Evidence of meeting #64 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was going.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

May 29th, 2012 / 5:35 p.m.

Liberal

Scott Brison Kings—Hants, NS

I want to talk a little about the OAS, because I actually think there's some common ground between what Mr. Clemens and Mr. Jackson have said, and I have real concerns. We may disagree on whether or not OAS is sustainable, and there are arguments being put forth in that regard. The OECD and the Parliamentary Budget Officer have said that it's sustainable in its current form. I think it goes from 2.7% of GDP now to, I think, 3.1% in 2030, and drops down thereafter.

You've raised a good point. If it is not sustainable, there are more progressive ways to address its sustainability. First, I believe it's sustainable, so I don't think we have to make those changes, but it's a good idea to consider what we could do that would be less regressive than the approach being taken. The reality is that 40% of the people getting OAS are making less than $20,000, and 53% make less than $25,000.

It's fine to say you can work a couple of extra years if you're a politician, an economist, a journalist, or an accountant, but if you're a physical labourer or a woman working in a fish plant in Newfoundland in a cold, damp environment, the extra couple of years from 65 to 67 may be very difficult.

You suggested addressing this through the clawback approach. Should we, for instance, consider ideas that include taking a look at the type of labour? You also suggested looking at single seniors. Does that not take a more thorough analysis? Is that not one of the arguments why we should be dealing with this as a separate piece of legislation, so that we can really devote Parliament's time, efforts, and research to it?

Either of you can answer.

5:35 p.m.

Conservative

The Chair James Rajotte

Go ahead, Mr. Clemens.

5:35 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

I'll just quickly clarify the sustainability issue. The traditional definition of sustainability is that, given current policies, it can be funded without changes over time, and the OAS is going from being equivalent to $1 in $5 of total spending, to $1 in $4. So it either is going to be financed by more taxes or by crowding out other spending.

5:35 p.m.

Liberal

Scott Brison Kings—Hants, NS

Respectfully, we differ on that point. I'm trying to get to a point where we may agree, and that is the—

5:35 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

Sorry, I just wanted to clarify why I was saying that it was unsustainable.

I would be open to either of those suggestions. Again, part of the point I was trying to make post-budget, after the original announcement was made by the Prime Minister in Davos, is that there are a lot of moving parts to retirement income. If we only look at OAS and GIS, we're missing considerable parts.

So if we bring up the issue of the single elderly person, then we're definitely talking about GIS. Some of the other programs are moving parts—

5:35 p.m.

Liberal

Scott Brison Kings—Hants, NS

Or the physical labourer.

5:35 p.m.

Director of Research, Macdonald-Laurier Institute

Jason Clemens

My concern would be the technical process through which we're going to make those determinations. Again, I think the easy lifting, so to speak, is to identify the clawback threshold for OAS, that is, to ask the question of better targeting. And I think it's fairly easy to do that for single seniors, since we already differentiate those benefits now.

5:40 p.m.

Liberal

Scott Brison Kings—Hants, NS

Mr. Jackson, did you have something to say?

5:40 p.m.

Chief Economist, Canadian Labour Congress

Andrew Jackson

I think that, if you increase the clawback, it would be a less bad way of going about doing things. On the sustainability thing, we're phasing in this increase in such a way that it really only applies when the cost of OAS peaks, so it doesn't really make that much difference to the cost of the program. The average person of 65 is going to live past 80, so you're cutting off two years. It's not a huge percentage point reduction to the cost of the program.

What I would say is that I would not ignore the importance of OAS to people who aren't in a very low income situation. We know that baby boomers, or a significant section of middle-income baby boomers, aren't saving enough for retirement. CPP and OAS in combination replace 40% of the average wage, which is a very low public pension compared to the great majority of OECD countries. So there are a lot of couples who are going to lose a significant chunk of change, the ones who are fully affected by it. I guess basically they're going to have to work that much more to make up the difference, or save that much more, but we know people are having trouble saving.

I'm not sure whether the real motivation for this is the cost or the view that people are retiring too early. To my mind, there are all kinds of positive incentives we can put in place for people to continue working past 65 and to encourage employers to retain workers. We could talk about all those things, if that's what the debate is about.

5:40 p.m.

Conservative

The Chair James Rajotte

Thank you.

We're right at five minutes, Mr. Brison. Thank you.

We'll go to Mr. Jean, please.

5:40 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

Thank you, Mr. Chair.

I've been in Fort McMurray for 45 years, since there were 1,500 people. My community is built by people from the rest of Canada—the unemployed, mostly from eastern Canada, from Newfoundland and Labrador. Actually, they say that Fort McMurray is the second largest Newfoundland city in the world, which I think is probably true.

Once thing that resonates as true is exactly what my friend Mr. Hoback says: many people come to Fort McMurray to get the maximum number of weeks, and then they go home, wherever that home may be. I understand why; I'd like to be home too, right now, but I'm here working because I accepted this job.

Since it is such a common thing to have people work the minimum number of weeks and return to their home, do you think it's reasonable that they do that? What would be reasonable, in the circumstance, as a minimum number of weeks for people to work to be able to return home? The jobs are available. Let's face facts: they're there; they're just in a different part of the country.

5:40 p.m.

Chief Economist, Canadian Labour Congress

Andrew Jackson

I'm not sure I really understand the question. Presumably they wouldn't qualify for EI unless their employer in Fort McMurray laid them off. If they're—

5:40 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

I also know that many people ask for layoffs and I've never heard of anybody refusing them. And if they do refuse, they go to the EI office and they complain for 15 seconds and they get their EI. That's common. I've worked in the labour unions, I've worked in those areas, and I know that this is what happens, because I've seen it happen consistently. I'm just asking you what would be a reasonable number of weeks for a person to come to western Canada and work in order to receive unemployment benefits for the rest of the year. That's my question. What do you think is reasonable?

5:40 p.m.

Chief Economist, Canadian Labour Congress

Andrew Jackson

I'm baulking slightly at the question. I don't object to the current rules. We haven't said workers who quit their jobs should be eligible for—

5:40 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

Ignoring the current rules, what do you think is reasonable in the circumstances? You're opposed to these changes, so I'm asking you what you think is reasonable. It's a simple question.