Bill C-36 (Historical)

An Act to amend the Canada Pension Plan and the Old Age Security Act

This enactment amends the Canada Pension Plan to implement the existing full funding provision for new benefits and benefit enhancements. It also provides for their calculation, the requirements for public reporting of those costs and the integration of those costs into the process for setting the contribution rate.
It changes the contributory requirement for disability benefits under the Canada Pension Plan for contributors with 25 or more years of contributions to the Canada Pension Plan, to require contributions in only three of the last six years in the contributory period. Other contributors will continue to have to meet the existing requirement of contributions in four of the last six years in their contributory period.
It also makes changes to the Canada Pension Plan of an administrative nature to modernize service delivery. It authorizes the Governor in Council to make regulations respecting the payment of interest on amounts owing to Her Majesty under Part II of the Act. It also addresses anomalies in the Act, amends the penalty provisions and clarifies certain language used in the Act.
In addition, this enactment amends the Old Age Security Act to authorize the Governor in Council to make regulations respecting the payment of interest on amounts owing to Her Majesty under the Act. The enactment also eliminates the ability of estates or successions to apply for income-tested benefits and ensures that sponsored immigrants are treated the same for the purpose of determining entitlements to income-tested benefits. It also corrects anomalies in the Act, amends the penalty provisions, modernizes and simplifies the application and delivery of the Old Age Security program and clarifies certain language used in the Act.

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

Thank you, Mr. Chair.

I am going to go back to an intervention by Mr. Shillington, which in my mind is very important. We are looking forward to adopting Bill C-36 because it will make things better. We are going to make amendments to it and vote for it. Mr. Shillington pointed out that we were delighted with initiatives that should, of course, have been taken much sooner. We are facilitating access to the Guaranteed Income Supplement, to the forms, etc.

The fact that we have to set government machinery in motion to correct a situation that should have been resolved is rather sad. It bothers and saddens me. Another thing that saddens me it the fact that my colleague, Ms. Yelich—and I am not blaming you for this, Ms. Yelich—gave what was an inappropriate example in my opinion.

People who absolutely do not want to provide basic information as to whether they are alive or not would not want to be receiving Old Age Security benefits either. In fact, to get the benefits, they have to provide exactly the same information as is required for the Guaranteed Income Supplement. In the latter case, the only difference is that they also have to indicate whether their level of income makes them eligible.

If people have income they do not want to reveal, it’s their choice. If this is the case, they won’t be applying for Guaranteed Income Supplement benefits. They’ll tell department officials not to pay out the supplement because their income is sufficient. They don’t have to reveal that they are hiding income. Other people are responsible for checking into these things. So with all due respect, I don’t think we can use this example to penalize a whole group of people.

A certain number of people are entitled to some income under Canadian legislation. The question is: do we allow them to access it or not? We know that in 2002, 340,000 people were deprived of benefits to which they were entitled. Today, there are still about 100,000 people in this situation in Canada. That is a very serious. I don’t think we can invoke the Access to Information Act in this case. Even the privacy commissioner told us that it didn’t apply. Otherwise, it would apply to all the other benefits related to income security, including employment insurance. There is a minimum amount of information that has to be submitted to the government. Given the discussions that will be taking place with respect to the recommendations and amendments to be made regarding Bill C-36, I think this is an important point.

I will thank you now because I won’t have the opportunity to do it later. I would appreciate your comments on what I just said.

[Bernard Dussault]

I have a quick clarification. Maybe I misled you when I talked about interest. You're right that no interest is charged presently, but in Bill C-36 there are two paragraphs to the effect that interest would be charged on overpayments. That was my concern.

[Alice West]

You'll have to pardon my lack of French. If you heard me, you'd laugh. I'll try to do this in English.

Yes, we think this program is very important. People over age 55 have the most difficulty finding any job. As a matter of fact—and I have to admit I did work for the federal government at one time—we found that even people over the age of 40 had greater difficulty finding work.

It's extremely important that we have a bridge somewhere between involuntary layoff.... People don't close down the fish plants or the logging industry or whatever it might be; the corporations do it for their financial benefit. But it leaves the working person alone.They may qualify for EI for a very limited period of time, so they need that bridging. It has to be a decent bridging; it cannot be a minimal amount, which barely keeps body and soul together.

So yes, we're very much in favour of that, and we would certainly support things like that.

Unfortunately, I don't know what Bill C-36 says, so I can't comment on it.

[Bernard Dussault, Senior Research and Communications Officer, Federal Superannuates National Association]

Good day. Thank you for inviting the Federal Superannuates National Association to appear as a witness.

We represent the Public Services, Canadian Forces and Royal Canadian Mounted Police pensioners and pensioned federally appointed judges. All these people, once they reach the age of 65, receive the Old Age Security pension and they also receive a pension from the Canada Pension Plan or the Quebec Pension Plan, sometimes before the age of 65. Even though our mandate primarily concerns Public Service or public sector pensions, we are also concerned about everything that is happening with respect to the Old Age Security pension and the Canada Pension Plan.

Clearly, we can only be pleased with the amendments proposed under Bill C-36. There is only one aspect that I would like to bring to your attention, as a result of comments I’ve been getting from members of our association when problems arise. In 99% of the cases, everything is fine, but one of the things that irritate our members the most is when there is an administrative error resulting in an overpayment. Not only do they have to reimburse the overpayment, but also pay interest.

We agree that the overpayment and interest should be paid in the case of fraud, but these plans are so complicated that in many cases, when errors occur, people can’t tell. I don’t know if anything can be done in this regard, but I just wanted you to know that it is an important issue, not only for the less well-off, but also especially for the less well-off who do not understand what is going on.

Thank you very much.

[Nicole Demers, Bloc, Laval, QC]

Thank you, Madam Chair.

Good afternoon, mesdames. Thank you for telling us about your experiences. It's very enriching for us to know what is actually going on in the field.

Ms. West, you told us about a few issues concerning 55-year-old women who lose their jobs. Previously, there was the Program for Older Worker Adjustment, POWA, which enabled older workers who lost their jobs to make it to retirement with a decent income. That program no longer exists. It's been transformed.

Do you believe that kind of program could help women who lose their jobs after the age of 55? It's harder for them to find another job than men.

Ms. Calhoun, Bill C-36 is currently being considered by the Human Resources Committee. It's a very interesting bill: people will only have to apply for the Guaranteed Income Supplement once in order to automatically receive it thereafter. I must admit that the government has introduced a very promising bill. However, we're not talking about raising the Guaranteed Income Supplement to the poverty line. The poverty line in Canada is approximately $14,000, which is very low. In Quebec, it's $17,000 for a single person. So the poverty line is much higher in the provinces.

Should we establish a poverty line that takes the needs of older persons more into account? Needs increase as we age: drugs, housing, food, taxis and so on. Could we increase people's incomes?

[Richard Shillington, As an Individual]

Thank you for this opportunity to speak to you about Bill C-36, which seeks to make some changes to the legislation for old age security, the guaranteed income supplement, and the Canada Pension Plan.

I would like to begin by emphasizing the critical importance of these programs to the financial health of seniors, particularly those who retire without an employer pension plan. Without these programs, these seniors would be destitute. Even with these programs, the circumstances of low-income seniors are not comfortable.

For a single senior without a pension plan, the average income is $15,000, and 82% of single seniors who don't have an employer pension plan live on less than $20,000 a year. So you can imagine the circumstances that they would live on if they weren't getting OAS, GIS, or CPP.

The purpose of these programs is income security. It was said to me very well by a friend the other day: income security, the security of their income. We want income security, so that seniors aren't destitute and so that working-age Canadians can work knowing that these programs will be in place when they retire.

This income security is only achieved if seniors receive the benefits that are provided for them in the legislation. The ultimate purpose of the legislation is to place money into the hands of seniors. I'd like people to remember that.

Some of you will know that I became involved in this issue in the fall of 2001, when it was discovered that some 300,000 seniors who were eligible for the guaranteed income supplement were not receiving it. We've made some progress in this area, and this committee's report at that time was called “The Guaranteed Income Supplement: the Duty to Reach All”. But I do not think we have achieved the objective of reaching all. We're some distance from it for each of the programs: OAS, GIS, and CPP.

Bill C-36 is the first legislation in the last six years that I recall actually addressing the procedures for applying for these benefits. It's the first legislation since the realization in 2001 that hundreds of thousands of seniors were not getting the benefits they were entitled to. To my mind, Bill C-36 makes some minor improvements, but it is some distance from addressing the major remaining problems with the administration and legislation of these programs.

The remaining problems are discussed in my brief. They include take-up, which is the policy wonk's term for people getting the benefits they're entitled to.

Retroactivity is the provision to provide benefits to people who, either because of an error on the department's part or their own, are not receiving the benefits they were entitled to.

Interest and retroactivity is an issue I would like people to discuss for a minute, and it's dealt with in Bill C-36. We could talk about the current practice, what the legislation provides for, and what it should provide for.

Application for early CPP is discussed in my brief very quickly.

Regarding the determination of administrative error, the current legislation provides full retroactive benefits when there is an administrative error. But I think there are problems in what we mean by administrative error and who decides when an administrative error has been made.

Regarding the design of the GIS clawback, some of you know that this is RRSP season, and my name appears in the press regularly advising low-income senior who will be on GIS when they retire that the last thing they want is an RRSP. Also if you're a low-income senior, working will not primarily benefit you. You'll face an effective tax rate of well over 75%. So presently the design of the GIS, in terms of the clawback, is dysfunctional.

In the first piece of legislation that we've seen in some years, I would have liked to see some provision to address all of these issues in Bill C-36.

Thank you very much for your time.

[The Acting Chair, Liberal, Michael Savage]

Pursuant to the order of reference of Tuesday, January 30, 2007, Bill C-36, An Act to amend the Canada Pension Plan and the Old Age Security Act, I call the meeting to order.

Welcome. I want to thank the witnesses who have taken time to join us here today by teleconference. Thank you very much.

We will begin by asking for presentations by the witnesses who've taken time to be with us, and then we will go to questions.

We will begin with Monsieur Salembier. You have seven minutes, sir, sept minutes.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue the debate on the Liberal opposition motion.

Tomorrow morning we will begin debate on the procedural motion relating to the back to work legislation, to which the opposition House leader was referring. Also, we will have Bill C-45, the Fisheries Act, following question period.

On Monday, we would like to conclude the debate on the statutory order regarding the Anti-terrorism Act, which is very important for Canadians for public security reasons. We are also getting down to the deadline when certain provisions of the Anti-terrorism Act will sunset.

I have consulted with the other parties and I will propose a related motion at the end of my business statement.

Next week we will consider the following bills: Bill C-37, financial institutions; Bill C-41, competition; Bill C-11, transport; Bill S-3, defence; Bill C-42, the Quarantine Act; Bill C-36, Canada pension plan and old age security; Bill C-10, mandatory minimum penalties; and depending on developments regarding the railway strike, we may call the procedural motion relating to the back to work legislation.

Thursday, March 1 shall be an allotted day.

As I mentioned earlier, following discussions with the House leaders of the other parties, Mr. Speaker, I believe if you seek it, you would find unanimous consent of the House to adopt the following motion. I move:

Motion

That, notwithstanding any Standing Order or usual practices of the House, once the Statutory Order regarding the Anti-terrorism Act is called on Monday, February 26, and when no member rises to speak on debate or at the expiry of the time provided for Government Orders, all questions necessary to dispose of the Statutory Order regarding the Anti-terrorism Act be deemed put, a recorded division deemed demanded and deferred until Tuesday, February 27, at 5:30 p.m.

Persons with Disabilities

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

I am counting on you, Mr. Speaker, and I thank you very much. That will allow me to propose an amendment.

Recently, in 2004, the Canadian government wanted to have even greater control over managing the file concerning persons with a disability, in relation to the provincial jurisdiction and Quebec's jurisdiction.

At that time the Bloc Québécois proposed an amendment to the plans for reforming the system, an amendment to ensure that the Canadian government would respect provincial jurisdictions. The government of the day rejected the motion in order to exercise even greater control over this area of provincial jurisdiction.

In my proposal, I maintain that we, as Quebeckers, find it quite appalling that every time the Canadian government interferes in aspects of those jurisdictions that should belong to the provinces and to Quebec, it fails in its duty to correctly assume this responsibility.

As I stand and speak here today, an election has just been called in Quebec. Every time there is an election, this issue of jurisdictions enters into the debate: our ability to be able to exercise our powers, to manage our own holdings and, of course, the money we send here to Ottawa, and the assurance that it will be used as it should be.

Employment insurance is one example. To date, the government has diverted more than $50 billion from employment insurance. At least a quarter of this amount belongs to Quebec.

Today, in ridings throughout Quebec, including my own, activists and other members of the public are meeting to discuss how to reopen this political debate during the election campaign, not just to focus attention on this issue, but to see how Quebeckers can eventually regain control over their own destiny. I want to commend the people who have already begun the debate.

In my opinion, it is important to point out to the hon. members of this House that we in the Bloc Québécois have always been open about our intentions, our goals and our vision of the future. Today, when we look at the issue of persons with disabilities, the federal government's responsibility for these persons, the way it has handled this issue and the government's negligent attitude toward monitoring support for persons with disabilities, we are sorely disappointed.

This study will also have to look at the issue of areas of jurisdiction.

The member for Kitchener Centre has called on us to examine all aspects of the treatment of the disabled. She would entrust this task to the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities.

This is a matter that we must not take lightly and we need to take our time to study it correctly. At this time, the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities is studying several bills. We have just completed a review, after recommendations, of Bill C-257, An Act to amend the Canada Labour Code (replacement workers). We have before us Bill C-36, An Act to amend the Canada Pension Plan and the Old Age Security Act. This government bill deals with the guaranteed income supplement for seniors. We also have two bills pertaining to employment insurance.

Mr. Speaker, I see you are indicating that I have two minutes left. All these bills will require a great deal of time to study.

If we want to do our job with regard to the motion before us, the following amendment should be made. I move:

That motion M-243 be amended by replacing “no later than May 2007” with “no later than November 30, 2007”.

I believe I require the consent of the member who tabled the motion, thus the member for Kitchener Centre, to amend the motion. She could second it, if she consents.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, I appreciate the opportunity to speak to Motion No. 243 presented by the hon. member for Kitchener Centre.

This motion would instruct the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities to undertake a study of the current level of financial support that is being provided to people with disabilities through the Canada pension plan disability benefit.

May I state at the outset that the Government of Canada is pleased to support this motion.

In supporting Motion No. 243, I would like to talk today about three central points: first, what the Canada pension plan disability benefit is intended to do; second, who it is meant to assist; and third, how it is governed. I wish to briefly discuss each of these areas because I think it is important for Canadians to understand what the CPP disability benefit is all about.

What is it intended to do? I would like to remind members that the Canada pension plan is one of the most highly regarded public pension plans in the world. The Canada pension plan, along with old age security, provides Canadians with a solid foundation upon which to build their retirement income. Together, Canada's public pensions deliver about $54 billion in benefits to Canadians each year.

Starting at the age of 18, Canadian employees and the self-employed contribute to the CPP throughout their working lives. Employers match the contributions of their employees. The funds built up by the investment of these contributions enables CPP contributors to access important benefits for themselves and for family members over the course of their lives. These benefits include retirement pensions, survivor and death benefits, children's benefits, as well as disability benefits.

I know that members are already aware of how important the CPP disability program is to Canadians. CPPD is the largest long term disability insurance program in Canada. It provides annual benefits of more than $3 billion to almost 300,000 Canadians with severe and prolonged disabilities who can no longer work, as well as nearly 90,000 dependent children. As a matter of fact, according to the 2005-06 statistics, the most recent available, there were 296,000 beneficiaries of which 89,000 were children, and a total of $3.3 billion in benefits.

Who is it meant to assist? The primary role of CPP disability is to replace a portion of the earnings of contributors who, due to a disability, are incapable of regularly working. It is important to understand the specific eligibility requirements for CPP disability. It consists of two parts as laid out in the Canada pension plan.

First, applicants must have made valid contributions to CPP in four of the last six years. This means that applicants have to have worked recently to be eligible for CPP disability benefits. Second, the legislation stipulates that eligible applicants must have a severe and prolonged mental or physical disability which prevents them, on a regular basis, from doing any substantially gainful work, not just their previous job. This means that not all Canadians with a disability are eligible for the benefit. It is a benefit intended for some of the most vulnerable Canadians.

Who gets CPPD? Let me give the House a snapshot.

Seventy per cent of CPPD beneficiaries are between the ages of 50 and 64. The gender breakdown of recipients is roughly equal, with females at 50.5% and males at 49.5% in 2005-06. It is interesting to note that this is a significant change from 20 years ago when over 70% of the beneficiaries were male, or 70.7%. That was in 1986.

Persons with mental disorders now represent the largest proportion of Canada pension plan disability beneficiaries at 27%. Until recently, 2004-05, persons with musculoskeletal conditions represented the largest category.

How is it governed? A moment ago I referred to the Canada pension plan legislation. This brings us to the issue of how CPP, including CPPD, is governed. Although the federal government administers the Canada pension plan, the federal, provincial and territorial governments are joint stewards of the plan.

It should be noted that the legislation stipulates that substantive changes to CPP benefits and financing require the approval of Parliament, as well as that of at least two-thirds of the provinces with two-thirds of the population.

Every three years federal, provincial and territorial ministers of finance review the Canada pension plan to ensure that it remains financially sound and to make any necessary adjustments. This review also enables us to ensure that the CPP is evolving to meet the changing needs of Canadians throughout their lives.

The triennial review process, therefore, is an important way of demonstrating accountability and transparency to Canadians.

Notwithstanding the ongoing review of the CPP, we welcome the opportunity to have a separate study of CPP disability benefits as proposed by Motion No. 243.

A study of this kind by the standing committee would help to reinforce the practice of the Department of Human Resources and Social Development to continually monitor and assess the plan in order to ensure that it is meeting Canadians' current and future needs and that it remains affordable and financially sustainable.

I spoke earlier about the eligibility requirements for CPP disability. I would now like to discuss our government's recent action in this area.

In November 2006 this government introduced Bill C-36, which will, among other things, ease disability eligibility rules to promote fairness by making it easier for applicants who have worked for many years to qualify for disability benefits. This is a change that the disability community, as well as members of the House, have long wanted. This is exactly what our government has delivered. We are listening carefully to Canadians' concerns and acting on them.

The amendment will allow applicants with 25 or more years of contributions to become eligible for disability benefits if they have contributed in three, rather than four, of the last six years. Of course the applicants, including long term contributors, must still meet the medical eligibility requirements.

Introducing this change to the CPPD eligibility rules will mean that in the future, thousands of applicants will be able to receive disability benefits. For example, in the four years following the coming into force of this amendment, it is estimated that an additional 3,700 disabled individuals will receive CPPD benefits, as well as 800 of their children. This is an estimate by the chief actuary of the CPP.

This improvement and others included in Bill C-36 clearly demonstrate how governments can work together to improve the lives of Canadians while keeping CPP affordable.

Today I have tried to underscore the important role that CPP disability plays in the lives of hundreds of thousands of Canadians. Accordingly, we want to ensure on an ongoing basis that this program is soundly administered and transparent in all aspects of its operation. We want to also assure Canadians that it provides good value for money with demonstrable results in keeping with the program's intent.

The study proposed by the hon. member for Kitchener Centre would enable the standing committee to provide us with valuable information to help keep this essential program strong, transparent and accountable.

For these reasons, I, along with the Government of Canada, am very pleased to support Motion No. 243.

[The Chair, Conservative, Dean Allison]

We can deal with that after. We have to deal with Bill C-36 right now, as it is proposed.

[The Chair, Conservative, Dean Allison]

One more thing. We need a budget. You have a budget before you for witnesses for Bill C-36.

Mr. Savage.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

I noted that two of the improvements proposed in Bill C-36 are to enhance the fiscal sustainability of the Canada Pension Plan. One provides new guidelines that would instruct the chief actuary about how to go about calculating the full benefits of the CPP benefits. The other provides some rules around greater transparency in terms of reporting these costs and integrating this new fully costed arrangement into the deductions that are paid.

I also note that the other part of the bill calls for extending Canada Pension Plan disability benefits. For the benefit of the members of this committee, I'd like you to elaborate on the intricacies around these two proposals with respect to federal-provincial jurisdiction and how complicated it was to get to this point because, as we all know, the Canada Pension Plan is not exclusive federal jurisdiction; it is joint jurisdiction, and there is a very complicated collaborative process to get us to this point. Maybe you could also tell this committee that any changes to this legislation with respect to the pension plan would require us to go back to the provinces to restart the consultation process and regain their consensus on this matter.

[Susan Scotti]

I think we've already answered that question in part. I'm nevertheless going to try to answer it, but in English.

I don't know about the numbers. We'd have to go back and look at the numbers base.

But the essential point here is that we go to extreme efforts to try to reach all eligible Canadians. We use a variety of mechanisms, whether it's letters, agreements, partnerships with the Canada Revenue Agency, or partnerships with the non-governmental sector, which at the community level might be able to identify people much better than we can here in Ottawa.

So the outreach is continuous and constant. Every single effort is made to find those people who might be eligible but have not applied. At the end of the day, there may be other means we haven't thought of. We would be quite open to receiving the benefit of your ideas about other means that we might use to extend our outreach efforts. But I can assure you that through all the mechanisms available to us, we have done our very best to ensure that everybody who is eligible is receiving a benefit.

Through the measures we're introducing in Bill C-36, over time the fact that there will be one single application, and that individuals will not have to continuously report the changes in their income levels to us, will reduce any gaps that may exist in terms of the take-up on eligibility.

So moving forward, things are going to be better. Where we are right now is a vastly improved situation—

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

All right.

Bill C-36 is a positive initiative for seniors, particularly with regard to the Guaranteed Income Supplement.

To what extent will the fact that you no longer have to apply for this supplement every year mean that more people will receive it?