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37th PARLIAMENT, 3rd SESSION

Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities

EVIDENCE

CONTENTS

Thursday, May 6, 2004

0905

The Chair (Mrs. Judi Longfield (Whitby—Ajax, Lib.))

Mr. Michael Atkinson (President, Canadian Construction Association)

Mr. Dennis Ryan (Director, Industry Human Resources, Canadian Construction Association)

Mr. Michael Atkinson

0910

Mr. Dennis Ryan

0915

Mr. Michael Atkinson

The Chair

Mr. Gilles Taillon (President, Conseil du patronat du Québec)

0920

The Chair

Mrs. Joyce Reynolds (Senior Vice-President, Government Affairs, Canadian Restaurant and Foodservices Association)

0925

The Chair

Mr. Peter Woolford (Vice-President, Policy Development and Research, Retail Council of Canada)

Mr. Yvon Godin (Acadie—Bathurst, NDP)

Mr. Peter Woolford

0930

The Chair

Hon. Eleni Bakopanos (Ahuntsic, Lib.)

Mr. Peter Woolford

0935

Hon. Eleni Bakopanos

Mr. Peter Woolford

The Chair

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, CPC)

Mr. Peter Woolford

The Chair

Mr. Michael Atkinson

Mrs. Carol Skelton

Mr. Michael Atkinson

Mrs. Carol Skelton

Mrs. Joyce Reynolds

The Chair

Mrs. Joyce Reynolds

Mr. Gilles Taillon

0940

Mrs. Carol Skelton

Mr. Gilles Taillon

Mrs. Carol Skelton

Mr. Michael Atkinson

Mrs. Carol Skelton

The Chair

Hon. Eleni Bakopanos

0945

The Chair

Mr. Gilles Taillon

The Chair

Mr. Peter Woolford

The Chair

Mrs. Joyce Reynolds

Mr. Michael Atkinson

0950

The Chair

Hon. Eleni Bakopanos

Mr. Michael Atkinson

Hon. Eleni Bakopanos

The Chair

Mr. Gilles Taillon

Hon. Eleni Bakopanos

Mr. Gilles Taillon

The Chair

Mr. Peter Woolford

0955

The Chair

Mr. Yvon Godin

1000

Mr. Michael Atkinson

The Chair

Mr. Gilles Taillon

Mr. Yvon Godin

The Chair

Mr. Yvon Godin

The Chair

Mr. Yvon Godin

The Chair

Mr. Gilles Taillon

Mr. Yvon Godin

Mr. Gilles Taillon

1005

Mr. Yvon Godin

The Chair

Mrs. Joyce Reynolds

The Chair

Mr. Eugène Bellemare (Ottawa—Orléans, Lib.)

1010

Mr. Michael Atkinson

Mr. Eugène Bellemare

The Chair

Mr. Eugène Bellemare

Mr. Michael Atkinson

The Chair

Mr. Peter Woolford

1015

The Chair

Mrs. Joyce Reynolds

The Chair

Mr. Eugène Bellemare

Mr. Peter Woolford

Mrs. Joyce Reynolds

Mr. Eugène Bellemare

Mr. Michael Atkinson

Mr. Eugène Bellemare

Mr. Gilles Taillon

Mr. Eugène Bellemare

The Chair

Mrs. Carol Skelton

1020

The Chair

Mr. Peter Woolford

Mrs. Carol Skelton

The Chair

Mrs. Joyce Reynolds

Mr. Michael Atkinson

Mrs. Carol Skelton

Mr. Gilles Taillon

Mrs. Carol Skelton

Mr. Gilles Taillon

The Chair

Mr. Peter Woolford

1025

The Chair

Mr. Peter Woolford

The Chair

Mrs. Joyce Reynolds

The Chair

Mrs. Joyce Reynolds

The Chair

Mrs. Joyce Reynolds

The Chair

Ms. Yolande Thibeault (Saint-Lambert, Lib.)

Mr. Peter Woolford

1030

Ms. Yolande Thibeault

Mr. Peter Woolford

Ms. Yolande Thibeault

Mr. Gilles Taillon

Ms. Yolande Thibeault

Mr. Gilles Taillon

Ms. Yolande Thibeault

Mr. Gilles Taillon

Ms. Yolande Thibeault

Mr. Gilles Taillon

Ms. Yolande Thibeault

The Chair

Mr. Yvon Godin

Mr. Peter Woolford

1035

Mr. Yvon Godin

Mr. Peter Woolford

Mr. Gilles Taillon

Mr. Yvon Godin

Mrs. Joyce Reynolds

Mr. Yvon Godin

Mrs. Joyce Reynolds

Mr. Yvon Godin

Mrs. Joyce Reynolds

Mr. Yvon Godin

1040

Mr. Michael Atkinson

The Chair

Mr. Yvon Godin

The Chair

Mr. Gilles Taillon

Mr. Yvon Godin

The Chair

Mrs. Joyce Reynolds

Mr. Yvon Godin

The Chair

Mrs. Carol Skelton

Mr. Dennis Ryan

1045

Mrs. Carol Skelton

The Chair

Mr. Peter Woolford

The Chair

Mr. Gilles Taillon

The Chair

Mr. Michael Atkinson

The Chair

Mr. Dennis Ryan

The Chair

Mrs. Joyce Reynolds

The Chair

Mr. Peter Woolford

The Chair

Mr. Peter Woolford

The Chair

CANADA

Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities

NUMBER 010

3rd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 6, 2004

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mrs. Judi Longfield (Whitby—Ajax, Lib.)): Good morning, ladies and gentlemen, and welcome to the tenth meeting of the Standing Committee on Human Resources, Skills Development, Social Development, and the Status of Persons with Disabilities.

This morning we're continuing with our review of “Beyond Bill C-2”, and we have with us witnesses from the Canadian Construction Association, the Conseil du patronat du Québec, the Canadian Restaurant and Foodservices Association, and the Retail Council of Canada. Gentlemen and lady, we are very pleased to have you here with us today.

I know the clerk has explained that you have between five and ten minutes to make initial opening remarks, and then those will be followed by a question and answer period.

I'm going to start with the Canadian Construction Association. Mr. Atkinson, if you would, introduce the person accompanying you and you can begin.

Thank you.

Mr. Michael Atkinson (President, Canadian Construction Association): Thank you, Madam Chair.

It's indeed a pleasure for the Canadian Construction Association to have this opportunity to present our views and recommendations on reforming the employment insurance system.

My name is Michael Atkinson, and I'm the president of the association, the full-time chief staff officer. With me today is Mr. Dennis Ryan; Mr. Ryan is the director of industry human resources at the association.

The Canadian Construction Association is the national voice of the non-residential construction industry. We represent some 20,000 individual firms located in every region of the country, and 95% of those firms are small businesses by anyone's definition. The total construction industry in Canada, including the residential sector, directly employs some 950,000 Canadians. Our industry is therefore a major contributor to and beneficiary of the current employment insurance program.

Because of the limited time allotted to us for our presentation this morning, we would like to concentrate on the items contained in recommendations 7 and 12 of the committee's report and to speak briefly to the need for mobility incentives in the act.

I would now like to call upon Mr. Ryan to introduce our first recommendation.

Mr. Dennis Ryan (Director, Industry Human Resources, Canadian Construction Association): The first recommendation we have for the committee is that a yearly basic exemption be introduced. CCA strongly supports recommendation number 7 of the committee's report, which recommends the implementation of a $3,000 yearly basic exemption. Under such a regime no EI premiums would be paid by either the employer or the employee on the first $3,000 of earnings. It would make EI premiums more progressive and reduce the heavy tax burden on labour-intensive industries.

CCA would recommend that the yearly basic exemption be similar to what exists in the Canada Pension Plan and the Quebec Pension Plan--that is, where the first $3,500 of insurable earnings are exempt. Introducing a yearly basic exemption in the EI program would also make it less costly and more attractive for employers to employ additional employees. In the construction industry the bulk of that additional employment would likely come in the form of new apprenticeship opportunities, which could certainly over the long run help to alleviate the skill shortages that are surfacing throughout the country.

Mr. Michael Atkinson: Turning to recommendation number 12 in the committee's report, I can say CCA believes it is time the government reinstated equal premium rates for employees and employers; in other words, it's time the employer multiple was eliminated. Prior to 1972 employers and employees made equal contributions to the then unemployment insurance fund. It was only in 1972 that employers started paying a 1.4 multiple. This occurred at the same time the federal government announced it would cease contributing 20% of the program's cost.

The apparent rationale behind the employer multiple is that employers have greater control over layoff decisions whereby the payment of EI benefits is triggered, and therefore they should bear a higher overall share of program costs. In recent years, however, employment insurance benefits totally unrelated to layoffs have been introduced into the program, including family-related benefits such as parental leave, proposed compassionate family care leave, etc. In addition, developmental uses or training grants have become a significant part of the EI program, contributing a great deal to higher program costs.

In fact, many of the benefits paid by the EI fund are now triggered by the employee rather than the employer. The rationale for an employer multiple is no longer valid. Eliminate the employer multiple. Equalization of employer and employee contributions can be achieved without reducing benefits or increasing premiums by reintroducing if necessary the federal government's 20% contribution.

Our third recommendation deals with the need for a refund system for employer over-contributions. Employees are refunded excess contributions over the annual contribution limit, but there is no mechanism in place to refund employer over-contributions.

CCA would also like to point out the inequitable treatment afforded to associated companies under the current EI rate-setting system. Given the nature of the construction industry, it is not uncommon for a construction employer to operate a group of associated companies. It is also common for the same employees to be engaged by more than one of those associated companies over the course of a single year. This group of associated companies is treated as a single entity for tax measures under the terms of the Income Tax Act such as the small business deduction.

However, under the Employment Insurance Act they are treated as different employers. As a result, especially since the introduction of the accelerated payment system, employers are finding themselves paying more than the maximum levels with no means for a refund even in situations where the employees are essentially working for the same employer, i.e. associated companies. While the foregoing proposed yearly basic exemption might alleviate some of that inequity, this is still a significant burden on small businesses.

Introduce a mechanism for refunding over-contributions to employers, and treat associated companies as a single employer for the purposes of annual EI premium contribution limits.

I'd ask Mr. Ryan to speak to our second-to-last recommendation.

¿ (0910)

Mr. Dennis Ryan: The fourth recommendation CCA would put forth speaks to the issue of enhancing mobility for a skilled trades workforce. There's no question that an adequate supply of skilled workers is critical to a smoothly functioning construction industry. While there are many regions in the country that are enjoying a significant construction boom, there are also areas where unemployment in the industry is at elevated levels.

One concern for the construction industry centres on how to bring the unemployed workforce and unfilled jobs together. Labour mobility is a key factor in matching jobs and people in Canada's construction industry. Labour mobility, however, involves significant financial costs. For permanent relocation, these costs include the cost of moving, the cost of selling non-movable assets such as a house, and the costs involved in relocation and resettlement in a new area.

Not all workers, however, want to make a permanent move, but rather than stay at home and draw EI benefits, they could be available to fill vacancies in areas of the country where skill shortages are having a negative impact on construction projects. In keeping with the federal government's stated commitment to the unfettered mobility of Canadians, it is our belief that by providing incentives the federal government could facilitate temporary relocation.

Moreover, the implementation of appropriate incentives could benefit individuals, employers, the industry, and the country as a whole domestically and would assist in ensuring Canada's competitive advantage in the global economy.

Rather than being beneficiaries of EI benefits in one part of the country, many workers could be making significant contributions in other parts of the country where skill shortages are evident. Such incentives for the individual could include reinstating the former temporary mobility program and providing travel assistance, temporary accommodation, and financial assistance, for example, EI benefits for the first two weeks in a new location until individuals are able to attain employment.

For employers, incentives could also come in the form of reimbursement of travel costs where incurred by an employee, other employment-related expenses such as licensing, welding tests, etc. that may be required in a new jurisdiction for the employee, and the costs that are associated with bringing employees from one part of the country to work in another.

¿ (0915)

Mr. Michael Atkinson: Those, Madam Chair and committee members, are basically the four recommendations we would like to draw your attention to today. Perhaps I can go over them very quickly: one, introduce a yearly basic exemption similar to what exists for CPP and QPP, the first $3,500 of insurable earnings exempt; two, reinstate identical premium rates for employees and employers, or in other words eliminate the employer multiple; three, provide a refund system for over-contributions by employers, and treat associated companies as a single employer; and four, look at the introduction of incentives to encourage unemployed workers to seek employment in other regions of the country.

Thank you for you attention. We certainly welcome questions and discussion.

The Chair: Thank you.

Our next witness is Mr. Gilles Taillon, from the Conseil du patronat du Québec.

Dix minutes, s'il vous plaît.

[Translation]

Mr. Gilles Taillon (President, Conseil du patronat du Québec): Merci, madame la présidente.

Mon nom est Gilles Taillon and I am President of the Conseil du patronat du Québec.

The Conseil du patronat du Québec is a federation of employer organizations bringing together associations from every sector in the economy. Through our associations, we represent 75% of Quebec's work force.

We tabled our comments with the Standing Committee in February 2001. Our main arguments have remained essentially the same. I will however summarize what is most essential while keeping an eye on the clock and of course taking into account the responses of the government of Canada in its October 2001 document.

I will begin by giving a brief overview of the situation, from our viewpoint, after which I will outline for you two important recommendations.

Let us begin with a progress report. Over the course of time and of the various political wills we have seen expressed, we have witnessed a broadening of the scope of the Employment Insurance Program which has lost its first vocation, that of temporarily replacing the income of those persons who lose their job and which has come to encompass a whole series of social measures such as health benefits, parental leave, etc. One can reasonably wonder if widening the social security net in this manner will not be to the detriment of accessibility for the unemployed, adequate compensation and services facilitating reintegration of the workforce.

Furthermore, the setting of employment insurance premium rates is still not in the hands of those who fund the system in its entirety, in other words employers and workers. The surpluses of the employment insurance fund have been used by the Canadian government to balance its books and pay off its debt, especially since 1996. In the end, the management of employment insurance has become more political than ever before and, to quote the Forget Commission that carried out a study on the Employment Insurance Commission in 1986, “the government has expropriated the plan“. Despite certain commitments contained in the 2003-2004 federal budget—commitments that we had enthusiastically welcomed—, concrete measures designed to give premium payers better control over the employment insurance fund have been slow in coming.

An examination of the other proposals contained in the October 2001 response by the government of Canada shows that in our view the government is not tackling head on two essential conditions for a true reform of the employment insurance plan. These two preconditions are in fact our recommendations to the committee.

First of all, we must get back to the basics. The employment insurance plan must be returned to its main mission, that of providing income stability to persons seeking a job and, secondly, offering active measures so as to allow these people to reintegrate the labour market. The social programs that have been coupled with the plan over time must be uncoupled. It is the government's duty to take over their cost and to exercise responsibility for their administration in a different way, namely through greater devolution to the provinces in areas that are closer to their jurisdiction.

Secondly, the government must give back authority and transparency to the plan through the granting of additional responsibilities to the Employment Insurance Commission. In order for there to be a rate-setting process that is transparent, sustainable and stable, the Employment Insurance Commission must gain back its authority and decision-making power. Consequently, the CPQ would like to see this organization rebalanced with an equal number of representatives for employers and workers, those who, let us not forget, are the ones funding the system. In order to retain the public and compulsory aspects of the system, the new commission should be presided over by a representative of the government of Canada appointed by the minister in charge.

¿ (0920)

In brief, in our view, beyond certain cosmetic changes, the act must be reviewed in depth.

The obligations of a true public employment insurance plan should be enshrined in law so as to ensure the plan's public and universal character, whereas the management aspect would come under the new Employment Insurance Commission. The funding of the reformed plan would be excluded from the accounting purview of the government of Canada.

Madam Chair, members of the Committee, thank you for your attention.

[English]

The Chair: Thank you.

I will now turn to Ms. Joyce Reynolds, senior vice-president, government affairs, Canadian Restaurant and Foodservices Association.

Welcome, Ms. Reynolds.

Mrs. Joyce Reynolds (Senior Vice-President, Government Affairs, Canadian Restaurant and Foodservices Association): Thank you, Madam Chair.

I appreciate the opportunity to be before this committee today and restate the views of the Canadian Restaurant and Foodservices Association. I represent a $43 billion industry. Over 17,000 employer members have a direct interest in the employment insurance system because of the labour-intensive nature of our business.

When CRFA appeared before this committee in response to Bill C-2, in February 2001, we focused our comments on the need to address the acute problems of EI program integrity and accountability. We set out that it was irresponsible to allow the reserve of the EI account to accumulate to nearly $40 billion, because of the enormous financial obligation it created for government to the program and to the employers and employees who exclusively fund it. Three years later, the surplus has grown to $45 billion, and premium rates continue to be set at a higher level than needed to meet the needs of the program.

We also proposed establishing a yearly basic exemption in the program, a proposal that we were pleased to see included in this committee's report, “Beyond Bill C-2”, which has since been endorsed twice by the Standing Committee on Finance.

Today I want to again focus on these two priority areas.

Last year our industry reached a significant milestone with the hiring of our millionth employee. We now provide more jobs than agriculture, forestry, pulp and paper, banking, and the automotive industry combined. Many Canadians get their first jobs in food service. Some 40% of our employees are under the age of 25, and the flexible hours and work schedules of our industry make it very popular with students of all ages. The biggest constraint to hiring more Canadians continues to be high payroll taxes, which comprise 40% of the tax load for the average restaurant operator. Payroll taxes punish us every time we add someone to our payrolls, and they affect labour-intensive businesses disproportionately.

Introducing a YBE into the employment insurance program would turn a regressive tax into one that proactively supports Canadians at the lower end of the income scale, those who will benefit most from reduced taxes and increased job opportunities. The YBE refers to the annual earnings level in which premiums are not applied and not to the first $3,000 of earnings.

The response from HRDC to the committee's recommendation for a YBE in October 2001 was:

There is a concern that exempting the first $2,000 or $3,000 of earnings would mean that these earnings and the hours of work they represent would not be insured.

We do not believe the implementation of a YBE would necessitate a change in the calculation of benefits. In fact, CRFA would recommend including the $3,000 exemption in the contribution base. I'll get into more details about the YBE, if necessary, during questions.

I want to talk about ways to fix the rate-setting process and to end the government's reliance on EI premiums for general tax revenue. Your report would indicate that this committee also has a keen interest in seeing the rate-setting process issue addressed.

In setting the framework for the new rate-setting process, CRFA has proposed two possible avenues. One option is a truly stand-alone EI fund, established and administered at arm's length from government. This is the only fair and responsible way to set EI premiums on a counter-cyclical basis. It is also the only way the program can be maintained on a sound financial footing without tempting government to hone in on its tax-collecting power.

The second avenue is to establish, by legislation, a low long-term premium rate. Under this scenario, the EI account must continue to exist and a premium rate would be established to ensure the credit in the account is drawn down to a pre-set minimum level over a ten-year period. There would be a statutory requirement to reduce premium levels further, if the surplus in the account failed to decrease or began to accumulate again.

Under this approach, government would not be required to hand back the surplus, except in small amounts over a period of time. However, government would be required to absorb the additional cost of benefits if and when the unemployment rate rises. In order to give employers and employees some assurance that they will not lose their claim to the surplus they have contributed to, or that they will not be overcharged in future, an act of Parliament would be required to raise the EI premium rate.

In terms of the other committee recommendations to increase EI access and coverage, CRFA has not seen evidence that warrants making further changes to the 1996 reforms. The reforms were designed to promote labour market flexibility and mobility, to curb repeated usage of the program and disincentives to work—objectives we support.

Despite these changes, seasonal workers continue to be a large and growing proportion of EI beneficiaries, according to a winter 2003 Statistics Canada “Perspectives on Labour and Income” report. This report cites:

One reason for the growing proportion of seasonal workers among EI claimants may be that the 1996 change from a weeks-based to an hours-based system for determining eligibility has had a positive effect on their EI eligibility and entitlement.

¿ (0925)

In contrast, first-dollar coverage has increased the payroll tax burden on our industry and our entry-level employees.

To conclude, CRFA does not support any further backtracking on the 1996 EI reforms or restructuring the benefit side of the EI program. Instead, CRFA is seeking the committee's help on the revenue side. A low, long-term premium rate and a YBE would assist job creators and economic development in all regions of the country.

Thank you, Madam Chair.

The Chair: Thank you.

Our last presenter today is Mr. Peter Woolford, who is the vice-president, policy development and research, of the Retail Council of Canada.

Welcome, Peter.

Mr. Peter Woolford (Vice-President, Policy Development and Research, Retail Council of Canada): Thank you, Madam Chair.

Coming fourth like this, I find myself going through my notes saying that has been said, that has been said, and that has been said. Maybe I'll be more brief than all my counterparts. We'll see. I'll try to fill my time and give you some value.

Mr. Yvon Godin (Acadie—Bathurst, NDP): Usually at this point I start to get hungry.

Mr. Peter Woolford: Was that an invitation?

Anyway, thank you very much for the opportunity to appear here this morning.

Employment insurance is a very important issue for our industry. We employ almost two million Canadians in retail. In fact, last year we thought we might actually reach the two-million level and came just very, very short of that. We employ people in every single community in this country. In fact, you don't really have a community until you have a store in it, and that gives you a sense of the breadth and importance of our industry.

The Retail Council speaks on behalf of this industry. We are the voice of retail in Canada. We have 9,000 members of all sizes. Like many trade associations, the overwhelming majority of our membership--over 90%--are independent merchants with one or two stores operating in the communities in which you live.

We also have retailers of the larger sizes. We cover all the categories of the trade on the general merchandise side. So we have the mass merchants, the big boxes, the department stores, the national chains, the regional chains, specialty stores, and electronic Internet retailers as well.

We represent in our industry between 10% and 12% of the employees who work in your ridings. In every single riding in Canada, retail accounts for between 10% and 12% of all the employment that occurs there.

We had a fairly short opportunity to appear before this committee, so I have not had as much chance to do the preparation I would have liked to do in order to appear here with our views, but we didn't want to miss the chance to come and talk to you, primarily about three things: one, about the notion of extending seasonal benefits through the employment insurance program--we believe that is a bad idea; and then two recommendations for the committee, again dealing with the process of setting rates; and like my counterparts, we support the notion of a yearly basic exemption as well.

Let me address first of all this notion of extending seasonal benefits. We have concerns about this really for two reasons: one, we believe there are some economic disadvantages to doing that; and two, we feel that is disadvantageous to the employees who work in the retail trade.

A couple of years ago we commissioned Jack Mintz and Tom Wilson, two professors from the University of Toronto, to look at the notion of experience-rating of employment insurance. That's useful for this committee because it comes at that issue from a different perspective. It looks at what are the economic impacts of actually requiring seasonal industries to carry more responsibility for the experience they have. The result of the research that has been done in the economic field suggests that requiring seasonal industries to carry a higher level of responsibility for their experience is beneficial for the economy.

The technical committee on business taxation did some analysis and found that if you had a one-quarter experience rating, if one quarter of a firm's experience was reflected into the rate they paid for employment insurance, you'd get a half percentage point improvement in employment in Canada. That's about 80,000 jobs that would be created by the process of requiring seasonal industries to take more responsibility for the pattern of employment that occurs in their industry. So that's one of the reasons we think it's useful to look at that side of things as you're considering whether to extend regional benefits.

The second side is that it in effect means an implicit subsidy from employees working in retail establishments, over to employees working in seasonal industries. How does that work? We acknowledge and accept the principle of shared responsibility. This is an insurance program. Although like many of my counterparts here, we have some concerns about the level of insurance still there, we recognize that it is a collective responsibility that employers and employees share. However, we think it is not proper that employees of very modest incomes in fact, through their premiums, are subsidizing employees who have a relatively higher income.

The over 400,000 part-time retail salespeople and clerks earned, on average, in 2001, $9,800 a year. The 2,034 part-time cashiers earned $7,600 a year. These people pay employment insurance benefits, part of which would go to cross-subsidize extended seasonal benefits for people in construction. Part-timers there earn $22,400 a year. There are 28,000 part-timers in logging and forestry, and they earn $18,000 a year. So what you have is people in very modest-pay positions paying premiums in order to cover the costs of individuals who in fact are earning more.

We see that currently as being one of the facts we live with. We certainly would not want to see that extended. We would suggest instead that the committee focus on some measures that will make changes to employment insurance that in fact will benefit all workers and employers and strengthen the functioning of the economy.

¿ (0930)

The best way to do this would be to move--as Joyce has already recommended--to set a fixed, long-term, low-premium rate for both employers and employees. This would have significant benefits in giving people assurance of what their costs would be. If it were set at a low rate, the benefits in employment in our industry would be substantial. We would see many more individuals working longer hours in retail stores. That would work two ways for our industry. First of all, individuals would receive more on their paycheques every week, but also their customers coming through the store would have more money, as a result of the reduction in the premium rate.

Second, we believe it would provide some certainty for the future. It would also recognize the very substantial overpayment that Canadian employers and employees have made in the last ten years, to the extent of $45 billion. We're not asking for that money back. We recognize the contributions made to the fisc, but we do believe that some acknowledgement should be made of the huge sacrifice that employers and employees have made.

A new system has been promised by two finance ministers, and we recommend that this committee urge Mr. Goodale to bring forward his recommendations as soon as possible.

The second priority we recommend for this committee is the YBE, the yearly basic exemption. Others have pointed to the benefits of this. I don't want to go through that at any great length. We too would see similar benefits in retail. As I said earlier, this is an industry with very modestly paid people, many of whom are at very low overall annual levels of income. Exempting the first $3,000 of that income from employment insurance premiums would mean additional hours and income for those individuals.

Madam Chair, those are my opening remarks. I'll be glad to answer any questions.

The Chair: Thank you.

Ms. Bakopanos.

Hon. Eleni Bakopanos (Ahuntsic, Lib.): Is it possible to table the report you spoke about? That's the first time I have heard--

Mr. Peter Woolford: Unfortunately, I didn't have time to have it translated. I have copies here that I believe I can make available to members afterwards, if they ask me.

¿ (0935)

Hon. Eleni Bakopanos: Okay, I'd like a copy. Thank you.

Mr. Peter Woolford: Okay.

The Chair: We'll have ten-minute rounds. We'll start with Ms. Skelton, followed by Ms. Bakopanos.

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, CPC): Thank you very much, Madam Chair.

Thank you very much for coming today. It's very interesting to hear you talk about a commission. That was brought up to us by the union people at our last committee meeting. They would like to see a commission of employees and employers, separate from government. Mr. Woolford didn't speak about this. I would like to know what his feelings are on that.

Mr. Peter Woolford: Thank you.

We think there's some value in having independent outside representatives from both the employer and employee sides having a significant say in the operation of this program. They are the two entities that finance it. The current structure, though, I have to say, does not work. As one of the employers who is supposedly represented by the person who is currently the commissioner, we did not have any say in the selection of the commissioner. We were advised after the fact. So if there is to be a commissioner for employers, it needs to be somebody who is selected by the employers in Canada, rather than by the government of the day.

Second, we've seen in the last ten years that the commissioners have had no role. That's been usurped by the Minister of Finance. If a commission is to be set up, it should have real powers to make decisions, at least with respect to the annual setting of the premium rate.

The Chair: Mr. Atkinson.

Mr. Michael Atkinson: I'd also like to point out that when the unemployment insurance was changed to allow developmental uses, around the 1980s or so, there was a strong negative reaction from the business community to having training development funding come out of the system. When it became clear to us it was going to happen regardless of our protests, we made it very clear we only wanted it to happen if employers and employees had a big say in how those funds were going to be expended. That led to the Canadian Labour Force Development Board, which was supposed to assume that role. It was supposed to allow employers and employees to have a direct role in the management of the developmental uses portion of the EI fund.

Unfortunately, the CLFDB has gone the way of the dodo bird, and developmental uses continue to be a major portion of the system. Not long after that the federal government made an announcement that it was getting out of labour market development funding, yet the EI fund continues to exact premiums from employers and employees for developmental uses under the fund.

So a precedent does exist for ensuring a direct role for employers and employees in the management of the EI fund, and I'm specifically talking about training or developmental uses. Unfortunately, we all suffer from lapse of memory, but that's the way it was supposed to be.

Mrs. Carol Skelton: So there is a commission, and then there's a board. Are there other boards set up under the program then?

Mr. Michael Atkinson: Well, the board no longer exists.

Mrs. Carol Skelton: Oh, it doesn't exist. Okay.

But there is a commission. How many people sit on this commission, and what or whom are they representing? Are they private individuals?

Mrs. Joyce Reynolds: Can I respond?

The way the commission is currently structured, there's a chairperson, who is usually the deputy minister of HRDC, and then there's an employer chair and an employee chair. But as Peter rightly pointed out, the employer chair is supposed to be selected with input from employers. I don't know of any employer group that was consulted on the appointment of the last employer representative.

So we don't feel that we have a commissioner who represents our interests. As far as we're concerned, the commission structure, in its current form, is not working at all.

The Chair: There's also a vice-chair, the associate deputy minister, so it's actually four persons.

Mrs. Joyce Reynolds: That's right, I'm sorry. I forgot to tell you.

[Translation]

Mr. Gilles Taillon: Madam Skelton, our impression, despite the make-up of the commission, that seems to set aside room for employers and workers, is that the powers of the commission are for all intents and purposes nonexistent in practical terms. The government is in full control of the functioning of the Canada Employment Insurance Commission. This is why we are more strongly taking position than ever before. It is important that the constitution of the commission be reviewed, of course in the context of a social act under which the broad obligations of the commission would be set in law.

In Quebec, in the area of workplace health and safety, we have another form of insurance. That is our way of doing things. There is framework legislation, a president appointed by the government and equal representation for employers and employees. This system works well even though this is an area that is far from easy to manage. It is a system that is capitalized for workers, that is not expensive and that is very competitive. There therefore have been interesting experiences and we believe that with regard to employment insurance the same type of formula could be adopted Canada-wide.

¿ (0940)

[English]

Mrs. Carol Skelton: It was very interesting when we heard from the union representatives the other day. They spoke about the EI fund being a trust fund, and they felt the employers and employees could manage that fund. What I'm hearing today is that you're saying the very same thing.

Mr. Gilles Taillon: We agree with them. It's rare.

Mrs. Carol Skelton: Thank you. I love that; that's wonderful.

I'm one who always talks about training and apprenticeship programs. Do you agree that the EI fund should be used for training of employees, especially in the construction industry, that it should be helping young people to be involved in industries?

Mr. Michael Atkinson: First of all, we are labelled as a seasonal industry, but we don't accept that tag any more. In fact, with the kinds of measures we talked about today, including some kind of incentive for mobility, we would hopefully have a situation where we would be able to employ our workers on a full-year basis.

In terms of incentives like the training and development uses of EI, we've always said yes, but only to the extent that it's truly the employers and the employees who are managing those funds and ensuring those funds are going into useful and relevant training, training that ultimately puts those individuals back full-time into the workforce so that they're not drawing EI benefits on an annual basis, or on any basis, quite frankly.

From that perspective, I think to the extent that those developmental uses, the training funds, are managed by employers and employees and used for the sole purpose of getting people off EI, if I can put it that way, it is something that would be supportable and workable by employers and employees in this country.

Mrs. Carol Skelton: Thank you.

The Chair: Thank you, Ms. Skelton.

Ms. Bakopanos.

Hon. Eleni Bakopanos: Thank you very much. And I will apologize for having to leave at ten o'clock. There's a debate in the House--on EI, in fact, on this report. I just want to put that on the record, that I'm not leaving.

Thank you very much for your presentations.

You do all know that the Auditor General did in fact say that putting EI into the consolidated fund is acceptable accounting practice. Those were her words, not mine.

She also said that the monitoring and assessment of the EI program is one of the most comprehensive analyses that are done by the federal government. So there is an ongoing process in terms of assessing whether our programs or practices are responding to the changing marketplace.

Also, recently there was a report that came out that the EI premiums and contributions are about equal at the moment. At $1.98 we're just about at the break-even point.

I have two or three questions. In setting the fixed annual exemption, you realize that will have quite an impact in terms of the actual contributions. If you do agree that this money, then, should be reallocated for manpower training, where would we go for the money for manpower training if we lowered the amount of contributions that are made into the fund?

At this moment the fund has a surplus, because the economy has been good and people are working. In another period, in another time--hopefully it will never happen in Canada, I hope....

[Translation]

I hope that that will not happen. We must nevertheless retain a surplus. Perhaps you do not agree, and you may give your opinion on that, but we must always maintain a surplus in my view. We should never have a balanced account, because there are periods during which the economy is not as strong. With but a few exceptions, the impact would be considerable during periods of high unemployment. At present, things are going well and we could provide for an annual exemption, but during periods of high unemployment, there would be a negative impact on this fund that is there for those who will lose their jobs.

[English]

I'll stop there for the moment.

¿ (0945)

The Chair: Mr. Taillon, and then Mr. Woolford.

Mr. Gilles Taillon: Thank you, Madam Chair.

For us, it is very clear: we must maintain a reserve fund for employment insurance, as Canada's Actuary in chief has recommended, so as to be able to deal with the economic conditions and cycles. However, according to the actuary, to be sufficient, the reserve fund should total 10 billion dollars rather than 45 billion. Clearly, all other things being equal, that would have a tremendous effect on reducing rates. But you will have guessed that in our view we should go further still, all other things being equal. There must be a reduction in the costs that are presently covered by the employment insurance plan and which to our mind do not really come under employment insurance. When you want to maintain competitive rates, offer new programs and recover a portion of your costs to balance your books, then you will reduce the benefits recipients get. This to us is the wrong path to take.

The Chair: Mr. Woolford.

[Translation]

Mr. Peter Woolford: Thank you, Madam Chair.

We are among those employers who recognized some ten years ago now the need to ensure that the employment insurance fund have a surplus. We are somewhat disappointed today, because this surplus today amounts to 45 billion dollars. That represents three years of costs without any money coming in. This is absolutely unnecessary and it is in our view a scandal.

It must be recognized that the contributors, the employers and employees, have contributed too much over the course of these ten years. We believe that the government now has the capability necessary to reduce the rate imposed upon employers and employees. And despite such a reduction, there would be enough money in the fund to cover education and training needs as well as the basic annual exemption.

It must also be recognized that today, without the contribution of the interest on this surplus, the rate is at $1.98. However, according to the program's auditor, its cost, with the interest on the surplus, could drop to $1.80. There therefore is a surplus that could be used for these other needs.

[English]

The Chair: Ms. Reynolds.

Mrs. Joyce Reynolds: I'd like to agree with Peter. In terms of the account, in terms of cashflow, we may be able to break even, but when you add in the interest, we could be at a much lower rate.

I do think the situation is quite different from what it was during the 1981-82 recession and in 1991, when interest rates were extremely high. The long-term forecasts call for unemployment rates to continue to decrease. Government finances are in a much more stable position. The government is able to withstand economic shocks to a much different degree from what it could during the last couple of recessions, and because of the over-contribution, as Peter said, by employers and employees for so many years, it is now necessary to start to reduce the credit in that account. I don't think it should necessarily impact developmental uses.

Mr. Michael Atkinson: We would agree. In fact, I think the problem has been that there is certainly a perception out there by small business and employees that the EI premiums are going to fund the EI program. Having it all in the same pot as all the other revenues come into in fact gives the temptation, let's say, to use the surplus to balance the books.

The problem is that employers and employees continue to believe that these funds being collected under the EI system are going to EI uses, not to balance the books, government's overall books.

There have been situations where governments in the past have exacted certain taxes or surtaxes and said it was for the purposes of deficit reduction or debt reduction, or whatever. But that has never been said to employers and employees with respect to the EI system, the EI fund, and I think that's part of the problem. Canadians generally believe that when they're paying EI premiums, that's going to fund the EI plan, not to balance the government's books.

¿ (0950)

The Chair: Thank you.

Ms. Bakopanos, you have about four minutes left.

Hon. Eleni Bakopanos: The next question has to do with the different programs--maternity, parental, and other programs. Training is a little bit different in Quebec, so we won't go there. We gave it over, in terms of the federal government giving that responsibility to the provincial government. But I would be interested in knowing whether you feel that the government should continue, in fact, through the EI--although I think I heard the opposite, but I may be mistaken--to use that fund in order to fund the other programs.

As the workforce changes, as people decide on their lifestyle, part-time work seems to be becoming even more important now in our society, and people are choosing also to start their own businesses. They don't in fact receive benefits, based on the system we have at the moment, although a lot of different reports have come out of different task forces asking, especially for women entrepreneurs, that the same benefits be applied to them. Would you have any comments in terms of whether you think it should be through that fund, through that system, that these other benefits should be funded?

Mr. Michael Atkinson: The first comment I would make is that's one of the reasons we talk about getting rid of the employer multiple. If you are going to continue to fund maternity and parental leave through the EI system, then really it should be equal contributions from employers and employees, because that's a system that benefits both--although, in essence, maybe to quote the vernacular, the employer doesn't get pregnant. So from that perspective, if they're going to stay there, if they're going to stay in the EI fund, I think a strong argument could be made that the premiums should be equal.

Secondly, I think the government's decision to put other types of social programs into that particular basket speaks volumes again for the need, as my colleagues have said, for employers and employees to have a direct, meaningful, and effective say in how the fund is impacted by those programs. Right now, it is a partnership between employers and employees only. The federal government now only funds in the event of a shortfall.

If the government is going to come along and announce that we're going to enhance the program or that we're going to introduce a new social program into the EI fund, employers and employees who are contributing to that fund have to have a major say in how that's done, if it's done at all, and under what terms and conditions. Unfortunately, up until now, that's not happening.

I don't know if I answered your question directly, but I think if they are going to continue to be part of the EI program, it has to be conditional on those points.

Hon. Eleni Bakopanos: There are sectorial tables. I do want to put that on the table too. There are sectorial tables that do exist in terms of training—though I didn't say that earlier—where there is input from the employers in terms of training programs.

The Chair: Mr. Taillon.

[Translation]

Mr. Gilles Taillon: The funding of social programs like parental leave through the Employment Insurance Program rather than through general taxation measures is such that some 25% of our work force, namely independent workers and non-standard workers, are left aside. This is the great weakness of the system. We should, for these programs, use general tax measures, which would allow us to cover our entire labour force.

Furthermore, we are recommending that you opt for greater provincial management, given that these are areas that fall more under provincial jurisdiction. It is clear that employment insurance is an insurance aimed at those who lose their job; it is also an insurance that guarantees practical training opportunities.

In the end, the problem is that by applying such measures, we limit the benefits they entail to those who pay, leaving aside 20% of our labour force, those who are self-employed.

Hon. Eleni Bakopanos: [Inaudible—Editor]... a few MPs.

Mr. Gilles Taillon: Yes, but have all taxpayers paid into it? Businesses and workers.

[English]

The Chair: Mr. Woolford.

Mr. Peter Woolford: Thank you, Madam Chair.

I have just a brief comment. The problems Madam Bakopanos has referred to arise from that fact that what was an insurance program has now become a social program. So, just as Mr. Taillon said, you have some people paying into what they believe is an insurance program and who are now also funding a series of social programs or social objectives.

We believe it would be much cleaner if the social objectives were treated as a separate social program of the government funded out of general tax revenues, and the insurance component of employment were treated as such. It would make that program cleaner, and you'd end all of those boundary problems with independent entrepreneurs and women entrepreneurs who are about to have children. All of those boundary problems go away when you move that, to recognize that it is in fact a social program. We would think that in terms of policy design that would be a much preferable result.

¿ (0955)

The Chair: Thank you.

[Translation]

Mr. Godin.

Mr. Yvon Godin: Thank you, Madam Chair.

I welcome you before the Committee on Human Resources and Skills Development.

As I was earlier this week telling a worker representative group, if we were to look at the minutes of our last meeting held in 2001 dealing with the report entitled Beyond Bill C-2, we would see that we are still at the same point. It is as if we were listening to the same song on a CD or on a record. Practically speaking, the position you are sharing with us today is the same as the last time.

I see certain similarities. Employers and employee representatives agree that there should be a separate fund and that the two groups that contribute should be making the decisions. In my view, the best way to know where the money goes is to look at paycheck stubs.

In one box, you see the gross salary, which is what one normally earns, as well as the contributions made to the Canada Pension Plan or the Régie des rentes du Québec, and which are used to pay out insurance after we retire. Then there is employment insurance, which is normally aimed at those employees who lose their job and that can also be used for other things that we are not in agreement on. Lastly, there is the tax portion, which is used to pay the debt, social programs, etc.

You will agree with me in saying that Mr. Atkinson, in his remarks, did not come down hard on the government for the theft of $43.8 billion from the employment insurance fund, which belongs to employees and employers. He then went on to say that the situation is not acceptable, but one could have thought that he was not representing employers and workers. These $43.8 billion were nevertheless stolen from the employment insurance fund in order to balance the budget and reach a zero deficit on the backs of workers and employers.

That being said, there are also the benefits other than those provided for workers who lose their job. It is, I believe, Mr. Atkinson, who stated that it is not the employer who gets pregnant. However, you might agree with me in saying that in the 40s, when the employment insurance system was set up, only 5% of women were in the workforce. One must adapt to today's labour market. Why should people on social assistance or retirees be financing this instead of those who are truly participants in the system?

With regard to the 25% of workers who are self-employed and to whom Mr. Taillon alluded, we could have them contribute to the employment insurance fund given that they are workers just like all the others. Let us not forget where these people come from. In a good many cases, these are women who, with the advent of new technologies, were told that their services were no longer required. They were sent home with a computer that they used to type letters and this is how they became independent workers. This phenomenon has contributed to the fact that there are today a lot more self-employed workers than there were in the past.

I would like to hear your comments on what I have just said. I do not agree with you when you say that in the case of a woman who becomes pregnant, we are talking about a social program: that is part of life. In the case of each and everyone of us here, a woman one day became pregnant and put us on this earth. Pregnancy is not an illness.

If it is not the role of employers and employees to fund this program, then it is society as a whole that will have to take care of it.

À (1000)

[English]

Mr. Michael Atkinson: I'd like to address that point, because I think you misunderstood my quote about maternity leave.

The reason I am using that as an example is to show why the premiums should be equal. It's not always the employer now who triggers the benefits under EI. The argument for having the employer multiple was that it's the employer who lays people off and it's the employer who triggers the benefits.

I'm not arguing that maternity leave or parental leave should be funded in some way, either through the EI system or elsewhere. I'm saying that if those programs, in particular, are going to continue to be part of the EI basket, then it's a strong argument to say the premiums should be equivalent. It is not simply the employer who triggers the benefits, but it is the employees themselves through the decisions they make.

Please don't misunderstand my comment. My comment is on who triggers the benefits from the program, not who should be the recipient of a social program or assistance under EI for maternity or parental leave.

[Translation]

The Chair: Mr. Taillon.

Mr. Gilles Taillon: Thank you very much, Madam Chair.

I think it is somewhat utopian to believe that one could force self-employed workers to pay so as to include them in the system as we now know it. Indeed, one must understand that, were we to ask independent workers to participate, they would be forced to pay 100% of the costs, in other words 40% as a worker and 60% as an employer. I have met with independent workers' groups. They are well aware that they would be unable to face that, especially given the fact that they are not the best paid.

This is why we are saying that they would be best covered by programs of a more social nature, more general social programs that would be funded by general tax revenues. Employers will pay taxes and workers too. After that, we might look at how they could be covered in case of job loss through some policy that might fit into the program with a specific grid for them.

It is therefore dangerous to simply say that we will include them in the program, given that they are not in a position to assume the costs of the program. Otherwise, it will be employers and salaried workers who will have to cover the benefits paid out to self-employed workers, which would place us in a odd position.

Mr. Yvon Godin: I believe, Madam Chair, that there has already been a discussion on the fact that independent workers could contribute voluntarily. Thus, if they wished to pay both portions, they could do so. We have already discussed this.

[English]

The Chair: Says the member, through the chair--

Mr. Yvon Godin: I'm sorry. If you check the blues, I said “Madam Chair” before I made the statement. I know you're very picky with me, but it's okay.

The Chair: I just get lonely sitting here.

[Translation]

Mr. Yvon Godin: I have a second thing to say. Let us say, as an example, that I come from the mining industry. Health insurance was negotiated in the mining sector. Who was the first to suggest to employees that they use up their first 15 weeks of employment insurance so as to reduce the costs of health insurance premiums? The employer. Employers were happy to pounce on unemployment insurance and use it to pay out benefits to the sick. But today, the argument is that we should not even be paying for that.

Honestly, I participated in those negotiations, and it was the employer who was asking that the employment insurance fund be used to cover sick leave benefits. I do not know if you remember those arguments of some 15 years ago, but I was there, on the other side of the fence. You could perhaps explain to me why you used to want that, because the employer is also responsible for giving social benefits to his or her employees.

If I still have time, I will talk about others in the industry who normally do not pay for social benefits. This is why these employees do not have enough hours of work. It is because employers do not wish to contribute to social benefits.

[English]

The Chair: Mr. Taillon.

[Translation]

Mr. Gilles Taillon: Madam Chair, at the time when Mr. Godin was on the right side of the fence...

Mr. Yvon Godin: I was a union representative.

Mr. Gilles Taillon: I think we perhaps also realized, at the time, that it was another form of insurance that we were buying. Today, with everything said and done, people would much prefer that the Employment Insurance Program truly be an insurance and not a program encompassing a whole series of things that are not linked to insurance, to the loss of one's job.

À (1005)

Mr. Yvon Godin: Madam Chair, let us now talk about the $3,000 you speak of in your recommendations. Is there not a danger there? You will perhaps supply different arguments from the side of management, but very often, be it in stores or in restaurants, employees do not get the number of hours that they should, namely 40 hours a week. Indeed, if they were given that many hours, they would become full-time employees and they would negotiate their benefits. They are therefore given 15 hours, 20 hours, 10 hours a week. You perhaps need 30 people, but you hire 125.

Would there not be a danger if we were to set the cap at $3,000? From what I understand, if you pay less than $3,000, you would be exempted from paying employment insurance. Is there not a risk that that might encourage certain employers—not all of them, but some—to lay off employees before they reach that amount, to then turn around and hire someone else who would stay as long as it took until he or she reached the $3,000 cut-off? Have you thought of that? I am asking my question through the Chair.

[English]

The Chair: Mrs. Reynolds.

Mrs. Joyce Reynolds: The exemption doesn't apply to the first $3,000. Once they hit $3,000, it's not like the old system, when it was a 15-hour week. If you had a 15-hour week, there were no premium deductions. As soon as you hit 16 hours, then the premium deductions began. The way in which the $3,000 yearly basic exemption works is universal, such as in the CPP. If you make $7,000, it means you're only going to pay premiums on $4,000. If you make $12,000, then you are going to be paying premiums on $9,000. If you make $200,000, you'll be paying premiums less $3,000.

The difference is the exemption is much more meaningful to a person who is a low-income worker or a modest-income worker than it is to a high-income worker. In terms of labour-intensive businesses, right now there is an incentive for employers. Once they've reached $39,000, if they bring on another employee, then they're going to have to start paying payroll taxes all over again. They will pay the employees overtime or extend the hours of their current workforce instead of hiring additional employees.

In our industry, there are a lot of people who are interested in the flexible hours that are offered. Students are a good example. They don't want to work full-time, but they need to earn money to save for and contribute to their education, so they need jobs in our industry. They are required to pay premiums, even though they will not need to make use of the program and would not be able to accumulate enough hours to make use of the program. In effect, as Peter said earlier, some of their premiums are subsidizing benefits for unemployed workers.

The Chair: Next round, Mr. Bellemare.

[Translation]

Mr. Eugène Bellemare (Ottawa—Orléans, Lib.): Thank you, Madam Chair.

[English]

I find the witnesses very knowledgeable and extremely interesting on a very complicated subject.

The first question would be to Mr. Atkinson. You made a reference to social programs. You said EI premium rates should go to the EI fund and not to balance the government books. I found that interesting.

At another point, you talked about a $45 billion surplus. I believe the surplus is actually a cumulative virtual surplus of $43.8 billion, over the years.

I won't discuss the fact that on occasion in the past, governments were faced with deficits. Who pays for these deficits? The general population pays, because those who were supposed to pay for the premiums did not pay enough or we had too many people unemployed because of an economic downturn.

Let's go back to the social programs you mentioned on maternity leave, paternity leave, educational programs, and cours de formation for people to go back into the workforce. Are you in favour of these or not? I suspect from the comments you made that you are in favour, because you talked about a partnership, where the employer and employee organizations should be part of the decision-making of a committee of some kind.

À (1010)

Mr. Michael Atkinson: First of all, again, please don't misunderstand my previous comments. When I referred to the developmental use portion of the program to maternity and parental leave, etc., out of EI, it was in the context of making the argument on why employer and employee contributions should be equivalent. Employers shouldn't be paying a multiple amount over employee premiums.

My comments with respect to the government's books and the EI fund are that employers and employees in this country, whether you like it or not, have a perception that when they pay EI premiums, it's to fund the EI fund and not to balance the government's books. I'm not saying it is not the case or shouldn't be the case. It is where small-business employers and employees believe the EI premiums go.

It's not a case of saying there has been some kind of mishandling of funds, or that kind of situation. It's the point that the surpluses have run for so long at such a high level. One looks and asks why those surpluses are so high. They're being used to balance or fund other government commitments.

Mr. Eugène Bellemare: May I interrupt at this point? You raise a very important question here. Perhaps our researcher could answer this question. These funds, we pay the insurance when people are unemployed. From the moneys collected, do we, the government, actually grab money from that fund to pay for these benefits: maternity leave, paternity leave, educational programs? Does it actually come from there? That's the perception, but is it a reality?

The Chair: I'm told that, yes, it is the case, the reality. Funds that were contributed through either employer or employee benefits have been used for funds other than for insurance benefits.

Mr. Eugène Bellemare: Thank you very much. I'm not suggesting by my question that it should be a no-no, but I thought it should be clarified.

So these other benefits that people receive, you don't disagree with parental leave and so on. It's just the accounting part that worries you.

Mr. Michael Atkinson: Partly, and secondly we're concerned that if those kinds of social programs are going to remain part of the EI system, employers and employees must have a much greater control and effective input into how those funds are expended.

It's interesting--I'll make one quick comment here--I mentioned earlier that the federal government at one time was a direct contributor to the fund, some 20%. I dare say that employers and employees did not have 80% of the say of what was going to happen to the fund at that time. But now the federal government is not a contributor whatsoever, unless the fund goes into a deficit situation. Yet, from the other witnesses, not just me but from the other witnesses, they've told you how much effective input employers feel they have in the fund. I dare say that at the last meeting when you were meeting with representatives of employees, they were saying the same thing. So we're all saying the same thing in regard to the effectiveness we feel we have over the control and management of the fund.

The Chair: Mr. Woolford.

Mr. Peter Woolford: Madame Chair, I'll just remind Mr. Bellemare that in the early 1990s the employment insurance fund--then, the unemployment insurance fund--did run a deficit, and at a time when Canada was going through some very difficult times. Rates were raised and the employers and employees of this country paid that debt back to the government very quickly, with interest. Since that time, the surplus has risen and risen and risen to $45 billion, which, as I said to Madame Bakopanos, is three times the annual cost of the program. So there's now enough in the fund to run the program at the current level of cost for three years with zero contributions from employees. This is a huge amount of money.

We recognize where it has gone. We recognize that it is included in the fiscal accounts of the Government of Canada. But we do believe there should be some acknowledgement of the sacrifice employers and employees have made to get the books of Canada in order. And we do want to see a system put in place that prevents that kind of thing from happening in the future.

À (1015)

The Chair: Thank you.

Ms. Reynolds, did you have anything to add?

You'll get extra time, Mr. Bellemare.

Mrs. Joyce Reynolds: I think Peter covered it, thanks.

The Chair: Mr. Bellemare.

Mr. Eugène Bellemare: I'd like to move to accessibility. Have you noticed anything about people who tried to access the insurance and couldn't because of all the regulations? If you have, do you have recommendations or suggestions?

Mr. Peter Woolford: From the position of the Retail Council of Canada, we are not aware of any access problems among people in our industry at this time, but we do represent the employer side, so it's not likely that we would know much about that.

Mrs. Joyce Reynolds: If I could add something, what we're hearing more about are skilled and unskilled labour shortages virtually right across the country. In some areas it's much more pronounced than others, although I must say that SARS, avian flu, BSE, and a number of these other issues have had a little bit of an impact. From our perspective, there's not an accessibility problem at all.

Mr. Eugène Bellemare: My other topic is abuse. Around 1996, a lot of abuse was noticed on the part of some people getting unemployment, I'm told. The insurance became more restrictive and it is more difficult now to get your insurance once you are on the unemployment roll.

In abuse, have you noticed any abuse of late, let's say in the last three or four years? Since you're paying into that, both the employees and employers are paying into this, people often ask, why is it that the government permits this; they should have rules for this, etc. On the question of abuse, do you have any comments or suggestions or observations?

Mr. Michael Atkinson: The only thing I would add to this is that we work very closely with the Canada Revenue Agency in looking at ways and means to ensure the underground economy comes under close scrutiny. Obviously, that's one situation where people are operating in an illegal manner, with employers not paying the EI premiums when they should be, among other things. Our sole focus in that area, ensuring that employers pay their proper legal fair share, is to work closely with agencies like the CRA to try to combat the underground economy.

[Translation]

Mr. Eugène Bellemare: Mr. Taillon, how should independent workers be covered? How could we give them coverage while ensuring that there is not abuse?

Mr. Gilles Taillon: I believe that we must absolutely deal with this question. Is it not proper that 20 or 25% of our labour force are not eligible under social policies such as employment insurance or parental leave.

We nevertheless believe that the social part, in other words, parental leave, etc., should be provided for in our laws. You are aware that in Quebec they passed a law opening the door to independent workers, which requires government funding to cover these people, because they cannot ask them to pay for the total employer contribution. In their case, there is no employer. They are therefore insured by the government.

With regard to employment insurance, once we have cleaned things up—in our view, we must free up employment insurance from those additional programs that do not come under employment insurance—, we will most probably have to there find a way of covering these workers through some insurance formula.

Mr. Godin was saying earlier that the worker would be free to chose to participate or not in the program. When you are dealing with insurance, as you well know, it is more difficult to leave the choice up to the individual, but it should certainly be possible to find an appropriate formula.

Mr. Eugène Bellemare: Thank you, Madam Chair.

[English]

The Chair: Thank you.

Ms. Skelton.

Mrs. Carol Skelton: I know you're employers, but I just want to make the point that we find in the agriculture sector, where you have farm families who work, that it's very hard for individuals to collect EI. Quite often the woman works on the farm with the husband, and she cannot get EI benefits or they're clawed back from her. That was just a point I wanted to make.

Now, with respect to the recommendations of October 2001, Mr. Atkinson mentioned he would accept recommendations 7 and 12. What do you think of the other recommendations? I was wondering if the rest of our presenters had looked at the recommendations. I know I got what your feelings were during the first round, but what do you think of them as a whole?

À (1020)

The Chair: Mr. Woolford.

Mr. Peter Woolford: As I said in my opening remarks, Madam Skelton, we had very limited time to prepare for this. What we tried to focus on were the key areas we thought were of greatest importance to our membership. I must confess I haven't looked that closely at the others. My apologies.

Mrs. Carol Skelton: It was unfair of me to ask that; it was just that Mr. Atkinson had brought it up.

The Chair: Ms. Reynolds.

Mrs. Joyce Reynolds: I have gone through the recommendations, and we do have concerns about backtracking on the 1996 reforms. We have serious concerns, and our reasons are similar to the reasons Peter cited earlier.

We're looking at a situation where our payroll tax load has increased substantially. We see a cross-subsidization again, where our lower-wage, entry-level employees are required to pay into the program from first dollar, yet their premiums are subsidizing some very lucrative seasonal positions. Those people are able to collect an annual supplement on top of an income level that's sometimes four times or five times what our employees are making.

I can look at it from the employer's perspective as well. My phone is ringing off the wall these days from restaurant operators who are having difficulty eking out a living. The margins are so small they are having trouble making payroll, and they see their premiums, again, as a subsidization of other sectors.

Mr. Michael Atkinson: First of all, I'd just simply say that with respect to the changes, particularly looking at any enhanced benefits or enhanced coverage, none of that should come without looking at the more fundamental issues that we all addressed here today. I think that has to be number one.

The only other comment I make on the specific recommendations is that recommendation 11 we very much like, but it has been acted upon. So we were pleased to see that.

[Translation]

Mrs. Carol Skelton: Mr. Taillon.

Mr. Gilles Taillon: In fact, these recommendations are in our view very vague: “The government is considering...”. In our opinion, if there was real desire to follow up, after having carried out the clean-up operation we are hoping for, we would be wondering about the cost of the enforcement of the measures envisaged. Once all of this is established, then we would be able to make a more enlightened decision.

[English]

Mrs. Carol Skelton: In other words, basically what we should do is chuck this out and go back and start all over again with the Quebec plan. That's sort of what you're telling us, start all over and look at the whole program, come up with a commission of employers and employees, and put it in a separate arm of government--but I must say, I'd like the Auditor General to look after it--and govern it that way. Is that what you would like to see?

Mr. Gilles Taillon: Absolutely.

The Chair: Yes, Mr. Woolford.

Mr. Peter Woolford: Thank you.

We have put forward an alternative to that, which is to see the fund retained within the consolidated accounts of the federal government.

What we then want to see put in place are a series of measures that ensure that the program is not a kiddy bank that the Minister of Finance can raid in the future. We also want to see, in setting that up, a low rate, fixed in time, for an extended period of time, in recognition of the overpayment that has happened in previous years.

That would allow the structure to remain the same, at least in financing and fiscal terms. It would not have to have a separate existence outside the accounts of Canada but it would have some measure of control and assurance so that employers and employees who pay into this for insurance purposes know their money is going for the purposes for which they've given their funds. We believe that would help to provide a measure of assurance and honesty to the program, which is not there today.

Then the second piece is that we do believe there could be some very useful advice and oversight by employers and employees into that program even though it is still situated within the accounts of Canada. That is an alternative that is there for the government that would allow it to meet the requirements of the Auditor General, but would also assure the premium payers that they're getting value for their dollar.

À (1025)

The Chair: I don't want to take your time. I'll give you more time. But just to follow up on that, would it be acceptable to begin that on a go-forward basis? Or under your recommendation, do they have to take into consideration the $43 billion?

Mr. Peter Woolford: We believe they should take into consideration the money that has been paid in. We do recognize that the money is gone, that there's not an account sitting somewhere with 43 billion loonies in it.

We do believe there should be some acknowledgement in the rate. So what we would suggest is that the rate be set at a lower level to reflect some partial payback of the debt that is owed to premium payers. And secondly, we believe that if there is a downturn and the fund were to go into a deficit situation, again the notional surplus that is in the accounts of Canada would be used to pay that deficit, and the employer and employee premium payers would not be required to make that up in the next upturn. So in effect what you would see is a gradual paying down of that debt over time.

We recognize that it's not possible to pay it off right now or to find the money right now. We do believe that over time employers and employees should be compensated for their overpayment. What we're looking for is a structure that meets the fiscal needs of the government but also recognizes that overpayment.

The Chair: Ms. Reynolds.

Mrs. Joyce Reynolds: Madam Chair, I won't take up a lot of time, because I agree with everything that Peter has just said.

Our concern is that this account has to remain, with a credit balance that needs to be reduced. When you ask are we interested in a going-forward basis, that implies to me that somehow you're going to lop off that credit balance and we're going to start from square one. We are absolutely and totally opposed to that. Even if it is only a notional account, we need to see that credit balance, and we believe there is an obligation.

The Chair: Seeing that credit balance, do you want that reflected in terms of lower rates immediately, or just that it's there for future problems or downturns?

Mrs. Joyce Reynolds: We see a gradual reduction of it. But also, if there were shocks, if there were an economic downturn, that would have to be absorbed.

The Chair: I'm fine with that part of it. It was on the other part of paying down that I wanted to know....

Mrs. Joyce Reynolds: Obviously there would be some financial implications of that, and it would result in a reduction in the credit in that account.

The Chair: Any others on that particular one?

Then I'll go to Madam Thibeault.

[Translation]

Ms. Yolande Thibeault (Saint-Lambert, Lib.): Thank you, Madam Chair.

Ladies and Gentlemen, you have all stated that certain aspects of the Employment Insurance Program are rather social programs and that they do not truly fit with what we normally mean by employment insurance measures. I am referring more specifically to parental leave, and other such things.

Mr. Woolford, you talk about a fixed rate for the coming years. Would you be in favour of the inclusion of programs such as parental leave? Do you believe it would be preferable to exclude such programs from employment insurance?

Mr. Peter Woolford: You have in fact asked two questions. It is our belief that we should first correct the funding problems of the program. We discussed that a little earlier. We should then reflect upon the restructuring of the employment insurance concept, but that is a broader issue.

We are of the view, as are my colleagues present here, that it is necessary to get back to basics, to identify the most important needs that this program should be targeting, to ensure that the program does encompass them. We must also identify the various needs of Canadians that are more social in nature and determine the best way to serve them. Perhaps we should let the present program deal with them, and perhaps we should establish a new social program to take care of those needs that are closest to Canadians.

Mention was made during the exchange with Ms. Bakopanos of the problem of women entrepreneurs who become pregnant. If that is covered by a program that is funded in the way of an insurance program, then that will obviously create problems. If we were to restructure the program and if the new program no longer covered such needs, which are more social in nature, then we might have a better, clearer and healthier picture. In summary, we must first correct the funding problems and then restructure the program overall.

À (1030)

Ms. Yolande Thibeault: As I listened to you speak, it seemed to me that we should perhaps go back to using the term “unemployment insurance” instead of talking of “employment insurance”. In the end, that is the real issue.

Mr. Peter Woolford: Perhaps.

Ms. Yolande Thibeault: Madam Chair, Mr. Taillon, in his presentation, talked about devolving to the provinces certain aspects of employment insurance or certain employment insurance programs, if I understood correctly. I would invite Mr. Taillon to explain this further. I would like to understand what he is getting at.

Mr. Gilles Taillon: Thank you very much, Madam Chair.

In fact, I believe that the Employment Insurance Program, purged of so-called social programs, should remain the responsibility of the government of Canada and thus be governed by an act of the federal government. The federal government should not determine if we want to have parental insurance-type social programs, but it should analyze the possibility of delegating their management and legislative responsibility to the provinces. The federal government should analyze that. That is the meaning of our recommendation.

Ms. Yolande Thibeault: Like the training program, for example.

Mr. Gilles Taillon: Yes.

Ms. Yolande Thibeault: The training program which has already been...

Mr. Gilles Taillon: Which has already been devolved.

Ms. Yolande Thibeault: Which has already been devolved, with results that are perhaps not those we had been counting on. That is my opinion.

Mr. Gilles Taillon: You are right in saying that at the beginning of the devolution process, the situation was difficult. But I do not believe that we can still say, today, that the situation is bad in Quebec with regard to training program management. Interesting work has to my mind been done. We know that it has not been easy because there was the matching of federal and provincial employees. There was therefore a need to adapt and to put systems in place. I must tell you, Madam Thibeault, that today, the situation is satisfactory, both for employers and for worker representatives. It is always possible to do better, of course, but I am telling you that it is satisfactory.

Ms. Yolande Thibeault: Madam Chair, those are all of the questions I had for the witness. Thank you very much.

[English]

The Chair: Thank you.

Monsieur Godin.

[Translation]

Mr. Yvon Godin: Thank you, Madam Chair.

I would like additional information on what you were saying earlier, Mr. Woolford, with regard to problems of accessibility to the Employment Insurance Program. Where is the problem?

Mr. Peter Woolford: This is the problem we talked about and which Ms. Bakopanos brought up. There are women entrepreneurs who become pregnant and who are unable to benefit from unemployment insurance because as self-employed workers they do not pay premiums and do not receive benefits. If we had a social program covering everyone, they would have coverage. Today, they do not. That is all.

À (1035)

Mr. Yvon Godin: You are leaning in the same direction...

Mr. Peter Woolford: In the same direction as Mr. Taillon, yes.

Mr. Gilles Taillon: I agree fully with Peter's analysis, Madam Chair.

Mr. Yvon Godin: Very well.

Furthermore, Madam Chair, Mrs. Reynolds stated that in her industry there are apparently a lot of people who pay for employment insurance but who are not eligible for benefits because they work part-time or for some other reason. Would she not agree with me in saying that there are people who work in two different restaurants because they really need a greater number of hours of work?

This question is an interesting one. I am quite familiar with the restaurant business and I see the same people working in two or three different restaurants.

[English]

Mrs. Joyce Reynolds: Yes, that does happen.

Mr. Yvon Godin: Why?

Mrs. Joyce Reynolds: In some cases they can't get enough hours at some restaurants. As I mentioned before, we're looking at an industry with very skinny profit margins. Restaurants need workers when customers are in their restaurants, and customers tend to be in their restaurants primarily on evenings and in lunch periods. So they don't always need employees earlier in the week, but they need employees on weekends and evenings, and that's not a time when people always want to work.

One of the things that restaurant operators try to do is to accommodate the needs of their workers, particularly students, accomodate their other responsibilities in terms of their schoolwork, and to their families and their other social activities. It's a real give and take in terms of employers and employees in our industry. Are employers trying to accommodate the schedules of those people? Sometimes it's working moms who want to be there when their kids get home from school but would like to be able to work just over lunch hour. So there are all kinds of different situations in which there's a give and take between employers and employees.

Mr. Yvon Godin: But Madam Chair, we're talking here about people who, if they lose their job, would be able to get employment insurance. I did not see any argument by Mrs. Reynolds that said why don't you bring the number of hours down, because when I cannot keep my employees then they lose their jobs, and they'll be able to get to this program they're paying into, and I care so much about my employees, I want them to be able to get employment insurance. Would it be the ideal to bring the number of hours down instead, to have those women parents be able to get employment insurance?

Mrs. Joyce Reynolds: There's also the situation where there are other opportunities. Maybe these people, if they're in a situation where there's seasonal work, should instead be encouraged to further their education or get skills training in some other areas, so that if there aren't any more jobs in that particular region in our industry, they have other opportunities.

We live in a society where, if you're an entrepreneur, if you're enterprising, you can pretty much start a business or work in a business any place on the planet, because we're so connected now with technology. Our industry provides many excellent full-time jobs and opportunities to move up, but we also provide a lot of entry-level jobs that aren't going to be permanent careers for a lot of people.

Mr. Yvon Godin: Madam Chair, for people in construction, I believe part of what has been said. Would you agree—and I think this, it's what I've heard—the two-week waiting period to go for training...?

If we recall the change to EI and what the government was saying, it was “We want to make a change to EI”—and that's not the statement of Yvon Godin, it's the statement of the government—“We want to stop abuse.” Is it not an abuse of a person who works in construction and goes for a training program to take their livelihood away from them by taking their pay away from them? I know the government will answer: “Well, every time they went to their training program, we used to deduct the two-week waiting period. Now it's only one time, a one-shot deal.”

Don't you think this is wrong? Does the industry agree that should really be removed, because it's a punishment for employees going for training, which is good for the industry?

À (1040)

Mr. Michael Atkinson: We certainly would have preferred to see the two-week waiting period eliminated altogether. But in most provinces apprenticeship is four years, and what was happening before was even worse, where the two-week waiting period applied four times during the life of that apprentice, because of having the classroom portion of his or her training.

You're right; now the new rules say the two-week waiting period only applies once. We would prefer to see it not apply at all, that's correct, but we'll take what we have, because what the situation was before was much worse, in having the same individual have to wait four times during their apprenticeship.

The Chair: You still have another couple of minutes, if you wish.

Mr. Yvon Godin: Okay.

The other thing is, looking at the transfers sent to the provinces, I notice since they transferred the employees from HRDC to the human resources of the province—it's all across the country: it's not only in Quebec; it's in New Brunswick; the only place they don't have it is Ontario—what we don't have is an appeal system. If somebody says you don't qualify to go into the program, there's no place to appeal; whereas before, I believe, in the federal program, if you were not accepted, you had a chance to appeal the decision of the public servant, or the one who made the decision.

Would you agree that in this program, if there's any negotiation made with the provinces, there should be something to say a person could appeal the decision? It's very sad, the way that person gets up in the morning, if you say no, no, no; there's no appeal system. Would you agree we should have an appeal system for the workers who go to those programs?

The Chair: Mr. Taillon.

[Translation]

Mr. Gilles Taillon: This is an aspect that we have not studied, but I must admit that it is indeed worrisome. We are certainly going to look into this in Quebec.

Mr. Yvon Godin: Thank you.

[English]

The Chair: Mrs. Reynolds.

Mrs. Joyce Reynolds: Madam Chair, I actually had the opportunity to participate on a board of referees in a community, and from my understanding these boards of referees are right across the country. If somebody wants to appeal a decision made by an HRDC employee, that option is open to them.

Mr. Yvon Godin: On a point of clarification, I'm not talking about going for the employment insurance; I'm talking about the training program. The training program has been passed to the provinces, and there's no board of referees when you're refused by the province. If the province says yes to your training program, HRDC are happy to sign the cheque, because that's the agreement they have with the provinces. It's when the province says no that there's no board of referees. There's no appeal; that's what I was talking about.

The Chair: Thank you.

Ms. Skelton has indicated she has one further question.

Mrs. Carol Skelton: I have to go back to this question of training.

From your industries, do you think the standardization right across Canada of the training programs is what we need, so that every province has the same standard in your journeyman's or any of your training programs, right across the country?

Mr. Dennis Ryan: Actually, it's a very timely question.

The human resources committee within the Canadian Construction Association has just made the recommendation, which was endorsed by our board of directors, to look at national apprenticeship standards. It's a standardization not just in the content of what individuals are trained in throughout the country, but also in the school start and finish times within each province.

For an individual who begins an apprenticeship, say, in eastern Canada, and for problems related to lack of work is not able to carry on, there's little opportunity to move to boom areas. If they can move, they're most likely going to lose a year in their training, because they can't pick up this training as they left it off in Ontario, or Nova Scotia, or wherever it happened to be.

If there were standardized start and finish times for the training, as well as the actual content, it would certainly facilitate the movement of labour among the skilled trades.

À (1045)

Mrs. Carol Skelton: Thank you.

I was worrying about the training of our young employees. A lot of young people in my riding can't get into journeymen programs, and when they do get in they find they can't transfer if they want to go someplace else. I think the standardization right across Canada would help us greatly.

Thank you very much.

The Chair: Mr. Woolford.

Mr. Peter Woolford: Thank you, Madam Chair.

I would just add to that, for the members' information, that we have started through regional council a whole series of programs aimed at setting standards and norms in the retail trade as well. This is for two reasons, really: one, to raise the overall level of performance in the industry and also to get recognized, accredited skills for front-line employees, partly to attract people into the industry because, like some of the other industries here, we're seeing a shortage of people; second, to improve the experience of the customer in the store.

Thirdly, it's to give these employees a career and some mobility within the trade, trying to keep people within the industry, allowing them to build a career path, and to grow. Having standards that are recognized and set at a good, high level is very beneficial for our industry as well.

The Chair: Thank you.

Generally at this point I offer the witnesses a minute, if they have any closing remarks about anything that wasn't dealt with that they hoped might be, or one last opportunity to put a point across.

I will start with Mr. Taillon.

[Translation]

Mr. Gilles Taillon: Thank you, Madam Chair.

I believe we have properly expressed our point of view. I therefore have nothing to add.

[English]

The Chair: Mr. Atkinson.

Mr. Michael Atkinson: I would just say that whatever this committee can do to light a fire under the Department of Finance with respect to their review of the EI rate-setting process and to address some of the major concerns that have been identified by all the groups here today, please go for it.

The Chair: Mr. Ryan.

Mr. Dennis Ryan: I have nothing further to add. Thank you very much.

The Chair: Ms. Reynolds.

Mrs. Joyce Reynolds: I guess my last, parting comment would be please focus on the revenue and the accountability part of the EI program, and not on the benefits.

Thank you.

The Chair: Mr. Woolford.

Mr. Peter Woolford: Madam Chair, I think if I talked about rate-setting again, somebody would throw something at me.

The Chair: No, no, we're very civil here.

Mr. Peter Woolford: That, again, is the message I would leave with this committee: that getting the rates set right, getting a system in place that's responsible and well designed, is our top priority.

The Chair: I thank each and every one of you. I know you're all busy individuals, and we appreciate the time you've taken today out of that schedule to be with us.

Thank you to the committee members as well.

The meeting is adjourned.