Human Resources Committee on June 2nd, 2009

[Ben Lobb, Conservative, Huron—Bruce, ON]

For sure. I think that's great.

I wanted to ask Ms. Gosse a question to get back to the Canada learning bond or an idea about the registered education savings plan. Sometimes in agricultural programming they put a kickstart in to get the account set up and to get it rolling. Is that coupon or voucher what you're talking about? For someone who was receiving the child benefit, for example, for the RESP account, would the government maybe kickstart $500 or $1,000 in to get that account started? Is that what you'd propose?

[Barbara A. Gosse]

The Canada learning bond is a grant program, so there is a $500 initial kickstart into the account. Then there are contributions also made at specific points in the child's life as well. There's a total contribution grant, ultimately, that comes from the federal government to the family for their children that would amount to $2,000.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay. That's great.

On the flip side, at the other end of life, let's say when we head into our fifties, do you see a possible mechanism that could be in place whereby the government sees someone in their fifties and they have no RRSP accounts set up, they have no tax-free savings account, so the very same mechanism triggers, which says, “Okay, Fred, you have a problem here, because you have maybe 10 years left in your life to work, and you have nothing set up here except your Canada Pension Plan.” Do you foresee a possible mechanism that could be in place so that it's not too late at 50 to start saving, but there would be a plan to kickstart that?

[Barbara A. Gosse]

Absolutely. Having the incentives to save toward your future makes you feel different about your future. I would bet that everybody in this room has done that. That's what happens. At 50, it's possible to institute that. I've actually talked to friends around the dinner table about this. I've been in shelters. We've talked to kids in shelters, and you wouldn't believe how many of them have actually mentioned their retirement funds. We've been very surprised.

There can be lifetime savings accounts set up that can actually incentivize savings for different periods of lives. Even the tax-free savings plan is a mechanism that could be used if there were matched savings incentives for lower-income Canadians as well. That's a mechanism that's already in place.

If people have some sort of assets at 50, they've already thought about those investments. If they have a home but don't have retirement funds, it's a possibility. I know we're talking about poverty here, so we may not be talking about people who have substantial assets, but there are ways to incentivize savings through very effective and efficient means. There are mechanisms in place across this country today that could be utilized to do that--definitely.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Just to conclude--I know my time is up--the 50 factor is what I talk about, because my riding is a retirement destination. We see retiree after retiree coming into our office who has no savings. They're 65 or they're in their seventies, and it's a shame.

[Barbara A. Gosse]

The other thing is that you can provide support to those incentivized savings accounts as well, such as financial literacy, which you mentioned earlier. Financial literacy is actually a key component to these asset-building accounts as well. We have actually found that the matched savings incentives seem to attract people to these accounts and get them involved in the accounts, but it's the financial literacy that can actually be moulded to fit individual groups of people's circumstances, their age limits, and where they're going in their lives, while supporting their goal choices as well, that actually makes them successful when they complete these courses.

I should mention as well that the Financial Consumer Agency of Canada has created a program for high school students on financial literacy—it's called The City—and it is out there. I don't know if they've been working together with the school boards yet or not, but I know they have the program out there now. I just thought I'd mention that as well.

[The Chair, Conservative, Dean Allison]

Thanks for that.

We have time for another question.

Maria, you have five minutes.

[Maria Minna, Liberal, Beaches—East York, ON]

Thank you.

Just very quickly, I'm actually invited to my local high school to talk about savings and that sort of thing once in a while.

[Reno Melatti]

There is the VIP program.

[Maria Minna, Liberal, Beaches—East York, ON]

Yes.

I just have two quick questions.

In my riding, one of the reasons the kids weren't going to school was that they didn't have money for bus fare. Do you know if the schools are identifying within their catchment area, especially for the high schools, or do they have to go much further in identifying kids who may or may not have enough money to actually go to school, and whether that's why absenteeism is....

[Reno Melatti]

There is now shared transportation between school boards, so there should be no reason why a student cannot go from one area to another. The problem of finances comes up when students want to engage in co-op programs within their rural area. They cannot have access to those programs because they may be 30 or 40 kilometres away. The school board does not provide that transportation. That's where the lack is.

[Maria Minna, Liberal, Beaches—East York, ON]

What about going to regular high school?

[Reno Melatti]

That should be no problem. There's shared transportation between school boards. If you're enrolled in school, they'll pick you up wherever you are.

[Maria Minna, Liberal, Beaches—East York, ON]

I'll check it out. I think I know of an area that has no bus service.

Mr. Stapleton, we've talked a great deal about all of the pieces up to a limit, but we haven't talked much about the pension aspect of things. We throw it in there and make the assumption that seniors have been taken care of since the time of Pearson. But that was a long time ago, and there's a lot of stress and poverty among seniors today. We also know that our pension structure isn't working as well as it could. RRSP is not working for the average Canadian and CPP needs to be maybe....

Has your group looked at pension reform in relation to housing and what have you?

[John Stapleton]

There have been a number of studies on pension reform, and I know there's going to be another one dealing with the viability of CPP and RPPs. I think there's a general recognition that the portion of people who have a defined benefit pension plan, the type we call good pensions, is somewhere around 11%. Generally, these are only safe in the public sector. So the amount of savings that people have is insufficient.

We are concerned about the premise of the registered retirement savings plan—that you have higher income in your working age years and then when you become a senior you have lower income and take money out of your RRSP. But poor people often have a lower incomes in their working years and higher incomes when they go into retirement. So the type of investment vehicles we have are insufficient for people who are in that position. Often people have RRSPs that they start to dip into, and it reduces their entitlement to a guaranteed income supplement. When that happens, you start to see seniors who cannot meet the cost of their dentures, their home repair bills, or their assistive devices. We need to be rethinking programs that provide—

[Maria Minna, Liberal, Beaches—East York, ON]

Would you reconsider the CPP with a view to enhancing it in some way? Would that be one vehicle?

[John Stapleton]

Maybe, but you have to remember that the CPP is taxable and old age security is taxable. The CPP payments diminish the GIS component by 50%. So it may be that we should not be looking at reforming the CPP itself. Instead, we should be looking at how the CPP reduces other income forms, especially for people who have needs.

[Maria Minna, Liberal, Beaches—East York, ON]

I see.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Minna.

I want to thank our witnesses once again for taking time out of their busy schedules to be here.

This meeting is adjourned.