February 19, 1935

CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

Yes, within the provisions of the subsection to which I directed attention.

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IND

Alan Webster Neill

Independent

Mr. NEILL:

I wish to ask only one further question, and I believe it must be asked at this point because this is the only section referring to part II of the schedule, appearing at page 31. I should like to know why domestic servants, other than those working where a business is carried on, should not be included?

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

For the same reason that it has been impossible to find cases, except very exceptional ones, where there has been continual service for a period of two years, which would enable them to make the forty payments. That is the reason.

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Section agreed to. Section 16 (as printed; now section 15), agreed to. On section 17 (as printed; now section 16)- Contributions by employed persons and employers.


LIB

Ian Alistair Mackenzie

Liberal

Mr. MACKENZIE (Vancouver):

I would suggest that we take this section by paragraphs.

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CON

Raymond Ducharme Morand

Conservative (1867-1942)

The CHAIRMAN (Mr. Morand):

Very well; we are now on subsection (1): "Contributions by employed persons and employers".

Subsection (1) agreed to.

On subsection (2)-Rates of contribution.

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LIB

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

I should like to make a few observations regarding some of the industries in my section of the country. I have in mind particularly the mining industry and permanent industries. May I state at the outset that I have always supported a system of contributory unemployment insurance, but I believe the operation of the present measure would be injurious to the gold mining industry. I have in mind the fact that the Hollinger mine for example has been operating consecutively for twenty-two years, and the McIntyre mine, the Dome mine and others have been worked for long periods of time. Geologists maintain that most of those mines will function for another sixty years at least.

Under the present scheme the employers and employees each contribute a third. For the sake of argument we will suppose that one of those mines operates steadily for the next twenty-five years. We can readily see that the men working in them would receive no compensation for the money they had paid.

Unemployment Insurance

In such cases I am convinced there should be a gradual decrease in the contributions made by the employers and employees. For instance, some men have been working in the Hollinger mine seven days each week for twenty-two years, without losing one hour of time. It is fair to assume that many workers will work as steadily in those mines for the next twenty-five years. The present scheme I am convinced would do an injustice to those men and to the corporations affected. They would not be making mere contributions; their insurance payments would be, purely and simply, a tax. I repeat, that so far as these industries are concerned the insurance payments would be a tax. I should like the Prime Minister and the committee to consider inserting clauses in the measure which would provide that contributors making payments for a period of five consecutive years, for instance, who have not lost any time through lack of work would enjoy the benefit of a gradual decrease of 20 per cent each year down to a minimum of five cents per week. Payments could continue at that rate until the close of the mines working period.

Hon. members familiar with gold mining in this country will know that the history of that industry indicates it has been a permanent industrial organization. It has given employment for three shifts each day, seven days a week. This has been going on for the last twenty-two years in the case of some mines. Take some of the mines in the constituency of my hon. friend the Minister of Labour, some of the old silver mines at Cobalt, for instance, which have been working consecutively for the last thirty-five years or more, and I believe that the same remark applies just as strongly to our gold mines in northern Ontario at least.

I am making an earnest appeal to this committee to see that no injustice is done to the mining institutions that must be regarded as permanent. Otherwise it would be simply encouraging some other industries which have been highly seasonal in their employment to be more seasonal in future. I have a case in point. I hold no special brief for any of the big owners; I am speaking for the working men, and also the industries, and I say that steady employment has been provided over a long period of years in the gold mines, and these contributions would be simply an added tax on the working men. To illustrate the permanency of some of the mines in Canada I need only mention the Hollinger, McIntyre and the Dome mines, where men started in to work when the mines were first opened and have continued to work there for

twenty to twenty-two years, and have now their sons working alongside them in the same mines. I think the committee will be vividly seized of the permanency of employment in some of these mining organizations when I mention that, and again I make this appeal very sincerely, more particularly on behalf of the working men. In the case I have just cited it would be simply direct taxation on the shoulders of the miners to support an insurance scheme from which they will get no benefit whatever.

The committee must also bear in mind that so far as the mining industry generally is concerned there is only a definite amount of ore, a certain amount of minerals, to be taken from the bowels of the earth, and when that is done the life of the mine is finished. I want the committee to study this question very thoroughly so as to be fair to that section of the population. I know the miners and the mine-owners in our section of the country want to be fair to this act. They know that it can be very beneficial in many cases, but I believe that it is not the intention of the Prime Minister to put an added load on people who will receive no benefit from this legislation, but will simply be an additional direct tax on them.

I would like to hear the Prime Minister's views on the case I have presented.

Mr. BEiNNETT: I have listened to a

good many pleas in parliament in my time. My sympathy for these fortunate gold-mine owners is not so great as that of the hon. gentleman. Their inability to make the contribution required under the act does not move me greatly. When I hear the hon. member for Bow River speak of the difficulties and privations which the miners in another industry have to undergo, and then when I hear the hon. member for North Timiskaming speak of the richness of the natural conditions under which other men are working in other parts of Canada, and with no unemployment at all, it indicates the necessity for having a national bill so that the richness of the one part may compensate for the paucity of demand in another section for another deposit that we call coal.

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LIB

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

I did not mention the

word richness.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

But that is what it

means. Gold means that. There is just one other point I should like to make. In my lifetime I have not been unfamiliar with the plea that has been set up by the very rich who claim that they should not pay the

Unemployment Insurance

high taxes because they do not get corresponding benefits from them. That is an old story, as old as time itself. It is the old plea, but it does not go with respect to this bill.

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LIB

Joseph-Arthur Bradette

Liberal

Mr. BRADETTE:

They do not want to

be excluded. I would ask this question of the Prime Minister. Does he not think it would be fairer to the workers themselves if there was a graded tax, just as insurance premiums are graded and become less after a certain period of years? If you take out automobile or accident or life insurance, after a certain number of years the premium you have to pay is less. The mining companies want to play the game, as they showed in connection with the gold taxation last year. The miners in my section are also willing to help their comrades in other occupations, but surely the committee should be fully seized of this fact, that under this scheme men may be paying contributions all their lives without any chance of receiving benefits whatsoever. I am going to leave that for the consideration of this committee. Would it be fair to ask people to make payments for a long period of time without any expectation of them being able to receive benefits under this scheme? This scheme is not intended to penalize anybody I know, but it would seem to be in the nature of a penalty in the case I have just mentioned. There is no question of richness among the miners in our section. They are receiving fair wages but no riches, and these contributions would be a direct tax on them. It would mean that they would be paying into the fund for years and years without receiving any benefits whatsoever under the present provisions.

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LIB

Peter John Veniot

Liberal

Mr. VENIOT:

Mr. Chairman, I wish to

ask some questions touching the actuarial work that was carried on. Would it be in order for me to do so under this section?

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

I have no objection, Mr. Chairman.

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LIB

Peter John Veniot

Liberal

Mr. VENIOT:

With respect to the computation made by the actuaries, am I right in saying that the years they included were from 1922 to 1931 inclusive?

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

Might I just say to

the hon. gentleman that in view of the suggestion that was made yesterday afternoon I have asked the printers to complete as quickly as possible the printing of the reports of Mr. Wolfenden and Mr. Watson, and I think they will be completed and distributed before six o'clock. One has just come to my hand. If the hon. gentleman will wait

until he has these documents before him he will perhaps be enabled to deal with the matter a little more readily.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

I am personally opposed to the provision for contributions by employees, and I propose to give to the house a few reasons why.

In the first place it is very clear that this act does not propose to apply itself, nor can it be applied, under the insurance principle, to the unemployed. They cannot contribute so they are out.

Then those who are employed may be divided into three classes; first, those who are permanently employed, such as bank clerks; they also are out. It seems to be the view already that those who are permanently employed and are not likely to be unemployed should not against their will be taxed contributions to maintain the operations of this act.

There is the third class, the seasonal class, and the Prime Minister has already used an argument in the house this afternoon to show that they should not be included. So we have left the class in between as the only ones who may be expected, in accordance with the discussion this afternoon, to contribute. Let us take them-no, not them alone; we will take them all.

We find by reference to the figures supplied by the Dominion bureau of statistics showing the average earnings by wage-earners in Canada and the provinces for 1931, that the average earnings of all adult males was $927 per year and of females $560. I emphasize at this moment the very, very meagre annual earnings of all wage-earners in Canada as indicated by those figures. If we subdivide them into some of the more important branches of industry that come under the operation of this bill, we find that in manufacturing the average annual earnings amounted to $1,038 for males fully employed and $542 for females, or an average of $790. In the construction trade the average for males is $709 per annum and the average for females $732. In the vegetable products branch of manufacturing the average for males is $910 and for females $453, while in the animal products branch the average for males is $941 and for females $479. I could go on to cite many more, for instance, the earnings in the coal mining industry. The figures show positively appalling wages, on the basis of which it is not possible to maintain any decent standard of living in this country, much less a comfort standard; and until the wage earner is in receipt of a decent standard of living there

Unemployment Insurance

should not be exacted from him a contribution for any period of unemployment that may ensue. One of my reasons for that statement is this. The evidence that has come before this house in the past, still on record, the evidence given before the industrial relations committee some years ago with respect to standards of living, as well as the results of investigations by social service councils and other bodies on this continent, have definitely shown the serious effect upon the health and character of the citizens of the country when they are subject to such desperately miserable conditions by reason of lack of income.

The labour bureau, following the example of Paul Douglas, a research student of the United States, undertook for the benefit of the industrial relations committee some years ago to compile for the use of that committee and of members of this house what they called standard of living budgets, taking various levels of living for the basis of their budget. The minimum subsistence level, according to the labour bureau, is 11,077 per annum. May I point out that this is not the minimum subsistence level budget of 1926 or 1930; it is the minimum level brought up to December, 1934. The health and decency level required in December, 1934, was $1,339 and the comfort level was $1,878. Let it be noted that only under the comfort level budget is there any provision for medical or dental care, and only under the health and decency level and the comfort level is any provision made, meagre as it is, for such necessary things as soap and, let us say, a daily newspaper or a magazine or something like that once in a while. In other words, the average standard of living in Canada is far below the minimum subsistence level, which does not enable the average wage earner in the country to indulge in such things as I have mentioned.

To me this is a shocking state of affairs because it must inevitably lead to a health condition that is not good. Great Britain has had in operation for many years an unemployment insurance act, and yet it has been discovered that the benefits under that act are so low, the general standard of living is so miserable that the general health of the country is suffering; and Dr. Kenneth Fraser, the Cumberland school medical officer, in his report for 1932 stated that there were a large number of children then carrying on in Great Britain without adequate food. Precisely the same thing may be said of 'Canada; for every hon. member knows, as indeed we were told in testimony in the inquiry that took place some years ago, that the income

of the earner is low especially among women workers, and they are disposed to scrimp on food supplies and use the little income they receive to buy clothing so that they may have an appearance of decency. The result of the combination of unemployment on the one hand and low standards on the other has led to the discovery in medical circles recently of something that is now coming to be known as depression shock; I think they copied it from the phrase that became current throughout the world after 1915-shell shock. But the effects of these standards are not merely physical. It is not only a question of having enough to put in your stomach, but the mental and moral effects must also be considered, while there is inevitable humiliation and bewilderment. And these mental conditions are just as real as not having your breakfast or not having sufficient clothes to put on your back. It destroys self-reliance and the sense of usefulness, and once these are gone the situation is hopeless for the people.

I know that hon. gentlemen, or some of them, may contend that a non-contributory unemployment insurance would lead to that very lack of self-reliance of which I speak That is not necessarily so. If you can grant the citizens of the country an element of security in keeping with the richness and the productive capacity of the country then I am satisfied that you will raise their conception of life and create in them a desire for more of the cultural things which they can acquire only by personal effort. It is just as well for the committee to recognize therefore that under the modern trend of the system which the Prime Minister has made popular under the name of capitalism, there is a steady drift of the total income of nations, or the total value of manufactured products in nations, towards those who draw their incomes in the form of dividends, bonuses, profits and so on.

I have here the last monthly survey of the American Federation of Labour, and in a chart they published in a recent statement they show that the wage earner's share in each dollar created by manufacture has steadily contracted. In 1849 the wage earner received 51 per cent of the value created in manufacture, the other class receiving 49 per cent. In 1919 the wage earner received 42 per cent and the others 58 per cent; in 1933 the wage earner received 36 per cent and the others 64 per cent, and so the tendency to contraction in the wage earner's share is continuous. This bill in its present form, with the contributory feature included, simply

Unemployment Insurance

means that there will be a definite decline in the available amount of purchasing power in the hands of the wage earner. That is inevitable. Every contribution he makes to the trust fund is a dollar or two dollars out of purchasing power, and he needs the money and would spend it. Furthermore, every dollar the employer contributes will be passed on whenever possible-and that is usually possible-in increased cost of goods; for the employer does not take anything of that sort to himself which can be avoided. They make their books annually; they make their budget preparations annually with everything foreseen that can be foreseen; and every foreseen charge is charged into the cost of goods. And so you have a second system by which total purchasing power is limited.

Now you cannot restore the system in Canada by that sort of thing. What the country needs is increased and not decreased purchasing power-certainly an increase in the pockets of the people. Under this scheme the third method, the minor method of securing contributions, is what the state provides. It is fractional. I might at this stage direct the attention of the committee to the fact that though the bill is said to be based on the British act, this government has not accepted the same measure of responsibility in regard to its contribution that the British government has. Under the Canadian proposal there is a contribution of twenty-five cents from the employee, twenty-five cents from the employer, and from the government ten cents plus administration. Under the British act the contributions are eight pence from the employer, seven pence from the employee and seven pence from the government. On that basis the government here might consider twenty-five cents as its contribution in keeping with the contribution of the employee. But I shall be told: We are taking responsibility for the administration costs. Let us examine that. It has been stated that the cost of the operation of the British act is twelve and a half per cent. Twelve and a half per cent of the total of sixty cents that would be collected under the three-way method under this scheme means seven and a half cents, which would then be the maximum cost that the Canadian government would have to pay in administration. In Great Britain the total contribution translated into Canadian money is forty-four cents. Twelve and a half per cent of forty-four cents is only five and a half .cents, so this government anticipates that this legislation is going to cost them seven and a half cents

and the cost under the British act is five and a half cents. This does not look very good to me, and it is not as bright an act as one would have hoped to come from this government after the radio addresses we heard. Has the government really recognized what is fundamentally wrong with the system? It should not endeavour to finance this scheme by reducing the total volume of purchasing power in the country-and that will be the inevitable effect of the legislation from the beginning-but it should undertake to finance the scheme by a direct issue of currency backed by the national wealth and carry on all that is required of the scheme in that fashion. I make that suggestion as strongly as I can to the Prime Minister. I am definitely opposed to this contributory feature under present low wage levels and will remain opposed to any contributory feature until the wage earner is receiving at least the average income set forth by the Labour department as required for an ordinary healthy and decent living, or an average of $1,339 per annum. Until the wage earner is receiving that on an average I am opposed to the contributory system. I therefore move, seconded by the hon. member for Vancouver South (Mr. Maelnnis):

That section 17, subsection 2, be amended by deleting the words "every employed person and."

So that the clause would then read:

Subject to the provisions of this act, every employer of any such person shall be liable to pay contributions in accordance with the provisions of the second schedule to this act.

I move this in order to direct the attention of the members of the committee to this situation, and not because the amendment in itself would do what I have in mind, namely, increase the purchasing power of the people; that must remain a responsibility of whatever administration is in power. If the government is not prepared to make the necessary financial changes in the bill to increase instead of decrease purchasing power, then I tell them that this bill is not worth the paper it is written on.

Topic:   UNEMPLOYMENT INSURANCE
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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

Perhaps the hon. gentleman will explain why he voted for it.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

I voted for the principle of unemployment insurance in order that I might have an opportunity at this time of moving just this type of amendment. If the contributory feature is retained in the bill, I shall not support it on third reading.

Unemployment Insurance

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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

I would like to say a word in reference to the remarks made by the hon. member for Bow River. If I understand the latest British act which I have before me, the contributions are not such as are indicated by the hon. member. Taking the adult contributions, I find that the government contributes not eight but ten pence per week or, in Canadian money, twenty cents; the employee contributes an equal amount of twenty cents and the company an equal amount of twenty cents.

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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

There is one word I should say. When the hon. member for Bow River referred to the portion of the earnings of companies that now went to wage earners as compared with what that proportion was in previous times, he should in fairness to this chamber have indicated the amount that now goes for taxes as compared with previous times. When he left the impression that the proprietors of the enterprise received the difference between the proportion that went to the wage earners and the sum total of profits, he was stating something that is fundamentally unsound. The fifty-six per cent or fifty-one or fifty-two per cent that in earlier days went to wage earners has been reduced to as low as thirty-six per cent. The taxes payable by enterprises in these days because of the demands made by the public for social and other services has increased between the date when the rate that went to wage earners was fifty-one per cent and now when it is thirty-six per cent in a far greater ratio than the lessened distribution among wage earners.

I have never been able to follow the figures to which the hon. gentleman referred as the amount necessary to be received on the average by every wage earner in the country to enable him to live in comfort. It is not the first time I have heard these figures used, but although I have not had an opportunity to investigate them, I think they must refer to the average of all wage earners probably including apprentices and youths in ascertaining the sum total of wages, because even those who fish by the sea sometimes receive as much as ten, twelve or thirteen dollars a day and those engaged in many occupations to which reference might be made, receive during the time they are employed, fairly large sums. But that is beside the question. This is a contributory insurance measure. It was for that measure, the principle of which is contributory insurance as has been explained in the house, that the hon. gentleman voted yesterday. Just why beween then and now he has had a change of heart, he has seen a new light, I cannot say. But at any rate he now says that he did that

for the purpose of enabling the bill in committee to be amended by striking out the contributory clauses. That is an excellent reason why one should vote against the second reading of it; it is a little difficult to give it as a reason why one should vote for it on second reading and then destroy it in committee. This measure falls if this amendment carries. It falls in its entirety, for it is predicated upon actuarial computation based on contributions being made by the three parties to it: the state, the employer and the employee.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

I am sure there are in Canada certain low paid workers who are not in a position now to make any contribution, and it should be possible to provide in the bill for the establishment of a minimum wage line whereby workers receiving wages below that line should not be asked to contribute. The contribution in such cases might come from the industry and the state combined. It might be possible to include in the bill a provision of that kind. I feel strongly there are certain people who will be called upon to contribute under this scheme and whose wages are now so low that it really does not seem proper to compel them to make such contributions.

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February 19, 1935