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 21, 2001

• 1635

[English]

The Chair (Mr. Peter Adams (Peterborough, Lib.)): Colleagues, if we could begin consideration of Bill C-2... But before we introduce our witnesses, I have some housekeeping matters.

First of all, as you know, we meet tomorrow after Mr. Blair's presentation. In the notices you received it says 11:30 a.m., and we're going to proceed through lunch, as we described, until 2 p.m. if necessary. Obviously, if for some reason Mr. Blair goes on, then we'll start later. So that time is 11:30 a.m. or as soon as we can start following Mr. Blair's presentation. If that's okay with you, I'd be grateful.

Second, I need the names of some steering committee members from some of the parties, and I'd be grateful if I could receive those.

Third, I need the names of suggested witnesses. Notices have gone out to your offices about that. I'd be grateful for that. We can't, in fact, plan our hearings until we have the witnesses, as we discussed the last time.

Lastly, I propose, because some members are away later tomorrow and Friday, that we have a steering committee meeting on Monday. I've already spoken about this, and we don't need to decide the time now, although we do need to decide it tomorrow. But I know some members will not be here Monday morning. My suggestion is that the steering committee meet as late as possible Monday afternoon—might be four o'clock, might be five o'clock, but we'll decide that tomorrow.

Are people comfortable with those arrangements, because I would like us to start?

Thank you very much. Paul Crête.

[Translation]

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Next Thursday I do not think that I will be in Ottawa. I'll see what I can do. If for some reason I was not available, would it be possible to have a teleconference with those who are not in Ottawa?

The Chair: Certainly. We'll discuss all of that tomorrow.

[English]

Colleagues, the meeting is set, and because of the vote in the House, we're starting late. I've already spoken to some colleagues, and I think we should aim to finish at six o'clock, which was the agreed time. I know a number of members have difficulties after that.

Thus I would ask our witnesses that the presentations be precise, and I would say to all parties, when we get started with the questioning, let's move the thing along, so that as many people and parties get an opportunity to question as possible.

I'd like to welcome the Honourable Jane Stewart to our committee again. Minister, we are very pleased to see you and your colleagues. I wonder if you'd care to begin by introducing your colleagues, and then we look forward to what you and they have to say.

Hon. Jane Stewart (Minister of Human Resources Development): Thank you, Mr. Chair, and thank you, committee members, for agreeing to meet with me today. It's nice to see some familiar faces from around this table and to welcome new members, for many of whom I imagine this is the first committee meeting. Yes, it's great to be here.

Anyway, let me introduce to you my deputy minister, Claire Morris; Wilma Vreeswijk, who is the acting director general for labour market policy—really Wilma is our policy guru on employment insurance; Gordon McFee, director of policy and legislative development, whose responsibilities tend more towards implementation of the policy at the local level; Peter DeVries from the Department of Finance, director of fiscal policy division.

Again, thank you for letting me come and talk to you about the content of Bill C-2. I can tell you that this legislation is very important to me. Using a balanced approach, the government is proposing here changes to the Employment Insurance Act that will benefit Canadians in all parts of the country.

• 1640

[Translation]

As committee members are aware, in 1996 following extensive consultations with Canadians, the Government replaced Unemployment Insurance with Employment Insurance to better reflect the changing needs of the economy, the labour market and workers. The objectives of the reform were to make the system fairer, to promote workforce attachment and to help people prepare for and obtain employment. The Government remains committed to these goals.

[English]

The government remains committed to these goals.

Successive EI monitoring and assessment reports have concluded that overall, the reforms we introduced in 1996 are working well. For example, the hours-based system has improved the link between the amount of paid work done and the length of time benefits can be received.

Another key element was the family supplement. With the supplement, claimants from low-income families with children can receive up to 80% of their insured earnings. Nearly 200,000 Canadian families benefited from this measure in 1999-2000.

I've made a point of meeting Canadians across Canada—New Brunswick, Quebec, Ontario, British Columbia—and hearing their views on employment insurance. With a program of this size and scope there will always be room for improvement and fine-tuning to ensure the program is evolving with changing labour market realities.

This is not the first time we've made adjustments. In 1997 we acted quickly to introduce the small weeks adjustment project, to make sure that weeks with low earnings would not reduce benefits and to encourage people to take all available work.

We've also responded to the desires of Canadians for greater support in balancing work and family responsibilities by enhancing EI maternity and parental benefits as of December 31, 2000.

Mr. Chair, in Bill C-2 we're proposing some further adjustments to the program to ensure it's fair to all Canadians and consistent with our efforts to support families and children. As members are aware, these legislative amendments were first introduced and debated in the House of Commons last fall.

During the election we promised to re-introduce this bill if re-elected. After the election we stated that this bill would be a legislative priority for the government, in order to benefit workers, and that's why you see it here today as one of your first orders of business.

This bill takes a very balanced approach to modifying otherwise sound EI reforms. Let me briefly highlight the most important changes.

The intensity rule would be eliminated, retroactive to October 1, 2000, because it has not proven to be effective and has had the unintended effect of being punitive.

Benefit repayment provisions, known as the clawback, would also be modified, as there are indications they are not properly targeted. The clawback was introduced to discourage individuals with higher incomes from repeatedly collecting benefits. However, some affected groups are clearly not dependent on EI. That's why we're proposing that first-time claimants, who are not, by definition, frequent claimants, be exempted from benefit repayment, to ensure the program is there for Canadians who seek temporary income support for the first time.

[Translation]

We are also proposing that individuals who receive maternity, parental and sickness benefits no longer be required to repay benefits. Parents who stay at home with their newborn children, or workers who are too sick to work, are clearly not dependent on EI and should not be penalized.

[English]

Finally, the clawback doesn't reflect today's economic realities. To make sure that the provision is properly targeted at higher income workers, all those who earn less than $48,750 net income would no longer have to repay EI benefits. For those with higher incomes the repayment would be simplified to 30% of their net income above the $48,750 threshold. All of these new measures would apply to the 2000 tax year.

Another area requiring attention relates to the re-entrant rules. Re-entrants include parents returning to the labour force following an extended absence to raise young children. Currently these parents are treated as if they have no labour force attachment. The rules governing re-entrant parents would be adjusted so that after returning to the workforce they would qualify for regular benefits with the same number of hours as other workers. This measure would also be retroactive to October 1, 2000.

• 1645

Fishing regulations would also be adjusted retroactively to December 31, 2000, to ensure fishers also benefit from the enhanced maternity, parental, and sickness benefits.

Mr. Chair, I'd like to briefly outline some other important elements in Bill C-2, beginning with the extension of the monitoring and assessment of the employment insurance program until the year 2006.

This has clearly been an important exercise in understanding how employment insurance is affecting Canadians. That's why we propose that the Canadian Employment Insurance Commission continue to report annually for another five years on the impact of the program on people and on communities. In this way, we will ensure that employment insurance is responsive to changes in the economy.

Also included in the bill is a proposal to maintain the maximum insurable earnings at $39,000 until the average industrial wage catches up to that level.

As members know, last December the government announced that the EI rate for 2001 would be reduced by 15¢, putting more money in the hands of working Canadian families. At the current rate of $2.25, employers and employees will save about $6.4 billion in the year 2001, compared to the 1994 premium rate of $3.07.

By constantly improving the employment insurance program to reflect labour market realities and by reducing employment insurance premium rates to put more money back into the economy, we're continuing to take a balanced approach in responding to the needs of Canadian workers.

In 1999 the Standing Committee on Finance recommended that we examine the rate-setting process. Specifically, the report said we should, and I quote, “contemplate a rate-setting procedure based on a forward-looking basis”. Mr. Chair, in Bill C-2 we are acting on this recommendation. We're undertaking a review of the employment insurance premium rate setting process. We're also ensuring predictability and stability in premiums while this review takes place.

[Translation]

As the Minister of Human Resources Development, I am aware of the critical need to continue building for the future. That's why my primary objective is to provide Canadians with a wide variety of tools to succeed in the new economy.

[English]

Employment insurance is only one of those tools. The Government of Canada will continue to focus on helping Canadians gain the skills and work experience that will enable them to fully participate in the modern labour market.

In the interests of brevity, I'll conclude my formal remarks now and take advantage of the advice and questions of the members.

[Translation]

The Chair: Thank you, Minister. Do your colleagues have anything to add?

[English]

Ms. Jane Stewart: Not at this time.

The Chair: No. Okay. Thank you.

Colleagues, I suggest we proceed in the order we agreed. We'll begin with the official opposition, go to the government side, and then move down the opposition parties. I will keep to four or five minutes. I discussed that generally last time, but it's particularly important this time. I'm not trying to cut off debate, but four or five minutes.

Val Meredith and then Joe McGuire.

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Mr. Chair.

Welcome, Minister. We're pleased to have you appear before us.

I want to raise an issue that has been raised in the House. The finance minister is very quick to assure Canadians that Canada is very much supported by the IMF. He took great delight in quoting from their latest report. However, what he didn't bring up in the House of Commons and what hasn't been reported to any great degree is the fact that in paragraph eight of that report... I would like to quote from it:

In particular, the IMF staff sees the proposed elimination of the intensity rule, which was designed to discourage frequent use of the system, as sending the wrong signal.

And then it goes on in another part to say:

Therefore, the IMF staff continues to endorse the implementation of new measures to reduce the frequency of EI use (such as experience rating of the EI premium rate, which would tie the rate for individual firms directly to the use of the system by their workers) and the elimination of regional extended benefits.

• 1650

I would like to ask you, Minister, why you are going back on changes you made that were very much supported by the IMF, and why you're introducing this legislation, which is heading in exactly the wrong direction, as reported by the IMF—they're concerned you're now going in the wrong direction.

Ms. Jane Stewart: Indeed, Ms. Meredith is right.

The IMF gave us kudos for the 1996 amendments. They also recognized the importance of the national child benefit and how valuable it has been in developing and encouraging a flexible workforce.

What's interesting in the commentary is, as you point out, that they talk about the intensity rule being designed to encourage workforce attachment. What we found, however, is that though we thought we were designing something that would do that, it's not been the case. Indeed, when we look at the actual percentage or number of frequent claimants, it's the same today, Val, as it was pre-amendment. I don't think the IMF would want us to continue with undertakings that aren't giving us the result we expected.

Let me just confirm to you that we remain, as I said in my opening comments, absolutely committed to the intentions of the amendments in 1996. A vast majority of these amendments are working and working well. The ones we are addressing in Bill C-2 are ones we have found not to be giving us the results that we expected. So we think, as I believe the IMF thinks, that it's right to make changes as appropriate.

The Chair: I remind the witnesses, as well as the members, that the time allocated includes the reply. I would be grateful if both sides would be brief.

Ms. Val Meredith: Yes. Thank you.

I appreciate what you're saying, Madam Minister. But I would want to know whether there is statistical information supporting the conclusion that the changes made in 1996 have not worked. Has there been enough time to allow that kind of program, with the changes, to actually work in the workplace and to see the benefit? I'm not sure that three or four years is long enough for those kinds of changes to work through the system.

But beyond that, I would like to raise the issue... This legislation also introduces the concept... Although there are maybe disagreements with some aspects of the bill, one thing the opposition is very much unanimous in is that this bill amends the legislation in such a way as to put an awful lot of power in the executive branch of government, that it's going away from an insurance commission at arm's length from the government, particularly in the setting of rates.

We feel that's the wrong direction for the government to take; that the insurance commission should be encouraged to be more at arm's length from government; that the control of the ability to run the employment insurance fund should be with the employers and the employees, not with the executive branch of government. We see this as a continuing pattern that's being shown, where the government tends to be putting more control into the cabinet, as opposed to putting more control either into Parliament or into arm's-length commissions. We're concerned about that.

So why is the government going in this direction?

Ms. Jane Stewart: First, in response to your question, yes, we do think there has been enough time and sufficient review through the monitoring assessment report, and in consultation with Canadians, to give us the confidence that the intensity rule isn't working and providing what we're looking for.

With specific regard to the commission, I remind the table that there are still considerable responsibilities the commission must undertake, continuing to preside over and manage regulations, how they're applied, and any changes required. There is the responsibility, as you know, to manage the EI panels and the review process that happens in your communities, the appeal process. Third, they'll continue to be responsible for the monitoring and assessment of the employment insurance program, something which, if the bill is passed, we want to continue for another six years.

Specifically, though, we want to respond to the recommendation of the finance committee and the Auditor General, to look at the premium rate setting process. We want to have predictability and stability in the undertakings while that review is going on.

So what you see is a balanced strategy, to continue through in a predictable and stable fashion, set the premiums, while the review of the EI premium rate setting process is undertaken.

The Chair: Thank you, Minister.

• 1655

It's Joe McGuire, Paul Crête, and then Diane St-Jacques.

Joe McGuire.

Mr. Joe McGuire (Egmont, Lib.): Thank you, Mr. Chairman.

I too would like to welcome the minister to the hearings on changes to the EI Act.

I first would like to address the intensity rule. I'm not really sure why the IMF would be making comments on our EI program in the first place, but I want to commend you for listening to the Atlantic caucus and many other caucuses who found that the intensity rule was a punitive measure, as was the small-weeks penalty, which we adjusted almost immediately when discovered.

I would like to know, one, what was the cost of implementing the intensity rule, and two, by eliminating the intensity rule what did it cost the government? On an average claim—say, a 26-week minimum claim—what would it really mean to a seasonal worker?

Let's say you're a fish plant worker or a fisherman's helper. The job itself is seasonal, but people are going to fill those jobs whether on a short-term basis or a long-term basis. To penalize people who have a seasonal job, to penalize them because they're doing that type of work, filling that role in the economy... Seasonal economy exists right across the country, not just in Atlantic Canada.

My question is, what would a minimum claim actually cost? What would the payout be to an individual on a minimum claim?

Ms. Jane Stewart: Specifically on the broad question, the enhancements for the intensity rule are valued at about $250 million at maturity.

In terms of the specific question about the hit, perhaps Wilma can answer.

Mr. Joe McGuire: Just on average.

Ms. Wilma Vreeswijk (Acting Director General, Labour Market Policy, Department of Human Resources Development): The intensity rule reduces benefits by about $11.84 a week, on average.

Mr. Joe McGuire: So the improvement is not really that dramatic. It is a very small measure when you look at it in an individual context. It eliminates a punitive measure but it really doesn't improve one's personal income a great deal.

Ms. Jane Stewart: The results of our work, and the conversations with Canadians, really bear that out. For some low-income Canadians $11 a week really is a significant piece of their weekly income. But in terms of really changing behaviour, it has not been effective in changing the behaviour when really there are no other options that are yet available.

For us, though, it is important to recognize that this undertaking has resulted in its being a punitive measure as opposed to an effective measure at reducing the frequency of claim. We also realize that one of our challenges is in the area in which we continue to be involved right at the local level—that is, in helping to build new and diversified economies in communities where seasonal work has really been the only option.

Mr. Joe McGuire: On the retroactivity part of that, would the individual seasonal worker have to apply for that or would it be automatic? What process will be in place to go back to October 1?

Ms. Jane Stewart: Gordon.

Mr. Gordon McFee (Director, Policy and Legislative Development, Department of Human Resources Development): Thank you.

We have started tracking the claims in the system that could be affected by this. If the House of Commons were to pass the bill, when we implement it this would be done automatically. These people do not have to apply.

Mr. Joe McGuire: Has the maternity benefit been implemented already or will it be retroactive as well?

Ms. Jane Stewart: The maternity benefit was implemented as of December 31, 2000. It's in place. In this bill we recognize that fishers also need to be able to participate in that benefit. That's the retroactive aspect of it in this bill—taking effect December 31, 2000, for fishers.

The Chair: Joe, you have 30 seconds.

Mr. Joe McGuire: That's fine, Mr. Chair.

The Chair: Paul Crête.

• 1700

[Translation]

Mr. Paul Crête: Good day, Minister. As you indicated, the changes contained in Bill C-2 cost some $500 million, I believe, of an annual surplus of $6 billion, which represents some 8% of the surplus. As has just been said, as far as the intensity rule goes, we are dealing with $250 million, namely about $11 per week for the individuals affected.

During the election campaign, the party in power undertook not to table Bill C-44 again, but to make major improvements to that bill. I could quote Mr. Coderre, Mr. Gagliano and the Prime Minister, who recognized that there were major gaps.

Are you willing to demonstrate openness with regard to Bill C-2, so that we can make major changes to the bill and deal with things such as, for example, eliminating discrimination towards young people and their access to the regime?

Only 45% of those who are unemployed qualify for employment insurance. As to the percentage of general benefits, for example, we could go from 55% to 60%.

In other words, instead of putting 8% of the annual surplus into the system—and the fund surplus already totals over $30 billion—would you be open to the prospect that Bill C-2 could include a whole series of other improvements which it does not currently contain?

Will witnesses who appear before the committee perhaps make proposals along these lines, or will they have to limit themselves to technical changes to what you are proposing within the bill, in spite of the fact that the Auditor General and the Chief Actuary have already stated that the surplus was exaggeratedly high?

[English]

Ms. Jane Stewart: Merci, Monsieur Crête.

I have a number of things in response to your question. First and foremost, I think what we have here is a balanced package of amendments. On the one hand it deals with looking at those few amendments from 1996 that are not working and not working well, and we want to deal with those. On the other hand it gives us the opportunity to respond to the standing committee and the Auditor General on the issue of premium rate setting. The vast majority of the amendments from 1996 are working and they're working well.

As you have the time to look at the monitoring assessment reports and to talk to your own constituents and beneficiaries, you'll see that the divisor rule is working. People are getting more work. You'll see that the family supplement, for example, is very effective at targeting low-income families and providing them with additional benefits.

Mr. Crête talks about young people. Of course, part of our original thinking was we wanted an employment insurance system that was not easy to get into. We don't want to start and perpetuate the dependency Canadians found to be inappropriate with the old system. We're very glad to see that the unemployment levels for young people are significantly lower now than they have been in the last decade. We have our youth employment strategy, which is now a permanent structure, so we can deal with young people in various ways.

In terms of eligibility, you talk about 45%, and you're talking about the BU ratio, Mr. Crête. That's a very broad measurement. It talks about full-time students who are not in the workforce and citizens who have not been attached to the workforce. It covers self-employed people who do not contribute to the employment insurance fund. Maybe a better way of looking at the coverage is to consider the 12 million Canadians who are paid employees. Should they need employment insurance benefits, 88% of them would be eligible.

Again, you talk specifically about changing the benefit level from 55% to 60%. I would remind you of the undertaking back in 1996 to really target low-income families and make sure they have access to a higher benefit.

So these are things that have been part and parcel of the consideration. For us what's important is, as we have said, to pass this piece of legislation, which was a commitment we made to the Canadian people, to get these changes in place, changes that are widely accepted and wanted by the public. I hope we can move the process along. But, indeed, the committee will look at the bill, hear witnesses, and decide what steps you want to take.

The Chair: Paul Crête.

[Translation]

Mr. Paul Crête: I would like the minister to answer my question in order to know whether she intends to leave the $6 billion surplus in the fund, as has been forecast for next year again. Is she open to improvements being presented by this committee, as was proposed, notably, by Mr. Coderre and Mr. Gagliano? Will the minister, yes or no, demonstrate a spirit of openness?

I'll give you an example. With regard to the intensity rule, we tabled a bill in 1998, because we were aware for some time of the effect that that had in the population. The government took some three years before reacting.

• 1705

The percentage of young people who qualify for benefits went from 98% to 24%. One in four young people can qualify now. As for women, the numbers went from 82% to 38%. Will the minister wait very long before making any changes to benefit these individuals? As we saw with the intensity rule, the evidence is clear.

In other areas as well, the evidence is clear. We don't need to wait for evaluations over the next five years. Is the minister ready to correct the situation right away, and to tell us whether if we have any arguments which would allow us to correct other aspects of the legislation, she will proceed, or will she tell us that it is impossible because she cannot make any changes to the spirit of the legislation?

Does this mean that she finds it acceptable, as Minister of Human Resources Development, that a $6 billion surplus will be added to the current $28 billion surplus?

[English]

The Chair: Minister, I have to say you have less than a minute.

Ms. Jane Stewart: Again, what I say is I believe we presented a balanced package of amendments. They are responsive to the issues Canadians have raised as well as to the research we have undertaken year to year in the department and through the commission. It's my view that the committee will reach its own conclusions after it hears from its witnesses. But I think we have a good bill, and I think you will find that your constituents are anxious to have the bill passed.

[Translation]

The Chair: Mr. Crête, you have had over six minutes. Be brief.

[English]

Mr. Paul Crête: Is the change to the contribution rate, which will now give control to the Minister of Finance rather than to the Employment Insurance Commission of Canada not a way to close the door to returning the money to the surplus so that it never again ends up in the employment insurance fund? Will that not be the consequence of the change being made to the contribution rate?

Ms. Jane Stewart: Are you going to give me more than five seconds on this one?

The Chair: It has to be very short, Minister. You could return to it later.

Ms. Jane Stewart: The honourable member is talking about the surplus. It's no secret that employment insurance premiums affect the government's bottom line positively and negatively. In 10 of the last 18 years there was a deficit, and the Government of Canada had to make its contributions because of the obligation under the act. With regard to the surplus, the Auditor General talks about it as being a notional surplus, and you know that to be the case. It's not a cash amount that's there. Indeed—

The Chair: Paul, I'm sure we can return to it.

Next is Diane St-Jacques, followed by Yvon Godin and Raymonde Folco.

[Translation]

Ms. Diane St-Jacques (Shefford, Lib.): Mr. Chair, I would like to ask whether it would be possible for me to share my time with my colleague Jeannot Castonguay, given that we are running somewhat late, and to give an opportunity to the largest number of MPs to ask questions. Is that all right?

[English]

The Chair: You'd each have to be very short.

Ms. Diane St-Jacques: If I have time, I will come back.

The Chair: Okay.

[Translation]

Ms. Diane St-Jacques: One of the priorities of the government, as we saw in the Speech from the Throne, is of course children. Naturally, their welfare depends on the welfare of their parents. Therefore, what I would like to know about the measures that you are proposing is how they will ensure that we reach this objective. How will we truly be able to come to the assistance of parents?

[English]

Ms. Jane Stewart: First and foremost, I think we all agree that the most useful thing for parents to have is a job. The honourable member herself comes from New Brunswick. I was pleased to see the headlines yesterday saying that January was one of the strongest months in history for job creation in New Brunswick. That's very positive.

I think in the context of the overall strategy, we view employment insurance as being one tool to be there when those who are working find themselves between jobs, and the indications are that the vast majority of those who are eligible for employment insurance are able to get it.

In the context of the amendments here, we are recognizing, particularly with the repayment strategy, the clawback aspect, that it's probably not appropriate for us to claw back from those who are taking maternity or parental benefits or those who are sick. So we're changing that, and I think that will have a big impact.

As well we're looking at the re-entrant strategy. For us to suggest that mothers, for example, who have been away on maternity leave and parental leave were not attached to the workplace is incorrect. They had to have significant attachment to the workplace, 700 hours, not 600 hours, to be eligible for the special benefits. So that's why in this series of amendments, Madame St-Jacques, we are changing the re-entrant rules and having a longer look-back period to recognize that. That's all in the context of family—

The Chair: You have only 30 seconds.

• 1710

Ms. Diane St-Jacques: That's okay.

[Translation]

The Chair: Jeannot Castonguay.

Mr. Jeannot Castonguay (Madawaska—Restigouche, Lib.): I want to come back to the fact that the changes presented today are perhaps the last changes that we will be able to make.

On our side, currently, there is a committee which is working very hard and which will no doubt present recommendations. I spoke to the chair of that committee last weekend and he told me that the committee was holding public consultations and that they were not done with their deliberations. What is of concern to him, given the bill currently under study, is whether this is their last opportunity to make any changes. These people are concerned. They have concerns, and so do I. Are our concerns justified?

[English]

Ms. Jane Stewart: There are a number of things. First of all, let me recognize that we do have committees, such as the one working in your community, Monsieur Castonguay, that are helping us build new strategies and diversify the economy. They're very important to the work of the citizens they represent in the communities where they are found.

As we look at our track record, as I mentioned in my commentary, we have made changes to the employment insurance system over the last number of years. We are again making changes through this bill. We are ensuring that, as a result of this legislation, the monitoring and assessment of employment insurance and its impact on communities and individuals will continue to be undertaken. We will continue to make changes as appropriate and necessary.

Our strategy here is not to get into a tight spot as we have in the past, where we get a program that's out of step with what Canadians view as the right thing to be doing. Rather, we should on an ongoing basis monitor the impact of the Employment Insurance Act and its elements to make sure it continues to be consistent with what Canadians believe they want.

So in response to your question, I think that what we've got here is the right strategy. We're prepared to make these amendments now because the research is there to support them and because Canadians want them. We will continue to do so as the information comes forward, not the least of it from community groups such as your own.

[Translation]

The Chair: You have 30 seconds, Mr. Castonguay.

[English]

Mr. Jeannot Castonguay: I want to be able to go back to my community and assure them that it's not cast in cement. This is an ongoing process, and not only should we be able to look at it, but if we have to adjust and fine-tune it, we should be able to do so.

Mr. Yvon Godin (Acadie—Bathurst, NDP): Every election—

An hon. member: 2004.

Ms. Jane Stewart: I think it is very clear that one of the strengths of this bill is that it ensures that the strategy of continuous monitoring and assessment will become standard practice. It is available until the year 2006, and every year the commission will continue to review the impact and make recommendations as to where changes should be made.

Mr. Yvon Godin: Okay, thank you.

The Chair: Yvon Godin, Raymonde Folco, Greg Thompson, and then Georges Farrah.

[Translation]

Mr. Yvon Godin: Mr. Chairman, first of all, I would like to thank the minister for the small changes that have been made. The government always says that the opposition doesn't want to recognize these changes.

It was time for the intensity rule to hit the road. On this issue, the minister has my support. I also support the minister on the issue of clawbacks and I congratulate the minister for her position on this issue. Canadians want changes and they have good reasons for wanting to see these changes come about sooner rather than later. These rules were unacceptable.

The minister said that she has been to the regions. As far as I'm concerned, Minister, I have crossed the entire country. All Canadians, not only those in the Atlantic provinces and in the Acadian Peninsula, are suffering from the changes made to employment insurance.

For example, let's look at the intensity rule. The lowest common denominator is punitive. It is not the fault of those people who work in a given industry. The lowest common denominator is part of the things that this committee should be empowered to study and we should be able to make recommendations to the minister without waiting for the next elections. I am sure that my colleague on the other side, Mr. Castonguay, will say the same thing. We both share this problem.

Secondly, in calculating the eligibility period for employment insurance, you have to go back 52 weeks to calculate the number of hours, but to calculate the amount of money, you only go back 26 weeks.

When a woman worked and earned on average $300 to $400 a week, she ends up with benefits of $34. That doesn't make sense. That was not why the program was established and I don't believe that you want to punish people in this way, Minister. Therefore, little changes could be made, but these little changes would make a huge difference to these people. In Canada, there are no seasonal workers; there are seasonal jobs. In my region, that would include the fisheries, the forest industry, the tourism industry. You can't close all of that down. You just can't do that.

• 1715

Employment insurance was there to help those people. If you are saying that employment insurance wasn't intended for seasonal workers, then what other system existed for them? Name one. We in Acadia, in the Acadian Peninsula and in Bathurst, are losing profits to the tune of $69 million per year. All of the small and medium businesses lose money as well.

Another topic that I want to deal with quickly, is the black hole, the famous black hole. How do you expect a person to support themselves between February and May when the fishery season only opens in May? These people are thrown into a dark hole and the department is not doing anything for them.

I congratulate you for the changes that you have made, but it is not enough and workers are still hurting. You came here and you created a committee. This committee made recommendations and you adopted one: a meagre 5%. That small 5% will do some good, Minister. Eleven dollars per week will make a difference to people who have practically no money to put food on the table. Yes, it will do some good, but it is not enough.

These are the things that the committee really wants to look at: the real problems. We want to be able to attack the real problems. I would even invite the committee to come into my region. The committee should come and see the men and women who are suffering and the children who have nothing to eat before going to school and nothing to wear to go to school. Let them come and see these people. That's where things hurt, Minister and that is why Doug Young was defeated. You know just to what extent it hurt. That is why Dingwall, in Cape Breton, also lost his seat.

During the election campaign, the Prime Minister himself said that changes would be made. He recognized that the government hurt people. You have hurt people throughout the country, not only people in the Atlantic provinces.

I would like to have an answer to my questions. This is a topic which in my region has hurt people. And it's not fair for the government to hurt people. This program belongs to the workers and to the employers.

[English]

The Chair: Minister, I have to warn you that that was four minutes, so you have about a minute, and some flexibility of reply.

Ms. Jane Stewart: Very good.

I appreciate the strength of the honourable member's presentation here. I've had the advantage of travelling to his riding and speaking with his constituents and seeing first hand the life in the Acadian peninsula and the interests there. I know he will agree with me that his constituents say time and again that they don't want to live on employment insurance. They want to work. That's why we've been working in the community, increasing the number of opportunities, and we'll continue to do that. I appreciate that the honourable member is supporting us in that and helping his constituents in that regard.

In the context, though, of some of the specific undertakings, we are looking at the divisor rule. We are following it. What we do see in actual fact—and it's in the monitoring and assessment report—is that it's working. While it was designed to strengthen the labour force attachment by encouraging claimants to get more work, it's doing that, and only about 2% of all claimants failed to work the extra two weeks. So it's working. And it isn't a punitive one. It is encouraging people to get more work. The indications are from the research that by and large that's the case.

Similarly, in terms of our research we find that the number of gappers has been reduced in number since the employment insurance reform.

So I just want to convey to the honourable member that in fact we're following all these issues. When we find the results that we are finding, we see that the vast majority of the amendments are working.

Again, specifically with your suggestion about going back to looking at the full year, the 52 weeks, to find work attachment, the whole logic is that we want to encourage a system where all available work is taken, and that's why the look-back is 26 weeks. That too is working.

The Chair: Just a comment—

Mr. Yvon Godin: It's not true. It's not working. If you look at the 26 weeks... how can it work when a woman only gets a $34 paycheque for a week and the average of her work was $300? How can you say it's working? It's not working.

The Chair: Thank you.

Raymonde Folco, Greg Thompson, Georges Farrah, and Carol Skelton.

[Translation]

Ms. Raymonde Folco (Laval West, Lib.): Welcome to our meeting, Madam Minister. This is the first this year and I hope it won't be the last.

I'm aware that, on several occasions, you have spoken to the fact that this bill will benefit not only the unemployed in the Atlantic provinces but also the jobless throughout Canada.

• 1720

I would appreciate it if you could give us a few figures for Quebec. Contrary to what one might think, Quebec is a province with a very high unemployment rate. This rate has dropped but in light of the economic slowdown in Quebec there is potential for it to rise again.

Could you give us a few figures for Quebec? What impact will the bill have on the changes affecting the labour force?

[English]

Ms. Jane Stewart: The amendments in Bill C-2 will apply right across the country, and they are going to have, I believe, a positive impact on the program in every part of the country.

With regard to the numbers, go ahead, Wilma, you have them.

Ms. Wilma Vreeswijk: With regard to Quebec and the intensity rule, the number of claims in Quebec that have been affected by the intensity rule, as reported in the monitoring assessment report, is approximately 226,000. These would be the claims that would benefit from the elimination of the intensity rule.

With regard to the clawback provision, the number of claims in Quebec that would be affected by adjustments to the clawback provision is about 750.

Ms. Raymonde Folco: It's 750?

Ms. Wilma Vreeswijk: I'm sorry, it's 750,000.

Ms. Raymonde Folco: Thank you.

The Chair: Next is Greg Thompson, followed by Georges Farrah, Carol Skelton, Judi Longfield, Monique Guay, and Alan Tonks.

Mr. Greg Thompson (New Brunswick Southwest, PC): Thank you, Mr. Chairman. I thank you for the strategic position next to the minister, which was probably more our doing with our small numbers in the House than your generosity.

The Chair: Don't underestimate yourself.

Mr. Greg Thompson: But it's nice to be here anyway, and we won't discount your generosity.

Madam Minister, it's nice to have you and your advisers with us. I do want to thank you, through your deputy, for getting back to me promptly on an issue that is very important in New Brunswick. It is not part of this bill, but maybe we can talk about that at a later date.

With regard to the EI rate, the EI actuary tells us that the rate could be as low as $1.75 and that we could sustain it at that level through the long term even if we had an economic downturn, which we're hoping we don't have, obviously. In fact, the actuary tells us that the rate could have been as low as $1.46 last year. I am concerned about that.

I am also concerned about the surplus. As we know, it's in general revenues. Your officials can correct me if I'm wrong on this, but there's still a notational entry in the books. It's still credited to this phantom EI account. It's my understanding that surplus still has to pay interest into the account, which in turn helps reduce the rate. So if we have a $35 billion surplus in that fund, the interest on that surplus helps keep the rate lower.

My concern is, Madam Minister, that with the stroke of a pen, in this bill—and I do support most of what is in the bill—you allow the Governor in Council to set the premium rates for the next two years. You suspend the role of the commission in its ability to set the rates. I'm uncomfortable with that.

The context in which I say that is the fund itself. With the stroke of a pen, by Order in Council that notational entry in the government books could eradicate that surplus, which I call a phantom surplus. When that happens, we will not have that surplus there to help keep rates lower. In other words, it will for all time be turned over to general revenues. It will not be credited to the fund, as it is today. In his report the Auditor General, as you well know, goes on in great detail in terms of the surplus in the fund and what he would like to see happen.

In terms of time, I'd better let you get on with your explanation of some of those points.

• 1725

Ms. Jane Stewart: There's a number there.

First, I will remind the honourable member that it was 1986, during the Tory government actually, when the Auditor General suggested that it was most appropriate for EI premiums to be considered as part of the general revenues, that the government had to come clear on the premiums that were going in and also the liabilities that may accrue. As I mentioned earlier, in 10 of the last 18 years there was not a surplus but a deficit in the notional account.

Mr. Greg Thompson: And we don't want that to happen, obviously.

Ms. Jane Stewart: That's right. By way of description, the Auditor General most recently talked about the EI accounting this way:

...the EI Account as such really is a tracking account - to keep track of how much money has come in and how much money has gone out.

So that's the concept of a notional account. It's not a cash account that is set aside. I would note that—

Mr. Greg Thompson: Minister, I don't want to interrupt, but the question I really want answered is this. Can the government eradicate that? The interest then would be suspended on that account, which now helps keep the rates lower. In other words, by the stroke of a pen, can the cabinet do that, as they did with the commission, for example?

Ms. Jane Stewart: In the context of this bill, what we are doing is essentially saying that we believe it's going to take two years for us to analyse, consult, and do what the Auditor General wants us to do, which is to review the premium rate setting process and get an appropriate solution to that. What we want to do is ensure that there's predictability and stability in the account, and I'd remind the honourable member that—

Mr. Greg Thompson: But your own actuary tells us that is there now, Madam Minister.

Ms. Jane Stewart: I would also remind you that the premium rate has been a unanimous decision of the commissioners. It's not the government. It was a unanimous decision of the commissioners, and every year—

Mr. Greg Thompson: But why would you eradicate their ability to do that if it was unanimous?

Ms. Jane Stewart: Because we're responding—

Mr. Greg Thompson: Now you're going back on... You understand the logic of my question. You just eliminate their ability to do that. You're saying they support you in terms of what the government wanted to do, but now you're eradicating their ability to do that.

Ms. Jane Stewart: You see, the direction that has come forward, not only from the Standing Committee on Finance but from the Auditor General, is that we don't know that this is the right approach to setting the premiums, the approach that we take now where the commissioners go out and consult and make their—

Mr. Greg Thompson: But it wouldn't be a political move to eradicate their ability to set the rate?

Ms. Jane Stewart: That's not what we're doing. Essentially in this bill what we're doing is responding to the Auditor General's recommendation that we look at how we set the premium rate. So we're going to do that, if the bill is passed, and—

Mr. Greg Thompson: Your choice of words is very interesting.

Ms. Jane Stewart: —at the same time we will continue, I think, to manage very effectively, as we have in the past, which is to reduce the premium rate every year, which was a little different from the honourable member's—

Mr. Greg Thompson: Just for the record, Mr. Chairman—

The Chair: Greg, that's it.

Mr. Greg Thompson: —we don't want to go back to the bad old days where—

Ms. Jane Stewart: I agree.

The Chair: If we speed up we may get back to you, Greg.

Georges Farrah and then Carol Skelton.

[Translation]

Mr. Georges Farrah (Bonaventure—Gaspé—Îles-de-la- Madeleine—Pabok, Lib.): Good afternoon, Madam Minister. I'd like to welcome you to this committee.

First off, you visited the Gaspé region last year and while there you became aware of some aspects of our reality. Among other things, you responded to some requests on the issue of dividing up the region in such a way as to ensure that the cities did not have too much weighting in the calculation formula, which led to a cut in benefits. I'd like to thank you for listening to the people.

However, I have a responsibility as both an elected official and a member of Parliament from a region which is experiencing an absolutely terrible crisis. Unfortunately, the 1996 reforms severely hurt this region. There is one very simple reason for this. The reform cut eligibility to employment insurance and the economy was not in sufficiently strong shape to cover these people. This is the problem that we are facing and the government has a social responsibility in this regard. This legislation is a social safety net and it must...

You have stated that the best way to solve the unemployment problem is to create jobs. We all agree on that. The problem is that people can't wait. We are continuing to work very hard to create jobs but you have to understand that people are suffering greatly. I know that you are aware of this, since you visited our region.

A pulp and paper mill at Chandler has closed down, with the loss of 300 direct jobs and almost 1,000 indirect jobs. These are very bleak times. People are living on seasonal work, such as fishing, forestry, and tourism. Consequently, these people see no light at the end of the tunnel. Some people have committed suicide because they were unable to support their families. The reality is very stark and I would be remiss as a representative of my constituents if I did not mention it, Madam Minister.

The problem we have is that there has been economic growth throughout Canada but my region has not tapped into this growth. Moreover, an economic slowdown is on the horizon. How do you expect these people to offset this slowdown in terms of jobs?

• 1730

In all sincerity, I'd like to say to you that we have to understand the reality of things. I'm aware that there's an on- going process of adjustment, but the situation is pressing. Madam Minister, people can't wait. What I'm asking you to do is to make the government understand that people are suffering and that the bill must be amended. I'm aware that there will be a fiscal impact and that there is accountability involved here. However, you must understand that people are suffering. People see no way out of their problems. If I were to tell you otherwise, Madam Minister, I would not be doing my job as a member of Parliament.

I have a slightly more specific question that I would like to ask you. You can perhaps reply in your commentary, but I think it's important that we remember that there are groups who will come to meet us. We will listen to what they have to say, and they will be representing the opinions of whole regions. We must remember that we have to be open to their opinions.

Now, turning to more technical issues, we know that the lowest common denominator 14 significantly affects the level of benefits. What would it cost the government to reduce the lowest common denominator by one point? For example, what would be the extra cost to the government if the lowest common denominator were reduced from 14 to 13, 13 to 12 or from 12 to 11?

[English]

The Chair: Minister.

Ms. Jane Stewart: The response to the specific question as to the value or the cost of a—

Ms. Wilma Vreeswijk: One point decline.

Ms. Jane Stewart: Yes.

Ms. Wilma Vreeswijk: We would have to return with estimates on the cost.

The Chair: If you can send that to the committee, I will see that the members get it.

Ms. Jane Stewart: Then we'll do that.

Again, in recognition of the intervention of the honourable member—I have again had the pleasure of working with him in the Gaspé—there's no doubt in my mind about the efforts we have to continue to make, recognizing the reality that some parts of Canada have not had the same economic buoyancy as others.

I'm very glad to see the committee in your area working hard, Monsieur Farrah. I know, in communications with our colleague the minister responsible for economic development in the province of Quebec, we are seriously attending to the issues there. And we'll continue to do so, because it is a real issue.

[Translation]

Mr. Georges Farrah: In conclusion, I'd like to say to you in all sincerity that this is a cry from the heart. We have to remember that there are people who are experiencing very hard times and that it is our responsibility, as the elected representatives of the people, to fulfil our social duty. We have the means to do this. We must remember that people are experiencing hardship and they can't wait, Madam Minister. Thank you.

[English]

The Chair: It's Carol Skelton, Judi Longfield, Monique Guay, and then Alan Tonks.

Ms. Carol Skelton (Saskatoon—Rosetown—Biggar, Canadian Alliance): Madam Minister, you have stated that some of the intended EI reforms have not achieved their 1996 policy objectives. What studies were conducted by the government, and will you table them?

Also you stated that statistics were gathered. Will you table those statistics for us, please?

Also what programs are you monitoring? What number of claimants have received EI? What number of claimants stay in the system?

Thank you.

Ms. Jane Stewart: Welcome to the new member—

Ms. Carol Skelton: Thank you.

Ms. Jane Stewart: —and to the process of legislation.

With respect to the reports we review on an annual basis that look at every single aspect of the 1996 amendments in the Employment Insurance Act overall, there's an annual report made to me by the commissioners. The commission includes a representative of employers, of employees, and the government. The reports are made public. We just made the last one public about three weeks ago. It's this. The details and data are all there, and you can follow it year by year.

This bill, as you know, will, if passed, ensure that those reports continue to be undertaken. I think it's a reflection of how we want to manage programming as a government, not, as I say, with a big bang approach, but monitoring the outcomes of change and interventions on an ongoing basis, so that we can respond to the needs of Canadians in that regard.

In terms of actual numbers—Wilma.

Ms. Wilma Vreeswijk: The total number of claims in 1999-2000 in the monitoring assessment report was 1.7 million. Then as to the frequent claimants—I believe you asked about those as well—

Ms. Carol Skelton: Yes.

Ms. Wilma Vreeswijk: —in 1999-2000, there were 548,695 frequent claims.

• 1735

Ms. Jane Stewart: I think the important message there is that despite the numbers in terms of percentage, the overall number of those receiving benefits has declined as the economy improves, and that's great. But in terms of actual percentage, the number of frequent claimants remains the same, at about 40% of the overall claimants.

Ms. Carol Skelton: Okay.

The Chair: Carol, you have plenty of time.

Ms. Carol Skelton: No.

The Chair: If I may, should any colleagues not have the most recent report, the committee can provide one. Just let me know, though most members have them.

Carol?

Ms. Carol Skelton: Do you have any numbers on how many claimants fall through the cracks in the system? Have you looked at that?

Ms. Jane Stewart: One way of responding to that would be to look at those who would be eligible. We're concerned with paid employees—the employment insurance system is there for Canadians who are working in paid employment—and at the moment there are some 12 million, of whom 88% would be eligible for benefits if they needed them.

Ms. Val Meredith: Can I just—

The Chair: Yes, Val Meredith. You have about a minute and a half.

Ms. Val Meredith: In those numbers you're giving us, how do you monitor the individuals who qualified and were on EI but are no longer claimants because they've run out of benefits and are not fully employed? Is there a way you have of monitoring those individuals who might, in your statistics, look as if they're a negative factor now that they're no longer claimants but who are also no longer employed? Do you have some way of monitoring that as well?

Ms. Jane Stewart: Yes, indeed, we do. And Gord, you might want to comment on that.

One of the important results of the recent monitoring assessment report came because we looked at claimants and asked how many were maximizing their benefits, that is, how many were taking the full benefit and therefore becoming gappers or whatever. What we found is that two-thirds of the claimants don't utilize the full benefit period. This brings us back to the question of number of weeks and again suggests to us that the system is working as it should. People aren't requiring the full benefit but are getting back to work.

But there are maybe some other things my colleagues would want to comment on, in terms of data management.

The Chair: Next will be Judi Longfield, Monique Guay, Alan Tonks, Yvon Godin, and Anita Neville.

Mrs. Judi Longfield (Whitby—Ajax, Lib.): Thank you.

It's good to see you back, Minister. I want to pick up on a point Ms. Skelton was talking about, and that has to do with the monitoring and assessment. Currently, the legislation states that it has to be done by December 31. Clause 2 says no later than March 31 of the year following. Why the lag time? Given that it's going to take a while to table the report, we're not going to see it until maybe May or June, and that makes a long time to be looking back. Why the change in the legislation?

Mr. Jane Stewart: I appreciate the concern registered by the honourable member. The reason we're proposing a longer period of time for the collection of data after every year is that we now have a very strong partnership with the provinces and territories. The honourable member will know that we have devolved a lot of part II moneys to the provinces and territories through labour market agreements, and the provinces have asked for more time to collect their data and return it to us. So it's in keeping with our promises.

Mrs. Judi Longfield: Okay. So if we get it no later than March 31, when might we reasonably expect to see it tabled in the House so we can look at it?

Ms. Jane Stewart: I think the requirement is for 30 sitting days after I receive it. Is that correct?

Mrs. Judi Longfield: Thirty sitting days.

Ms. Jane Stewart: Yes.

Mrs. Judi Longfield: Okay, so in May-June?

Ms. Jane Stewart: Yes.

Mrs. Judi Longfield: Okay.

Ms. Jane Stewart: But again, as I say, it was out of deference to the provinces, who are managing—

Mrs. Judi Longfield: Okay. The other question I have relates to the fact that normally when we make changes to a bill, they're not retroactive: new claims, new rules; old claims, old rules. Why are we retroactive on this?

• 1740

Ms. Jane Stewart: In this particular bill, it's really because Canadians want the amendments made. We had hoped to have them done. We introduced the bill last fall and hoped to have them completed then. With the call of the election, the bill hadn't been through the full legislative process, so we felt the wise thing to do was to include in the legislation a retroactive clause.

Mrs. Judi Longfield: What's the cost?

Ms. Jane Stewart: I don't know, the investment of the...

Mrs. Judi Longfield: The cost of retroactivity.

Ms. Wilma Vreeswijk: On the income benefits, the costs are the same. In terms of the calculations, the costs are all done at maturity, so it is not anticipated that there will be additional costs at maturity.

Mrs. Judi Longfield: Thank you.

The Chair: Monique Guay, Alan Tonks, Yvon Godin, Anita Neville.

[Translation]

Ms. Monique Guay (Laurentides, BQ): Good afternoon, Madam Minister.

First off, I'd like to clarify one thing. I have been a member of Parliament for seven years and, during this time, I have dealt with various unemployed people in my riding. People come to see us quite simply because they have problems. These are not people who want to defraud the system, but rather people who are in need. They have paid employment insurance contributions and this insurance should be available to them. I pay insurance premiums on my home, and therefore, if something untoward should happen, I'm covered and I can call on my insurance. Consequently, it's quite natural that people should expect to be eligible for insurance. However,, let's be clear on one thing: this insurance is becoming increasingly unaccessible.

The minister was saying that unemployment insurance should not be easy to get. I'm sorry, we're not talking about easy access to insurance here. I don't think that employment insurance should be abused and I also do not think that it is. This insurance should not be punitive. I do not see why people should be penalized just for applying for employment insurance. This insurance is designed to give them a helping hand until they find another job.

Madam Minister, I think we have to be aware of one thing here. Even my Liberal colleagues have concerns and have commented on this issue. I hope that you will not ignore them. They are concerned for those people in their ridings and their regions. This bill is not politically motivated. It must be here to protect people.

It is quite outrageous that, in this great country of Canada, one child in five lives below the poverty line. It is also quite outrageous that the eligibility of women for employment insurance is restricted. Madam Minister, we have the figures before us today. We can give them to you if you need them. It's outrageous that young people are not eligible for employment insurance. We have all seen this.

It's quite unacceptable that the program does not extend to self-employed people. We have been asking for this type of coverage for a long time. There are increasing numbers of self-employed workers. This is the reality of the new millennium. These people are making demands. There is an association of self-employed workers. These people will probably come to testify at this committee.

I'm seeing a lack of co-operation here. The four opposition parties have asked for the bill to be split to enable us to solve the problems. Earlier, in the House, we saw the government's reaction to this demand. It refused. We in the Bloc Québécois have a list of 35 witnesses who are prepared to come and testify before this committee. We have a comprehensive list. The people on this list are very interested in this issue because they are directly concerned.

I have only one question to ask the minister. For years now, the Bloc—I think that Peter has known me for a long time—has done comprehensive, substantive work in all the committees and in the study of bills that it has been involved in. I would like to know whether the minister will agree to consider the briefs presented by the various groups that will come to testify at this committee. I'm not talking about party politics here. Women's groups and young people's groups will come. We will even hear testimony from associations of unemployed people. In the past, these associations did not exist. They have only come into existence since these serious problems began. In the Magdalen Islands, an association for the unemployed was created because of severe problems there.

Will the minister agree to make the major changes to the bill that will correct the problems that people are currently experiencing? Can she confirm for us that these people will not be travelling for nothing? We know full well that when a bill is being studied by a committee, it will not be coming back the following year. It is quite clear that this bill will not be revisited for at least five years and that we won't be hearing about it again.

I would like to know if the minister is ready to accept this. We, as members of Parliament, are prepared to do our work. I think that all of the members present here are prepared to do their job, if she is truly ready to make significant changes to the bill.

• 1745

Does the minister also intend on considering the Auditor General's report? These are not silly comments. This is a specialist that said this. This is an auditor who works for the community and for the people. Does the minister intend to take this into account in the bill?

The Chair: Monique, there is only one minute left for the answer.

[English]

Ms. Jane Stewart: Perhaps I'll go in reverse order. Indeed the bill is directly responsive to the recommendations of the Auditor General in looking at the premium rate setting process. So that's there. I would suspect, if it's so important to the honourable member, she'd want to get on with it and pass the bill.

When we look at the question of who is covered, again the honourable member makes reference to independent workers, and you will hear from some people who say they want to be in. You'll hear from the CFIB, who say the majority of their membership don't want to be in. They just did a survey, and 80% said they don't want to be paying to employment insurance programs. But you'll hear from witnesses and make your own conclusions.

I think, again, when the honourable member makes reference to the issue of poverty—and indeed I am very glad to see in the government's Speech from the Throne that the focus on the unacceptable levels of poverty in Canada is clearly identified. But I don't believe it's going to be the Employment Insurance Act that is the only solution there.

Indeed, if we look at the EI Act, our decision in 1996 to make sure that low-income families, most of them led by women, have access to an 80% benefit, I believe was the right thing to do, and the results are bearing that out. I think our decision to expand the national child benefit has an extremely important role to play in dealing with the issue of poverty.

I would just ask the table, as you hear from witnesses and hear the challenges that will be set before you, to think not only of the Employment Insurance Act, but of all the other aspects that have to be developed, are developed, have to continue to be supported, to deal with the large question of poverty. Because we don't want to have, and I don't think it's possible to have, all the solutions found within the Employment Insurance Act alone.

The Chair: Alan Tonks, and then Yvon Godin, and then Anita Neville.

Mr. Alan Tonks (York South—Weston, Lib.): I'm trying to understand the intensity rule a little bit, and its application, from the overview that was given by Mr. Godin. I want to approach it from the aspect of equity.

In seasonal employment situations, in particular in the fisheries industry, is there not an inherent flaw in the application of the intensity formula, capped as it is? Is it not inequitable, inasmuch as in those industries they are going to run up to the 5% cap without any question? Do you not see that's an inherent flaw?

I do understand that you're not looking at EI as an income supplement or a guaranteed annual wage, or anything related to that. But I want to understand the application and where the government was coming from in regard to applying the intensity rule.

Ms. Jane Stewart: It was introduced in 1996 specifically with the intention of reducing the number of frequent claims. We're finding it is not doing that job. What we're finding in the context of seasonal workers is that the percentage of frequent claimants who are seasonal workers remains at the same level as before. What this says is that the feeling among Canadians that this is a punitive measure is being borne out by experience, and so that's why we're changing the undertaking there. That's why we're eliminating the intensity rule.

That said, we must continue to focus on parts of Canada where, as we've said before, the economic buoyancy is not as clear as in other parts of the country. I applaud the community groups who were there looking at options, working hard to develop them, with the provinces, who we have to partner with in this regard, who have certain levers that come through part II funding, but other investments too. And the challenge that we have is to work together to diversify economies at the local level.

But specifically with regard to the question of intensity, we found it just wasn't having the impact that we had hoped. When it comes to seasonal workers, you're right, without options they would continue to be frequent claimants despite this aspect.

• 1750

The Chair: I will go to Yvon Godin. We're getting close to our deadline, folks. Anita Neville has yet to have her turn, and Greg Thompson is entitled to another turn, if we can do it. Then I'll try to get somebody else on if I can. So it's Yvon Godin and then Anita Neville.

[Translation]

Mr. Yvon Godin: For your information, this year, there are 512 people who will be living in the black hole. This is the information that I have just received from the Bathurst office: 512 people.

When you spoke of the lowest common denominator of 14, you said that there were fewer people falling into this category. Let's be honest. The government is subsidizing its own projects to provide these people with 14 weeks. It's artificial, because fishing, as we know, only lasts approximately 10 weeks, sometimes 12. I want my objection to stand on the record, Madam Minister, because the reality of the situation is completely different.

Another important topic that I want to touch on, and which has not been discussed, is phase 2, training. Before, tradespersons who went to a community college, for example, could access their money immediately without being penalized. Now there is a two-week wait. They lose two weeks of salary when they go to a community college. Why should we be punishing them in this way? In my opinion, it makes no sense, because it goes against the intent of the Employment Insurance Act, which is to encourage people to work and to provide them with additional training.

For example, tradespersons who go to a community college have a two-week waiting period during which time they may not receive benefits. This is really punitive, all the more so because these people are not abusing the system. Often, it's the company that hired them which is changing its industrial operations, and they need additional training. These people then lose two weeks of salary. This is why they are not interested in training.

There was also a recommendation on this. The Member for Mississauga even said in the House that he supported us. A number of Liberal members stood up and said that it did not make sense. Our tradespeople are being penalized when they should not be. I would like, Madam Minister, an answer on this.

[English]

Ms. Jane Stewart: With regard to the honourable member's reference to the gappers, let me put it in this context. The Employment Insurance Act applies across the country, and what we're trying to do with that act is make it as responsive as possible to Canada. There are places where we have challenges. When I give you the statistics that say overall the number of gappers has been reduced, that's true. When I say overall the divisor rule is working and the vast majority of Canadians are finding those two weeks, that is true.

Rather than try to make an act responsive to specific challenges, like we find in the Acadian peninsula or in the Gaspé, it's wiser for us to try to resolve the issue of work opportunities at the local level.

Mr. Yvon Godin: For five years—

Ms. Jane Stewart: But to change an act to respond—

Mr. Yvon Godin: —it didn't work. After five years we have people who are still in the gap and have nothing coming in as an income.

Ms. Jane Stewart: But if we look at—

Mr. Yvon Godin: It's nice to stand back here in Ottawa, and it's nice for people who work 12 months a year and have their paycheque, but what do we do? I understand, and I will work my heart right out 24 hours a day to have our people go to work. But they don't decide on Monday if they have a job or not. The employers tell them, I don't need your services next week.

[Translation]

The Chair: The chair is still here.

[English]

Mr. Yvon Godin: Do you understand?

[Translation]

The Chair: Yes. I understand. That is excellent.

[English]

Mr. Yvon Godin: You tell that to the minister, because it's very important.

[Translation]

The Chair: You have learned a lot.

Mr. Yvon Godin: I simply want to finish what I was saying.

[English]

The Chair: Go ahead.

Mr. Yvon Godin: I just want to finish on this. The more the economy is getting better, the more punitive it is because then they are only allowed to have employment insurance for 18 weeks. We saw what happened in your region. You know how everybody got upset in the west part and from the south to the north of New Brunswick when we changed the zoning. It's not working. That's why I demand and I'm pleading with you... Do you want me to get down on my knees? For the working people your system doesn't work. Give us the opportunity and the tools so that we can do some work here to resolve some of the problems on an issue that is very important for those people.

The Chair: I say to all colleagues please address your remarks through the chair. You have about a minute.

Mr. Yvon Godin: I was doing that through the chair.

The Chair: I know you were, Yvon.

Madam Minister.

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Ms. Jane Stewart: But again, in reality—

Mr. Yvon Godin: That is the reality I'm talking about.

Ms. Jane Stewart: —the employment insurance program is not going to solve all the challenges we face. We have so much more to do.

The honourable member will know that the number of jobs available in the Acadian peninsula has increased considerably since he was elected the first time. I identify the headline in the newspaper in New Brunswick that said New Brunswick had a record number of jobs created in the province in the month of January.

I recognize—and I hope the honourable member will also recognize—that improving the skills of all Canadians is a priority for all of us. In the Speech from the Throne the Government of Canada identified that as being an important national undertaking.

In the context of providing opportunities for individuals community by community, it is a shared responsibility of the provinces, the Government of Canada, the individual communities, and the individuals. To my way of thinking, saying to citizens that their only solution is employment insurance is not appropriate.

Mr. Yvon Godin: We're not saying that.

Ms. Jane Stewart: The employment insurance system is there. It does respond by and large to the needs of Canadians.

Where there are regional challenges, we have to set our mind on fixing them. I don't think the honourable member would want to say to his constituents that their only option is employment insurance.

Mr. Yvon Godin: We never said that, and you know that.

Ms. Jane Stewart: Then we agree.

The Chair: Next is Anita Neville.

Mr. Yvon Godin: The Prime Minister himself said let's attack the economy and then the people will go to—

The Chair: No, Yvon. We have to wind it up.

[Translation]

You have said enough.

[English]

Next is Anita and then Greg. We have to wind it up, so I think you two should be very brief. I'm going to go to Anita and Greg, and then we'll finish.

Ms. Anita Neville (Winnipeg South Centre, Lib.): Thank you, Mr. Chair. Through you I will be very brief.

As someone new to this forum, I'm enjoying the discussion and the learning that's going on, and I thank you, Madam Minister, for the information.

One thing I wanted a little clarity on is you spoke earlier about the premium rate setting process that will take place after the bill is passed. Can you elaborate a little bit on what that process will or will not be.

Ms. Jane Stewart: Yes. The Department of Finance will take the lead on this. They'll prepare a paper on the issue, and they will consult broadly with Canadians, commissioners, and interested parties. Then out of that review recommendations will be brought forward. The changes that need to be made will be made. They may include legislative changes, I'm not sure. If that's the case, it takes considerable time, so that's why the two-year period was identified. It will be a process led by the Department of Finance and supported by our department, but it will engage interested parties in what is a very important undertaking, which is the rate setting of premiums.

Ms. Anita Neville: Your expectation is that it will take the two-year period.

Ms. Jane Stewart: We feel we can do it within that timeframe, but it's not going to be an easy process.

Ms. Anita Neville: Okay. Thank you.

The Chair: Next is Greg Thompson, briefly.

Mr. Greg Thompson: Thank you, Mr. Chairman, for your generosity.

Madam Minister, we're probably going to disagree on the suspension of the ability of the commission to set the rates.

But I'm stuck on this idea of the surplus. It's probably more my fault than yours and your officials, but I didn't get an answer in terms of this surplus and the notational or otherwise bookkeeping entry that allows interest to be paid into the EI fund, which in turn helps reduce the rate. Am I right in believing that the government, that is, the cabinet by Order in Council, can eradicate that? In other words, it can eliminate that entry so that in fact we'd no longer have a notational entry in the books and we'd no longer have that interest in the fund that in turn helps to reduce the rates.

Ms. Jane Stewart: No, we can't by the stroke of a pen do that. It would take legislation, so don't worry.

Mr. Greg Thompson: But the government does have the ability to do it.

Ms. Jane Stewart: We don't. It would require legislation because we are legislated to account.

Mr. Greg Thompson: You're absolutely certain it cannot be done by Order in Council.

Ms. Jane Stewart: Well, I am, unless Mr. DeVries wants to correct me.

The Chair: Colleagues, before I thank our witnesses, I'd like to say something to our new members of Parliament, those who are new to the committee, and the people watching. This was a shorter meeting than usual, so that accounts partly for my emphasis on time. But the other thing is this is an 18-person committee. It's larger than the normal committees on Parliament Hill, and if we're going to be fair to all 18 members, we have to keep the thing moving. That was the reason for my emphasis on time.

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Second, I repeat, I need the list of witnesses. I need the names for the steering committee. Our meeting tomorrow begins after Mr. Blair's presentation. I would be most grateful if you could get there as quickly as possible.

It is my intention that by tomorrow we will have decided when the steering committee will meet late on Monday. It's going to be late on Monday, at the request of members.

Greg Thompson.

Mr. Greg Thompson: I have a very quick point, Mr. Chairman, with your generosity. Because the officials are at the table, could they tell us, the committee, how much interest was paid into the—

The Chair: No. No. No, Greg. No, they can't.

I want to thank the honourable—

Mr. Greg Thompson: Mr. Chairman, no, they can't, or you don't allow them to?

The Chair: No. You can ask them individually. I'm sure they'll give it to you.

Mr. Greg Thompson: This is a point of order.

The Chair: You ask me a point of order. I had concluded that part of the meeting. I'm sure that sort of information can be gathered. If the officials would take note of it...

Colleagues, I want to thank the Honourable Jane Stewart. I want to thank the deputy, Claire Morris, and the other representatives from HRDC. We always appreciate having you here, and we're looking forward to working on this very important legislation.

Colleagues, the meeting is adjourned until tomorrow at 11:30 in room 269 West Block.