I call the meeting to order.
Welcome, everybody. We're going to get started.
Before we get things going officially, I would like to officially welcome back Julie, our clerk, from a bit of a hiatus. Welcome back. We missed you.
I'd just like to read a quick statement. It will frame what we're doing today.
It is with regard to clause-by-clause consideration of a bill in committee. There are many new folks in the room, myself included, so bear with me. I'd like to provide members of the committee with a few comments on how committees proceed with the clause-by-clause consideration of a bill.
As the name indicates, this is an examination of all the clauses in the order in which they appear in the bill. I will call each clause successively, and each clause is subject to debate and vote. If there are amendments to the clause in question, I will recognize the member proposing it, who may explain it. The amendment will then be open for debate.
When no further members wish to intervene, the amendment will be voted on. Amendments will be considered in the order in which they appear in the package each member received from the clerk. If there are amendments that are consequential to each other, they will be voted on together.
In addition to having to be properly drafted in a legal sense, amendments must also be procedurally admissible. The chair may be called upon to rule amendments inadmissible if they go against the principle of the bill or are beyond the scope of the bill, both of which were adopted by the House when it agreed to the bill at second reading, or if they offend the financial prerogative of the crown. If you wish to eliminate a clause of the bill altogether, the proper course of action is to vote against the clause when the time comes, not to propose an amendment to delete it.
Since this is a first exercise for many new members, I will go slowly to allow all members to follow the proceedings properly. If, during the process, the committee decides not to vote on a clause, that clause can be put aside by the committee so that we can revisit it later in the process.
As indicated earlier, the committee will go through the package of amendments in the order in which they appear and vote on them one at a time unless some are consequential and dealt with together.
Amendments have been given a number in the top right corner to indicate which party submitted them. There is no need for a seconder to move an amendment.
Once an amendment has been moved, you will need unanimous consent to withdraw it.
During debate on an amendment, members are permitted to move subamendments. These subamendments do not require the approval of the mover of the amendment.
Only one subamendment may be considered at a time, and that subamendment cannot be amended. When a subamendment to an amendment is moved, the subamendment is voted on first. Then another subamendment may be moved or the committee may consider the main amendment and vote on it.
Once every clause has been voted on, the committee will vote on the title and the bill itself, and an order to reprint the bill will be required so that the House has the proper copy for use at report stage. Finally, the committee will have to order the chair to report the bill to the House. That report contains only the text of any adopted amendments, as well as an indication of any deleted clauses.
I thank the members for their attention and wish everyone a productive clause-by-clause consideration of Bill .
To add to this, we did not have any amendments submitted prior to last Friday.
My apologies, Mr. Chairman. It's a busy time of year for our board of directors, and we were just vetting it before I sent it off. We're in the middle of lobster season right now, so it's a busy time for all. Irrespective of that, it's certainly not anything for which people couldn't jot down a few notes, so I'm sure you'll have a few questions. Basically, I want to thank you for the opportunity of presenting to the committee.
I want to give everyone a little bit of background on the Prince Edward Island Fishermen's Association. We represent close to 1,270 fishers on Prince Edward Island. Our primary species are lobster, tuna, herring, mackerel, halibut, and those types of species.
Even though Prince Edward Island is quite small, our organization has the area divided up into six local locations, and they each have their elected executives. Two members of those local associations sit on the P.E.I. board of directors, so our board comprises 12 directors and an elected president.
One thing we thought would be important and, hopefully, of value to the committee is mentioning that a lot of our members are under the fisher EI program. We want to clarify and put a little bit of information out there on how that program works. A lot of Canadians aren't aware that although there's some more flexibility in the program than in maybe some of the other programs, there is a clawback provision in the fisher EI program. Once an established economic threshold of $39,000 net income is achieved, there is a clawback provision under which any benefits paid up until that point would start to be paid back. The fishing community is less than 1% of all EI claimants nationally, so we're a pretty small part in the total scheme of things.
Another point of clarification, I would say, is that because there are lags in between fishing seasons, many of our fishers will fish one species and then another species may not open up for a number of weeks, so it's quite common for them to leave a claim open. Depending on how the numbers are analyzed, sometimes that can make the numbers seem artificially high for the number of people who are collecting. I think that a lot of the time people assume that if a claim is open, that person is collecting benefits during the whole period, and that's not necessarily the case.
Based on some of the more recent classifications, the fishers are classified as frequent claimants. This means three or more claims and 60 or more weeks of regular fishing claims in the past five years, and that's the category that a lot of our fishers come under.
Another thing we also want to point out to the committee is the impact on crew members of some of the recent changes. We are a weather-related fishery, so the length of the season is hard to predict. Some years we get additional weeks of income and fishing. Other years we don't, because of the weather. That will always be with us, as long as it's a wild fishery out there.
One change that was made fairly recently.... We did have situations of people taking other jobs and then coming back to fishing. The crew requirements are to have highly skilled people on the back of the boats. It is a very dangerous profession. There are a lot of safeguards in place for training a crew, but it is really important to have continuity on the back of the boat as much as possible. Our captains were starting to experience, until very recently, quite a challenge to recruit skilled people and keep them on the back of the boats, and it's only because of the unfortunate economic downturn in Alberta that this has softened a little bit for this year. A reversal the committee may want to consider is allowing people to seize an opportunity for some good, solid income at a higher-paying position and not penalize a person for taking that opportunity.
In the past few years we have been seeing an improvement in our returns to our captains, but certainly it hasn't been that way for a number of years, up until the last two or three years, and it is very common for captains to use family members as crew. There again you can have situations in which there may be two people in the household collecting, but they're actively involved and working with the fleet.
My last point with regard to crew impacts is that a shortage of skilled workers has developed, and we feel the less flexible EI system was a contributing factor to some of these staffing shortages on the back of the boat.
My next statements will address the impacts of overall EI changes.
One of them regards the Social Security Tribunal, which I believe is fully up and running.
The board of referees was discontinued back in 2013. Certainly the purpose of that panel was to significantly reduce not only administrative costs but also the number of appeals. To my understanding, that panel has 74 full-time appointees, whereas there were close to 1,000 locally based people on the other review panel, and they're handling not only EI claims but also CPP and old age security claims.
Now that the Social Security Tribunal has been in place for a couple of years, it may be an ideal time to assess the effectiveness of it. My understanding is that it's a challenge to have your case reviewed, and that may contribute to some of the significant drop in claims.
Jumping back to the fishing community again, fishing and regular claims used to be assessed separately during the year. Now there's a provision with the changes that one claim must run out before a new claim is started, and a lot of times that creates a lot of unnecessary paperwork. There are some nuances to the fisher EI, but there are times when the regular EI is part of the program too, so in an effort to streamline operations, that might be well worth considering.
In P.E.I. 11% of the workers are seasonal workers. I'll address this a little more in a further aside here, but some of the recent changes have restricted the ability of these workers to earn additional income or to switch to higher-paying positions, as I just mentioned. That may be something the committee would want to look at in a little more detail.
There was a program in some parts of Canada that was discontinued several years ago. It provided five weeks of additional benefit to seasonal workers. We can say from the fishing community standpoint that it was extremely beneficial in tiding people over to the start of the next season when they could go back to their seasonal job. It was of great benefit to a lot of the plants too, because it brought back a very skilled workforce.
I mentioned the discontinuation of the five-week program and the benefits it provided not only to the fleets but also to the plants. One of the other things we wanted to point out that seems to be punitive irrespective of what type of EI someone is on is some of the recent changes to working while on claim. It was at $75 or 40% of the weekly benefit; over that amount, it was clawed back. Now there is a higher degree of clawback once you're over 50%. Certainly we want to encourage people to take opportunities to earn additional income, and we feel that change has been more counterproductive than it has been productive.
In the overall EI service parameters—and this was taken from the government literature—claims are to be processed in the same time frame regardless of how you apply—mail, online, or in person—and payment is to be received within 20 days of application.
A point we'd like to make is that we feel the fishery EI program appears to be working very efficiently, and we view the recent proposed change to one week of processing time as a very positive development.
The last thing I wanted to say in our remarks was that the fishery is federally regulated. Unfortunately, there has been some poor management of a number of species by DFO. This situation has made the captains and crews more reliant on the EI safety net in recent years.
The PEIFA is working with the federal government to increase efficiency and financial returns to the fishery. I'm pleased to announce that there have been some very positive developments over the last couple of years in regard to the fishery starting to gain back some financial strength.
I have a couple of final points. Many people don't realize that you just don't fire up your boat and put it in the water and away you go fishing. There is a significant amount of preparatory time building traps, checking nets, checking motors, all those types of things. Although some of the actual fishing seasons might be quite short in duration, there is quite an amount of time taken up in preparing for them.
We have a letter from Human Resources and Social Development Canada from a few years back. It was written by Louis Beauséjour, who was director general at that time. It was addressed to the president of the Southern Kings and Queens Fishermen's Association. I'd like to read a quote from the letter:
|| Moreover, unlike regular EI benefits, fish harvesters are able to make claims and receive benefits twice each year for up to 26 weeks each time, reflecting the unique nature of the fishing industry with a summer and winter fishing season.
I think that really captures some of the uniqueness and challenges of our fishery. I wanted to share some of the differences in how our program works.
That concludes our remarks to the committee at this point. Thank you.
Mr. Chair, members of the committee, good afternoon.
My name is Judith Andrew, and I am the commissioner for employers at the Canada Employment Insurance Commission.
I'm very pleased to be here on this first opportunity to appear before you on your present study of employment insurance. I'm joined by my colleague, Charles Côté, who is a policy adviser in my office.
The Canada Employment Insurance Commission is marking its 75th year of tripartite oversight of the employment insurance system, and I'm proud to serve as a non-partisan representative of employer interests on the commission, alongside my counterparts representing labour, Commissioner Donnelly; and government, the chair of the CEIC and also the deputy minister for one more week, I understand, Ian Shugart; and the vice-chair, soon to be the deputy minister, Louise Levonian, all of whom have recently appeared before a HUMA committee.
A synopsis of the mandate of the CEIC and the independent commissioners' role in it is included in the information kit distributed to you. It's quite a complete kit.
Although the commission isn't a household name, mainly because EI operations have been delegated to the department, CEIC retains important direct responsibilities and continues to oversee the system in several ways, including preparing an annual report to Parliament that's bolstered by commission-led research on the functioning of the system.
Today I will address the topics you set out for your study in February: first, the impact of recent reforms to the EI program, with brief comments on the most recent reforms in the budget; second, an examination of low rates of access to EI and their causes; and third, the impact of recent reforms to EI appeals.
I will also address EI finances and the financial accountability of the EI program, with reference to the government's campaign commitments.
To begin, I want to draw your attention to a document in your kit entitled “Guiding Principles for Employment Insurance from Employers”. It's in the top right of your kit. This principles document was developed with employer groups at the outset of my term as commissioner, and they continue to guide my work in this role. For example, the reference in the preamble to holding service delivery to high standards has played out in my continuing to press for studies and upgraded comprehensive reporting on service to Canadians in chapter 4 of the EI monitoring and assessment report, recently tabled before Parliament by your colleague, Parliamentary Secretary Rodger Cuzner.
I turn now to the former government's Connecting Canadians with Available Jobs measures, those that defined the job search responsibilities of unemployed workers.
The measures required EI claimants to undertake an active job search and broaden their search parameters over time, based on claimant category. Detailed and somewhat complicated, the changes were sometimes misreported and often misunderstood. Ultimately, the CCAJ changes were seen as especially punitive to claimants, who were accustomed to using EI regularly as an income supplement, typically between seasons. This view was sometimes shared by claimant employers. However, despite the quite vocally expressed concerns, the CCAJ changes actually had very little impact in terms of disqualifying claimants for benefits.
I know some of the researchers have given you some very small numbers on that.
It should be noted that internationally, according to a recent OECD study, Canada is at the low end of the stringency spectrum on such measures. Typically, countries that have an easy access to a generous EI system rely on active return-to-work measures to keep things in balance. In Canada, I hear from, and I know this committee heard from, at least one employer group that has member data on employees actually asking to be laid off, and I know it varied from one in four to one in five, roughly. That does put a different complexion on the job of ensuring that laid-off EI claimants are actively looking for work.
With the repeal of the CCAJ changes, what is important in the context of our system, which is becoming more generous by some $2 billion more per year, is to take care not to send claimants the wrong message about the need to look for work while unemployed on EI. It is important for the department to continue holding meetings with new claimants to highlight their responsibilities in the system as well as conduct continuing eligibility interviews where warranted.
Employers remain puzzled as to why it is optional for claimants to register their search parameters with the job bank so that job seekers have the benefit of electronic notification of possibly interesting job matches with the positions on offer. To employers who are facing shortages of qualified labour now, as well as worsening challenges owing to demographic trends, it's inexplicable that the use of the EI ratepayer-funded national employment service—a.k.a. job bank—is not boosted in this way.
My office's March 2016 bulletin covering the budget offers commentary from the employer standpoint on each of the announced measures in EI and related matters, such as EI-funded training and labour market information. Among the measures that may cause employers extra payroll and administrative challenges are the waiting period reduction, meaning having to rejig top-ups, and the employee flexibilities that are signalled around special benefits.
Referring again to the guiding principles, it's worth noting that special benefits covering life events as opposed to workplace events—maternity, parental, sickness, compassionate care, parents of critically ill children, and so forth—are now approaching a third, or 31% right now, of benefit costs in a tripartite system wherein employers pay 7/12 of the cost, employees pay 5/12, and government contributes zero.
Moving along to another aspect of your present study, examination of low rates of access to EI and their causes, may I commend to your attention a relevant analysis from the EI monitoring and assessment report, which is found the chart in MAR, chapter II, page 39. For 2014, the most recent year available, the Statistics Canada EI coverage survey shows some 1.26 million unemployed people, of whom 482,600—or 38%—were eligible for benefits. You are probably aware that the 38% has been quoted as a castigation of the EI system, but before jumping to conclusions, a closer look is necessary.
The difference between the total unemployed and the number eligible for benefits is accounted for in a number of ways. One group, those not having insurable employment, meaning self-employed people and unpaid family members, numbers in the vicinity of 50,000. A second group includes those who have not worked in the last year, including a substantial number who have never worked. A third group is made up of those not having a valid job separation—that is, people who have voluntarily quit. A fourth group is made up of people who have not worked insufficient hours to qualify.
In short, EI has eligibility criteria, just like any insurance program, or really any other program. Even social assistance has criteria. People who have not worked in a long time, who have never worked, who didn't work enough, or quit their jobs of their own volition simply do not meet the EI eligibility criteria.
Using the 38% number raises the possibility that people who have never worked, who haven't worked in the last year, who quit, and so on, should be as entitled to EI benefits as those who have worked sufficiently and paid premiums but lost their jobs through no fault of their own. Employers do not subscribe to that kind of thinking, and I would doubt that most hard-working employees do either.
I will briefly comment concerning the impact of the former government's reforms to EI appeals, which saw the long-standing, well-tuned former appeals system dismantled in favour of the new Social Security Tribunal, which encompassed not only EI appeals but also old age security and Canada pension appeals.
No doubt the thinking was that this reorganization of the appeals systems would be more effective from a cost perspective and otherwise, not unlike when diverse services to Canadians or procurements across departments were placed under one authority. It does seem to me that rather than taking the so-called benefits of such moves on blind faith, governments need to conduct careful before-and-after analysis to drive toward the intended improvements.
After learning about the change in the 2012 budget, commissioners worked diligently to gracefully stand down the old EI appeal system to ensure as seamless as possible a transition to the new SST. Subsequently we worked hard to ensure that SST activity concerning EI appeals is as comprehensively reported in the EI monitoring and assessment report as was its predecessor tribunals.
On the financial front, I personally have been trying to validate that EI is shouldering no more than its fair share of appeal costs, taking into account that the SST was originally resourced to handle a much higher level of EI appeals than actually materialized. The reason was that a new mandatory reconsideration step inside Service Canada, requiring the agent to actually telephone the client to explain the decision in lay terms, has resulted, happily, in far fewer appeals being presented to the SST.
This brings me to my final topic, which is EI finances.
According to the Public Accounts of Canada, in 2014-15 total EI revenues of $23 billion were higher than its expenditures of $19.7 billion, thus generating a $3.3 billion surplus. This was a bigger surplus than in prior years, but we have finally come back into the black, with an operating account balance of half a billion dollars.
Committee members may know that just prior to the recession, a cumulative surplus in the EI account of some $57 billion was zeroed out. With the account being a notional one and the funds intermingled with general government revenues, the money had been spent by previous governments on priorities unrelated to EI. The EI account was left with no cushion for the last recession, which meant the account fell into a significant deficit, and employers and employees were called upon to pay that off. We finally made it back to the black.
That's why the government's positive election commitment to spend EI monies on EI benefits and programs is so important to employers. Employers have absolutely no desire to repeat the sad history of the $57 billion of their and their employees hard-earned EI payroll taxes used for other things, never to be repaid.
Understandably and accordingly, as commissioner for employers, I'm keeping a close eye not only on the account balance but also on what gets allocated to EI on the expense line, and that's a complicated job.
Finally, here's a word on applicable tax credits. I am referring to the government's proposed youth hiring credit and the present small business job credit.
For 2016, the employee EI rate—which is how the rates are always quoted, in the employee terms—is $1.88. The employer pays 1.4 times that amount, or $2.63 per $100, up to the maximum insurable earnings, so the total for a given job is quite onerous, at over 4.5%.
Moving in 2017 to a rate-smoothing, seven-year, break-even mechanism, it seems good news that the EI rate is forecast in the budget to fall to $1.61, lower than the government's election commitment of $1.65. However, owing to the small business job credit relief of $275 million per year—that is a budget 2015 figure—the effective rate currently being paid by some 90% of businesses in the economy is $2.24. Unless something is done, the so-called decrease in store will be a de facto increase for small business.
Going forward, it will be especially important for government to gear incentives such as tax credits for hiring—especially youth—and for training to the business sector, which has a good record in doing both.
Chair, I am glad to attempt to answer questions from the committee.
I have a natural tendency to talk fast. I'll do my best to slow down. I have just 10 minutes, so I'd like to get out as much as I can.
A study by the parliamentary budget officer revealed that just 38% of unemployed workers were eligible to collect EI benefits. That sounded the alarm. As my predecessor pointed out, this reduced access to the EI system has been the subject of outcry for years.
In fact, we believe significant improvements to the system are needed. Not only is it necessary to undo the recent EI changes—at least the bulk of them—but it is also imperative that improvements be made, especially as regards access to EI.
My presentation will focus on three areas. First, I will talk about repealing the recent changes. Second, I will recommend measures to improve access to EI. Third, and finally, if I have enough time, I will address enhancements to the program.
As far as EI reforms go, mainly two major changes had serious consequences: one, the new definition of suitable employment; and two, the new method for challenging EI decisions by the Employment Insurance Commission.
On the subject of suitable employment, there have been been few cases reported in Quebec of claimants being disqualified for refusing suitable employment. The fact is that few people have been disqualified for this reason, but we believe that the protests and objections stemming from these changes resulted in a less strict application of the disqualification provisions. Our sense is that a directive was given to enforce these regulatory provisions on a more limited scale, or a more flexible basis, if you will.
What's more, this definition may have caused unemployed workers to behave differently given the potential problems associated with filing an EI claim. On the one hand, people heard about and saw all the problems tied to the reforms. On the other hand, each claim is recorded and could therefore push an unemployed person from one category to another and render them subject to other consequences.
We are therefore calling on the Government of Canada to repeal the changes and reinstate the pre-2012 definition to section 27 of the Employment Insurance Act. In our view, the new definition violates fundamental rights, including the right to freedom of choice of employment, the right to unemployment protection, and the right to social security. We further believe that this definition discriminates against certain categories of workers, in particular, women, vulnerable workers, immigrants, seasonal workers, and young people.
That's all for that recommendation.
When it comes to the method for challenging the Employment Insurance Commission's decisions, we are calling on the government to abolish the Social Security Tribunal. Not only does the mechanism give rise to inordinate delays, but the very way it operates causes miscarriages of justice. We have observed numerous problems tied to the Social Security Tribunal and the method for challenging EI decisions. For that reason, we are recommending that the mandatory administrative review step be eliminated. The administrative review by the Employment Insurance Commission used to be optional. Previously, the claimant could proceed directly to the board of referees stage but now has to go through the administrative review. The step lengthens wait times, especially for those who will nevertheless have to appeal to the General Division, and the Appeal Division after that.
Furthermore, decisions do not have to be rendered within a certain timeframe. The wait times are excessive. Some claimants have had to wait up to a year before having their case heard. Then, it can be months before the unemployed worker receives the decision, since there is no prescribed timeframe for the tribunal to make its determination.
Summary dismissal is another serious problem, with some people not even having the possibility to be heard. When their cases are reviewed, their application and their request for leave to appeal to the Appeal Division are dismissed outright. They are actually being denied their full-fledged right to appeal, particularly in person. We have noted that in-person hearings are being bypassed in favour of video conference or telephone hearings, creating problems for some claimants.
We have also noted that the number of appeals has declined by 85% and that only 15% of unemployed workers who receive a negative decision following an administrative review end up taking their case to the Social Security Tribunal. MASSE believes that this mechanism discriminates against unemployed workers and discourages them from asserting their right to benefits. The mechanism, then, is clearly problematic.
Another consequence of the EI reforms was the non-renewal of the pilot project to extend the employment insurance benefits by five weeks in certain economically disadvantaged regions. We are calling on the government to reinstate the pilot project, which was not renewed, thus restoring the additional five weeks of EI benefits provided to unemployed workers in economically disadvantaged regions. This recommendation applies to regions where the extended coverage was previously in effect, as well as the new regions identified in the budget.
I'm not sure whether you're familiar with the infamous black hole, the period of time between the end of benefits and the return to seasonal employment. In some cases, workers have no income whatsoever during this period.
Now I will touch on the other recommendations.
We are recommending that the eligibility threshold be set at 350 hours or 13 weeks. This is a hybrid measure that would improve access to the EI system, while taking into account the restructuring of the labour market.
MASSE believes that the government should abolish disqualifications of more than six weeks. We have always opposed the 1993 measure, which can result in total disqualification from the EI program in the case of voluntary departure or misconduct. In our view, the disqualification period should be limited to a maximum of six weeks in all cases. This would allow workers to maintain their fundamental right to protection against unemployment, while still punishing, albeit more reasonably, certain conduct considered to be non-compliant such as refusal of suitable employment, voluntary departure, or misconduct. We believe that disqualification for six weeks would be dissuasive enough to curb potential abuse.
We would also like to see the benefit rate increased to 70% and calculated based on the best 12 weeks. While that may seem like a lot, as I mentioned earlier, an October 2014 study by the parliamentary budget officer showed that, had the government not lowered premium rates and left them intact, it would be possible to raise the benefit rate to 68%. That means, then, that 70% is a realistic target. Given the surplus in the EI fund, it would be possible to increase the EI wage replacement rate without placing an additional burden on employers, at least in the short term.
In addition, MASSE is recommending that the government establish a minimum floor of 35 weeks of benefits. We believe that would constitute a reasonable period of time, taking into account the multiple factors that can affect a job search, which vary from person to person. Those considerations should be taken into account. At the same time, it is our view that the regional unemployment rate is not an adequate measure to determine the number of weeks of benefits or an unemployed worker's access to benefits.