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Publications - October 18, 2001




[Recorded by Electronic Apparatus]

Thursday, October 18, 2001

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The Chair (Mrs. Judi Longfield (Whitby—Ajax, Lib.)): I'm going to call the 33rd meeting of the Standing Committee on Human Resources Development and the Status of Persons with Disabilities to order.

Members, just before we get into our deputations, there's one item I want to address as a result of the meeting we had on Tuesday. It concerns the motion by Ms. Davies to add another area of study. In our exuberance, and knowing that we had wonderful cooperation from both sides, I neglected to ensure that we had unanimous consent to put the motion forward. You will know that all motions need 48 hours notice. I realize that everyone was nodding, but I failed to do that. So that we don't get ourselves in difficulty sometime further on, notices of motions, unless there's unanimous consent to do otherwise, will require 48 hours notice.

I thank you for your indulgence, and we just clarify that.

We have with us today three groups that will be making presentations. This particular area of study, I think, is something that crept up on a lot of us. That so many of our citizens do not know of benefits they are entitled to is something I think needs to be addressed. I think we have people at this end of the table who can give us the benefit of their understanding of the situation and perhaps help us as we try to resolve this problem.

I would first call on Mr. Richard Shillington from Tristat Resources.

Mr. Shillington, I think you have someone with you you might like to introduce.

Mr. Richard Shillington (Principal, Tristat Resources): Yes, I had the nerve to bring a citizen with me, Gloria Lewis, who lives in Perth and contacted me after some articles that appeared in the Ottawa Citizen. Basically, she was one of these citizens who discovered too late that she had been eligible for some benefits. I'm going to ask her to say a couple words, just about her personal experience, and I'll just begin my presentation quickly.

The Chair: Mr. Shillington, just before I let you start, we limit your comments to about five minutes initially, and then at the end there'll be time for questions.

Mr. Richard Shillington: Okay.

Very quickly, we're here because the media discovered, and through the media the public, that there were hundreds of thousands of low-income seniors who were missing out on hundreds of millions of dollars of benefits, and in fact, through Revenue Canada—if I can still call them that—and HRDC, they could have been identified. This has been known to policy experts for some time, this is not news, but it became news to the public, and so there were some newspaper articles about it and some discussion. This GIS story came to me because of my work at Saint Christopher House in Toronto. I talked about it in various speeches, included it in reports, but last August—I guess it was a slow news month—at a press conference with the Daily Bread food bank, a food bank in Toronto that is seeing more seniors, they were the ones who brought it to the attention of the media at the right time, so that it got some press coverage.

When first approached, HRDC officials told me they couldn't tell seniors about this benefit because of the privacy issue. There's been no official announcement, but I understand that HRDC is working with Revenue Canada, so that, in fact, citizens will be approached in some way to tell them they're eligible for benefits. So I guess, in some sense, that first issue has been addressed.

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I just want to raise a couple of issues I think people should understand. The support programs we've designed for seniors are extraordinarily complex. You have various programs that all interact with each other. So the fact that somebody didn't get GIS, the guaranteed income supplement, we all know means they're missing out on $5,000, $6,000—their family could be missing out on $10,000—of income. A single person could be living on $5,000 instead of $11,000.

That would also mean in several provinces they're not getting a GIS top-up. Several provinces run programs to supplement the income of low-income seniors. So not everybody would be immediately aware of that. But even more, and this illustrates the complexity of the system, in Newfoundland there's a prescription drug plan for seniors if you're a GIS recipient, but not if you're not. So the second-order effect of not being told you're eligible for GIS in Newfoundland is that you're missing out on a prescription drug plan. In Saskatchewan there's a prescription drug plan for seniors; the deductible—the amount of money you have to pay out of your own pocket—is $400 if you're a GIS recipient, $1,700 if you're not. Whether or not you get a GIS affects the rent you pay if you're in social housing, it affects a whole raft of various programs. So the thing is extremely complex.

I ask you to think about a couple of things. Why do we have to apply for GIS at all? Newfoundland has a support program like GIS for seniors, where you don't have to apply—you file your tax return, they mail you a cheque. I don't know if you've seen the GIS form, but I've helped a couple of people in my office at home fill in this form. As far as I understand, that information is not really used as long as you file a tax return, because they go and use the tax form information instead. So I ask a basic question: why do people who file tax returns have to apply?

Another reason for concern about the reliance on Revenue Canada for this information is that according to surveys done at the same food bank in Toronto, 25% of people who go to food banks don't file tax returns. If we're designing programs for low-income people based on tax information, it's a problem if a substantial portion of the most marginalized low-income people aren't filing tax returns. They don't file tax returns for the same reason I haven't filed my last year's return—there are Revenue Canada people back there, I shouldn't say that—but I'm not losing benefits for not filing my tax return. I'm going to pay a little interest, but that's it. Low-income people, if they don't file their tax return, lose GST credit, they lose this, they lose this. So I worry about using income tax information so heavily for things like the GST credit, the child tax benefit, and GIS.

Of course, the guaranteed income supplement is not the only program with a notification problem, identifying people. There's the old age security, Canada Pension Plan, the GST credit, and the child tax benefit. All these programs will have Canadians out there who are eligible, but don't know it.

We need clarity in this system. Look at the old age security application form—the booklet is 17 pages. It says in the booklet you might want to apply for GIS if you have little or no income. You can get the guaranteed income supplement and have an income of $10,000, $15,000, $20,000, so I think “little or no income” is kind of vague.

The one remaining issue I want to speak to for just a minute is retroactivity. My understanding is that if somebody comes in, a 75-year-old woman... You wouldn't believe the phone calls I got from people across the country saying, my mother-in-law lives at this place and she's got an income of this, is she eligible? So there are people now looking at the tax returns of their mothers-in-law and their parents. We know there are hundreds of thousands of people who have been living on incomes of $5,000 when they could have been living on incomes of $12,000 or $13,000, both of which sound pretty low, but nonetheless.

Under the current legislation, I'm told, if you walk in now and say, I'm 75 years old, I've been eligible for GIS for the last 10 years, you knew I was eligible—you collectively, the federal government—HRDC and the current legislation go back 11 months. It's the same 11 months, I understand, for old age security, although it used to be five years.

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It's the same 11 months for Canada Pension Plan, which I think is outrageous. The reason Canada Pension Plan is different is that people have bought their own Canada Pension Plan, they've paid for it. So if I somehow fall off the tracks, I'm age 75, and I've been in a nursing home, having emotional problems, or whatever, and I discover that I'm eligible for Canada Pension Plan and have been eligible for the last ten years, they'll only go back 11 months? No, that's my money. I paid for that in a different way than with GIS.

The Chair: I'm going to let Ms. Lewis say a few words, because I've been very lenient.

Mr. Richard Shillington: Okay. Am I over?

The Chair: Oh, you are over, yes.

Mr. Richard Shillington: Okay.

The Chair: I'm sure some of the issues you want to address we'll touch on when we get to questions.

Mr. Richard Shillington: Okay.

In 30 seconds, the system we have now is convoluted, unfair, perverse, and unfortunately what's come out in this GIS story is that there are federal agencies that could have been much more proactive. I understand they're going to be more proactive, but it's a little late. Anyway, I'm glad they are now—better late than never.

Ms. Gloria Lewis (Individual Presentation): My name is Gloria Lewis, and in May of this year I turned 64 years of age. Shortly thereafter I received an application from the OAS-GIS, HRDC, informing me of my application for the coming May of 2002, when I would be entitled to receive OAS. With the application was also an information brochure that advised me that if I was a widow and between the ages of 60 and 64, I would be entitled to a widows supplement. I did not understand what it meant, so I called HRDC, and they said I would have been entitled to an amount from the age of 60 until I turned 65, and I have never received it. I feel I was never informed of it. HRDC have told me they will take it back 11 months. I've already sent the application in, and I have received a form back that I have to make some corrections to.

My feeling is that, first, I was 60 years old, and HRDC knew that, because I had been collecting early Canada Pension. HRDC also knew that I was a widow, because I was collecting widows Canada Pension. I did not think I would be entitled to anything under OAS, because OAS stands for old age security. My husband has been dead for 17 years. I was 48 years old when he passed away. There was no reason for me to believe I would be entitled to anything under OAS, unless I was informed. I realize that the criterion of $17,000 is applicable, but at least I should have been given the opportunity to say, oh, I'm over $17,000 this year, next year I might not be over $17,000. But I was never informed, and so I have never received the benefit from the age of 60. I'm now 64 and a half.

The Chair: Thank you, Ms. Lewis. I know there'll be questions when it comes up.

Our next presenter is Monsieur Gilles Fournier from the Tables régionales de concertation des aînés du Québec. Bienvenue.


Mr. Gilles Fournier (Coordinator, Tables régionales de concertation des aînés du Québec): Good morning. I am pleased to be speaking to people who are so keen to resolve our problems.

Today I'm going to be presenting some excerpts from a study that is currently underway on poverty amongst the elderly. The final document will not be ready until the spring of 2000. What we are now finding out, as we search for a solution to diminish poverty amongst the elderly, is that an enhanced Guaranteed Income Supplement is unavoidable.

Indeed, it is the Guaranteed Income Supplement that keeps indigence at bay for single women once they reach the age of 65—and this is very important—for the retired who were not able to earn enough money in order to prepare for their retirement and for the workers who have never had access to an employee pension plan in the sectors where they were once employed.

I would refer you to the A Pension Primer published by the National Council of Welfare. I would refer you to page 44, where it states that 58% of workers have nothing, have no pension.

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Consequently, where does all of this lead us, when we think about the fact that, in January, an individual who received the Guaranteed Income Supplement was entitled to, along with his or her Old Age Security pension, $11,328?

What disturbs me about this number, is that everybody says that the low-income threshold for a single person is $16,486. Consequently, I am forced to conclude that this individual was $5,188 below the low-income threshold, and was therefore living on an income that was 32% lower than this limit, which we all feel should be respected.

Hence we are deliberately, for economic or other reasons, keeping our seniors in what I would call poverty. This is why our regional tables feel it is essential that the Guaranteed Income Supplement be increased as quickly as possible.

To illustrate how urgent the situation has become, I would like to remind you that the National Council of Welfare, in its document 113, which I have here, says on page 95 that 7.5% of the elderly were living in poverty in 1998.

Our table based itself, particularly in Quebec, on a study published by a demographer, Serge Benoît, who did a very complete survey in the city of Laval. His study comprised 480 pages of statistics illustrating that 28.76% of the people aged 65 and over live below the low-income threshold. To my great surprise, the situation there is a little bit better than the one in the city of Montreal. I'm referring you to these figures because they apply to our region, our objective in Quebec.

There is another extremely interesting document published by the Conseil des aînés du Québec [Seniors' Council of Quebec]. I brought this document with me because many people who are interested in Quebec would be well-advised to obtain a copy. I would refer you to table 14, where it says—pay attention to these figures—19.3% of seniors aged 65 earn less than $10,000. Further on, we are told that 41.2% earn less than $14,999. If you look at the situation for women, you can see that 75% of them earn less than $14,999. For men, the figure is 40.3%.

Consequently, when you're talking about misery, when you're talking about poverty, the Guaranteed Income Supplement plays a very important role. I do not think that we will be able to resolve poverty, because there will always be poor people. If the Guaranteed Income Supplement was designed as a social measure in order to help people, I believe that we should do our best to make use of it.

We are convinced that, in order to reduce poverty, we have to make certain changes. Once again, I would refer you to the conclusions drawn in A Pension Primer, published by the National Council of Welfare in the summer of 1999. The conclusions are extremely interesting. Our studies are painting a slightly different picture, but this is what stands out.

First of all, they say that the benefits are inadequate for protecting the elderly against poverty. Everybody is saying this.

Secondly, they say that the cap established for retirement income benefits is too low. That means that if someone is counting on the Quebec Pension Plan or on the Canada Pension Plan, he or she will usually, because of the limit set, have to apply for Old Age Security and the Guaranteed Income Supplement once he or she is retired. These people, however, are still below the low income threshold. We therefore have a problem, a societal problem.

Thirdly, according to the studies, the coverage or the protection against inflation provided by the private sector is inadequate. By private sector I mean companies such as SNC-Lavalin, Canadian National, etc.

Fourthly, the study states that RRSP and professional retirement plans are beneficial to well-heeled individuals. As I said earlier, nearly 58% of the population have nothing. That means that the others have the means to pay for such a plan.

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Fifthly, the study states that as long as 40% of the population have no other retirement income coverage other than Old Age Security, the Guaranteed Income Supplement and some income from the Quebec Pension Plan or the Canada Pension Plan, many retires will be living below the low income threshold.

It is therefore essential that the federal government take action and increase the Guaranteed Income Supplement by at least 50% of the difference between the GIS limit and the low-income threshold. We have to bridge this gap and the matter is urgent. When our elderly are forced to choose between eating or taking medication, we all have a problem.

Thank you.


The Chair: Thank you. Our next presenter is from Canada's Association for the Fifty-Plus, Bill Gleberzon, who's the assistant executive director, and Walter Kelm is here as shotgun.

Mr. Bill Gleberzon (Assistant Executive Director, Canada's Association for the Fifty-Plus): Thank you very much. A handout of my presentation was given to the clerk so she could circulate it to everyone, and I also have some information about CARP.

The Chair: We have a copy, the clerk has it, but rules do not permit circulation if it's in one language. We will make certain that it gets translated, and it will be distributed to all members of the committee.

Mr. Bill Gleberzon: Okay, excellent, thank you. Sorry about that.

The Chair: Listen, it was very short notice, we're happy that you're here.

Mr. Bill Gleberzon: Okay. So are we.

I'll just introduce ourselves again. My name is Bill Gleberzon, the associate executive director of CARP, Canada's Association for the Fifty-Plus. My colleague is Walter Kelm, who's a retired civil servant and a member of CARP. Mr. Kelm, during his working days for the government, was instrumental in the creation of CPP, and he is very knowledgeable about GIS. Both of us, in particular Mr. Kelm, would be only too happy to respond to any questions you have later.

It appears to us that the issue before the standing committee is how to enhance accessibility to guaranteed income supplement in regard to three areas: greater awareness about it, improved eligibility for it, and expanded income from it. I should say that we support the comments of both previous speakers.

We understand and support HRDC's consideration of initiatives to improve awareness about GIS among seniors, to include a note describing GIS, its eligibility criteria, and how to get it in future mailings of OAS statements and the appropriate T4 slips, and to become more proactive in making low-income seniors aware of their eligibility for GIS by working through Revenue Canada. However it's done, it has to be done, and that's the main thing.

However, as Mr. Shillington pointed out, many low-income seniors do not file income tax forms, and so these initiatives have to be supplemented by other methods of reaching low-income seniors. We're suggesting that a major advertising campaign in all media, press, TV, and radio, magazines that focus on older populations, such as our magazine, a copy of which is in here, which reaches about a million Canadians, should also be utilized, as should all outlets where seniors congregate, like seniors centres, community centres, banks, post offices, all sorts of medical and health facilities and outlets, including home care services like Meals on Wheels. The Internet may be helpful to make the announcement, although many low-income seniors do not have access to it.

In the media campaign, whether in the form of advertisements or brochures, the language used should be simple and straightforward, in larger type, at least 12 point, and on non-glossy paper, as should all instructions. The application forms should also be simple, straightforward, short, and user-friendly, especially senior-friendly—and there is a movement out of Calgary that deals with making materials senior-friendly. The application process itself must also be simple and straightforward. Focus groups, consisting of the target audience, should be organized to review all materials and procedures before they are finalized, to ensure that you reach those goals.

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The second area is eligibility. The current low-income cut-off line to be eligible to receive GIS should be increased to reflect the real increase in the cost of living, not the one that's published by Statistics Canada, but the one that really affects people in necessities like the increase in rents and property taxes, cost of electricity, heat, telephone, food, medical and health care expenditures out of pocket, postage stamps, and the like. A more realistic threshold for receiving GIS would require an increase of 20% to 25% over the current level at the very least.

Finally, the amount of income an individual or couple receives in GIS should also be increased. In that regard, in appendix one of our presentation we present a formula for increasing the amount of GIS, as well as a recommendation on reducing the clawback on GIS for those occasions when a recipient may experience a periodic increase in annual income.

For example, some seniors had shares in certain insurance companies that demutualized, and then they found that their shares were turned into either cash or shares in a privatized company. Because they had that one year blip in their income, they lost GIS for that year and the following year. We dealt with some of the ministers in the cabinet to make them aware of that, and they assured us that they would ensure that nothing would happen, but people did lose GIS over that two-year period. That's just an example of the sort of thing I mean.

Our recommendations would put the clawback more in line with clawbacks in other areas. Also, annual increases in the amount of GIS should reflect the real increase in the cost of the necessities of life, to which I have previously referred.

I know we're only allotted five minutes, so we chose not to read our recommendations, but they are available for the committee to review later. I'll speak on Walter's behalf and say that any questions you have about those I'm sure he'll be only too happy to respond to.

I'll conclude, and if you don't mind, I'll then turn it over to Mr. Kelm for just a few minutes.

We have presented a number of practical and feasible recommendations on how to improve access to GIS in regard to awareness, eligibility, and income. The decisions made by this committee will affect the quality of life for over a million low-income seniors, a large percentage of whom, as you've heard, are women, women who worked at home to raise families without any compensation. Society, we believe, owes these people sufficient financial support to ensure a good quality of life and well-being during the latter years of their life, when the opportunities to increase income are severely limited for a variety of reasons.

Thank you.

The Chair: Thank you.

As a follow-up, I would like to think that this committee could make those kinds of decisions. Regrettably, we don't have those powers, but we certainly have the ability to make recommendations and to lobby on your behalf.

Mr. Bill Gleberzon: Whatever recommendations you decide to make are the ones we're referring to.

The Chair: Thank you. Okay.

Mr. Walter Kelm (Consultant, Canada's Association for the Fifty-Plus): I just want to make one point—I wasn't aware I was going to be asked to say something—and that's the point Bill was making about the difficulty low-income seniors have been having. It's been particularly bad in the last couple of years, because shelter, home heating, and energy costs have been rising much faster than the CPI, and seniors, of course, spend a lot more on these items than corresponds to the weight given these factors in the CPI. As a result, CPI has not been adequately reflecting the cost of living for low-income seniors. That's the only point I want to make.

The Chair: That's a good point.

We'll now move to the question period, and as has been the procedure here, we'll start with the official opposition. We'll start with a seven minute round.

Ms. Carol Skelton (Saskatoon—Rosetown—Biggar, Canadian Alliance): Thank you very much for coming. I really appreciated it. As critic of the family for the official opposition, I find this very important in my whole portfolio, and I would like to have all the studies, if possible—I will give you my cards afterwards.

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I would like to know from each of you what you think the major point is for seniors. Is it understanding these forms? Is it not being aware of the forms? Just what is the major thing? What was the hardest part, Gloria, for you? Was it lack of information?

Ms. Gloria Lewis: Lack of information.

Many seniors, I think, don't file tax returns because they have a zero taxable income. Connecting it to the tax return may be an important issue in certain areas, but it should not be the only way, because many seniors don't file. I'm not a chartered accountant, but I am a tax consultant, and I know. I personally have a friend in Perth who makes $11,400 a year, of which $5,500 is the OAS widows supplement, which she was made aware of. Why? She found out about it and I didn't, and I'm the more informed person. I don't know.

In another area, I was informed, when my husband was killed, by the funeral directors of certain benefits under Canada Pension, which would be a lump sum payment to help with the death and so on. This information obviously has gone to funeral directors. Why would OAS not go to funeral directors? I think the information needs to be dispersed better than just through tax returns.

Ms. Carol Skelton: Okay.

Mr. Richard Shillington: I'm one of those policy people who have known about this for a few years, and then it somehow had its time in the light. Six months ago, if you had asked me who these people were who are missing these benefits, I would have talked about immigrants, people who don't speak English or French, people who are in hospitals with mental health issues or Alzheimer's, and I've learned that was totally wrong.

You have people—and family members, to my regret—who are really ill-informed. They thought, old age security, I'm not there yet, or, I'm not poor enough. I've had family members who said, I forgot I had $3,000 of interest income last year, I guess that makes me ineligible, and I said, no, you still can apply. So I don't turn it on the seniors. I say, why didn't we tell them? Because through income tax and the various records we knew who they were, the vast majority of these people.

The Chair: Mr. Fournier.

Mr. Gilles Fournier: He has a point. If you look at the large municipalities, you'll find that about 43% of the elderly are paying more than 50% for their rent if they earn only $11,300 and something a year. You can figure out how poor they are. That's why I do insist on the fact that we have to raise the amount. It's much too low.

The Chair: Mr. Gleberzon or Mr. Kelm?

Mr. Bill Gleberzon: It's a variety of things. A lot of the people aren't aware. When they do become aware, the issue that it's only retroactive for 11 months is a grave concern.

It is not only not being aware, it's not knowing the process, and the process is very cumbersome. The way the process works, it's incumbent on the individual to take the initiative, and a lot of people are intimidated, and if they're not intimidated, they don't know what to do and they don't know where to go. Where I work, we get lots of phone calls from people, and all they want us to do is give them a telephone number. They don't want us to do it for them, they ask who they should call about this, and we give them the hotline—there's a OAS-CPP hotline that we give them, a telephone number. That's the sort of information people want when they find out about it.

Then, as you've heard, there are the application forms themselves. This is a system that should be simplified, and it should be based on the premise that if the government is committed to providing this support to people, it should provide it with an open hand.

The Chair: Thank you.

Ms. Carol Skelton: Having tried to help my mother fill out one of these forms, I know how terrible they are—it's mind-boggling.

When you talk about the heating going up and everything, how would you help, Walter? What would you make changes on?

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Mr. Walter Kelm: First, there's the rate, but I think right at the bottom they could measure, for example, how much the CPI is out—that's easily measured. We have suggested that the clawback not apply on the first dollar of income earned, that you allow an exemption, and that you have not just one rate, the 50% rate, but several rates, applying the ability-to-pay principles of the Income Tax Act to the GIS. In the income tax you have an exemption that's not subject to taxation, and after that your income tax rate depends on the amount of your income. There's no reason with the GIS you couldn't start off with, for the sake of argument, a $1,000 exemption: the first $1,000 of income is not going to be clawed back. After that maybe a band of earnings of $2,000 might be subject to a 15% or 20% clawback, and so on until you finally get to 50%.

You have this strange situation. I know you can get into the niceties and say a clawback is not the same as a tax, but it has the same effect on your pocket. Here we have the situation of a poor pensioner whose income is clawed back 50%, yet for a person having an annual income of over $100,000 a year, under the new tax rate that was established a year ago, it is less than 50%. The equity of that is kind of screwy.

Ms. Carol Skelton: Yes, that's good.

The Chair: Thank you.


Ms. Folco.

Ms. Raymonde Folco (Laval-West, Lib.): Thank you, Madam Chair.

First of all, I would like to thank you all for coming here today. What struck me in particular was the common thread that ran through your presentations this morning. Everyone agrees on the same points.

As the Parliamentary Secretary to the Minister of Human Resources Development, I too came to the realization that the Guaranteed Income Supplement was not meeting requirements, on the one hand, and more importantly, on the other hand, few people knew that they were entitled to it and what they had to do in order to get it.

Moreover, I can tell you that I appeared on a television program in Montreal, in French, one Sunday morning. Mr. Fournier no doubt is familiar with this program which is intended for seniors. Apparently, after my appearance on the program, hundreds and hundreds of people called in to say that finally, they had received a little bit of information.

This is simply my prelude. I am struck by many things. You underscored the problems in a very clear, succinct fashion. Those are the problems, in my opinion. I really do not need to ask you any questions, except on a few small issues.

I would like to ask you a more comprehensive question on solutions. My question pertains to the registration process that an individual needs to go through the first time that he or she wants to be put on the list of Guaranteed Income Supplement recipients. I believe Mr. Shillington asked why someone had to register.

I would like to know why one has to register, not only the first time but the other times as well, because there are subsequent registrations. How could we eliminate this step the first time and the subsequent times? That is my first question.

My second question is related. I know that Mr. Gleberzon talked a great deal about a media campaign, but there are a lot of elderly people who, despite the fact that they may look at television, do not really register these things. I am speaking from personal experience. I'm wondering how we could reach them to let them know that they are entitled to this benefit. They see the information on the television, but perhaps the information doesn't mean anything to them, personally. Do you have any ideas? My question is for anyone to answer.


The Chair: Mr. Gleberzon.

Mr. Bill Gleberzon: The studies we've seen show that the medium many seniors, a large percentage, use is the radio. Radio seems to be more of a companion than TV or newspapers.

It seems to me that if the message is crafted in a simple way to say—without spending time doing it now—the government has this program, if you think you're eligible because you have low income, call this number. Maybe you don't have to do any more than that, because as I say, based on our experience, that's all people want. They just don't know who to go to to get information about who they can call.

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The Chair: Mr. Kelm.

Mr. Walter Kelm: It seems to me that could be a way of approaching it. To build on Bill's point, often we've found—I remember this from when I was working for the government—that you try to put something out that answers all possible questions. As a result, it gets too long and is not read. Maybe what's required is a two-stage affair, something that just says, if you have an income less than x, you may be eligible, call this number. It's very simple. As Bill says, often all they want to know is who to call. So identify the people who should call, instead of giving them all the information they need.

The Chair: Mr. Gleberzon.

Mr. Bill Gleberzon: One other comment is that in any information there has to be a statement that says privacy is guaranteed. We know that a lot of people are very hesitant to talk about their income, and I guess it doesn't matter how much your income is.

I'll give you an example. When the Ontario government began to charge a co-payment for prescription drugs, it was able to get—by the way—information from HRDC on low-income people, which was then provided to the pharmacy retail outlets, so that they could determine who had low income. A lot of people phoned us about that because they were really concerned about the privacy issue. So the privacy issue is not about providing the information, it's about reassuring people that the information is going to be provided to you alone and won't be shared with anyone.

It's our understanding, by the way, that there is legislation that permits the federal government, we believe HRDC, to provide that kind of information to the provinces. As I said, when this happened in Ontario, we checked it out, and that would seem to be the case. But again, whatever the message is, it has to reassure people that this is going to be between themselves and whoever they talk to on the other end of the phone.


Ms. Raymonde Folco: And my first question, Madam Chair—


The Chair: I think Mr. Fournier had a comment.


Mr. Gilles Fournier: I have a suggestion to make. It is true that we have an information problem and it is true that the elderly have memory problems. I have noticed, in another association that I chair, that we need to repeat the same things constantly.

Our government is highly computerized and it receives our income tax returns when we turn 64. Why couldn't it automatically send out a nice little letter to every individual who will soon be turning 65 in order to explain his or her entitlements? A letter wouldn't cost very much, but all the information would be contained in it.

Secondly, our members of Parliament, who send us all kinds of information on their activities every year, could perhaps include this letter. As I was saying, you have to repeat things constantly with the elderly. You have a wonderful book put out by the federal government which talks about all of the services provided to the elderly throughout Canada. We distribute this book on a regular basis. We order it by the case. You could say that we always have to start over. There will always be half the people in the room who are not even aware of it.

Thank you.


The Chair: Madame Folco, your seven minutes are up.


Ms. Raymonde Folco: I understand, and what you have said is very interesting, but part of my question was, in my opinion, very important and no one has answered it. Perhaps it is because you have no answer. Why do people need to register? Could we not avoid this initial registration? Could we avoid the subsequent registration?


The Chair: Madame Folco, I hate to cut you off, but we're going to have to move on. We'll put you at the end, or maybe in the next round.

Ms. Raymonde Folco: Maybe someone else can ask the question for me.

The Chair: It may very well come up.

I'm going to move to Monsieur Gagnon.


Mr. Marcel Gagnon (Champlain, BQ): Thank you, Madam Chair. Indeed, I will repeat your question.

First of all, I would like to thank you. My name is Marcel Gagnon and I am the Bloc Québécois critic on seniors' policies. I'm very pleased to welcome you, because you gave us a lot of information this morning that I was missing.

I'm a bit scandalized when I see how many people are deprived of important resources. When you talk about people who are not getting the supplement, you're talking about the poorest members of society.

• 1150

I'm also a bit scandalized when I see that we're missing... As Mr. Fournier said earlier, we are in an age where information circulates quite quickly. When we want to reach people, we have all kinds of ways of doing so. This is a serious problem for the individual who, for example, is spending more than 50% of his or her income on housing alone. What is left over for other requirements? It just doesn't make sense.

One other thing shocks me. When the government realizes that somebody has not claimed his or her entitlement, why doesn't the retroactivity go back more than 11 months?

I'm convinced that if I were to make an error with my income tax, I could go back further in time. People have already gone back two, three or four years to claim things that they were entitled to claim. We are entitled to do this when we pay our income tax, and I think that it is inexcusable that we are not able to do so for income like that, which is an entitlement. This has to be changed quickly.

I would like to ask you a question. Someone said that we needed to repeat things often. I too have noticed that I now need to often repeat things in order to remember them but there are all kinds of associations that deal with the elderly, in Quebec in particular and no doubt in the rest of Canada as well.

In your opinion, would it not be possible to communicate information through associations that deal with seniors? Associations such as the golden age clubs or other associations such as the AFEAS.

Mr. Gilles Fournier: You are quite right, but I would like to point out one thing. I will take the example of a region that I know better than all others, the Laval region, where we have about 680 associations of all kinds.

Our regional groups bring together 280 associations for retired people. That's a lot of people. We always preach the same things. However, very often, the people who get stuck are individuals living alone, individuals who are isolated, and especially widows because in many cases they were dependent on their husband, who did not keep them well informed.

This is a problem, and we will always have to keep putting the information out. I belong to several associations—I am even a member of CARP, so that I can get more information and find out what is happening throughout Canada. I have noticed that many of the associations I know, including CARP, FADOQ (the Quebec Federation of Senior Citizens) and the AQDR always preach the same thing. Thus we cannot blame ourselves, we cannot say that the information did not go out. Perhaps there should be more of it, and perhaps it should be put out in a different way. It is important to repeat the message; I cannot emphasize that enough. I see this with the associations in which I am involved. How is it that people who have been members for seven or eight years suddenly discover, at one point, a document that passed right under their nose for months, or even years? What can we do? We cannot wring their neck.

Mr. Marcel Gagnon: Ms. Folco asked whether it would not be possible for this to be done automatically, instead of making people fill out a form. When individuals reach the age where they are entitled to the supplement, the government is aware of this. Would it not be possible to have an automatic adjustment so that those entitled to the supplement could receive it?

Mr. Gilles Fournier: I perhaps agree as far as the Old Age Security pension is concerned, but we cannot do that for the Guaranteed Income Supplement, because it depends on income tax, on income. It would be easy to do what I suggested to Ms. Folco: when you turn 64, you automatically receive a piece of paper telling you that you should register if you do not want to miss out on some money. Let us make things simple. Let us use plain language. That is how we will manage to reach as many people as possible.


The Chair: Mr. Gleberzon, you had a comment on the previous question.

Mr. Bill Gleberzon: Yes I did, because I think the two questions Madame Folco asked and Mr. Gagnon's are really related, and it's a matter of process. I can turn to the United States as an example. There's an association there called AARP, which is, I'm told, the second largest lobbying group in the world after the National Rifle Association.

The Chair: Okay.

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Mr. Bill Gleberzon: They have more members than there are people in the whole of Canada, about 34 million. The point is, it's a standing joke in the States that when anyone turns 50, they're going to get a letter from AARP that tells them they are now 50 and it's time to join AARP. So there is a process down in the States through which they're able to identify people on the basis of their age.

We have, I'm sure, more than one data bank in the federal government, the SIN for example; our SIN number is probably linked to age. I think there is a way, if the government chose, by which it could reach out to people and let them know, at least if they're 65, there's a number to call to see if you're eligible.

That may deal with the people who are straightforward 65-year-olds, but then we have all these refinements, if you will, widows allowance, the matter of couples, and so on. In our presentation, in the appendix, we point out that there are at least five different groups who are eligible for GIS: single individuals over 65; couples both of whom are over 65; couples where one of the spouses is over 65 and the other isn't; someone who's 65 with a spouse between the age of 60 and 64; and then finally the widow spouses allowance. These are slight variations under the general theme, but the general message is still to be, if you are over, say, 60 and may be eligible for these programs, here's a number to call.

The Chair: Mr. Shillington.

Mr. Richard Shillington: I do think the issue of application is important. All this conversation about helping seniors know they're eligible assumes that you have to apply, and I think that's a mindset that comes from 30 years ago, when these programs were designed and the computer systems weren't what they are now. As I indicated, some provinces now run a GIS top-up, where people do not have to apply. When the federal government sent the fuel rebate, people didn't have to apply; as long as you got the GST credit, you got this other amount as well. So you could change the mindset to say, as long as you file a tax return, we will send you this money automatically. I don't think there's any impediment to that except inertia. Recognize that this will miss the people who don't file tax returns, but you will know the vast majority of those people from the fact that they get old age security. If you do it automatically, based on a tax return, I think you will have a system much better than the current one, but it won't be complete, because the people don't file tax returns.

The Chair: Okay.

Mr. Marcil, seven minutes.


Mr. Serge Marcil (Beauharnois—Salaberry, Lib.): First of all, I must say that I agree completely regarding the GIS problem. It is even tragic for some. I have often had to fill out the form for my mother, my father-in-law and my mother-in-law. They were not very rich people.

You have surely done some research. Are some generations more seriously affected than others? Today's elderly are probably more affected than people who are 40 years old now will be when they reach 65. Has your research shown that for people of the current generation, who for the most part have RRSPs and pension funds with the companies for which they worked, the problem will be less serious, or whether a similar percentage of individuals will experience exactly the same problem as our elderly when they reach 65?

Mr. Gilles Fournier: I assume that your question is for me.

Mr. Serge Marcil: Yes.


The Chair: Mr. Fournier.


Mr. Gilles Fournier: The research that we are currently doing shows that there is a kind of dead end. We are being strangled by a situation which is giving us a great deal of trouble. It is the whole pension plan. It is not strictly the CPI, the Guaranteed Income Supplement and all that. No, there is more involved.

• 1200

More than 40% of the labour force have nothing. How do these people live? They will be living off their Old Age Security, the Guaranteed Income Supplement and, to some extent, the Quebec or Canada Pension Plan.

This percentage is comprised of people who, generally speaking, earn approximately $30,000 a year and sometimes less. Because of family requirements, they are not even able to save any money. We are frightened by this constant, which appears to be stuck there and which hampers people from moving. Think of all our young people who are in precarious jobs, who do not have stable employment or work on a freelance basis. Do you think that they have a pension? They have nothing and this is what scares us a bit.

Moreover, we know that there have been some improvements with respect to poverty amongst the elderly. Although poverty has been reduced by 50% over the past 20 years, this improvement has levelled off. Why? It is because of the system, the system which does not enable some people to improve their lot.

I look at the statistics from 1996 to 2000 that I was able to gather. They do not paint a very pretty picture. With everything that is going on right now, I do not know how the situation will improve. We have a problem. I do not know if that answers your question.

Mr. Serge Marcil: Yes, that answers my question. Indeed, you said that approximately 40% of the workers currently earn salaries of $30,000 or less and cannot participate in RRSPs or similar things because they just manage to pay the rent, look after their children and all of that. Consequently, they do not have enough money. They are not even thinking about it. There are even some people who are earning very good salaries and yet they don't think about this.

I read an article in the Toronto Star about a study in August 2000. The article said that more than 86,000 people were entitled to the Guaranteed Income Supplement but had never applied for it. How does one determine a number like that?

Mr. Gilles Fournier: I do not know, but I can tell you one thing. As far as the Guaranteed Income Supplement is concerned—


The Chair: I'm going to remind people to go through the chair, so I have some sense of who's speaking where.


Mr. Gilles Fournier: I cannot answer this question, however, I would like to point out one thing. How is it that the Guaranteed Income Supplement has never been increased since 1984? Ask yourself this question.


The Chair: That is the question.

Mr. Gleberzon.

Mr. Bill Gleberzon: To reinforce what's been said, the nature of the labour force has changed in the past 10 or 15 years. We have more part-time casual people working. The average income of a family in Canada is around $60,000—$63,000 or $64,000—and that's generally because both spouses in the family—or partners, whichever—are working. If you add up the amount these people are making and you divide it, how much could they be making on an individual basis? But you're looking at $63,000, which isn't a lot of money.

I think it's fair to say that in the future we're going to see the need for GIS continuing and increasing, because beginning in 2011, the first wave of baby boomers are going to turn 65, and that process is going to continue over the succeeding 18 to 20 years, so that by the year 2030, roughly, about one out of four people will be over the age of 65. There's no reason to believe that the percentage of those receiving GIS is going to be much lower than it is today, because of the nature of the labour force and the nature of work. All you have to do is read the paper to see how many hundreds of thousands have been downsized just over the last six or eight months. When you're downsized, you don't have money to put into pensions, and if you're working on a casual part-time basis, where the greatest growth in jobs is occurring, you obviously don't have a lot of money or a pension.

So obviously, GIS is going to be with us, should be with us, has to continue. If present trends continue, the cost of living is going to be increasing as well. We had a real shock when the cost of natural gas suddenly spiked, but if the economy picks up again and starts expanding again—there's no reason to believe that's not going to happen again—that's just one example of what we're looking at into the future.

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The Chair: Thank you.

Ms. Davies.

Ms. Libby Davies (Vancouver East, NDP): Thank you.

First, thank you to the witnesses for coming.

Mr. Gleberzon, you said there's probably more than one database. Believe me, there are probably hundreds or thousands of databases. The amount of information the federal government has, millions of pieces of information on each Canadian, is quite awesome.

I guess, if there were an award for government screw-up and bungling, where people are actually being hurt, this would probably take the cake. I just find it appalling. Usually we're fighting for expanded social programs, for new benefits, but here we have something that already exists, that people are actually entitled to, and yet they're losing out on $500 million a year, 380,000 seniors. It's just appalling.

I'm very glad that Mr. Shillington is such a good number cruncher—I think that's what you call yourself—because if you hadn't been doing your number crunching and come upon this black hole, the fact that so many seniors are missing out, we might not be here today having this debate.

I wanted to agree that the issue is how to make this entitlement and benefit more automatic. We can talk forever about all the different ways to get information out there, but surely to God, there has to be a way to design a system so that seniors who are entitled to this benefit will automatically get it, even if they're not filing their income tax returns. I know from the community I represent that there are seniors who go to the Carnegie Centre in the downtown east side who haven't filled out an income tax form for 10 years for one reason or another, and they have been able to collect certain benefits—more than 11 months I might add.

So to me, the three issues are how to make it automatic, how to get a much better retroactivity, maybe five years, and how we deal with an adequate cost of living increase.

Mr. Shillington, if I could just follow up with you, in regard to trying to design something that would create a more automatic system, do you have any ideas to offer? And in dealing with the retroactivity, have you had conversations with HRDC, and what kind of response did you get from them?

The Chair: Mr. Shillington.

Mr. Richard Shillington: On the automatic entitlement, I know you're meeting with HRDC officials next week, and so you can ask them. As far as I can see, it's just a matter of saying, we'll change the process, instead of waiting for people to reply. I think some of you may have been through the GIS application form. I assume that if people file an income tax return, all the information that's put on that form is ignored. They're not going to use the income you write down there on that form, they're going to use the income from your tax return. If you write down that your income was zero last year and apply for GIS, they're not going to use zero, they're going to look at your tax return and use whatever is on that. So we have a system where a lot of stuff is just appearances.

Maybe the world is not as simple as it appears to me, but if the government can send cheques to everybody who gets a GST credit without their applying, it seems to me they can look up people and say, apparently from your tax return... As I said, some provinces are doing it now for GIS-like programs. So I think the application is not a big issue.

As to retroactivity, I've had a couple of conversations. The HRDC officials have been very kind and open and said, here are the regulations. The regulations were made by you people, right? It's in the legislation, it was passed by the House of Commons, so don't blame the officials for the fact that the retroactive period is 11 months. It was the House of Commons that decided that would be the case. They changed it from five years to 11 months for old age security, and that was done by the House of Commons. So they say, here's the legislation—they've been pretty good about that.

But I have basically said, you know, this is going to be a tough fight. Because if we're right and it's $500 million a year that people are missing out on, a retroactive period of five years i means $2.5 billion, which will probably get the notice of people who work for the Department of Finance. I suspect that's going to be, to put it mildly, an uphill fight.

Again, I would differentiate between the retroactive discussions concerning old age aecurity, GIS, and CPP. The CPP should be a very simple calculation. To me, it's no different than a pension plan—though I am one of the people who doesn't have a pension plan. If Canada Life had a policy that I had paid into all my life, and for whatever reason I applied for my benefits 3 years later, I don't think they'd get away with saying, no, you're only going to get the last year, especially if they knew I was there, knew where I lived, and didn't bother to tell me about the benefits I was entitled to.

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Ms. Libby Davies: Is CPP also only 11 months?

Mr. Richard Shillington: Yes.

The Chair: Ms. Davies, I'd remind you that I'm here.

Ms. Libby Davies: Sorry.

The Chair: Mr. Kelm.

Mr. Walter Kelm: Let me react to your question on CPP, and this is something that might be considered in relation to the retroactivity on OAS—I might add that I was an employee of HRDC and Finance. One way around that might to use what's done in CPP. In CPP it's only 11 months retroactive, but if you apply for it after age 65, the amount that's paid on a continuing basis is increased by 6% for each year, so that you can get five years, though you won't get the money in a lump sum. That gets around that $2.5 billion thing. That wouldn't work for GIS, but it might be considered for OAS, because it's being done now for CPP.

Ms. Libby Davies: Chairperson, if I just have a minute or so left, I don't know how we're planning to follow this up, but it seems to me that the committee should absolutely focus on the three key areas and come up with some recommendations to put to, probably, a couple of departments, so we can try to get some action on this. Mr. Shillington, you've said that HRDC is going to look at casting a wider net, but I think the matter of how we can make it more automatic and how we can begin to look at the retroactivity, as well as a general COLA increase, is something the committee should follow up. I would hope everyone would agree to that.

The Chair: I think you'll probably find agreement on that. And certainly, we'll have officials from the department here at the next meeting, so some of these questions we can pose to them and get answers directly.

Ms. Libby Davies: Okay. Thank you.

The Chair: Mr. McGuire.

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

I'd like to ask Walter a question on the CPP. People have worked on the others for over 30 years and really haven't come up with a solution that applies right across the board, that catches everybody. You can have funeral directors involved here, but they have a self-interest too. They'd like to get paid for their services, so it's to their advantage to tell somebody about the benefits that might accrue on the death of a loved one.

Especially on the CPP disability, when you finally get through it, you're automatically turned down the first trip around, unless you're at death's door, then they might give it to you. Otherwise, it will take a year, maybe a year and a half, two years. I've had files on my desk for three years before they get through all the appeal processes. They needed support while they were going through all these appeals, and they got that from social services in the province or municipality, and when they did get their cheque, the cheque had to be turned over to them. So basically, it didn't matter how much retroactivity there was, they weren't getting anything extra anyway.

But on the whole process of the CPP disability, do you have any opinions on why there are so many people applying for it? Nobody ever expected the kind of pressure that's on that program.

Mr. Walter Kelm: It's been a while since I was there, but we did some studies and found—this is not strictly related to your point—the extent of disability had very little to do with the hazardous occupations, it had more to do with the regions they were in. In the Maritimes, where unemployment was high, you found more disability, and where unemployment rates were lower, there wasn't as much disability.

But that is a tough one. And it's really the test—as I recall, it hasn't changed. You have to be considered incapable of any kind of meaningful work. And doctors are extremely hesitant about making yes or no decisions—they're qualified. So it's that test really.

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Mr. Joe McGuire: Why the explosion of applications under that program? At one time the program was well within its limits, and they were able to pay disabilities and still have leeway.

Mr. Walter Kelm: It's been 25 years since I was there, but I remember it was starting in the seventies, a bit before I left. We looked at it, and as I say, we found it had a lot to do with the unemployment rate of an area. I suppose one of the reasons it's exploded is that while the criteria haven't changed, with the heat the administrators have been getting, there are a lot of grey areas, so they've probably agreed with more of these requests.

Mr. Joe McGuire: Mr. Shillington, is there any partial solution to this through provincial governments and municipal governments? It must be to their benefit to have $500 million that could be spent in their communities or in their province that is not being spent. Do they have a better handle on seniors than the federal government has? Could they be of any benefit to the federal government in upgrading their processes?

The Chair: Mr. Shillington.

Mr. Richard Shillington: The role of the provincial and municipal governments in this again is very complex. Let's imagine a senior citizen sitting in a nursing home, or lying down in a nursing home, in Ontario. They go and apply for GIS, which they had been entitled to, but were unaware of. All of a sudden their income goes up by $3,000 a year. My understanding of the regulations is that their rent will go up by $3,000 a year. What will happen is that the $3,000 GIS will go from the federal coffers to the provincial coffers.

Mr. Joe McGuire: So why would they bother?

Mr. Richard Shillington: Actually, if we use the same regulations as apply to other types of provincial programs, they'll be told by the provincial government that they must apply for this. One of the reasons CPP disability applications went up was that provincial welfare departments were telling welfare recipients to apply for disability.

Mr. Joe McGuire: But if they're not on welfare, why would they apply, knowing that they're going to—

Mr. Richard Shillington: They won't necessarily know the regulations.

Mr. Joe McGuire: If one organization is going to give and the other one takes away—

Mr. Richard Shillington: I can point to lots of seniors in nursing homes or in other programs where, if their income goes up by $1,000, their standard of living goes down. Suppose somebody takes $1,000 out of an RRSP. They're going to lose $500 to GIS. One-third of GIS recipients also pay income tax, so those people will lose $250 on top of the $500, because they'll pay income tax on the money they took out of the RRSP. If they're in social housing, their rent is 30% of their income. If they're getting Meals on Wheels, the amount they pay for their meals is also geared to their income. If they're getting home care, it is as well. Somebody mentioned demutualization and receiving dividend income. Right now, if you're in a nursing home in Ontario and you receive $1,000 of dividend income, your rent goes up by more than $1,000. You're actually worse off. That's the kind of system we've designed for low income people.

Mr. Joe McGuire: So if they know they're going to be worse off, they're not going to—

Mr. Richard Shillington: They won't know this.

The Chair: No. That's the thing.

Mr. Joe McGuire: They won't know that?

Mr. Richard Shillington: No.

Mr. Joe McGuire: But if they do know it, they're not going to apply for it anyway, if they're going to be worse off.

The Chair: Mr. Gleberzon.

Mr. Bill Gleberzon: That's actually getting back to something Ms. Davies said, the three issues to deal with. The issue Mr. Shillington has raised is the issue we presented. There is a need to create within the system an allowance that is not going to have that happen, because these kinds of incomes, additional incomes, are usually periodic, not an annual thing.

Therefore, along with the three that have been suggested, there are two suggestions we raised. One is increasing the threshold at which people are eligible for GIS. The other is creating this band, if you will, within which people are eligible to receive additional income, which usually appears on a periodic basis and for which they will not suffer, bearing in mind that the financial suffering, which has other implications, is both for the current year and the next year. They may have received $1,000 or even $3,000 in one lump sum payment, and they will lose GIS that year and, because the next year is based on the income of the previous year, the next year. So I think it has to be expanded beyond the three.

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The Chair: Thank you.

We're going into the second round, and normally we'd go to the opposition, but Ms. Skelton has agreed to let Mr. Malhi go next. So you've got four minutes, Mr. Malhi.

Mr. Gurbax Malhi (Bramalea—Gore—Malton—Springdale, Lib.): Thank you, Madam Chair.

My question is to Canada's Association for the Fifty-Plus. Do you have any information about the many people over 65 who are not eligible for any benefit because of the residency requirements?

The Chair: Mr. Gleberzon.

Mr. Bill Gleberzon: That's true. I believe the residency requirement is 10 years, so anyone who has not lived 10 years in Canada would not be eligible. The numbers I don't know, sorry.

Mr. Gurbax Malhi: At the same time, there are some people over 65 who have been here less than 10 years, but are eligible for the benefits.

Mr. Bill Gleberzon: Some of that is due to the agreements that are made with other countries, reciprocity agreements. In effect, they may be receiving whatever they would have received in their own country, and it's somehow adjusted.

Without getting too much into a side track, among the major issues we also hear about are the taxable rate limits for Canadians who worked in the States, retire back to Canada, and have 85% of their social security taxable. This was being introduced over the past three or four years in a very roundabout way, and I won't go into the details. Another issue is that of British pensioners, people from the U.K. who have moved to Canada. Because they're outside the U.K. and Canada doesn't have the same kind of reciprocity agreement as, say, the States does, they have their pension frozen at the amount they receive when they turn 65. That affects a lot of people.

And then you get into the role of other people who, because of residency requirements, are excluded, or because they may have come from a country that does have a reciprocity agreement with Canada, they are not excluded, even though they've been in Canada for under 10 years.

Mr. Gurbax Malhi: Does your association have any comments or information on those who are not eligible because of the residency requirements?

Mr. Bill Gleberzon: It gets back to the government policy. I must say, I don't know whether that's an HRDC policy, if it's bureaucratic or government. But I think that's an area the committee should be investigating as well, to find out exactly what's behind all of that, to try to sort out what is really a patchwork of agreements the Canadian government has with other governments.

The Chair: Any other questions, Mr. Malhi.

Mr. Gurbax Malhi: No. Thank you.

The Chair: Ms. Skelton.

Ms. Carol Skelton: I have one quick question here. The 11-month period commonly used by the government, is that in other social programs? Do other social programs use that? Does anyone know?

Mr. Walter Kelm: I don't know, except that, as I say, in CPP if you wait five years, the amount you get on a monthly basis is higher than it would be. It increases by 6% for each year, and it works the other way too. If you apply before 65, it's reduced by 6% for each year; if you apply after 65, it's increased by 6% for each year, up to age 70.

Ms. Carol Skelton: Okay.

The Chair: Mr. Shillington.

Mr. Richard Shillington: My understanding is that for the federal programs it's pretty well 11 months.

As an interesting side note, for the child tax benefit, I wrote to people complaining about the 11 months, because this is low-income children. And I got a letter that basically says, yes, it's 11 months, but if you know anybody who wants to go back further, they can quote subsection 122.62(2) of the Income Tax Act, and if they're that well informed, we will go back further.

Ms. Carol Skelton: Really?

Mr. Richard Shillington: I'll show you the letter in the break, if you wish.

So basically, we have a system that says, it's 11 months unless you know the secret word; if you know the secret code, we'll go back further. Maybe there are secret codes for CPP and OAS and UIS, I don't know and I haven't been told. But I can tell you that for the child tax benefit we have 11 months, unless you're on the inside, and then there's another way. I'll show you the letter.

The Chair: I think we'd all like to see the letter.

Ms. Carol Skelton: Yes, that would be good.

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Mr. Richard Shillington: Okay. At break I'll show it to you.

This is typical. It's like that famous tax ruling that's being debated in Winnipeg. Here's the way the capital gains on trusts works, unless you can meet with Revenue Canada officials a couple of days before Christmas, and then there's another way.

The Chair: If there's something like that you are willing to share with the committee, you can pass it on to the clerk. She can have it circulated.

Mr. Richard Shillington: Sure.

The Chair: Anything else?


Mr. Gagnon.

Mr. Marcel Gagnon: Thank you, Madam Chair.

What I have understood from this extremely important and interesting meeting today, is that, first of all, we have to find some way of reaching these people who are entitled to it. Of course, this is the year 2001 and we should be able to find some way of contacting people who are entitled to it and who really need this income.

Secondly, when it comes to an entitlement, 11 months of retroactivity does not, in my opinion, make any sense. Even if we are told that this could cost 2 billion dollars to pay for retroactivity going back five years, for example, we are not talking about a gift, but an entitlement. This money has been paid for. If someone owes me money and does not reimburse me until five years have elapsed, I am not going to decrease the amount of money owed me because this person has delayed repayment by five years. In my mind, 11 months of retroactivity does not make sense. The retroactivity should go back five years, regardless of what the amount may be. These are amounts that have been paid for. I do not know whether I understood correctly, but this is the way I see it.

We are also talking about the need for an adjustment. If, indeed, the last adjustment to the supplement was made in 1984, we can imagine how much the poorest people—since those requiring the supplement are not wealthy but are poor—are penalized by the increase in the cost of living.

I would like to know if there have been any cases where the 11 months of retroactivity have been challenged. Are you aware of any cases?


The Chair: Mr. Shillington.

Mr. Richard Shillington: I think you misunderstood the 1984 adjustment. That's the last time the actual amount paid for the GIS was adjusted, but there have been cost-of-living increases since. People could say that the CPI isn't adequate, but seniors have not been undermined by the cost of living since 1984.


Mr. Marcel Gagnon: When was the last increase or adjustment with respect to the cost of living made? I had understood it to be 1984.

Mr. Fournier.


The Chair: We'll start with Mr. Shillington, and then go to Mr. Fournier.

Mr. Richard Shillington: OAS and GIS are adjusted every three months for the cost of living, but the last time the real value was changed was, I believe, in 1984.

The Chair: Mr. Fournier, you didn't need to answer that?

Mr. Gilles Fournier: That's clear.

The Chair: Mr. Kelm, did you have anything to add to that?

Mr. Walter Kelm: No, not to that particular point. Before you leave though, I'd like to make another suggestion that memory brings back.

The Chair: Mr. Gagnon has half a minute if he has anything else.


Mr. Marcel Gagnon: Mr. Kelm wanted to make a brief—


Mr. Walter Kelm: This reminds me of the early days of CPP. CPP was introduced in the sixties, and they got a lot of people in from the private side, particularly the managers, people in insurance and what not. As a result of that, a lot of private-sector techniques were used. One of them, which I know is fairly effective, is that a lot of the private sector people joined service clubs. They found this was a good way to get out to the community. Some of the headquarters people were a little leery of that, and there was a fair amount of discouragement. The government would not pay membership fees. But some of these people were so interested in it, they just paid for it out of their own pocket.

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There's an awful lot that can be accomplished at the local level. You don't have to go to just the province. You can encourage managers to show some initiative. Indeed, dealing with service clubs is a very effective way of getting messages out, getting service clubs involved in informing people and doing other things.

The Chair: Thank you.

Mr. Wilfert.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Madam Chair. Even though I'm only back on this committee briefly, I see my four years' seniority didn't get me moved up the list.

Voices: Oh, oh!

Mr. Bryon Wilfert: Through you, I'd like to make a few comments to the witnesses and maybe solicit a question.

A couple of years ago this committee dealt with the issue of a national ID card, the problem being that the SIN card really has no relevance any more, because it has been misused by the public in many ways. It was supposed to be for certain government programs, and now everybody asks you for the SIN number. It's amazing how we've moved, though—through you Madam Chair—so now we have 80% of the population suggesting they would support a national ID card. Two or three years ago we had opposition to it.

So there's the question of how much information we have, and it seems to me to come down to the issue of whether people should be entitled automatically to benefits. If so, what benefits? Or should they apply? Obviously, if they have to apply, they then have to reapply, at the moment at least, through the return on their income tax.

I would ask the fundamental question whether or not the social programs that were designed thirty years ago are still relevant today. I do not think some of them are, some of them I personally think we cannot afford as a society. I know there was a great deal of public consternation over the CPP review and the fact that it is going up faster than otherwise, but if we can't afford it, how do we pay for it?

I would agree with the comment that was made that unlike OAS or GIS, in respect of retroactivity, the CPP entitlement should be... The government can go back seven years on your income tax. If they can go back to get money out of you for seven years, we should certainly be able to provide money back to people for seven years. I think CPP is a special case.

I don't know where the 380,000 came from. I don't know how accurate it is, to be frank, because of privacy concerns. Maybe it's too low, maybe it's too high. I guess the question is whether the Privacy Act is an impediment in dealing with the situation. The fact is that we, as members of Parliament, should have the proper tools—and I guess you could pass this on to the officials when they're here next week—to inform constituents how they can acquire this information.

Finally, Madam Chair, I would agree with the comment that it is far too complicated a system. In fact, everything we do is far too complicated. We forget who we're here for. We're here for the public, not the other way around. I've given up trying to file my own income tax, because it's too complicated, and my accountant keeps telling me that his really is a full-time occupation. How much is the onus on the individual? From what I'm hearing from our witnesses, the onus should all be on the government. If that's the case, then it would be automatic.

The Chair: Mr. Wilfert, it's a half-hour bell, so we can stay here until about five to one.

Mr. Bryon Wilfert: Wonderful.

I take it from what you are saying that you would prefer the automatic approach. If it is the automatic approach, how much information do we require from Canadians, and how much are they prepared to give us? If they don't give it to us, quite frankly, I don't see how they are entitled.

Through you, Madam Chair, I'll put that to Mr. Shillington.

Mr. Richard Shillington: I would prefer it to be automatic. You probably have all received envelopes recently from the Canada Pension Plan telling you how much money you have earned every year since you were 18 years old. I have no choice but to give them that information. Information goes from Revenue Canada to HRDC to tell them how much money I made. If I leave a job, my employer has no choice but to file a form with HRDC that says how many hours I worked and how much I made. It's called a record of employment. There are requirements. Filing my income tax return is not optional either. I am required to give both Revenue Canada and HRDC a great deal of information about me, which is something we do.

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That information can be used to deny me a bunch of benefits. I can't get EI benefits if my income is too high, so HRDC has to look at my tax return and say, no, you aren't going to get EI. On old age security, if my income is over $60,000, they say, no, we looked at your tax return. So this sharing of information between government departments can be used to deny me benefits. I'm saying, maybe we can share the information to come back and say, it looks like your income is low enough that you can get GIS. To me, you can't have it both ways.

The privacy issue I don't think is important. Anybody who wants can go and read paragraph 8(2)(m) of the Privacy Act. It says any government agency can give people information about themselves if it's to their benefit. Privacy never was an issue. You can check that next week. The Privacy Commissioner or people from that office may or may not be here. I'll happily give you the part of the Privacy Act that I think makes it clear that this was never a privacy issue.

As to the 380,000, I asked HRDC officials for their estimate of what proportion of GIS recipients weren't eligible. They gave me some percentages, and I looked at the number of people and did a back-of-the-envelope calculation. I said 330,000, the Toronto Star said 380,000. I don't think any of us really knows, except that we know it's big.

I want to make another comment about whether or not we still need these programs. Walter may remember—

Mr. Bryon Wilfert: Not whether we need them, but whether we can afford them—

Mr. Richard Shillington: Well, who's paying for them and who benefits from them?

Mr. Bryon Wilfert: —and the present form of how they are delivered.

Mr. Richard Shillington: The GIS, like income tax, was temporary, correct?

Mr. Walter Kelm: Yes.

Mr. Richard Shillington: The guaranteed income supplement was introduced as a temporary program until the Canada Pension Plan was fully matured.

Mr. Walter Kelm: I'll go a step beyond that. In the paper we put out three years ago—a copy of it is included in that brief—we saw a perception that the publicly financed and tax-assisted retirement systems represent a net cost to government. We took a look at that, and there are a lot of things that are omitted. When you factor all the considerations in, the publicly financed pension system and the tax-assisted plan are actually creating a surplus for the government of about $5 billion a year. That's outlined in the paper we issued three years ago. As a matter of fact, it was shortly after that paper was issued that the government decided to drop the seniors benefit proposal. It was put forward as a counter to that—it may be coincidence, but I don't think entirely.

The Chair: Thank you.

Mr. Wilfert, you may not have been bumped up, but you certainly had more than your time.

Mr. Bryon Wilfert: I've been bumped out anyway.

The Chair: The last question will go to Mr. Marcil.


Mr. Serge Marcil: Madam Chair, this was more of a comment than a question. We do have a tendency to confuse things somewhat. When we talk about a retroactivity period of 11 months for the Guaranteed Income Supplement, we must understand that there is a big difference between the supplement and the Quebec Pension Plan or the Canada Pension Plan, which people pay into. It makes sense that people who have contributed... Let's take the example of Canada Life, which Mr. Shillington used. When you make contributions, it only makes sense that you're able to recover your investment. The Guaranteed Income Supplement and Old Age Security come from taxes paid by the entire population. There is, therefore, a difference, and a significant one at that.

There is something else that needs to be considered. If there is a retroactivity period of 11 months, it is no doubt because of the fiscal year, because the government never prepares a budget over five years. Budgets are tabled on an annual basis. Given the current economic situation, if the government were to make a commitment... This does not mean it's right, but I simply want to explain, as an example, that a retroactivity period of five years for a group of people who have not received the Guaranteed Income Supplement when in fact they were entitled to it could represent 3, 4 or 5 billion dollars.

The government needs forecasts. When you look at the current situation, you can see that even the surpluses of previous years are all going to be required. So it is a bit more difficult. Two recommendations have been made. The first recommendation is that people entitled to the Guaranteed Income Supplement should receive it. I think that everybody agrees with that. Secondly, Mr. Fournier recommended that when individuals who are 64 years of age file their income tax, they be immediately sent a letter advising them about the supplement. I think that this is an appropriate recommendation.

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You also said that no adjustments had been made since 1984. That was 17 years ago. We should probably explore this avenue. It is very difficult to come up with the ideal system, but we must look after our elderly who are currently in need. You said that 40% of today's labour force will experience the same problems once they reach age 65. We don't know what the cost of living will be for these people, once they reach 65 years of age.


The Chair: Thank you.


Mr. Marcel Gagnon: Madam Chair, I would like to be allowed to reply. We are not here to partake in a political debate, but this is the first time that I have heard it said that the government is giving us a gift. When legislation provides for a system, we are taxed accordingly. Even though this is not a direct contribution, the money is taken from taxes. The government never hands out more than it takes in. We have indeed paid. When it was decided that a supplement would be provided, we were taxed accordingly in order to pay for the supplement. The government calculated how many people were entitled to receive it.

When I receive money from the government, I am sure that I am not receiving a gift. I am sure that I am receiving money owed to me as a result of legislation that was passed and taxes that were paid. You said that we should have a surplus or a small fund for retroactive payments. That exists. We simply have to administer it differently. For instance, we could allocate less money for servicing the debt. But that is an entirely different issue.


The Chair: Right, it's a whole other debate.


Mr. Marcel Gagnon: We should not be taking money from the poor in order to give it to the rich. Thank you.


The Chair: Okay, thank you.

I will give Mr. Shillington one last go—as long as we're not into a political debate.

Mr. Richard Shillington: No.

I don't think HRDC is sharing files with the Ontario government in the prescription area. I think it's Revenue Canada sharing government files with the provincial Department of Finance, which is totally appropriate under the Income Tax Rental Agreement.

You asked about GIS. My understanding is that over the last 20 years the proportion of seniors who get GIS has been declining. It's between 35% and 40%, and that's been declining.

Mr. Walter Kelm: It's 36%.

Mr. Richard Shillington: Thank you. The question is, will that continue? CPP is now fully mature. It replaces 25% of your earnings—most of you with pensions will be getting more than 50% replacement of your earnings, but CPP is 25%. So that's no longer going to be reducing that figure. The question is pension coverage, and my understanding is that pension coverage in the employed population is now declining. It's a declining proportion of the working-age population. It is declining slightly, not dropping off. So I suspect the proportion of seniors who get GIS will stop declining sometime in the future, when more and more retiring people don't have pension plans, and then will go up.

Mr. Walter Kelm: If I could just comment—

The Chair: One short comment—I'm being very lenient here today.

Mr. Walter Kelm: Just to add to that, the decline is expected to continue for a while yet, and we're still, I would say, about 15 or 20 years away from its stopping. You have to keep in mind that with seniors, you also have people who have been retired for a long time, so you've got seniors who are in their eighties, and they're reflecting really the situation that existed 20 years ago. That's what's keeping the number up high, but as they and others die off, the percentage will go down.

The Chair: Thank you.

I want, on behalf of the committee, to thank Mr. Shillington, Mr. Fournier, Ms. Lewis, Mr. Gleberzon, and Mr. Kelm for some very interesting comments. We will keep you posted as to how we proceed. Thank you.

Meeting adjourned.