To begin, I'd like to thank the chair and other members of the committee for inviting me to speak today, and for providing me the opportunity to answer questions concerning Bill C-362, An Act to amend the Old Age Security Act.
This bill was introduced in the House, by me, on October 25, 2006. Its aim is as simple as it is important. It amends the Old Age Security Act to reduce from ten years to three years the residency requirement for entitlement to old age security. Lowering the residency requirement in this way will remedy a grave oversight in Canada's social security system, which is presently causing great stress to seniors across Canada and to the families and communities to which they belong.
All Canadians believe the elimination of poverty, especially amongst those most vulnerable in society, should be the top concern of the Government of Canada. This bill will go a long way to alleviating the hardship experienced by some of Canada's most vulnerable.
Let me take a moment to explain how it will do this. The federal old age security program came into existence in 1952 as a matter of social justice. It was motivated by a concern for the needs and welfare of Canada's senior citizens. Essentially, at that time Canadians recognized and decided that no Canadian senior should ever live in poverty.
Presently, the Old Age Security Act requires a person to reside in Canada for ten years before she or he is entitled to receive old age security. As a result, it is not at all uncommon for a Canadian senior citizen to go entirely without the benefits of old age security for many years, thus exposing them unnecessarily to the hardships of poverty.
However, I wish to emphasize that this is also about dignity and decency. Unlike the Canadian and Quebec pension plans, which are funded by contributions from each person over his or her working life, the OAS is presently funded from general tax revenues. This means OAS is funded from the taxes of every person living and working in Canada right now, not 10, 15, or 20 years ago. This is regardless of his or her country of birth. This also means that lowering the residency requirement does not affect or pose any sort of threat to the long-term viability of other pension schemes. Furthermore, OAS income is itself subject to tax, so ultimately, only those Canadian seniors most in need receive any OAS benefits.
From the perspective of social justice, a 10-year residency requirement is arbitrary and inappropriately discriminatory. Old age security, I want to emphasize, is not intended to reward seniors for services rendered. Rather, it is intended to ensure Canadian seniors will not live in poverty.
The needs of new Canadians are as genuine as the needs of those who have resided here for 10 years or more. Three years is the minimum residency requirement to become a Canadian citizen. If that's a sufficient residency requirement for citizenship, it's sufficient for old age security.
Of course, doing the right and decent thing costs money, and this bill is no exception. Based on statistical analysis undertaken by the Library of Parliament at my request, it can be estimated that if Bill C-362 comes into force for 2009, some 38,700 persons will become eligible for benefits related to old age security. That is, an estimated 32,900 will become eligible for old age security benefits, 28,100 will also qualify for guaranteed income supplement benefits, and an additional 5,800 will qualify for the spousal allowance.
When the changes are made, the total cost will be around $410 million. Of that total, approximately $40 million will be paid out in OAS benefits, $310 million in GIS benefits, and about $60 million in spousal allowances. It is estimated that the total cost per year will rise about $15 million thereafter. I should note also that the actual cost to the government will be a little lower, because some of the benefits will be recouped through taxation.
The total cost associated with the changes proposed by Bill C-362 is not inconsequential. Nevertheless, it is worth noting that the total cost per person is only about $10,000 to $12,000 per year. It should be further noted that these seniors do not all live in total isolation. By helping these seniors, we will also help families and the communities of which they are a part. Moreover, the cost to fix this glaring hole in our social security net is not insubstantial only because the needs of those affected are so great.
I believe Canadians all across the country want to address the residency requirement, which imposes a very real hardship on so many seniors, their families, and their communities. No person, and certainly no member of this committee, would ever want to face a choice between poverty and a life of absolute dependence on family and friends. By guaranteeing a certain basic level of support for all Canadian seniors, we guarantee a lifetime of dignity and self-respect for all Canadians.
On the whole, Canadians are a decent people. Without exception, whenever possible, we strive to do the right thing and to right wrongs whenever we encounter them. Even to the most casual observer, the hardships created by the 10-year residency requirement is a wrong that needs to be corrected. Why? Because it is the decent thing to do.