My name is Mohamed Boudjenane. As you said, I'm the executive director for the Canadian Arab Federation. With me is our legal counsellor, Amina Sherazee.
I'd like to thank you for the invitation.
Briefly, just to give you a little bit of information about our organization, the Canadian Arab Federation is a national non-profit, membership-based organization representing Canadians of Arab descent on public policy issues. Since its founding in 1967, CAF has sought to create a non-partisan relationship with the media and government officials in order to highlight issues of importance to the Arab community, including those concerning immigration and refugee protection rights.
The Arabs in Canada have been here for a while. The first wave of Arab immigrants came here in 1880, from the Syrian and Lebanese communities. But of course we receive newcomers on a regular basis, and according to Statistics Canada, the Arab immigrants now are one of the fastest-growing immigrant populations in Canada. According to Stats Canada, we have between 350,000 and 500,000 Arab immigrants or Canadians of Arab descent. Recently, in Quebec, for example, this immigrant population increased 45% since 2000, especially in the Montreal region. Those people, of course, come from north Africa--mainly Morocco, Nigeria, and Tunisia.
Arabic is the second most frequently used language in francophone schools in the Montreal region. It is a rapidly growing community, and it has very serious concerns. For the past three years we have, unfortunately, been witnessing a particular phenomenon: a sharp drop in the number of Arab immigrants, and more particularly, refugees. The waiting lists are longer for these communities. One has the impression that the Arab and Muslim world is being subjected to a system that is different than the one that is used for other immigrant communities, because of the so-called anti-terrorism measures that were instituted after September 11, 2001.
We are not here—with all due respect to the democratic process and the invitation that was extended to us—to validate or endorse today's exercise. We feel that this bill, or at least the section of the bill dealing with immigration, should be debated separately. Part 6 of Bill C-50 should become a separate bill, since, in our opinion, the proposed changes should not be taken lightly in view of their wide- ranging effects on Canada's immigration system.
Therefore, we are not here today to validate the work of this parliamentary committee. However, we do have serious concerns and we would like to share them with you. We feel that the powers being sought by the government—and particularly by the —are arbitrary and completely unprecedented. Unfortunately, we do have some concerns relating to the Arab and Muslim community. We feel that these measures could eventually lead to racial profiling. As I have already said, there are clear and rather distinct trends to indicate that immigrants from the Arab and Muslim world are being processed differently from those originating from other communities.
Also, we feel that an emphasis on what is being called an economic type of immigration challenges the fundamental values of Canada's immigration system. Economic considerations have never been the sole determining factor in Canada's immigration policy. Through immigration, Canada has always sought first and foremost to build and create this multicultural, diversified and multi-denominational country. We believe that an emphasis solely on business immigrants will eventually affect other immigrants, particularly those who are in the family reunification category.
The minister has stated that this type of immigration should be stimulated in order to maintain Canada's dynamic economy. We share the same view, and feel that the first step should be to tackle problems related to discrimination and the barriers that prevent immigrants here from accessing employment. I can give you a list of 250 doctors who have settled in the Montreal area, who are of Arab origin, and who have passed all of the tests that are required for them to practice here, yet they cannot work because no hospital wants to take them on as interns.
I can also give you a list of 1,000 foreign-trained doctors living in Toronto who have not yet found employment. If the government is really serious about employment access for foreign-trained immigrants, then it should take this situation seriously.
We are not against bringing in experts from the oil and gas sector, perhaps to help Alberta's economy or whatever, but there should be an objective approach when dealing with business immigration.
Moreover, we feel that this bill does nothing to help with the backlog in the system and the long waiting lists that the government claims to want to deal with. As you know, changes to the Immigration and Refugee Protection Act will only affect people who apply after February 2008. Therefore, the argument in this case does not hold water.
Finally, I would simply like to tell you that we have not come here only to criticize, but to make a constructive contribution to the debate on immigration. We feel that if the government truly wishes to be inclusive and democratic, it will split this bill, make part 6 a separate bill, and consult with communities such as ours.
I will now ask our legal advisor to discuss the clauses that are of particular concern to us and the fundamental changes to the Immigration and Refugee Protection Act.
I too want to hear my colleague David Cohen. I understand he has some very interesting comments to make to this committee.
I have set out the basis for our organization's concerns with respect to this bill in our policy paper. I would commend the entire paper to you and would ask you to read it closely. I don't have the time to go through it, but there are very important points that need to be made, which will expand upon our reasons for taking the position we have with respect to Bill , and in particular part 6.
There are ten parts to this bill, and nine out of the ten deal with fiscal matters, money matters. Then we have part 6. The rest of the bill deals with money matters, and we seriously question why it is that this government has disingenuously--and, in our submission, deceitfully--snuck in IRPA amendments to this bill that otherwise concerns money matters.
This leads us to our submission that, if you examine the provisions, if you examine the actual proposals, they neither give power that the minister doesn't already have with respect to....
I would respectfully request committee members to allow me to make my submission. I only have seven minutes.
Mr. Chair, members of the committee, I asked to appear before you today because of a story that my late grandfather told me when I was young and impressionable. He spoke of how his younger sister fled Poland just ahead of the Nazi occupation and how she managed to secure a residency permit in England, valid for one year. My grandfather did everything he possibly could to convince immigration authorities in Ottawa to allow her to join him in Canada. His plea, however, fell on deaf ears. The door to Canada was shut. In the end, his sister was expelled from England back to Poland. She was never heard from again.
Truth be told, we haven't always had an immigration policy to be proud of. I have been practising immigration law for the better part of 30 years, and I state candidly to you that it was only in 2002, with the introduction of the Immigration and Refugee Protection Act, or IRPA as it's known, that decisions based on discretion were removed from the immigration selection system, at least as it pertains to economic immigrants.
IRPA, in its present form, is a fine piece of legislation in which the selection of economic immigrants is based purely on objective criteria. It is based on the fundamental principle that everyone who chooses to submit an application to come and live in Canada is entitled to fair and equitable consideration.
The government is now proposing to amend IRPA. As part of the proposed changes, the would have the authority to issue instructions to immigration officers related to the processing of applications. More specifically, there are instructions as to which type of applications to process quickly, which applications to hold for processing at a later date and, most importantly, which type of applications to return to sender without any consideration whatsoever.
These amendments, if passed, would change our immigration selection system from one that provides fair consideration to all applications in the order they are received to a system based upon discretionary selection and outright denial of consideration. This would expose the immigration system to the type of discretion that IRPA finally eliminated.
Please understand that the issuance of instructions by the will not magically change anything. In practice, the minister will have to delegate the exercise of discretion to immigration officers who will pick and choose the applications to be processed. This will unavoidably make Canada's selection system vulnerable to human bias, or worse.
Don't get me wrong, I have a great deal of respect for Canadian immigration officers who, as a group, are professional and fair-minded. That said, I would like to place into the record a copy of the message posted on the public forum located on my law firm's website as a practical example of the danger of discretionary selection. I'm going to quote from the beginning of the posting on our forum:
||Here you will read the RANTing of a Canadian Immigration Officer.
|| I am so sick and tired of dealing with all the liars, cheats, frauds etc.
||This line of work has tainted me to the point that I can't even look at most immigrants anymore without pre-judging them as losers.
The person purporting to be an officer--and I'm satisfied that the person is an immigration officer--continues on to denigrate a particular ethnic group, and then concludes by stating,
||Well this felt good to rant a bit and I'll probably do more of this...but for now I have to go and deny a few people entry to my country.
This is the danger when discretion is allowed back into the immigration selection system. It's real, and it will affect people.
The states that these amendments are required to streamline and modernize the immigration system. In particular, the government intends to use the amendments to clear out the current backlog consisting primarily of 600,000 skilled worker applications. In addition, the government contends that the amendments are necessary in order to bring applicants whose skill sets are in high demand in Canada to the front of the immigration line.
In fact, these proposed amendments are not required to achieve the desired goals. IRPA, in its present form, contains the mechanisms to control the flow of economic immigrants and to bring applicants desired by Canadian employers to the front of the immigration line. IRPA does it objectively and transparently.
Please allow me to explain. Simply put, the backlog exists because the number of new applications received every year is more than the number of visas issued during the year. We can all understand that. One of the IRPA regulations foresees this eventuality. It empowers the minister to set the minimum number of points required to qualify as a skilled worker, keeping in mind the number of applications currently being processed versus the target number of immigrant visas to be issued.
The minister may, therefore, simply raise the pass mark above the current level of 67 points to curtail the number of fresh applications. People can count. They won't pay $550 in government processing fees only to be refused on the merits of their application--but the merits of their application will be considered.
The minister may also make use of restricted occupations, as provided for in another IRPA regulation. After conducting the appropriate consultations with provincial governments and other relevant stakeholders, the minister may designate as “restricted” certain occupations for which there is little demand in the Canadian labour market. Potential applicants with experience in restricted occupations would receive no points for their work experience, which would prevent them from qualifying under the skilled worker category. They would therefore have no incentive to apply. This would ensure that Canada selects a higher number of immigrants who meet the immediate labour market needs.
Finally, the present legislation allows for arranged employment in Canada. A genuine job offer from a Canadian employer entitles an applicant to an immediate temporary work permit or accelerated processing of the permanent resident application. This allows the best and brightest to be brought to the head of the immigration queue.
To summarize, IRPA currently provides the mechanisms that permit the government to achieve all of its goals--namely, cutting through the existing backlog of skilled worker applications and prioritizing the processing of applicants whose work experience is in high demand. IRPA is fair, and it could work.
I don't know if I have any time left, Mr. Chair. I have a couple of notes about the backlog in general, and it would only take another minute.
Thank you very much, Mr. Chair, and thank you so much for the invitation.
It's my privilege to serve as the president and CEO of the Canadian Urban Transit Association, the organization that many of you may have come to know as CUTA.
With me is a member of our executive committee, Louise Poirier, who is our vice-chair, municipal councils.
I say it's my “privilege” to serve as CEO of the association because I feel passionately that serving CUTA's mandate of establishing public transit as the primary solution to urban mobility in Canada is at the cutting edge of public policy in this country, and touches so many of the important issues of the day.
As MPs, if you think about climate change or clean air, transit is front and centre as a solution. If you think about increasing our economic competitiveness based on efficient travel and commuting, you have to think of transit. If you think of healthy living and quality of life for the majority of Canadians, again, transit is there. Picture this: one city bus carries as many people as 50 cars, and one commuter train can replace 15 lanes of traffic.
I'm sure many committee members have also heard from constituents about the increasing cost of gasoline. Again, transit is the solution.
I'd also like to underscore that our transit systems have never been more optimistic about the future of public transit in this country. I can tell you from travelling across Canada that our members are engaged with the public, and there is a new spirit of cooperation about building and achieving greater things for Canada based on improved public transit.
This brings us to the essential element of the bill before you today: the establishment of the public transit capital trust and the investment of $500 million. This is an extraordinarily important investment and is part of what leads to the optimism about public transit that we referred to earlier.
The public supports investment in transit. This funding will make a real difference to allowing transit systems across Canada to meet the growing demand and growing expectations. The investment is good for the environment, the economy, and healthy living.
That said, many pundits, politicians, and the media have raised the issue as to whether or not this is enough to meet the needs of Canadians and the needs of public transit. This is an important question, but in a sense it's less important than the question of how can we move forward to build world-class transit infrastructure and service in Canada? How can we do better?
Clearly cash injections are positive, but they have severe limitations. They're unplanned, and in an industry that requires long-term planning for capital projects, that poses problems. Regional considerations are also much more difficult to manage with a one-time spending process. So while the investments made in this bill provide real value, there's a better way for future spending.
Canada remains the only G-8 country without a national policy of long-term, predictable, dedicated trends in investment. This prevents Canadian transit systems from achieving their full potential. Together with the Federation of Canadian Municipalities, CUTA is urging the implementation of a national transit strategy.
The proposed strategy has five elements: dedicated federal investment to maintain, renew, and expand transit services across the country; federal tax incentives for individuals who choose transit, such as an income tax exemption for employer-provided transit benefits; support for research to enable innovation and make transit operations more effective and more efficient; a requirement for recipient communities to approve integrated land use and transportation plans that make transit the primary means of serving future growth and travel demand; and finally, intergovernmental cooperation to ensure that accountability measures are in place.
Thank you, Mr. Chairman.
It is interesting to hear from groups with diverging objectives, namely urban transit associations. That is a hallmark of the bill that we are studying. Work has already been done on the urban transit file, and money is now being allocated. It is perfectly normal to find this type of thing in a budget bill.
With immigration, however, that type of examination has not taken place. If we had met with urban transit representatives 10 years ago to amend the act without taking into account what people wanted, then things might have turned out quite differently.
I would also like to point out that this committee adopted a motion asking the Standing Committee on Citizenship and Immigration to study part 6 of this bill because we felt that we did not have the necessary expertise to delve into that part of the bill. We hope to have their report in time. I think that we share the same feelings about the need to withdraw that matter from the bill.
Mr. Boudjenane, Mr. Cohen and Ms. Sherazee, Quebec has a special agreement on immigration. Will this bill affect Quebec in any way or has the province been sheltered from the negative consequences that were expressed so well in your presentations?
I think we'd be stating the obvious to say that it's about a confidence vote. It's not fair to Canadians to be implementing legislation this way. It's part of a move toward legislative changes that will authorize instructions to be made in all sorts of areas, which will reduce political accountability.
I think it has serious implications for our constitutional democracy. It certainly has implications for the rule of law, particularly when people are going to be making applications under a particular set of laws, and then arbitrarily those criteria will be changed and their applications will be refused without notice to them. After their fee has been collected, after they've waited their turn, their application could be, as the Canadian Council for Refugees said, shredded.
It has really huge implications also for our international obligations--this is something I've set out in our written submissions--when we talk about humanitarian and compassionate applications not being required to be assessed outside of the country.
So these are all very major changes that impact on really fundamental aspects of our democracy. This railroading in passing the legislation, the high-stakes manner in which it's being done, is highly objectionable. It really calls into question the government's commitment to fair, open government.
Yes. Recently, as you know, the United Nations High Commission for Refugees singled out the Canadian government which was not doing enough to take in Iraqi refugees. The minister reacted, but in increasing the number of Iraqi refugees, she reduced the number of refugees from other countries, which seems rather contradictory. That is one point, but I can assure you that there are very clear indications in terms of number, of percentage, over the past three years. The number of immigrants from Arab and Muslim countries has dropped by 30%. Most of the immigrants from those countries wait three times longer than others to have their applications processed.
To also address a comment made by the Conservative member, I would add that the current system includes systemic barriers for certain groups of immigrants. Take, for example, the African continent, which is huge: we only have four missions to grant visas to immigrants from that continent. There are two in Asia; that includes China, Pakistan and India. Moreover, there are more than 50 in Europe and in the United States, there are 10 times the number of these...
Why is there such an emphasis on immigration that no longer comes to Canada, namely, European immigration, when most of today's immigrants come from Southeast Asia, the Middle East, Africa and Latin America? If we really want to reduce the waiting lists, then why not invest in services that will speed up the processing?
Good afternoon to you, Mr. Chairman, and to all. I thank the committee for inviting me. It is always a delight to appear before this committee.
Clearly I am here to discuss this budget bill, and there's a lot in that bill, so I'm going to restrict my opening comments to TFSAs and Bank of Canada powers, parts 1 and 10 of the bill.
Let me begin by repeating that there is a lot in the bill, and this point deserves emphasis. Members of the committee are keenly aware of the importance of the parliamentary process and may know that I believe MPs should have an opportunity to scrutinize legislation with the diligence it deserves. I will not second-guess the government's wisdom in bring forward omnibus legislation like this bill, but I point out that doing so and packing multiple issues together in one bill does make it difficult for any of us to give each aspect the scrutiny it deserves.
That said, there is much to like in this bill, and I do. I've made no secret of my support for tax-free savings accounts, and I'm absolutely delighted to see the idea appear in legislation. When Jon Kesselman and I first wrote about the concept in the Canadian context back in 2001, our focus was on expanding the range of options available for Canadian savers. We were concerned that, on the one hand, people planning their retirements did not have enough tax-recognized contribution in total. After all, the contribution limits on RRSPs were much lower then, and at the time had not moved much over many years.
We had two reasons for prescribing something other than just bigger contribution limits. We made the general point that people are better off when they have more options for how they can save. Sometimes, in anyone's life, it can make more sense to save out of pre-tax earnings, as with RRSPs, and others might be better off saving out of after-tax earnings, as with TFSAs.
I should add that we labelled them “tax-prepaid” savings plans, because we wanted to emphasize that the tax had already been paid on the earnings underpinning those savings. That reminder explicit in the tax-prepaid label was really aimed at future governments, because we were concerned that the plans would become very popular and large over time and that future governments would see the accumulated savings as a target for taxing.
That brings us to the second aspect of why I think the option of saving in TFSAs is good for Canadians. That is because RRSPs are not right for everyone. Consider an older worker, someone who perhaps immigrated to Canada late in life who doesn't have much savings or a workplace pension. This worker will almost certainly rely on the guaranteed income supplement when he or she retires and may be eligible for federal or provincial supplementary benefits. But what happens if she saves in an RRSP? When she retires and begins to draw down her RRSP savings, the withdrawals count to taxable income, but she must also count those withdrawals in establishing her GIS eligibility and will lose entitlements at the rate of 50¢ or 75¢ on the dollar for each dollar of private income, including from her savings. If she loses entirely her GIS ability, she'll lose access to other benefits such as provincial top-ups or subsidies that are made available to the people who qualify for the GIS. So some workers are no better off saving in RRSPs than if they don't save at all. In fact, they may be worse off if they do.
Some folks argue that low-income families don't save. In fact, they do. A few years back, GIS recipients had retirement savings totalling $37 billion, averaging about $25,000 each, but even if we thought saving was rare, policy shouldn't punish people for doing it. That's where TFSAs come in. I see them as beneficial for Canadian savers of all sorts.
For us to take advantage of them, however, we do have to see the legislation adopted and supportive regulations developed and published, because 2009 is not very far off, and if financial institutions are to roll out the new savings accounts, they need staff and promotional materials, they need to deal with their legal issues, and perhaps most important of all, they have to update their information systems. So all that has to be ready.
That implies two things. The first is swift action from the government in passing legislation and regulation if we are to see TFSAs as swiftly in place as I would hope. The second is that as we run through the regulations in particular, but the legislation too, we should see that, wherever possible, TFSAs be given provisions identical to those applying to RRSPs. This is a good example of where policy can usefully be guided by practice.
At this point, I would like to shift gears entirely while returning to the general issue of legislative scrutiny. Part 10 of the bill proposes broader powers for the Bank of Canada. Indeed, the C.D. Howe Institute published a brief last year stating that an updated Bank of Canada Act was due because the types of securities the bank was permitted to buy and sell no longer reflected the modern financial marketplace. That's a problem, because if the governor had to invoke emergency powers to respond to ordinary needs for short-term liquidity in support of otherwise solvent financial institutions, the announcement of an emergency would risk further aggravating the problems it sought to solve.
would broadly expand the governor's powers, subject to the requirement that the governor establish a clear policy and publish it seven days in advance in the Canada Gazette laying out how those powers could be implemented. That's good for accountability.
What concerns me, however, is whether the bank, with liberalized powers to buy and sell assets as well as lend, is sufficiently protected from pressure to prop up failing institutions, exposing Canadians at large to risks and costs that should stay parked with those institutions themselves.
The Bank of Canada is very well managed and recognized around the world for its independence and reliability, but it is dangerous to assume that this will always be the case, and risky to lower the institutional barriers that protect that independence. After all, when faced with political pressure to act in a particular way, it is useful for an agency head to be able to say that the institution's governing legislation does not permit what the political leadership says it wants.
Again, I think the bank will handle these powers well, but I find the recent U.S. experience of grave concern. There, after all, the Federal Reserve has come under intense pressure to support financial institutions, and to do so in some novel ways. For good or ill, the Fed has provided such support, so I see there some evident justification for my concern.
What to do about it? One modification would be to look for a longer lead time—longer than seven days—with respect to policy changes in what the bank may do in the course of its market activities, and to clarify that changes will take the form of regulations requiring order in council approval. Another would be for the legislation to be more prescriptive and less open-ended with respect to bank powers. Those are some options.
With that, I think my time is up, Mr. Chairman. I thank you very much for your time.
Thank you Mr. Chairman and members of the committee. My name is Rob Cunningham. I am a lawyer and a senior policy analyst for the Canadian Cancer Society.
On behalf of the Canadian Cancer Society, thank you for the opportunity to testify today.
Our single most important strategy to reduce tobacco consumption is higher taxes. The very high levels of contraband that we find in Canada today are undermining the success of that strategy. Teenagers are particularly price-sensitive. The high levels of contraband are a problem for not only public health but also public revenue; there's easily more than $1 billion lost by federal and provincial governments. It's also a problem of public security, given the nature of the problem.
My comments will refer specifically to clauses 50 to 69 of the bill, which we support and urge all members of the committee to endorse. We would like to endorse what was in the 2008 budget, in terms of contraband prevention measures, first, to prohibit the importation or possession of tobacco manufacturing equipment, except for those with a valid tobacco manufacture licence. In the absence of this provision, there is inadequate control of the ability to make cigarettes.
Second, we endorse making explicit the authority of the Minister of National Revenue to deny or revoke a tobacco manufacturer's licence where inspectors' access to the premises is impeded. We know this is currently a problem.
And we also support changing the way roll-your-own tobacco is taxed, to facilitate implementation of the government's forthcoming sophisticated tax stamping system. It is a positive measure that we support.
Another measure in the bill and the budget is to close a loophole for a product category called “tobacco sticks”, which are taxed at a much lower rate than cigarettes. Nine out of ten provinces have closed this loophole and the market share has fallen to less than 1%. It's a positive measure to prevent problems in the future.
I'd like to take the occasion to acknowledge and support the announcement of Public Safety Minister Stockwell Day last week with respect to moving forward on enforcement as it relates to tobacco contraband. There's a very serious recognition by the government of the magnitude of the problem. There's a political commitment to move forward. Minister Day recognized this is one step in the process and that more measures in the future will be considered, and we agree there are other measures that would contribute to having an impact as part of a comprehensive strategy.
If I could invite members of the committee to turn to the handout, on the final page is a graph comparing provincial tobacco tax rates in Canada. We see that Ontario and Quebec have the lowest tobacco tax rates, yet they have the highest contraband levels by far. This helps to illustrate that the problem of contraband today in Canada is not one of higher taxes or of demand, but of supply. The key to success is eliminating the sources of supply. We know where those are. The RCMP was very specific about that in the report it released last week on illegal operations on the U.S. side of Akwesasne in New York State near Cornwall, Kahnawake near Montreal, Tyendinaga near Belleville, and Six Nations near Brantford. And there are illicit distribution channels off reserve in various places, particularly in Ontario and Quebec.
What additional measures could assist here? First, to persuade the U.S. government of the importance of shutting down the illegal operations on the U.S. side of Akwesasne. It is a national security threat to both countries. The Canadian government is losing revenue. By far it is the most important source of contraband entering Canada, and we would expect that the U.S. government would ask Canada to act if the reverse were occurring and the U.S. market were being flooded with illegal cigarettes from Canada.
Second, prohibit the supply of raw materials to unlicensed manufacturers, not only leaf tobacco but also cigarette papers, filters, and packaging. We need to choke off illegal production even before we get to the factory.
Third, establish a minimum bond of $5 million to have a tobacco manufacturers licence. Right now, believe it or not, it's possible to get a federal manufacturing licence for as little as $5,000—which is a problem. If we had a meaningful bond, we could have the financial leverage to encourage compliance, and if there's a failure to comply, that bond could be forfeited in whole or in part.
Fourth, have a tracking and tracing system to build on the new tax stamping system that's coming to monitor shipments and identify the point of illegal diversion.
Fifth, and finally, have better promotion of the first nations tobacco tax opportunity that currently exists because of the 2006 budget. There is a very low level of awareness of this, but if we could promote it more, first nations could implement a tobacco tax equal to provincial tobacco taxes. They must have an agreement, an arrangement, with the province in which they're located, but this would assist them.
Contraband is a population-wide public health problem for aboriginal and non-aboriginal kids, and aboriginal and non-aboriginal populations. There's a very high smoking rate among the aboriginal population. It's caused in part by long-standing access to cheap cigarettes, including very cheap contraband cigarettes.
Thank you for your time. I look forward to any questions you may have.
Thank you Mr. Chairman.
My name is Michel Bédard and I would like to thank you for inviting the Canadian Institute of Actuaries to appear before your committee to discuss the creation of the Canada Employment Insurance Financing Board, as provided for in Bill .
Our profession puts public interest before its own needs and those of its members. It is with that in mind that in December 2007, we published our report on the funding of employment insurance and that is we are appearing before your committee today.
We support the creation of the Canada Employment Insurance Financing Board, an independent board to supervise the funding of the plan; however, there are major aspects of this bill that could lead to problems for workers and employers as well as for the government itself.
The merit in this new system, of course, lies in the fact that after 2008, all costs and premiums will be balanced. However, forcing the financing board to maintain that balance on an annual basis, one year at a time, represents a serious handicap and will lead to fluctuations in the premium rates, and, more particularly, will trigger a procyclical rate increase at the first sign of a recession.
To illustrate, let's look at the following scenario. A recession hits Canada. Unemployment levels rise to 8%, which is 2% higher than now, increasing payments to out-of-work Canadians by about $3 billion. What happens? The board's $2 billion reserve is totally depleted. The EI account is forced to borrow another $1 billion from the government, even though, by the way, the EI account shows a surplus at this date of $56 billion. Unemployment levels might rise further. The government fiscal balance falls into deficit.
When the premium rate is set for the following year, several things will need to happen. First, the $1 billion that was borrowed by the EI account will have to be repaid, and so premiums will have to rise to cover that. The $2 billion so-called reserve has to be repaid within a single year. Then, of course, an increasing number of Canadians are out of work, and premiums have to increase to cover those extra costs.
Well, consideration of raising the premiums above the legislated limit of 0.15%, which is in the current legislation, will then fall to ministers. This will not be an easy decision in a weakened economy and weakened fiscal position.
We can look at the many times that the government substituted its health to the EI commission in the past to see that this is a real risk and a real possibility. Of course the impact on Canadian businesses, which pay for nearly 60% of the EI program costs, will be significant at those times when their cashflow and profits are severely reduced. And workers, who foot the bill for 40% of the EI contributions, will also be deeply impacted.
We believe having a five- to seven-year time horizon, closer to the normal course of a business cycle, would eliminate the necessity of raising premiums at the precise moment when they need to be stable, not increasing. Our calculations also indicate that an actuarial reserve of $10 billion to $15 billion would be needed to stabilize premium rates over such a timeframe. The rest of the existing surplus, which now stands at $56 billion as I pointed out, is not needed for the proper financial management of the EI program.
Even during an economic downturn that's not as deep as the one I described.... Even deeper recessions might also be possible, but during a smaller economic downturn, the one-year look-forward system would necessitate raising premiums on each occasion, pro-cyclically. Canada's actuaries believe this mechanism needs to be abandoned.
In fact, the proposed system is likely to produce premium rates that vary erratically from year to year, even in normal times, to recover normal forecasting errors. The so-called reserve of $2 billion does nothing to prevent this, as it must be rebuilt each and every year. In this sense, it is not a real reserve under that proposed system. It will not help stabilize premium rates at all. In fact, there is no fiscal cost for the government in any of this, of course, as the new board's operations will be entirely consolidated with those of the government.
also has a number of restriction override provisions that, in our opinion, minimize or undermine the promise of independence put forward by the Minister of Finance in the February 26 budget. Under proposed sections 66.1 and 66.2--it's paragraph 2(b) in each--ministers are authorized to regulate what is binding on the board in addition to the rules they have to follow in terms of setting premium rates for a year.
Proposed subsection 66(8) allows ministers to override the 0.15% limit.
Proposed section 66.3 allows ministers to override the board without even any limit, at any time.
And proposed subsection 80(2) allows the Minister of Finance to dictate these loans and the pace at which they will be repaid.
We conclude with three recommendations. First, as I pointed out, the Canadian Institute of Actuaries recommends that premium rates be set taking into account a five- to seven-year period, with an actuarial reserve of $10 billion to $15 billion drawn from the existing surplus of $56 billion--maybe not all at once, maybe spread out over time, but ideally, given through a truly independent body.
Second, the institute recommends that be amended to allow the chief actuary and the board considerably more latitude in the assumptions and projections needed to develop the premium rates, taking into account a five- to seven-year time horizon.
Third, the institute must, as a point of principle, reiterate our position of principle that the existing surplus belongs to the EI system and to its contributors, and should be addressed clearly instead of being swept under the rug once again. And in that domain, I must point out, of course, that the Supreme Court will be hearing this very situation tomorrow morning.
Having listened to my predecessors, I am convinced once again that it's extremely unfortunate that the government has chosen to put so many diverse issues into one bill. I found the presentation by the actuaries association extremely interesting, and I think it would be extremely important to take heed of what he said. I would say the same of the presentation by the Cancer Society and by my friend from the C.D. Howe Institute as well.
In any event, having said that, I will address the issue that I know about. I don't know about actuarial issues but I do know about immigration law. I've practised it for 30 years.
I'd like to deal with the claim of the government that this has to do with the backlog. I hope by now it's abundantly clear that this legislation has nothing to do with the immigration backlog. It excludes the backlog from its application. If that's the case, the question arises: what are we going to do with this massive backlog?
I would suggest to you that first we have to understand how it came to be. It's only a backlog that was created in the last six years—900,000 in six years—because the law changed six years ago. How did we get to this massive backlog in six years? We got to it because, notwithstanding the fact that this government and the previous government had the tools in place to ensure that the backlog didn't grow--because they could have changed at any time the criteria--they stood by and allowed this massive backlog to exist. We now have a backlog, and this legislation won't do anything about it, so we have to ask ourselves why we are talking about the changes to the selection criteria if, in fact, we have 900,000 people waiting whose applications are going to have to be processed, which is equivalent to about six years' worth of applications in the backlog.
There has to be a strategy to deal with this backlog, and this legislation has nothing to do with that strategy. The has suggested that we need this legislation because we need to have more flexibility in order to determine who we select to come into Canada. As the speaker from the previous panel said, we already have that flexibility in place. The minister has the power to make political directions. One example is the provincial nominee program. There's nothing in the legislation that allows provincial nominee applicants to get priority processing over other applicants, but they get it because the minister directed her officials to process provincial nominee applications more quickly.
The can make any types of direction she likes, even dealing with occupations. I went to court two years ago and challenged the minister's authority to do this in the case of Vaziri. I lost. It was a case about processing sponsored applications, and I argued that the legislation said that parents and spouses had to be processed at the same time, and the only way the minister could give priority over spouses was through a regulation. The Federal Court said the minister had political power to direct processing of applications as she liked. That would apply to occupations, and it would apply to provincial nominees.
So the doesn't need that power through this legislation.
The has said that this legislation does not authorize her to interfere in individual applications. That may be her intent, but as immigration lawyers, we've learned many times that professions of intent are meaningless when you go to the Federal Court and the court looks at the wording. The wording, as it stands now, clearly allows the minister to interfere with individual applications. If the government is serious, they should introduce an amendment that expressly says she cannot do that.
I was at the citizenship and immigration committee before, and someone from the Bloc asked me if it would allow the to interfere with the power of Quebec to select immigrants. The answer is yes. The instructions that the minister can issue are unrestricted. Indeed, the minister could issue an instruction saying that all provincial applications are going to be given lower priority than others, or no priority, or whatever.
So that's extremely important for the people from all of the provinces to understand. And this gets to the question that was asked: what's the problem with this? If we have the power now, why do we need this legislation? Well, this legislation gives the minister the power to override any of the rules and regulations or even the agreements that exist between the provinces. It gives the minister extremely broad, unfettered discretion with respect to who gets into Canada, where there is absolutely no political accountability, and that, in my view, is a very serious problem.
The Conservatives came to power saying they believed there should be more participation by Parliament. What this legislation does, if it's passed, is basically undermine any participation by members of Parliament in any aspect of the immigration process, because anything that's debated can be undermined by instructions issued by the minister when Parliament isn't sitting, which wouldn't be subject to any debate. If this bill goes through before the end of this session and becomes law on June 30, on July 2 the could issue an instruction that could totally change all the rules under which applications are being processed, and Parliament wouldn't have an opportunity to discuss it until October.
This is extremely undemocratic, and undermines the role of Parliament in debating and discussing immigration policy. In my view, it's not correct that the minister will be politically accountable as a result of publication. She may ultimately be politically accountable, but by the time any debate occurs, months will have passed. So I would urge the committee to really defer a determination of this legislation because I think it's really ill-conceived, undemocratic.
My final point is that it sets a very negative precedent. If this legislation is allowed to pass, what is to prevent the from being given powers to issue instructions about important matters? What is to prevent the from being given the same power, to override the regulations through some kind of administrative fiat? Ultimately we can give all the different ministers the powers to issue instructions, and then we don't need to have a Parliament, we just have ministers who issue instructions. It's an extremely dangerous precedent that is a further centralization of the power of government, and I think it's something that should be carefully considered before it's passed into law.
Thank you very much.
Thank you, witnesses.
I agree completely with you, Mr. Waldman. We have four important issues, four important presentations--and I can't possibly do justice to your presentation so I'm going to ignore you; I apologize.
Voices: Oh, oh!
Hon. John McKay: I also want to publicly thank Mr. Cunningham for his group's assistance in passing my private member's bill on fire-safe cigarettes. It's an important and groundbreaking piece of legislation, and I understand it's pretty well gone around the world. So I think you need to be able to pat yourself on the back on that.
But I'm going to ignore your issue too, because we have a very limited amount of time and we have a bill that has a lot of extremely important issues to it.
I want to start with you, Mr. Poschmann, on this increase in powers. On a theoretical basis, we sort of agree that the legislative authorities of the Bank of Canada need to be updated. But there is a perverse consequence to this. It appears, in effect, to reward bad behaviour.
If bank X is in difficulty because it bought a whole pile of junk, and bank Y didn't buy junk on the marketplace, now bank X can go to the Bank of Canada and say, “Mr. Governor, I have this pile of paper here and I really need some money for it. Would you mind giving me some money?”
Under these authorities, particularly if there's any hint that maybe the bank has any difficulties with liquidity, the governor will be under an enormous amount of pressure to respond to that request on the part of the bank that behaved poorly in the marketplace.
I'd be interested in your comments on that.
Lorne, I just have one question. It pertains to the word “deceit”--a word used by the person who was sitting in the chair before you--in terms of moving this forward. I didn't hear you use that word, so I would like to at least take a little bit of direction from you.
You made a comment about the minister potentially making a decision on July 2 that couldn't be pursued, or at least asked about, until Parliament resumed the following September or October. While ministers are questioned on decisions from time to time in the House of Commons, I do pause and reflect upon that, because it suggests to me that....
I actually asked the ADM who came in to respond to a number of these questions, after the minister had been here, about the type of latitude you're suggesting. It borders upon the minister actually doing something illegal.
When I asked the ministry about this, they gave a pretty detailed response. First of all, there's the annual level exercise, which the Government of Canada goes through each and every year. It's then published. Any decision has to be consistent with the objectives in the Immigration and Refugee Protection Act. It also has to be consistent with the Canadian Charter of Rights and Freedoms--everything we do basically has to be consistent with that charter--and it explicitly prohibits any form of discrimination.
So I want to be clear that what you're suggesting isn't that the minister is actually going to do something that goes against the act or in fact against the charter. That is what you're suggesting, in a way, because you're saying she has these sweeping new powers. That actually isn't the case when you go through the act, because the minister has some latitude as we speak now.
I want to be clear that you're not suggesting she would actually do anything untoward or illegal, because she wouldn't be allowed to do that in the first place, regardless of whether or not she had the power to do so.
Mr. Chairman, I would first like to thank Mr. Waldman for the answer that he was ultimately able to finish.
Second, I would like to tell him how much we agree with his interpretation. In fact, since the beginning of this saga concerning the portion of the bill that deals with the immigration budget, we have always clamoured that the main problem is the discretionary power that it would give to the minister. There is an excellent and very simple way of illustrating this. We are in the process of changing the word “shall” to the word “can”, whereas before, provided the objective criteria were respected, people had the right to obtain citizenship. Now, everything hinges on discretion. It is this increase in discretionary power that he is denouncing, and rightfully so.
I would also like to ask the witness to give us more details on one aspect of his testimony, because I and some of my colleagues wanted to ensure that we understood correctly. He is not saying that Bill C-50 changes the current agreement that governs immigration matters in relations between the federal government and Quebec. If I understood correctly, he is saying that given that there is no limit on the directives that the minister could issue, then she could issue directives that would change these relations, even with Quebec.
Did I understand correctly?
As I said, as long as there's no....
I regret that I don't speak French.
If I did, I would embarrass you, so I'll speak English.
As long as the legislation does not put clear limits, the discretion of the minister, as it now stands, is not fettered, and it would allow the minister to make changes that could affect the agreement with Quebec. Now, Quebec could then challenge that constitutionally, but that would be a lengthy process, which may or may not be successful.
If the minister is saying they have no intention of doing these things, then it should be clearly set out in the act what powers the minister wants and doesn't want. The minister could agree to an amendment that states that nothing in the legislation allows the minister to issue instructions that would have an impact on provincial nominee programs or the Quebec-Canada immigration accord, and nothing in the legislation would allow the minister to make instructions with respect to individual applications.
This is what the ministers have been saying, but it's not what the legislation states.