Status of Women Committee on Nov. 5th, 2009

[James Pierlot]

I would add briefly that on divorce, most provincial jurisdictions provide upon marriage breakdowns for a roughly equivalent division of pension benefits earned during the marriage. How much each party actually gets varies according to the jurisdiction, but pension benefits are split on marriage breakdown.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Pierlot.

Mr. Whitehouse, you spoke about Ireland. Did you say 13% or 30%? It was hard to hear on this side.

[Edward Whitehouse]

I said more than 30% for Ireland's old age poverty rate.

[The Acting Chair, Conservative, Dave Van Kesteren]

Mr. Dewar.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Mr. Chair. Thank you to our guests.

There have been a lot of numbers thrown around. One of the concerns people also have is the amount of debt load that people are carrying. In fact, the average for Canadians in 1984, or the mid-1980s, was about 70¢ on every dollar. Now we're clocking in at $1.25 or $1.27 or somewhere around that amount for every dollar.

Of course, if they're in that kind of debt, it has a profound effect on people's ability to save. I don't know which guests—maybe Mr. Pierlot—want to try this question, but have you looked at how the personal debt ratio affect people's ability to save? Does it disproportionally affect women more than men? I think we need to look not just at real wages, though that's important, but also at debt. I'm just wondering whether you've looked at this.

Do you have an opinion on the personal debt load of Canadians?

[James Pierlot]

I have not looked at the personal debt load or how it impacts saving.

[Paul Dewar, NDP, Ottawa Centre, ON]

I think it's probably worth taking a look at, for obvious reasons. Debt load of Canadians has skyrocketed, according to the stats I've seen.

Is it something you've looked at or have an opinion on, Mr. Whitehouse, how to look at debt load in terms of people's abilities to save or in terms of the pension income?

[Edward Whitehouse]

I don't think Canada has as major a debt load as other countries in the OECD. I would point out the U.K, the U.S., Spain, and probably Ireland as well as countries where personal debt loads are much higher than they are in Canada. As to the impact of them on people's savings behaviour, I'm not aware of any studies that have particularly looked at that question.

Clearly there's an awful of people who are heavily in mortgage debt but who at the same time are still saving in the form of private pensions, in all of the countries I've mentioned. So it clearly is a constraint. I think the major debt effect is going to be, really, on the housing market rather than on pensions.

You've raised the issue of whether this affects women more than men. Again, I am not aware of any study that has looked at it. It is an extremely interesting question, which I think should be studied.

[Beverley Smith]

May I comment? We have lost the family allowance in Canada and lost the child dependant deduction and kept the spousal allowance quite low, so most people who stay home to take care of a child discover quite quickly that it costs more than they thought it would. The estimate is usually around $180,000 to raise a child to age 18.

We found that people start taking from their own savings, so it stops being unpaid labour and starts being reverse-paid labour: we are paying for the privilege of going unpaid. Of course we cannot save, and the household debt is a direct result of reducing all the social benefits for the care role.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you for that.

I would like to see someone look at this question. Possibly these numbers are a lot worse in other jurisdictions, but we're here in Canada. These kinds of debt ratios are not sustainable, and I think they would obviously affect people's ability to save. They should also be factored in if you are looking at trying to lift people out of poverty. To look at their long-term horizons, at least, you need to put that into effect.

By the way, Ms. Smith, I disagree on one or two of your points, but your point about ensuring that there is a benefit for children beyond the first couple of years is absolutely correct, and it's something we support and agree with.

I want to get a couple of comments on the best way to support Canadians as we watch private systems and private pensions melt. We need to look at other models. Is looking at the infrastructure we already have the best way to deal with this?

We've already mentioned a bit of this, but as a party we proposed that CPP is one way to go. Increasing or doubling the CPP in terms of what it is now, from $908.75 to $1,817.50, would have the net effect of doubling the potential income from $11,000 to $22,000. We've also put forward the idea of increasing the guaranteed income supplement by $700 million to push that money out to people who need it. Finally, having a national pension insurance plan, as they do in other countries, would provide an insurance plan to backstop pension plans when they are in trouble.

Could I get feedback on those ideas and how they could help women who are having problems when they see their pensions melt away?

[Beverley Smith]

I just read a study by the head of the Canadian actuaries that was recommending very much what you were saying, or so it sounded to me, and I'm very pleased to hear you say that.

I think we need a pension summit. There are a lot of seniors, and I know of two million of them who would like to have a pension summit to discuss these issues. Thank goodness you're noticing them; they very much matter.

[The Acting Chair, Conservative, Dave Van Kesteren]

Is there anyone else?

[Edward Whitehouse]

The Department of Finance in Canada has set up a retirement research working group chaired by the Parliamentary Secretary to the Minister of Finance, Ted Menzies, who is a member of this House. That working group had an experts day meeting on October 27. There is a group of Canadian experts chaired by Jack Mintz, a distinguished professor of public finance, which had deliberations, and there will be a conference call involving federal-provincial-territorial finance ministers next Friday.

The OECD is providing input into that discussion about pension reform in Canada to bring an international perspective and to show what other countries have been doing and the policy lessons that have been learned. I'm currently drafting a report on the international experience that I hope will be made public within the next couple of months. I believe this process will culminate in a meeting in Whitehorse on December 15 with the federal, provincial, and territorial finance minsters. I can also tell you that I've had meetings with Human Resources and Skills Development Canada today about that process.

As Ms. Smith mentioned, there is the concept of a pension summit, of a discussion or diagnosis of the issues with pensions policy in Canada. I know some people are very keen to push forward to reform proposals very rapidly, but at the moment the work is very much at the diagnosis stage, and the prescription stage, I'm sure, can begin in earnest next year.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Whitehouse.

Our next round is for five minutes, and we will start with the Liberals.

Madam Zarac.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Thank you, Mr. Chair.

Thank you for being here.

You have painted a very negative picture of the situation women are in, particularly widows and women who are divorced, seniors and women with children. However, I think it is interesting that after painting that picture, you still have solutions to suggest. I think there will not be one single solution, there will be several, and you have suggested some.

Now, we have to know how to put them into practice. I have taken notes and I said to myself that if we raised government pensions, if we were able to get people to invest and save more, and if we made sure that people enrolled in more private pension plans, we would eventually see better results.

In terms of government pensions, has a study been done? You talked about poverty. Given the pensions that women draw, it is obvious that there will be women living in poverty. When we talk about poverty, we are talking about quality of life. When we talk about quality of life, we are talking about health being affected. As well, it is expensive for governments to support people who are sick and poor, because support programs and health programs have to be provided for them. Have you done a study to find out what the cost is of this poverty, which is caused by a underfunding?

[Beverley Smith]

We've seen studies of what the cost of homelessness is....

[Edward Whitehouse]

In our research at the OECD, which was published last year....

Oh, I'm sorry.

Ladies first.

[The Acting Chair, Conservative, Dave Van Kesteren]

You're going to be the gentleman? Thank you.

Go ahead, Madam Smith.

[Beverley Smith]

Thank you.

You have asked about solutions, and I'm so glad we have the OECD looking at international solutions. I say this because Czechoslovakia, for instance, extends its family allowance to adulthood; and Singapore, China, and Australia have birth bonuses right now. Italy tried a homemakers' pension years ago, and Russia even has a birth bonus now. There's a little town in Quebec that not only has a birth bonus but also gives you more money and perks, and whatever, if you have a large family.

I think we have forgotten the stimulus this has and that most people would like, or dream of having, a child. But your government has done nothing to help them with this desire. I think other nations haven't lost sight of that goal. We need babies. Who's going to have babies? Help people with the cost of babies.

That would be solution number one, which isn't about pensions; it's about giving the people the money upfront, right now, when they have the need—and they can save for their pensions.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Ms. Smith, I would add that since these programs were established in Quebec, the birth rate has risen. So that is a good sign.

My next question is for Mr. Whitehouse. When you talked about divorce laws, you said there are changes needed because that affects women's pensions.

[Edward Whitehouse]

I was about to mention the big report we had last year from OECD, called “Growing Unequal? Income Distribution and Poverty in OECD Countries”. I'm not sure of the title in French.

In that report we went into much more detail than the standard measures of incomes that are used normally in the poverty and income statistics. In particular, we looked at measures of what is called material deprivation, meaning bad housing, bad environment, and those sorts of measures. We found that in most OECD countries, older people were less likely to suffer material deprivation than people of working age. They were less likely to have bad heating, bad housing, and a bad local environment in most OECD countries. The exceptions tended to be countries in eastern Europe, where older people in particular tended to live in bad housing. They tended to be stuck in very old and very bad housing.

In general, that put a rather more positive light on the situation. If we look at the incomes and poverty of older people over time, which is a concern you raised, we see that if you were old in a period like the 1950s, essentially you were almost certainly going to be poor. Nowadays if you are old, in OECD countries you are slightly more likely to be poorer than the population as a whole, but only very slightly. I think this is something we should celebrate: as a society we really did have an old age poverty problem, and over the past 40 or 50 years or so, we have defeated that problem.

The concern is that as populations age and as public pensions are having to be scaled back in many countries because of the pressures of the aging population, are we going to have a resurgence of old age poverty in the future? That to me is the key policy issue going forward, but of course it is very difficult to predict what is likely to happen.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Whitehouse.

To avoid confusion, perhaps I can suggest that if we have a question for Madam Smith, we should ask her so that she knows it's being directed towards her. It's pretty hard for her, as there's no eye contact here, obviously.

Go ahead, Madam Boucher.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

Good afternoon, gentlemen.

I myself am part of the statistics: I am divorced, and because I was poor at that time, I never had the chance to earn enough money to put any aside for retirement. We talk a lot about retirement savings. That is very important in Canada. We are entitled to a tax break.

Mr. Whitehouse, when the OECD did its analysis, did it take particular factors into account? Did it include RRSPs and group RRSPs in its comparisons?

[Edward Whitehouse]

In some of our calculations we do, but not in all of them.

We have not directly looked at the question of divorce in terms of having concrete empirical numbers on pension rights after divorce, because divorce law in different countries is very complex. I'm not a lawyer, and I find it very difficult to understand what happens in different countries.

In our recent review, we essentially collected information on what the rules are in different countries. An example would be whether there is some rule about the splitting of private pensions on divorce, and we found that somewhere around half of the OECD countries have a law requiring some sort of splitting of assets on divorce. In other countries it's often a negotiation in front of a court, and we therefore cannot really say what actually happened.

I am originally from the U.K. When you got divorced in the U.K., traditionally the husband kept the pension and the car, and the wife kept the house. That was essentially what used to happen before the divorce courts. Now the pension has to be split, so probably the other things are now all split as well.

Often there were trade-offs happening with other assets of the couple, rather than any set rule about the pensions. In the past it certainly looked as though women tended not to end up with much in the way of pension rights, but they had other assets in compensation.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

Thank you.