[Recorded by Electronic Apparatus]
Tuesday, May 14, 1996
.1530 
[Translation]
The Chairman: Order, please. We have quorum. Our witness this afternoon is Daniel Germain, from the Association coopérative d'économie familiale du Québec. He will be testifying on Bill C-31.
Welcome before the committee, Mr. Germain. You may begin.
Mr. Daniel Germain (Analyst, Association coopérative d'économie familiale du Québec; spokeperson for the Fédération nationale des associations de consommateurs du Québec): The Fédération nationale des associations de consommateurs du Québec regretfully notes that Canadian social programs are being eroded.
We believe that Bill C-12 and Part III of Bill C-31 are playing a major role in eroding these programs and are threatening the living conditions of clients we defend.
We would respectfully remind the Canadian government that many Canadians consider the current unemployment insurance system to be their heritage, forged through hardship and work by their parents and grand-parents and handed down to them. They see it as a heritage which, together with other Canadian social programs, constitute a bastion against free-market barbarism.
Was it not Sir william Beveridge who in 1942 stated that the purpose of a social security system was to support employment in order to eliminate unemployment, provide free health care and promote support for the family. In other words, the state has a duty to contain the most deleterious effects of unfavourable social and economic conditions, by adopting legislation that shares the risks inherent in economic fluctuations among all its citizens.
According to Sir William Beveridge, social justice is not only fair, it also fulfils a genuine economic purpose.
With respect to Bill C-12, we find it very odd that the government would table a bill which makes those excluded from the labour market, poorer in a period of economic disruption and reorganization - the very time that they need a system which can provide satisfactory protection.
The architects of Bill C-12 would have us believe that the legislation enhances work, not unemployment, by encouraging claimants to go back to work faster. The measures that are supposed to motivate them to go back to work range from more stringent eligibility criteria to reductions in the amounts and real duration of benefits. There are also penalties for repeat users.
How can measures like these provide any real incentive for the unemployed to get back into the labour market quickly? The job crisis in Canada doesn't seem to be getting any better. Is the federal government shirking its responsibilities to the regions, families and individuals by letting free-market dynamics take over the safe running of the economy?
When the State abandon its role as a promoter of development, it shifts the burden of economic renewal and job creation onto the regions. Yet in many cases, the economic reconversion processes will take years.
In cutting unemployment insurance benefits, the government is acknowledging that unemployment is first and foremost an individual responsibility, and that an overly generous unemployment insurance system inhibits individual initiative.
That it was this legislation's former sponsor, Lloyd Axworthy, who in 1995 tries to make Canadians believe that the reason one third of unemployed people stayed unemployed for more than six months, that the reason UI system costs had doubled since 1992, was not because there were no jobs. He said it was because people found it very easy to get unemployment insurance benefits. It is disgraceful that we have to listen to statements like these when jobs are going up in smoke all over Canada.
What interests could Bill C-12 possibly defend in forcing the most impoverished members of society to bear the socio-economic costs of Canada's economic restructuring?
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And in Part III of Bill C-31, we see further confirmation that the federal government is turning a deaf ear to the pleas of Canadians calling for fairness and social justice.
We deplore the fact that section 43 retroactively cuts maximum benefits from $445 to $413. We would remind the Standing Committee on Finance that this cut in maximum benefits is helping to make claimants poorer. The reduction in maximum insurable earnings is not fair to low- and middle-income workers.
Lowering maximum insurable earnings will primarily help high-income earners, who will see their total premiums drop. Lowering maximum insurable earnings will also encourage employers to assign overtime to their higher-income earners, rather than hiring additional employees. As we know, the employer will have no premiums to pay on any income that exceeds maximum insurable earnings. Furthermore, replacing the weekly maximum with an annual maximum will in our opinion penalize indeterminate employees.
The federal government is doing everything it can to convince Canadians that Bill C-12 is good legislation because it provides more coverage for employees and facilitates job creation. But in fact, if we take a good look at clauses 7, 10, 12, 14, 15, 17 and 145, we see that the bill provides for more stringent eligibility criteria and reduces both the amount and duration of benefits.
In April, the Standing Committee on Human Resources Development put forward a number of amendments focusing on work stoppages during the period used to establish average earnings, the divisor used to determine benefits, and the intensity rule. These amendments are not sufficient to mitigate the inequities that this legislation will visit on Canadian workers.
The Fédération nationale des associations de consommateurs du Québec rejects the whole of Part III of Bill C-31, because clauses 42 through 47 are budgetary provisions for a bill that the members of our federation have denounced.
We therefore recommend:
- first, that Bill C-12, an Act respecting employment insurance in Canada, be completely withdrawn, and that Part III of Bill C-31 be repealed;
- second, that the Unemployment Insurance Act, which was in force until December 31, 1995 and which we consider preferable, be maintained in force.
We are convinced that the Unemployment Insurance Act and its provisions are significantly more acceptable to workers than the measures provided for in bills C-12 and C-31.
But unfortunately, government does not seem to hear the pleas of Canadians. In years to come, Canadians will be telling their children and their grandchildren about the day that members of the House of Commons passed a bill that contributed to making low- and middle-income households even poorer.
I would like to thank the members of the Standing Committee on Finance for having taken the time to hear us.
The Chairman: We will begin with Mr. Bélisle.
Mr. Bélisle (La Prairie): Mr. Germain, on page 6 of your brief, you state:
- In fact, if we take a good look at clauses 7, 10, 12, 14, 15, 17 and 145, we see that the bill
provides for more stringent eligibility criteria and reduces both the amount and duration of
benefits.
Mr. Germain: We know that clause 7 provides for more stringent eligibility criteria. We gave an example. With the old system, claimants had to have 12 to 20 weeks of work, with at least 15 hours of work per week. With the new system, they have to accumulate 420 to 700 hours of work. In our view, the shift from a weekly-based system to an hourly-based system will considerably restrict eligibility.
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Clause 15 may be the worst provision in the bill, even though it has been suggested that the rate calculation period be extended to 26 weeks. We tried the calculation for someone who worked for a while, had to stop working for a while and then went back to work. We used a rate calculation period of 20 weeks.
This claimant usually earned $300 a week. Because we had to use the last 20 calendar weeks in our calculation, the claimant ended up with a lower average salary because he had stopped working. In fact, he had stopped working for eight weeks, and was then re-hired. So, for all practical purposes, he ends up with a weekly benefit of $99. That is less than income security.
How are people going to find the motivation to go back to work, or to look for a job, when just sending a curriculum vitae costs about $3? When you're looking for a job, it's not unusual to send out 200 to 300 CVs. With $100 a week, how are you supposed to dress properly, move around to look for a job, or do anything else you have to do?
A number of the measures provided for in the legislation make claimants poorer and limit their ability to select high-quality jobs.
Mr. Bélisle: On page 4 of your brief, you state:
- Social justice is not only fair, it also serves a genuine economic purpose.
Mr. Germain: At the risk of seeming a little old-fashioned, we have a more Keynesian perspective. We believe that the State should intervene. The current tendency is for the State to withdraw from intervening in the economy, but we believe that the State should take concrete measures to provide a climate conducive to full employment.
We don't necessarily believe that the government should give people jobs, just that it should create a climate conducive to economic renewal. A full employment policy doesn't just involve job creation. It involves broadening the tax base to increase revenue, something that should encourage the government to stop slashing what we consider essential spending - social programs.
Increasingly, we are seeing the government bringing people together but withdrawing from taking concrete measures. We have a lesson to learn from history, however. In the 1940s, Mackenzie King implemented the Unemployment Insurance Act because Canada had been through a major depression. Then came the war boom, with the economy going at top speed and the entire labour force employed. Yet in 1943, people already feared we'd fall back into a peace economy and into the Great Depression of the 1930s.
Oddly enough, government intervention worked well then, yet today we draw no lessons from that period. We're told that intervention is bad, that it makes people lazy and the economy sluggish. But I believe that the government can be an important stakeholder without interfering with anyone else's role.
The Chairman: Thank you, Mr. Bélisle. Mr. Solberg.
[English]
Mr. Solberg (Medicine Hat): You spoke of the need for the government to create an environment for job creation. Can you explain to me again what you think the government should be doing to create that type of environment?
[Translation]
Mr. Germain: Forgive me for answering in French, but I have some difficulty speaking English.
During periods of economic reorganization and recession, citizens need government intervention, particularly in the form of social benefits. We believe that spending cuts in the area of social programs, particularly unemployment insurance, exacerbates the domestic economic slowdown.
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As for the national economy, there is an increasing focus on market globalization and less emphasis on the creation of a climate conducive to domestic economic renewal. The domestic economy is being neglected, but we can't just hope to survive on exports. There are some Canadians who need to work. So the State does have a role to play, but that role isn't just cutting spending. Some cuts are needed, of course, but when the government goes too far, we are left with nothing but an empty shell.
[English]
Mr. Solberg: Okay, but if we don't cut in this social program... I think you're acknowledging that there have to be cuts somewhere, and if you don't cut in the social envelope, which is the huge majority of the spending... We've already seen the government cut about $10 billion out of operational spending. Where do you suggest these cuts should come from?
Mr. Germain: I have a good suggestion. Maybe Canada could modify its monetary policy.
[Translation]
Though interest rates have been fairly low for some years, the Bank of Canada is continuing to pursue an anti-inflationary policy. As we know, low interest rates allow us to rein in the money supply, but at the end of the day, that means an anti-inflationary policy and high unemployment.
If we figure we can't do anything because we have to follow the U.S. monetary policy and that of other countries, part of the solution is to be found at the international level. We have to organize to have monetary policies that will allow countries to avoid getting into awful debt as is presently the case. Many problems that we have now would disappear or become less serious.
On the other hand, they say that all that is done with a view to decreasing Canada's total payroll because we want to be competitive on international markets. Reasonably, just between you and me, how can we even think we can compete with a country like Mexico in the secondary industrial sectors when semi-skilled workers are getting $2 an hour over there? Even with the cuts being brought in today, we'll never manage to stay afloat.
Today, Canada and many other industrialized countries are aligning their policies on those of countries whose industrial practices date back to the stone age. We should instead enhance the practices we've had for many years now.
[English]
Mr. Solberg: Are you saying, then, that perhaps free trade is part of the problem?
Mr. Germain: Yes. Free trade is part of the problem.
Mr. Solberg: So you don't agree with the free trade approach. Okay.
Mr. Germain: Not in the way it's working right now.
Mr. Solberg: More specifically, on the whole issue of unemployment insurance, a lot of people would argue that because unemployment insurance pays a reasonably healthy amount of money in exchange for not very much work in some areas of the country, it creates a disincentive to work. And really, I think that's the major argument people have about unemployment insurance.
For the last 25 years, we've had regionally extended benefits and a fairly rich unemployment insurance system, compared to many countries in the world. If over that period of time unemployment has continually gone up, isn't it possible that the benefits themselves are part of the problem?
Mr. Germain: I don't think so, but we can measure it.
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[Translation]
We can't really measure it, but it could be done for a certain percentage of the population. It's often said that in any given system, on average, 5% of the claimants defraud, but once you're past that... Can it reasonably be said that the majority of Canadians without a job want to be unemployed?
If Canada really practiced a full employment policy, I could understand tightening the screws on unemployment insurance, but there's no concrete, full employment policy. We saw it inMr. Martin's budget, in March. In Quebec, it's the same thing with Mr. Landry's budget. That kind of policy just doesn't exist. So there are no doors open on employment. The whole matter is left up to individual and community initiatives.
As such, it's a beautiful principle, but how can you reasonably ask the provinces like the Maritimes who have had a seasonal economy - I emphasize seasonal - for a couple of centuries, to restructure their economy? It's going to take years.
During that time, people wind up in desperate economic straits. You can't blame individuals whose livelihood depends on a seasonal economy. We agree on the principle that maybe things should be changed, but if everyone were working, no one would need unemployment insurance.
With the Employment Insurance Act, we set a pattern by shifting the whole burden on the individual's shoulders. That creates individual guilt. If someone isn't working, then it's that individual's fault. I'm all in favour of encouraging people to work, but you have to give them real means of finding work. The bill on employment insurance doesn't convince us that is being done.
Amongst other things, just think about the bickering that goes on between the provinces and the central government on job training. We think there might be a solution in that area coming up, but in the meantime there are people drifting around who would actually like to improve their training to get a good job.
Does that mean we should shut down those regions in Canada where it becomes impossible to find a job?
[English]
Mr. Solberg: I'll pass on -
[Translation]
Mr. Pomerleau (Anjou - Rivière-des-Prairies): When I look at today's international markets, with robotization, mechanization, computerization, global markets, abusive international use of tax havens, the indebtedness of most industrialized countries, I figure the unemployment rates are going to keep on climbing dramatically and that, internationally, we're going to have to review all our concepts of work, economy, wealth and so forth. We're not there yet, but that's what will have to be done over the medium term.
You represent an association that has followed closely the evolution of bills C-12 and C-31 and the changes to unemployment insurance.
What's the thinking coming out of the area you represent? How do they see that?
Mr. Germain: I can tell you honestly that there are a lot of people who, even today, haven't the foggiest idea of what's coming down the road. Apart from the community groups that have sprung up and to whom we've really explained how the new employment insurance legislation would apply, people feel a bit lost.
As for those who are conscious of what's going on and have a relatively good understanding of the stakes of employment insurance, they're not very happy. They're not very happy and it's perceived as extra stress and worry.
We meet a lot of people. We work in the trenches. We offer advice on budgeting. That's one of the things that brought us into defending rights and making representations like we are today.
The pressure on low and medium income families is growing heavier every day.
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Income security and unemployment insurance benefits are being reduced. Rate systems are being gradually introduced. On top of that, more and more, you can feel part of the middle class sliding towards what is now being called the new poverty. We can see it happening more and more. Already, with 55% of their salary in the form of unemployment insurance, people find it hard going and on top of that they're being pinched with a restricted eligibility. People have even less leeway to find an acceptable job.
On the one hand, the view is that the present legislation stimulates people because the benefits period is shorter but, at the same time, you still have to live with the realities of the job market.
People are worried. Everyone here can probably feel the gloom descending on the people. They don't have confidence in the future any more. They know that the State has to rethink how it's doing things. At the same time, though, they're feeling the impact of those withdrawals more and more. There are people today wondering if that's really the appropriate solution, the right change in direction to make.
Mr. Pomerleau: You spoke about regions possibly emptying out. One of Canada's fundamental problems, contrary to many other countries in the world, is that Canada is one of the biggest countries in the world but its population is proportionally the lowest. We have to occupy our territory one way or another. We know that there are regions forced to make a living based on seasonal work. We can't all live in Toronto, Montreal, Vancouver or Winnipeg. There are regions where people live and grow but where work is strictly seasonal whether it's fishing, forestry, agriculture and so forth.
In your discussions in your field of activity, have you looked at the question of the possible consequences of legislation like this which by placing the full and total responsibility on individual shoulders is an incentive for people to leave these regions to go and work where, theoretically - and I stress theoretically - they should be able to find work, in other words the cities, even though it's not always the case? Doesn't that encourage people to empty out the regions of this country?
Mr. Germain: We're part of an organization called Solidarité rurale du Québec (Quebec rural solidarity). As we defend cases in the agro-food area, we're in contact with agricultural producers and the people who live in rural areas. My spouse comes from Mont-Joli, a rural area. We go there often and during the last 15 years I've seen the region emptying out and the social and economic fabric slowly crumbling. The population is ageing and, the same as everywhere else, the few youths that remain are leaving the region.
Pressure is being increased with legislation on employment insurance like the one we're being offered. I'm not sure that it's not going to encourage people to head for the city even faster. There are young people who don't know what to do. There's an exodus towards the big cities. How many Gaspesians can you meet in Montreal? There's a whole slew of them who get their welfare cheques in Chandler and finally wind up in Montreal with another welfare cheque. At the end of the day, they figure that they're far away from their family and friends and go back in the hope that some sort of regional economy will develop.
It's quite a blow, because, as you know, out in the regions, unemployment insurance helped many industries to survive. At one time, it was what everyone needed, politically and economically. Some businesses based their existence on the fact that there was unemployment insurance. They could have workers handy and available during the high season, and, after that, they fell back on unemployment insurance. Now, with free trade, the big thing is worker mobility.
Does that mean that people will have to move from one region to another to find jobs?
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When you have a family, you're attached to the area you live in. Can you reasonably expect to move people to Quebec City or to Sherbrooke and force them to make even more cruel decisions that will compromise the stability of their families? That's what the regions are feeling. People feel that by staying close together, solidarity is preserved. If people leave because of measures like that one, we'll be feeling the effects 20 years down the road. I have no study to support this, but this kind of thing can only promote an exodus.
The Chairman: Mr. Germain, I'd like to thank you for myself and all my colleagues. You gave a very good explanation of the situation of the unemployed, the poor, people who have a lot of problems, in other words, the phenomenon of new poverty. It's clear that you put a lot of work into this. We thank you very much.
Mr. Germain: I thank you all for your attention.
The Chairman: The next two witnesses are not here yet. We could take a little five-minute break.
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[English]
The Chairman: Order. We are now going to clause-by-clause on Bill C-31. Thank you, members, for all your cooperation to date.
Clauses 1 to 8 agreed to on division
On clause 9 - Where portion of public service established as federal business
The Chairman: Have you seen the amendment to clause 9? Does anybody want it read into the record? Should I dispense?
Amendment agreed to on division [See Minutes of Proceedings]
Clause 9 as amended agreed to on division
Clauses 10 to 15 inclusive agreed to on division
On clause 16
Amendment agreed to on division [See Minutes of Proceedings]
Clause 16 agreed to on division
Clauses 17 to 57 inclusive agreed to on division
Mr. Campbell (St. Paul's): Mr. Chairman, there is an amendment to clause 16, I believe.
The Chairman: We did that.
On clause 58 - Bill C-11
Amendment agreed to on division [See Minutes of Proceedings]
Clause 58 as amended agreed to on division
Clauses 59 to 64 inclusive agreed to on division
The Chairman: Shall the title carry?
Some hon. members: Agreed.
The Chairman: Let's have unanimous consent on the title.
Mr. Loubier (Saint-Hyacinthe - Bagot): No.
The Chairman: Let's do something really radical and amend the title.
Shall the bill carry?
Some hon. members: Agreed.
Some hon. members: On division.
The Chairman: Shall I report the bill to the House as soon as possible?
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Some hon. members: No.
Some hon. members: Agreed.
The Chairman: On division?
Shall the bill be reprinted?
Some hon. members: Agreed.
The Chairman: May I thank members for their very serious and diligent consideration of the clauses of this bill, and for their splendid cooperation in dealing with it.
Yes, Mr. Parliamentary Secretary.
Mr. Campbell: Mr. Chairman, on behalf of the government, I would also like to extend my thanks to the members of the committee for their study of the bill in this committee. Thank you.
The Chairman: You're very welcome. It was a pleasure to deal with it. It's a pleasure to work with all the members.
Thank you very much. We'll adjourn until 3:30 tomorrow afternoon, when we'll have the Governor of the Bank of Canada before us.