Human Resources Committee on Feb. 26th, 2009

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

That's too bad, because you look like a very warm-hearted person, a nice balance to this government in many ways.

I support very much the direction on the WITB. I think improving the working income tax benefit is a very positive thing. And we have to look at the entire scope.

As Mr. Cannan knows, we did introduce the working income tax benefit in the economic update, which the government copied but made a little less generous when they introduced it. But that's okay, they can take our good ideas. They've done it before.

I wonder if I could ask you a question on the universal child care benefit, the UCCB. What is the cost to the government of that? How much does it pay out? How much comes back in taxes?

I realize I'm near the end of my time. I can leave that with them to consider.

[The Chair, Conservative, Dean Allison]

I have it covered there, buddy.

Why don't you answer that question.

[Frank Fedyk]

I'm just looking for the figures. I know we pay out $100 a month to--

Shawn has the figures.

[Shawn Tupper, Director General, Social Policy Development, Department of Human Resources and Skills Development]

It's $100 a month, up to $1,200 a year. The total payout for the program on an annual level is $2.4 billion. The government recoups about $300 million in taxes.

[The Chair, Conservative, Dean Allison]

Okay, we're going to move on to Mr. Lessard.

Sir, you have seven minutes.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Thank you, Mr. Chair.

I would also like to thank our knowledgeable witnesses for being here this morning. The information you are providing us is likely to be extremely useful as we pursue our work. I would nonetheless like to focus on some clarifications that could be quite useful for us.

Am I mistaken in saying that an automatic correlation cannot be made between the low-income cutoff as determined by the official indicators, and household poverty?

[Sylvie Michaud]

No.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

In cities where vacancy rates are practically zero, rental costs are very high. Therefore, it is possible for an individual or for a family to be poor even if they do not fall within the low-income category. We agree on that.

If poverty is to be identified through the statistics we use, we have only the low-income cutoff to rely upon. We can also agree on that point.

Allow me to continue with my line of thought. My riding is comprised of 12 cities. For example, in the Chambly basin where vacancy rates are zero, there are four public food banks that are having difficulty meeting the demand. Some families have incomes that would not be considered low, however they are forced to set aside 50% to 60% of their income for housing. In my opinion, that fact makes these families poor, but they are not recognized as such. I do not want to make any faulty references; I simply want to make sure that we understand each other when it comes time to debate the issue. We must also consider other factors that have been raised this morning. I would invite you to take part in this exchange.

If my line of thinking is not correct, it should be pointed out immediately so that it can be corrected. If, however, my logic is accurate, I would like to obtain some statistics. How many people are not considered as earning low incomes, but because of the economic environment, are nonetheless poor?

Allow me to draw a comparison with the situation in 1989-1990, when vacancy rates were very high and rents were very low. I'll use Alberta as an example. I don't mean to be pretentious, I simply want to make sure I get an answer from you. Despite the fact that income in Alberta is higher, the percentage of people who must rely on food banks, and yet are working, is 18% to 19% which is 4% higher than the national average which is 14% to 15%. I would like your comments on these statistics. If you are unable to do so today, I would like you to come back with your comments another time.

To make full use of the time that has been allotted to me, I also wish to talk about the situation of persons aged between 45 and 64 years. For the most part, these people are employed, or are retired. They, in large part, are the ones being targeted in terms of Canada's goal to reduce child poverty. This category includes people who have children in high school or university. Since 1990, low-income rates have remained pretty much stable within this category.

What is the Department of Human Resources and Social Development—which has changed its name over the years—doing to reduce poverty and meet the targets set since 1990? What has been done relative to the goals the government set for itself? What has been not been done? I feel that in order to prepare the recommendations we are going to make to the House of Commons, we must avoid repeating past errors and oversights, because otherwise any work that we do will be futile.

[The Chair, Conservative, Dean Allison]

Just a quick response, because we're out of time.

[Shawn Tupper]

Okay. That was immense.

To start at the beginning of your comments with respect to looking at poverty, we don't define poverty; that's true. I think what we have tried to do is use a series of measures that help us understand the dynamics of poverty and low income.

I think it's important that people understand that the reason governments, not just Canada but governments around the world, have developed a series of measures as opposed to defining and focusing on one single measure is that these different measures tell us different things about what Canadians are experiencing who live on low incomes. So there are a number of measures that focus on income, and there are other measures that include other things in addition to income. That's where we decided to develop the market basket measure, because it will tell us more about the kinds of dynamics that people are confronting in terms of the costs.

You raised the issue of shelter costs. The development of the MBM gives us a greater facility to look at the impact of shelter costs in regions where they vary. Shelter costs include not just rent but also mortgages.

The value of looking at the MBM, for instance, is that we see a very different situation in Newfoundland compared to British Columbia with respect to people who hold mortgages. In Newfoundland, they have very low rates of individuals who hold mortgages. There's a higher rate of straight-out ownership. We can look at some of those dynamics and that diversity. So that's the value of having a series of measures.

The measures that we have in Canada, I think, fall between a more severe understanding or definition of what low income is and a more social inclusion approach to low income, which would include measures that would suggest families should be able to take a holiday once a year, that families should be able to entertain once a month. So there's a very wide perspective in terms of the kinds of things people want to look at. Our three measures together fall in between that very inclusive approach to measurement and the more subsistence approach to measurement.

In terms of looking at the dynamics of some of the individual populations, that is something we were asked to start doing over the past year. I think in the past we have kind of blended the population together. We talk about poverty and we have national statistics and overall numbers, but that doesn't necessarily tell us the difference between what poverty means to an aboriginal person versus an individual who is 45 to 64 years old. We're just beginning to understand those dynamics better. That work will evolve over time, and I think it will give us a better understanding as we look at trends over the last 20 years. As we follow the three measures that we have now, as we see those gaps between the measures starting to close, we'll have a better understanding of why that is and what the dynamics are that people are living in.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Tupper.

We're going to move to Ms. Chow now, for seven minutes.

[Olivia Chow, NDP, Trinity—Spadina, ON]

April 1 is coming, and the Canadian parents who received the universal child care allowance will soon have to pay out $300 million in taxes on that. Some of them will have difficulty doing so.

Why wouldn't the government make the UCCB non-taxable, not just for single parents but for everyone, and integrate it into the Canada child tax benefit? Doing so would mean that you would not have the administrative costs of two parallel systems. It would also mean that you would dramatically bump up the child tax benefit, especially the supplemental portion. And it would mean that those earning $20,000 or less, i.e. the poorest families, the poorest children, would in fact receive some of the money. Maybe collectively the $300 million in taxes we'll will be getting back from the UCCB can then at least go to some of the poorest families. That would make sense.

If we could even integrate these two benefits and increase the child tax benefit to close to $5,000 per child per family, then you'd be looking at around $400 per month per child per family. I believe it would have a tremendous impact on the poorest families and go toward reducing poverty rates in Canada.

The second piece I want you to comment on is the suggestion to increase the child care funding from what it is now, $1.2 billion, I believe, under the multilateral framework agreement and the bilateral agreement of 2001, both in 2006 dollars. If we doubled that to $2.4 billion, the number of child care spaces we could create across Canada would be dramatic. I would like this committee or your department to look at the possibility of doing that. What kind of impact would those two measures have on reducing the poverty rate in Canada, especially the child poverty rate? What would the numbers be?

Specifically, in your answers to these questions, could you tell us how many child care spaces are being provided for in each of the provinces next year, 2009-10, from the $1.2 billion put in 2008 toward early childhood learning and child care for the provinces? Could you list this for each of the provinces and territories, because what I've seen is a lot of fudging. I've seen numbers like, oh, 60,000 spaces were created or will be created. It would be useful for this committee to learn exactly how many spaces are being created per year and how many are being projected. Then we would be comparing apples and oranges and not lumping all of them together, which makes it impossible to determine precisely what's happening across Canada.

Also, do you have studies that would tell us the impact on a family of receiving $400 a month, especially the families in desperate situations because they're living in poverty?

So I have a combination of two or three questions for you.

[Frank Fedyk]

Shawn and I will share the response on this. Starting with your last one in terms of the impact of $400 a month, we haven't done that type of work.

On the child care spaces, the funding that is provided to the provinces and territories is through the Canada social transfer. The provinces decide how to use that fund with respect to the creation of child care spaces. We track and monitor their announcements and verify them with them. So we do have a list by jurisdiction of the spaces they've indicated they would be using the funds for.

Not all jurisdictions have chosen to use the $250 million additional funding provided for child care spaces. Some of them are increasing wage supplements for spaces. Others are improving salaries for child care providers.

We can provide that list of what the announcements are, but they're not all necessarily by years. Some jurisdictions have indicated that over a period of time they will be creating x number of spaces. We can provide that level of information.

As to an actual situation report of the number of child care spaces by provinces, that's available. I've forgotten the reference. The University of Toronto, Martha Friendly, produces the report. That's one where she's verified the information from the jurisdictions. To me, that's the best source available.

[Olivia Chow, NDP, Trinity—Spadina, ON]

On both issues, up to today, not the ones the provinces are planning to create, but would you be able to say approximately how many spaces have been created in the last two years since the $250 million was added on to the $1 billion? Would you have that figure, by any chance?

[Frank Fedyk]

We know the jurisdictions have indicated that since the money started to flow, which was in 2007, they would be creating over 60,000 spaces.

[Olivia Chow, NDP, Trinity—Spadina, ON]

They haven't done it yet. They promised they would?

[Frank Fedyk]

Some may have implemented it, but these are their announcements.

[Shawn Tupper]

We are just getting ready to finalize our latest report, which will give you those figures over the last two years. It is Martha's report. She has collected the data from the provinces. When that report comes out, which I think is scheduled for end of June or beginning of July, it will start to contain and show the figures that show the growth in the system over the period of time that you're interested in.

[The Chair, Conservative, Dean Allison]

That's all the time we have.

We're going to move over to Mr. Komarnicki. Seven minutes, sir.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Thank you very much for the presentation. I have a few questions.

First, in the various measurements, as you call them, of poverty there are differences. What about each of them do you dislike—maybe that's a strong term—or find somewhat difficult?

I think your recommendation would be to use the market basket approach. If not, can you identify the ones that you find somewhat problematic?

I may have another question flowing from that.

[Sylvie Michaud]

Each of the measures has its limitation. For me, the biggest drawback to the LICO, which we've used since the 1960s, is the fact that it lumps the large cities together, because of the survey it used to calculate its threshold. It doesn't have a sample size to be able to provide us more geographical breakdown. But we know shelter costs are quite different between Montreal, Toronto, and Vancouver. For me, that's the biggest drawback. However, it has a history since 1976, so at least you can monitor trends and see how they evolved. So the MBM, in that context, provides us more geographical breakdown, which I think is a better thing.

One of the drawbacks for the MBM is the fact that it goes back only to the year 2000. So it's a limitation if you're looking at previous time cycles. You can go back to the year 2000 only, which is why we produced the two measures, so it gives you an idea of where they're giving the same message and where they're different.

For Statistics Canada, the MBM is more complex to calculate. It's easier to explain to users, but it's more complex to calculate. But that's our own problem.

The LIM, with the international standards, doesn't move as much with the economic cycle, so some people have a problem with that. When you have higher unemployment, a measure linked to inflation will reflect some of these economic hardships. The LIM, because it's based on the median, doesn't tend to move as much.

What we see more and more in a number of countries is that they actually look at a suite of measures. That's what Frank has measured. I think you eventually want to look at maybe not just one but a few measures, to understand the strengths of each of them and how they complement each other.

Something else that is happening internationally that's linked to the question from Mr. Lessard is questions on material deprivation. Income is not everything. In our income concept, if you receive a large inheritance, it might help your well-being, but it may not be measured in your total income. So wealth does matter to your well-being. Some people ask about some material deprivation in conjunction with income to try to have a fuller picture.

We're starting to look at these measures, but we haven't done much yet on that.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Okay. Thank you very much. I appreciate that.

One of the other aspects I was thinking about as you were providing information is that there is a link, obviously, between the economy and how it does and what the poverty levels may be. Some measure that directly, and some not so directly.

In this material you've provided, do we have a breakdown of how things would be, relative to how well the economy is doing alone, without regard to government programs or initiatives or taxes, and then something to show the impact of the taxes? I know you had the low-income rate after taxes, which may address some of that, but when you compile that, do you take into account things such as social housing and the initiatives in the budget for renovations to homes, energy-efficiency programs, social housing for seniors and for the handicapped, those kinds of budgetary things that are maybe softer than some of the direct tax mechanisms?

I'll leave that to whoever ought to answer.

[Garnett Picot]

There are two parts to the answer.

For the years I show in this calculation—where we calculate the low-income rate based on earnings first, and then we add taxes and transfers—I've selected business cycle peaks, because we wanted the long-term trend. We do have these numbers for recessions and expansions, so we can see how that's changing across a business cycle. So we can look at it that way.

Regarding what it includes, it does not include the kinds of programs you're talking about. We're talking here about mainly direct cash transfers and tax effects, so it includes things like the child tax benefit, EI benefits, social assistance, workers' compensation, those kinds of direct benefits. It does not include the more indirect benefits.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

When I look at this budget that we have now and the ones in the past, I see there's the homelessness initiative, for instance, a commitment of $1.9 billion over five years for social housing. Then we have the universal child tax payment, the national child benefit, and of course the working income tax benefit, again in the budget and in the past. Do you have a compilation or a figure of what, in billions of dollars, the total amount of these programs would be and what the payout might be per individual?

I noticed you had some global figures. I'm not sure what's in those figures and what's not. But at some point it would seem reasonable to know, when you take all the programs into context, what is that in billions of dollars per year, and how much is it per person?

[Frank Fedyk]

Unfortunately, I don't have the detail by individual person. We have the descriptions for the various benefits you've described that we can break out and we can provide a supplementary table to the members. It is billions of dollars. In child benefits it's over $13 billion.