development of work, of job development in Canada. If you are referring to the discussion that is happening today without going back to what was done in 1990, 1994 and 1996, my hair would be standing on end if I'm being told that we have to strengthen all the requirements already in place.

I am relieved to see that the committee, at least to a certain extent, takes us seriously when we say that the intensity rule has had only a minor impact. Indeed, this rule has had an impact, but only a minor one. It has failed to really change people's behaviour, as some people said it would. Consequently, this rule should be eliminated.

It is not a bad thing for a government to admit that it has made a mistake or that it has gone too far. Let's bring back the old rule, since that was the best one.

The Vice-Chair (Ms. Diane St-Jacques): Mr. Fortin, we now have to go on to the next round of questions from Yvon Godin, John Godfrey, Carol Skelton, Alan Tonks and Monique Guay.

Yvon.

Mr. Yvon Godin (Acadie—Bathurst, NDP): Thank you, Madam Chair.

First of all, I would like to welcome you here today, even if I don't appreciate what some people have had to say. Indeed, I think that you have completely missed the boat in the Atlantic region. Completely missed it.

• 1620

I think that you don't understand fishing or that when you were a student, you dropped that subject. Studying at university is a fine thing, and I am quite prepared to advocate that people should go to university, but I think that you will agree with me when I say that you don't need four years of university to work in the fishing industry or in a fish-processing plant. You like lobster, don't you? I often used this same example in Toronto or even in Fredericton. There are no lobster in the St. John river. However, whenever I go to Fredericton, I see people eating lobster that comes from my region, from Chaleurs Bay. Consequently, people are needed to work in the processing industry.

Here is my first question. Are you telling us that we have to completely abandon this industry and pull out those people who work in it? Or, are you recommending that these people should work in the processing industry for 10 or 15 weeks and then go on welfare? Wouldn't it be possible to create the type of industry that could employ these people for a part of the year so that they could return to the fish-processing industry for the rest of the year? That is my first question.

Secondly, we mentioned earlier that there are companies looking to fill vacancies. Mr. Audas, from the University of New Brunswick, might or might not agree with me, but I am going to quote an example from my region.

The CIBC has set up a call centre in Fredericton, a city with an unemployment rate of 4.5%. The New Brunswick provincial government gave the company $750,000. Why didn't the company set up its centre on the Acadian peninsula, where there are francophones? It is a lot easier to move telephones than people. This company later complained that no one wanted to work for them. Call centres are being set up in major urban centres such as Toronto, Moncton and Halifax when people in rural areas have no work. Don't you think that would be the solution?

Thirdly, perhaps people are stupid in my region. Perhaps we should just say that we are going to be the ones to fish the fish and that it will transported nowhere else in the country before it is completely processed. Perhaps we should just say that we are going to cut down our own wood, set up barricades and do the secondary and tertiary processing of fish in our own region. That way, there will be jobs for us. In the future, there will be no industry in Toronto, in Vancouver or Montreal and we will be working 12 months a year.

Consequently, there is only a certain amount of work. Have you, academics and economists, looked at these minor points, which are hurting rural people so much?

I am aware that I am using up the time that I should be using to elicit replies. In terms of a fisherman who makes $80,000 a year, have you calculated that he has to buy a boat, he has to take on a deck hand to work on this boat, and he has to pay for repairs to the boat? Perhaps his income of $80,000 a year is only really equivalent to $20,000.

Those were my questions and I would like to hear your answers. What you said in your presentations leads me to think—and you will excuse me here—that you have been in academia too long. You forgot to go to the regions where the people live. These people support you through their taxes.

[English]

Prof. Rick Audas: There is an ivory tower argument.

Mr. Yvon Godin: I'm ready to argue.

Prof. Rick Audas: Apparently. The $80,000 figure is one that is reported to Statistics Canada as earnings, so that is after taxes and after expenses. That's an income, a true income.

What we're getting at, and one of the points we're trying to make... We're not advocating this reform, removing EI. I'm not advocating harsher responses to the reform. What we are saying is that we need to change the cycle. We need to get people employed more weeks a year, and we need to think of creative ways to do this. I'm not saying that changing EI is the be-all and end-all of anything. It isn't. We need to be creative.

For instance, we need to think about the skills these people have. To a large extent we underestimate the skills these people have and their ability to be creative, to create employment situations, to create wealth, and to build a stronger region. That's really what we're thinking about here.

I don't think the idea we're arguing for is that we should come in and remove unemployment benefits; nor is it anti-rural or against...

Mr. Yvon Godin: That's what your colleague feels.

Prof. Rick Audas: He's entitled to his views. I'm entitled to my views.

Mr. Yvon Godin: Well, he's always saying that you're his friend, and I thought you would feel the same.

Prof. Rick Audas: The fact that we may have similar views in some respects doesn't mean we have identical views. We're not stamped out by cookie cutters.

Mr. Fred McMahon: First off, you do have to remember that I am from Atlantic Canada and that I've grown up and have seen the system and the impacts.

Mr. Yvon Godin: You forgot where you come from.

Mr. Fred McMahon: That said, I think you have raised an important issue, and that's about seasonal work, rural work, and primary work.

• 1625

Every region in the developed world has had to shift away from rural, primary work, including Ontario, where there are fewer farmers now than there were. The adjustment of the economy... We don't live in a caste system.

Mr. Yvon Godin: No, but do you like your lobster? Do you want your fish? Do you want agriculture? Do you want your two-by-fours to build a house? That's my question. Yes or no?

Mr. Fred McMahon: Let me tell you what happened.

Between 1961 and the late 1980s, the farm population of Canada declined by 60%. That was because fewer people were needed to till the fields, to harvest the grains, to chop the trees, to catch the fish. There were other productive things.

Our handling of the Atlantic fisheries, which had ecological problems to start with, was so perverse that in a primary industry there were two and a half times as many people in the fishing industry by the late 1980s as there were in 1961.

We weren't allowing Atlantic Canada to adjust to even the new economy then. We trapped people in the seasonal cycle. Two and a half times as many people were in the fisheries in the late 1980s as 1961. How can you justify that sort of perverse economic policy—that trapping of people in the seasonal dead-end industries? Don't tell me that was a natural economic process where the people didn't have choices. They had choices and their choices were a rational response to this irrational policy.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. McMahon. We are now going to give the floor to Mr. John Godfrey, Carol Skelton, Alan Tonks, Monique Guay, Jeannot Castonguay and we will come back to Yvon Godin.

[English]

Mr. John Godfrey (Don Valley West, Lib.): Thank you very much for coming. I'm a visitor to this committee, so thank you for letting me ask a question.

It seems that what we're trying to do with the EI policy generally is reconcile three social and economic policy objectives. First we want opportunities and jobs and incentives to work, particularly for young people. Secondly, we want some kind of social justice and respect, particularly for people who don't have a lot of choices—often older seasonal workers. The third thing we're trying to do, which doesn't always get mentioned, is ensure viable communities. We don't really believe in the policy of Highland clearances any more.

If I understand what Messrs. Audas and McMahon are suggesting, they would view the impact of the total number of changes since 1989 as being generally positive—that is to say, it's putting out the right kinds of incentives, particularly for young people. So the policy direction is generally good. But what they seem to be suggesting is that it's difficult exactly to interpret which elements of the proposed changes to EI are going to be the negative incentives and have a bad effect on behaviour.

But when I hear Mr. Van Audenrode and Monsieur Fortin, they're saying that one thing that doesn't seem to have been a factor for good or ill is the intensity rule. It isn't big enough. That's what Monsieur Crête was saying as well.

So my question is whether you gentlemen agree. Do you accept this evidence on the intensity part of the change? And if that's not what's going to have an impact on behaviour plus or minus, what's left? Is it being more generous letting women get back into the workforce? Is it clawback, or is it just symbolic? It seems to me that you may be crying havoc, and that the gains we may make on the social justice side, which is really what we're hearing... It's not fair to penalize older workers for peanuts and we're not making any behavioural gains for younger people. So why wouldn't you be more humane and honour that part of your three objectives?

Do you accept the intensity, or do you think it's not intensity? If it isn't intensity, what is it that you're afraid of?

Prof. Rick Audas: I think it is intensity, but there is an important thing to distinguish here. Their study looked at currently unemployed people and how it's going to change their behaviour, and their evidence suggested that the changes were small. That sounds about right to me. What it doesn't capture is the way it changes somebody who is considering looking at their future and how they're going to move into the labour market and what sorts of occupations they're going to go into.

Now, granted these are subtle changes, but as economists we think at the margin. We think that small differences do matter at some level. It starts to change the way people think. If I look at the labour market and say five years ago I could have gone into an occupation that would have required me to work 10 or 15 weeks a year, and then I would have received some kind of supplement, and that supplement would have been reasonably generous, and if you make that supplement less generous, I'm less likely to choose that occupation.

• 1630

That's important, because it highlights peoples' ability to adjust. Our study suggests that through the 1990s people have adjusted. Young peoples' behaviour has changed. They get more education, they make better occupational choices.

Mr. John Godfrey: But I want to come back to Mr. Fortin. Do you think that for the size of the change... You're arguing against marginal change having that kind of behavioural effect, aren't you?

Mr. Fred McMahon: Whenever you're talking young people versus—

Mr. John Godfrey: Okay. First of all, they make the distinction between young people and old people. Let me ask Mr. Van Audenrode then, does your study identify any distinctions of behaviour?

Prof. Marc Van Audenrode: No. We didn't have a sample large enough to get differential evidence. Basically, they're throwing their hands up in the air. There is no evidence that it could have an impact on the younger people. It may, but I can't comment on evidence that doesn't exist. At this point the only quantified evidence about the impact of the intensity rule is this, and there is nothing else.

Prof. Rick Audas: There's an important issue to be raised here. That's largely because the data are not made universally available. The data we used come from 1997, which is the most currently available data source.

Mr. John Godfrey: But you were focusing on young people, you were focusing on intensity. Were you focusing on intensity specifically for young people?

Prof. Rick Audas: We were focusing generally on the changes, looking at the changes as a package.

The Vice-Chair (Ms. Val Meredith): Mr. Godfrey, is that it?

Carol Skelton.

Ms. Carol Skelton (Saskatoon—Rosetown—Biggar, Canadian Alliance): I'd like to ask Mr. Audas a question.

We talked about areas in Canada—this keeps coming up—and I'm from Saskatchewan, where EI is very hard to get. Right now our agriculture is in crisis, our farmers are leaving the farms. We can't get EI, so there's not equality right across the country. So what would your solution to that situation be? Do you have a solution for that?

Prof. Rick Audas: I wouldn't say I have a solution, but I have a guiding principle, which is that EI, as it exists now, creates haves and have-nots amongst the unemployed, and that is wrong. We've seen the number of unemployed individuals who receive benefit, as a proportion of the total unemployed, shrinking. That's wrong. I think we're differentiating. Some unemployed individuals we deem accepted for unemployment, others we don't. That's not fair. I think there's a real concern about equity here. An underlying principle of being a Canadian is a belief in equity, a belief that no one should observe undue hardship.

Ms. Carol Skelton: I know there are farm families at home that can't get welfare. They cannot get EI. They cannot get grants to go for training or anything. It's very, very unfair.

Prof. Rick Audas: When I look at the reform in place, I don't see anything here that actually helps the people of Saskatchewan get that.

Ms. Carol Skelton: No.

Prof. Rick Audas: We can argue back and forth that a few changes to the intensity provision are or are not going to be a big deal, but I think largely we can say it probably doesn't have a huge impact, because it's not a lot of money. But I think we are, to some extent, missing the boat on where the policy should be directed.

Ms. Carol Skelton: Okay. Thank you.

Ms. Val Meredith: I want to ask a question concerning this study of the intensity rule versus peoples' change in patterns of behaviour. I understand that you did this study for the Department of Human Resources. Is a year long enough to determine any change in a person's pattern of behaviour? Is one year of change in a program and reaction to it a long enough time to get a change in human behaviour?

Prof. Rick Audas: No.

Prof. Marc Van Audenrode: Obviously, yes, because we saw behavioural changes. We saw that.

Ms. Val Meredith: Is one year long enough for a person to have changed their attitude towards how they're going to deal with a change in financial expectation? Because I'll tell you, I'm not sure a year is long enough to have any long-term, established pattern of change. It may be a temporary thing, reacting to a situation, but it's not a long enough period of time to know whether it's a stable, long-term change in behaviour.

• 1635

Prof. Marc Van Audenrode: Okay, it might be that the real time period is 10 years. But then if change is so difficult, so slow, and so long, why should a marginal change in the amount of money you are giving these people induce these behavioural changes? What you are saying is that these changes are enormous for the people, that they are extremely costly, and that they take time and are difficult. Okay, I might agree that this is the case, and this is probably what our figures show. But then if you believe that this is the problem, why should giving them $10 less per month make them undertake these changes?

Ms. Val Meredith: I'd like to respond to that by saying that here you have people who experience changes of $5 a week or $10 a month, and you're telling me that there are tremendous changes, and yet we've just heard that there are whole communities in a province that don't get EI, that don't get welfare, and that have no place to turn. You know, if the changes are that minor, if it's $5 a week, why would that change somebody's behaviour to the extent that you're saying it does, so that we undo what we've done and turn back the clock?

Prof. Marc Van Audenrode: If you're asking me a question, the real problem of this community is not about getting EI. It is the fact that we have gone too far in cutting the benefits. But I am sure that my colleagues here wouldn't agree. The fact is that I keep talking as if we were in 1980. We are in 2001, and basically the generosity of our system—as Pierre said—is at about the level of generosity of the average U.S. state. This means that our system is less generous than those of our principle competitors, which are New York, Massachusetts, and the northern states. So that's the reality.

Ms. Val Meredith: Or the reality is about not getting it at all in Saskatchewan, where it's non-existent.

Prof. Marc Van Audenrode: Make it more generous. You'll have my full support on that.

Ms. Val Meredith: Well...

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): I'd now like to give someone else a chance to speak because our time has expired. I would like to remind everybody that, in the second round, we are going to try to stick to the five minutes allowed so that everybody can have a chance to ask questions. Alan Tonks, you have the floor. He will be followed by Monique Guay, Jeannot Castonguay and Yvon Godin.

[English]

Mr. Alan Tonks (York South—Weston, Lib.): Thank you, Madam Chair.

Mr. McMahon, I think it's your opinion that the reform package hasn't been working and that people who have been on EI have come back on it. Some of the statistics we've been provided indicate that, particularly for the regular and fishing claimants, 40% have in fact remained stable with the package of reforms we have. Of those, 80% would be classified as seasonal employees. I guess that just indicates that seasonality and frequent use are interconnected.

I'd be interested first of all in the clawbacks on the intensity provisions and whether those kinds of mechanisms are used in other countries that have something similar to the same seasonality, if you will, that Canada has. I think that you would agree—and I haven't heard you disagree—that there is a punitive aspect to rated systems that have mechanisms like clawbacks and intensity provisions. Could you comment on that, please.

Mr. Fred McMahon: Sure. To some extent, the experience in Atlantic Canada is unique. It's not totally unique but is to some extent unique, because EI came in at a time when the region was adjusting away from rural and primary industries. What it did was then trap... I was accused earlier of using this inappropriate language, “trapped” and “bribed”; well, I was there and I saw it, and I think those words meet their definitions. It trapped the region in these industries the region was moving away from and forced people into these seasonal and rural industries. I gave you the number about fishers earlier and explained how that was just inflated all out of proportion because of these policies.

• 1640

So now, in the year 2001, we are stuck on the east coast with an economy that is more seasonal than it would have been had these programs not been put in place, all of which creates the type of problem we're now trying to solve through this.

I think it's also important to understand that you're talking about the difference between a snapshot and a motion picture, if you will. Both Rick and I agree that it's very difficult to get out for somebody who's been in the system, who has not taken skills training, and who has gotten two generations now into this short-term work-and-EI cycle. What we're interested in is not this static picture but in the moving picture. Do we trap the next generation? Rick, through his study with morale, has shown that these changes are encouraging young people to do different things.

To come more directly to your question, is there another set of policies that could do it? Perhaps instead of penalizing workers you could just make EI really, really tough to get, and some of the changes to EI have made it tougher for young people to enter the system. Maybe you could work on that end of it a little harder and less hard on penalizing people already in, so young people will know that if they enter the system, they're going to get hit by a hard intensity rule or a clawback. They'll also know that the rules change, as they have changed a little bit.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Mr. Tonks, do you have anything to add?

[English]

Mr. Alan Tonks: I have one just if there was a comment with respect to the other... Mr. Fortin, or whatever.

Prof. Marc Van Audenrode: I agree that our study is a snapshot, but basically this is what this discussion is about: fixing or making an adjustment to a very specific law, the Employment Insurance Act. It's not about rebuilding the Maritimes or about changing or completely overhauling Canada.

So from that perspective, yes, it's a snapshot, and the snapshot says the intensity rule doesn't work well.

Mr. Alan Tonks: So you would agree with rescinding the intensity rules in the clawback.

Prof. Marc Van Audenrode: Yes, of course.

Prof. Pierre Fortin: There's an effect, but it is very small. There's enough time—a year is enough to see it—because the intensity rule applies after 20 weeks. The last time I counted, a year includes more than 20 weeks.

Mr. Alan Tonks: It's a percentage for each—

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Monique Guay now has the floor, followed by Jeannot Castonguay, Yvon Godin and Anita Neville.

Ms. Monique Guay (Laurentides, BQ): Thank you, Madam Chair.

Good afternoon, gentlemen. I have always greatly admired deep thinkers. I could listen to them for hours. However, that brings me back down to earth and I remember why I chose the career that I did.

I am the member for a tourist region, where 80% of the population works in tourism, and when the snow has gone, well the snow has gone. I am sorry, but that's the way things are and these people become unemployed. They might have good jobs during the ski season, but when the season closes, they are out of a job for some time. They don't necessarily like that.

I don't think these people are abusing the system. In my riding, anyway, I have not seen any abuse. What I see is that, when summer returns and summer activities, such as golf and lake-based activities begin, these people are only too happy to return to work. They are only too happy to work and they work very very long hours. Very often, they work between 60 and 80 hours a week, because they want to try to accumulate the greatest possible number of hours. People are now required to work long hours to be eligible for just a few weeks of employment insurance. They have no other choice. They have to work like that and these people often work in very low-paying jobs.

Consequently, I don't think that these people are abusing the system and I don't think that 5% more or less is going to make a difference. I don't think these people are career unemployed. On the contrary, these people depend on the system. They did not create seasonal work. They have seasonal jobs. They have to cope with that situation. They have to live with it. Do you think that a single mother, who loses her job, wants to be unemployed for a few weeks, or a month or two, and perhaps lose the daycare she has for her children? That is just a whole lot of trouble. These people don't want that.

• 1645

Therefore, I think you are on the wrong track. I think you are really on the wrong track. In any case, a few years ago—and I am not a rookie here, I have been here for almost eight years—we did some research in our region which showed that people were not abusing employment insurance. In addition, when you pay for insurance—and I think you all have insurance, gentlemen—you expect to be able to use that insurance if you need it.

Therefore, when something untoward happens, there is a problem of some sort, these people need insurance and they use employment insurance. There are unemployed people who abuse the system. These people can easily be identified, because in small communities such as my own, and in yours, Yvon, these people can be pinpointed. There are not very many of them. I think that your approach is flawed.

I would like you all to tell me if you think employment insurance shouldn't exist, because if employment insurance did not exist, it would be a great shame because as you well know, Mr. Fortin, people in Quebec would be forced to go on welfare. This is the direction in which we are going, and it is not where we want to go. We really don't want to go in that direction. I would like to know what short-term solutions you can propose to replace the employment insurance system, which you consider to be so inefficient, which does not work and which encourages people not to work?

I think that requiring a young person to work 910 hours to be eligible for employment insurance is a lot of hours of work. I don't think that our young people start out by thinking—and I know young people, I am surrounded by young people and I have children of my own—that they are going to work 910 hours just to get employment insurance. That is completely off the wall.

I don't think that we have instilled still this type of attitude among Canadians and Quebeckers. I think that perhaps you should have a... In any event, I would like to take you to my region. You would see just what things are like in my region. I would like to know what you think about what I have said. Thank you.

[English]

Mr. Fred McMahon: Nobody's accusing people who collect UI of abusing the system. They're using a system that was set up by the government. As I said, I think it's a rational response to an irrational policy.

A few years back, Human Resources Canada did a study that offered seasonal workers higher-paying work than full-time, year-round work. When they went on EI, they could actually earn more money by taking a short-term high-paying job rather than a year-round job. The Human Resources Canada study offered subsidies to people on EI to go and take full-time jobs, to make up the wage difference between seasonal work and full-time work. They offered subsidies to people, including people in high-employment centres like Halifax and Moncton.

The uptake on the study was so low—so few of the workers were willing to do it—that the study actually had to be called off. I think it was 2% that did it. They weren't abusing the system, don't make that accusation, but it is a way of life.

As for reform, I think we're trying to use EI for something it isn't. It has all sorts of weird policy goals for this and that floating around.

I'll tell you what we should do: set up a system that is what it says it is, an employment insurance system. Set up a system to help people when they're out of work, and do these other policy goals through other policies if need be.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you. I will now give the floor to Jeannot Castonguay, followed by Yvon Godin and Anita Neville.

Mr. Jeannot Castonguay (Madawaska—Restigouche, Lib.): Thank you, Madam Chair.

Throwing around ideas often gets results. I would like to thank our guests for their opinions. Perhaps that will stir our ideas up a bit. I agree that there are perhaps large-scale crab fishermen who earn a lot of money, but the man with the knife or on the nets does not earn a lot. He is the one who has the problem.

We have been told that we have to change attitudes in terms of employment insurance and I agree, Madam Chair. However, what should we do with people who lose their jobs and who have paid their contributions during this transition period? That is my first question.

How can you change the attitudes of a whole nation? Should that be achieved through punitive measures or is it rather a long-term process of education? I would like to hear from you on that. In my region, Madam Chair, there is seasonal work, there are people who do this seasonal work, which benefits all Canadians. This seasonal work varies from agriculture, forestry, fisheries, and construction to tourism. People come to the various regions in a good tourist season. That's great.

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If all these people were to be moved to the city—they might be unemployed there as well at some point—who will do this work which is so important for all Canadians? I would like to hear what our guests have to say on that.

[English]

Mr. Fred McMahon: Remember that the seasonal sector in Atlantic Canada has been inflated all out of proportion because of these policies. I've given you some of the numbers. You can look at others.

Yes, there is a greater problem in Atlantic Canada than there should have been, or would have been, had not these perverse policies been in place. In your question, you have picked the hardest part of any policy change. How do you make the world better in the future, without penalizing and hurting too much the people who have become dependent on bad policy in the past?

I keep saying we have to be generous to the people who were trapped, without trapping the next generation—making it more difficult for younger people to enter the stream. That's a really tough question. Rick's work on this is more recent than mine—perhaps he'd like to address that.

Prof. Rick Audas: No, I think Fred's point is pretty much right.

The people who are ingrained in the system—we can't expect them to completely change their lives and move, and so forth. What we want to do is prevent the next generation from going forward.

If I came to you today and said I'm 18 years old and I'm considering a career in the seasonal industries, you'd probably talk me out of it. I think that's an important point. I think we need to have policies that actually reflect this reality: that we don't want large numbers of people looking at seasonal occupations for their careers. Yes, in some cases it's okay to do it for a few years. And the people now in those occupations—we want to have them working more weeks and years, so that it actually resembles a year-round job in terms of the income generated from it.

[Translation]

Mr. Jeannot Castonguay: Madam Chair, I have some difficulty in accepting the argument that I would be discouraging a young person from seasonal work. Who is going to do that work? Who is going to plant the trees in my region so that the forest can grow? Who is going to cut down the trees to make lumber? Who is going to fish the fish? Madam Chair, I would say to that young person that he should attempt to develop skills in different areas to enable him to work for two or three seasons in a row. That would be my approach. I think that that is part of educating a nation. We should not tell these people that they should not do seasonal work. I am disappointed in you, Mr. Audas.

[English]

Prof. Rick Audas: I think there has to be a certain reality: if you work in seasonal industries, maybe you have to work in a couple of different seasonal industries that stretch out over the year.

We need to be creative in how we think about these things. When we look at the situation now, I think we're greatly underestimating people's abilities if we just say you can work 12 or 15 weeks a year, and collect for the other 40. We can be more creative than that.

Mr. Fred McMahon: Let me point out once again that this is an artificially created problem. We inflated the dependency on short-term seasonal work in Atlantic Canada through these policies. You can get at that by tracking seasonal employment. For instance, the fishers: two and a half times as many in the late 1980s as in 1961, even with declining stocks and improving technology. That's the trap we created, and we have to get out of it. That means we don't encourage the next generation to do this.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Mr. Fortin, a brief comment.

Prof. Pierre Fortin: How can we change attitudes? There are two ways.

If you look at the Canadian employment insurance system as it was until the late 1980s, there were a certain number of disparities between the regions with extremely high unemployment rates, especially in terms of the minimum number of weeks required for eligibility to benefits and in the maximum period of benefits.

No matter what our opinion on this issue, I would like to point out that Canada has cleaned up the employment insurance system. We can no longer, in 2001, refer to a Canadian employment insurance system. The system is no longer, as our anglophone friends like to call it, the “giveaway” that it was in the 1970s. Unemployed people today have a one in three chance of receiving benefits, whereas in the 1980s, the odds were three out of four. If that is not cleaning up the system, I don't know what is. The system has already been cleaned up.

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Secondly, if you want to change people's attitudes, give them jobs.

The Vice-Chair (Ms. Diane St-Jacques): Mr. Fortin, I am sorry. Could you quickly wrap up.

Prof. Pierre Fortin: There was 12% unemployment in the early 1990s. It is now 7%. We are on the right track. Let's continue that way.

The Vice-Chair (Ms. Diane St-Jacques): Thank you. Mr. Yvon Godin, you now have the floor, followed by Anita Neville, Val Meredith and Joe McGuire.

Mr. Yvon Godin: I agree with what Mr. Fortin said. We have to get people back to work. Is that the responsibility of the worker who lost his job on a Friday and who was unemployed on the Monday? Is it up to him to create jobs? I think that we are focussing on the wrong area. If we want to create jobs, that is not the government's responsibility. However, it is the government's responsibility to create the necessary infrastructure for economic development, especially in rural areas.

We Acadians, don't want to leave Acadia. I come from a family of 11. In 1972, only one of us had stayed in Acadia. I would like to tell you one thing. My brothers who went to live in Northern Ontario used to work the year round, but nowadays, they have to use employment insurance each year. My brothers and sisters who went to live in Prince George, in British Columbia, have to do the same thing. We are no longer just talking about Atlantic Canada here. Let's take British Columbia for example. People in Prince George, in British Columbia, now have to turn to employment insurance each year because of the wood quotas there. People in Nanaimo and in Port Alberni, in British Columbia, have to use employment insurance because fish stocks in British Columbia have collapsed. I drafted a report on Canada's 10 provinces. This report is called “The Human Aspect of Employment Insurance.”

In Vancouver, British Columbia, people are receiving employment insurance benefits. I have in front of me stories of people who have been affected by changes to employment insurance. These changes have not altered a lot of these people. Would you agree that people in British Columbia continue to fish and are now using the employment insurance system?

Are you going to solve the problem by taking away these people's livelihood and by sending their children to school on an empty stomach? Are you going to solve the economic problem by hurting these families? Is that the answer? This is not the way to go about things. To solve the problem, we need the necessary infrastructure. You are supposed to be very intelligent people. You should concentrate your efforts on this area. Instead of bashing the 1.4 million children who go hungry, you should go and bash those large companies, such as the Bronfman and the Irvings of this world, to get them to shoulder their responsibility and to create jobs. People are not cowards. At the Brunswick mine, in New Brunswick, people are being laid off, and there are a thousand people waiting at the gates for jobs. At the smelter, people are being laid off and more than 800 people are looking for jobs. That's the reality. That's why it is difficult to accept that you have caught people up in the net and that you have made them lazy, as some people claim. I am not saying that you think that, but it has been said by some that Atlantic people are a lazy bunch. People all over Canada have had to leave their families to find work elsewhere. We don't want to close down the Atlantic provinces. Find the answers! Don't you agree that we should work together to find the economic answers instead of taking it out on the ordinary working person, who has lost his job?

[English]

Prof. Rick Audas: I couldn't agree more.

Mr. Yvon Godin: Thank you. Let's go to who's next.

Mr. Fred McMahon: But this is not the way to do it.

Prof. Rick Audas: I think we're talking at cross-purposes here. I think economic development in rural Atlantic Canada is different from EI. I think what we need to do is create a system or put policies in place that will create opportunities in rural areas. My fear is that this doesn't do that. I don't necessarily think it entirely takes all that much away from us, but it certainly doesn't create opportunities, which are what we need.

Mr. Yvon Godin: If we agree with what you said, it's not punishing people that will give results either. Hitting the little people is not the solution.

Prof. Rick Audas: To reiterate Fred's point, we don't want to hit the little people, the people who have become ingrained in the system.

Mr. Yvon Godin: But they are the ones being hit in it.

Prof. Rick Audas: And I disagree with that.

Mr. Yvon Godin: Okay, then you agree to the changes to the EI, then.

Prof. Rick Audas: No.

Mr. Yvon Godin: Then you're contradicting what you're saying.

Prof. Rick Audas: No, I think you're—

Mr. Yvon Godin: You are.

Prof. Rick Audas: —advocating one policy for everybody. I think what Fred and I are saying is something rather different. We have to recognize that there are different kinds of people in the system, and different kinds of people need to be treated in different ways.

One of the areas I study a lot is education and early childhood education, and yes, you're right, poverty is equal to death for these people because they don't get an opportunity to get the education they deserve. We can't have that. But the EI system, as we see it now, doesn't alleviate that problem. As we just heard with Saskatchewan, tons of people can't get anything. Those are the kids who are doomed into the future. The policy here doesn't address that issue at all, so I think that if you want to look at a set of reforms that fix up EI and make it better, this isn't it.

Mr. Fred McMahon: May I make myself even more unpopular with you?

Mr. Yvon Godin: You're doing a good job.

• 1700

Mr. Fred McMahon: I would go further than Rick. I think EI in Atlantic Canada, or UI as it was, makes things worse by discouraging people from advancing in a way that would enable local employers to create jobs, by discouraging people from full-time work and so on. I think there's a great deal of evidence of that. You saw the unemployment rate in Atlantic Canada skyrocketing when the original EI reforms were in.

I do want to say one other quick thing. It is true across Canada that EI has been made a punitive system. You pay into it and you can't get anything out of it. But that's still not true among large pockets of privileged workers in Atlantic Canada. The reform has not been completed. We have two systems, and that's terribly inequitable.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): A very brief comment, Yvon.

[English]

Mr. Yvon Godin: Just to finish very fast, what do you do to the woodcutter who loses his job, but you still want your two-by-four where you come from? What do you do with the fish plant workers who process the fish? Do you still want your fish on your plate? Yes or no? It's as simple as that.

Mr. Fred McMahon: Sure, but as I say, people elsewhere in the world have moved away from those rural primary industries without depopulating those centres. We have reinforced that structure in Atlantic Canada. It didn't have to be as bad as it is.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. McMahon, but I shall have to interrupt you there. I am sorry. Let's try to be a bit briefer, so that everybody can ask their questions. Ms. Neville, you have the floor, followed by Val Meredith and Joe McGuire.

[English]

Ms. Anita Neville (Winnipeg South Centre, Lib.): Thank you, Madam Chairman. I apologize for coming in late. Much of what I wanted to address has already been spoken to.

I guess I'm having a lot of difficulty listening to you and visualizing the young 16-, 17-, or 18-year-old who is actively choosing a life of temporary or seasonal employment and all of the unknown vagaries that go with it. I don't know that they're looking at it as a choice, but that they're falling into it because of the realities of their life. I'm from Manitoba, so I'm not familiar with the Atlantic provinces. In sitting at this table, though, I've certainly heard much in the last short while.

My understanding of the EI bill is that it is not a tool of economic development. I would like to hear from all of you—and I realize the time is running out—something positive in terms of the potential for economic development in parts of the country that depend on EI, because the EI measures are not one size fits all.

Prof. Rick Audas: I saw something on the news yesterday about what I realize is a different situation. It was talking about an Indian reservation or native Canadian reservation, and about how EI had dried up there. There were fewer and fewer opportunities, so a lot of people were actually creating their own industries. They were creating craft industries. These people were actually now into doing handicrafts and were actually earning thousands of dollars by making these things. They're actually making a lot of money by doing it.

I think there's a lot of opportunity for entrepreneurship, and I think that's where the real key lies. These communities need to grow on their own, to a large extent. They need policies in place that support them, that encourage that kind of development. It's not what's going to happen, but I think the important point is that the policies do have to come from the communities themselves.

Mr. Fred McMahon: I entitled my last book Atlantic Canada and the Negative-Sum Economy. There's an assumption down there that anytime a job or something disappears, it will never be replaced, it's gone. It's a negative sum economy. Actually, the modern market economy doesn't work like that. As Rick was pointing out, there are plenty of ways to generate jobs, and we were generating them hand over fist in Atlantic Canada before EI was brought in.

And to answer your first question, I'm from Atlantic Canada, so I've seen people make those choices. It's not mysterious. It happens.

I would point out another place that has about the population of Atlantic Canada but had a worse economic situation than Atlantic Canada, with near 20% unemployment, declining growth, desperate out-migration, and that's Ireland. Fifteen years ago, Canada's per capita GDP was 2.5 times that of Ireland. Today, Ireland's per capita GDP exceeds that of Canada.

Ireland on a per person basis is richer than Canada. Its unemployment rate has virtually disappeared. It's bringing in people from around the world. The Irish did it with sensible policies. They cut taxes dramatically, we all know that. They had agreements between... I mean, it's remarkable. You can sit in Dublin and talk to a union leader who's complaining that the unions were too militant: “We weren't leaving enough room for profits. We went to wage moderation and we allowed people to make profits and all of a sudden we got investment and our workers were earning more than ever because they were more productive with this investment.”

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We need to look at those policies for Atlantic Canada. Make Atlantic Canada an attractive place to invest. Don't inflate wages by having government compete with private employers through EI. Do something about the tax burden in Atlantic Canada. We're a high-tax area in a high-tax country. No wonder we aren't growing.

The Vice-Chair (Ms. Diane St-Jacques): Anita.

Ms. Anita Neville: Monsieur Fortin, I would be interested to hear some comment from you on economic development and economic growth for the region.

Prof. Pierre Fortin: I'm quite upbeat about what has happened in New Brunswick. Unfortunately, Mr. Godin is no longer here.

Sometimes we speak as if nothing was changing in Nova Scotia or New Brunswick. What I've seen in recent years is the gap between the Quebec unemployment rate and the New Brunswick unemployment rate has gone down quite sharply. It is the same between Quebec and Nova Scotia. The Ontario-Quebec gap, which was four percentage points of unemployment 15 years ago, is now down to about 2.5 points. I think the situation is improving.

The general context is streamlined public finances in Canada on the one hand, and a central bank that is learning more and more from the south on how to run monetary policy. There is definitely hope that our unemployment rate across Canada is going down. Not only that, but the differentials between regions are also going down. My message is one of upbeat optimism. I think we're going in the right direction.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. Fortin. Val Meredith, you now have the floor, followed by Joe McGuire. It would be good if we could cut what we have to say by a few minutes. That way, Mr. Martin will have a couple of minutes to answer any potential questions.

[English]

Ms. Val Meredith: I'd like to thank you all for coming.

I'd like to ask a two-part question. Should employment insurance be exactly that—the employers and the employees control an insurance fund that is there for people who find themselves unemployed? Should the government be putting more emphasis on programming and financial resources into those areas that will stimulate some growth with people better equipped for work experiences by taking it out of employment insurance and putting more programming into advanced education, continuing education, and job training? Separate those two entities. Instead of using the employment insurance fund, which started as an employee-employer arrangement, let government do their social programming by assisting people to work through a separate entity that emphasizes job training and education.

Mr. Fred McMahon: I'll start. Yes, employment insurance should be what it says it is. A mix of policy goals always leads to bad policy because you don't know how to balance them or what you're doing.

As for education and training, that's tremendously important, but I would reject any government-run economic development program. What you end up doing is giving subsidies and help to the politically powerful, not necessarily to the more efficient. Give that subsidy to everyone by cutting everyone's taxes. That's the same as a subsidy, except it's fairly given. The people who are more efficient and can generate more jobs take more advantage of it. Employment insurance should be an employment system with education and training and no economic development programs.

Let me point out one other thing on the economic development front. There's wide-ranging literature now about convergence, the convergence of lagging regions to more developed regions within the advanced countries. In the United States, Europe, and Japan, the gap closes by about two percentage points a year, whether or not there's regional policy. There's little regional policy in Europe and almost nothing in the United States, but it still closes at two to three percentage points a year.

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In Atlantic Canada we were knocked off that rate of convergence by perverse policies like employment insurance, which inflated old primary industries, and by economic development programs that rewarded the politically powerful and politicized the economy. The economic literature and empirical evidence shows that if we do nothing, we'll do better than we're doing now.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you very much.

Can we now go on to Joe McGuire?

[English]

Mr. Joe McGuire: Thank you very much, Madam Chair.

Regarding skills development, I think that every province in Canada has a skills training development agreement with the federal government. It's called the labour market development agreement, and I think the only province that didn't sign is Ontario. Every other province in Canada has one, under part two of the unemployment insurance program. It's run by the province, because education is a provincial jurisdiction, but the money comes out of HRDC and goes to the province. In Saskatchewan, I think it's $43 million a year. So if your farmers, for example, have a problem getting retrained, they should be asking the province.

Anyway, as for youth, I don't think anybody's really looked at the impact on youth of the 1996 changes, the 910 hours you had to qualify, because you only went to 1997. The program was just getting started, and in a seasonal economy it's very, very difficult to get six months of work. So I'm assuming an awful lot of young people are either leaving the area or finding longer periods of work. But we don't know that, because nobody's really gone into it.

I'd like your opinion, though—from the witness, if you have one—on the divisor rule. That's where there's a divisor two points over the prevailing unemployment rate, and if the unemployment rate improves, then the unemployed are punished by longer waits and less money. I wonder if you have an opinion on the divisor rule, and how it's working.

Mr. Fred McMahon: Well, since no one else is talking, I'll talk again. I think I'm doing too much of it, though—and you probably think I am too.

I don't like the divisor rule, because it means inequitable treatment for people across the country. It means that if you're in a place with high unemployment, you get treated differently than in a region of low unemployment, even if your personal situation is exactly the same. That's unfair. You also wind up with an unemployment trap, because it's easier to collect unemployment in those areas. The system provides incentives for people to keep collecting unemployment insurance, which keeps the unemployment rate high, and you enter a vicious regional cycle. It's inequitable, and it starts a bad cycle.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you, Mr. McMahon.

We can now wrap up with Pat Martin. Just a couple of minutes, if possible, Mr. Martin.

[English]

a very short one.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you very much for squeezing me in at the end; I appreciate it. And since I only have two minutes, I'm going to limit my remarks to one specific point.

I'm a journeyman carpenter by trade, and I used to represent the carpenters union. One of the biggest problems for building trades and skilled trades workers is how the EI bill now affects apprentices in the college components of their apprenticeships. They're not unemployed when they go to college for their six- or eight-week learning component; they're just away from work.

When I went to school there was no interruption in income maintenance, but now they're being penalized with the two-week waiting period, just as if they had lost their jobs and were unemployed. As a result, a lot of apprentices simply can't take the college component of their training—because if they have families, they can't afford to go without two weeks of income maintenance.

So no matter how you feel about whether there should be an EI system or not, would you agree that this penalizing of apprentices when they go to community college is bad for the industry? Is that a negative change that could have been addressed in Bill C-2? How do you feel about that impact on the industry? Anybody.

Prof. Rick Audas: It sounds perverse to me. In my mind, if any policy discourages education, I have to be overwhelmingly convinced of its value.

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This doesn't strike me as being one of the few cases. As a nation, we need to add skills faster and we need to get skills more dispersed among more people. People in the trades need to be given full opportunity to improve themselves, because that's the way we improve productivity—and that's the way we become wealthier as a nation.

Mr. Fred McMahon: I'd only question that this subsidy is in the EI system. It's again a mixture of policy goals. If you want to encourage education and skills training, I think you go to a separate program with clear goals.

[Translation]

The Vice-Chair (Ms. Diane St-Jacques): Thank you very much. Mr. Fortin, a very brief comment.

[English]

Mr. Pat Martin: A nice way to conclude.

[Translation]

Prof. Pierre Fortin: Right from the outset, I had been looking for something on which Rick and I could agree. This time, I agree with him entirely.

The Vice-Chair (Ms. Diane St-Jacques): Thank you very much.

I would like to thank our guests today: Mr. Fortin from the Université du Québec à Montréal, Mr. Audas from University of New Brunswick, Mr. Van Audenrode from Laval University and Mr. Fred McMahon from the Fraser Institute.

I think that my colleagues will agree that our discussions have been very interesting and useful. So on that note, I would like to thank you for having agreed to come to meet us on such short notice. Have a nice day.

Now, I am aware that the clerk has circulated the schedule of the next few meetings. Tomorrow, at the next meeting, you will receive a list of the witnesses. I would like to remind you that tomorrow's meeting will take place at 11 o'clock. However, there has been a change of venue. It will now take place in room 237-C. Your offices have been informed of this change, but please take note of it.

To wrap up then, I would like to thank all my colleagues for allowing me to chair this meeting. I would also like to thank them for their co-operation since this is the first time I have chaired the Human Resources Development Committee.

The committee is adjourned.