Finance Committee on Sept. 26th, 2006

[Frank Stokes]

Yes, that's right.

[Garth Turner, Conservative, Halton, ON]

Fill us in on the bigger picture. Who's behind this?

[Frank Stokes]

Canadian Activists for Pension Splitting is only one of 16 organizations that have come together in a common front to advocate for pension income splitting. It's not a coalition. These organizations are all doing this independently, and I believe they represent about two million Canadian members.

[Garth Turner, Conservative, Halton, ON]

So how easily and quickly did this umbrella group come together? How widely spread in the pensioner community--if there is such a thing--is this issue right now?

[Frank Stokes]

Some years ago, I believe the Retired Teachers of Ontario were the first to take on this lobbying. They were joined next by the Georgian Bay chapter of CARP, and then CARP national. That's something of an early history of it. More and more organizations are joining all the time.

[Garth Turner, Conservative, Halton, ON]

I'm thinking about in the last few weeks. Right now, is this a big issue among people who are retired? Is it on the scale of things...?

[Frank Stokes]

Certainly. The amount of money it costs a Canadian pension couple to have widely unequal incomes can easily equal their property taxes. In my case, for example, the amount of money I pay in income tax yearly compared to any other couple of the same total household income, simply because my wife and I have widely different pension incomes, is equal to my property taxes of $2,400.

The largest percentage that unequal-income pension couples pay extra in income tax is about 45% to 46%, and that's in the $32,000 household income range. In other words, where spouses are getting $21,000 and $11,000 respectively, that couple is paying about $600 more income tax yearly than a couple of the same household income who are getting $16,000 each.

[Garth Turner, Conservative, Halton, ON]

Here's another question. You've heard all these presenters here this afternoon. We heard a very compelling case for the students of Canada. We heard a compelling case for the National Association of Friendship Centres. We heard compelling cases from a lot of people here. Some people say you're nothing but a bunch a high-income old retired people who are greedy. How do you respond, Frank, because it's something that comes up? Why should we be letting you off the tax hook? What's the justification?

[Frank Stokes]

It's an equity issue. This stems from a basic problem in Canada's income tax formula. That has been debated at least since the Carter commission in 1966, which recommended that income tax be based on family income. Canada's personal income tax system is based on taxation of the individual rather than the couple, family, or household. We also have a progressive tax rate system, where the greater an individual's income, the higher rate of tax he pays. Those two factors combined cause this very great difference in the income tax paid by very unequal-income couples and equal-income couples.

This basically discriminates against the traditional family lifestyle of the breadwinner and homemaker.

[Garth Turner, Conservative, Halton, ON]

Okay, Frank, thank you.

Jeremy, I was impressed by your plan. I think you have a tremendous kernel of an idea here that takes a problem for the federal government and essentially privatizes it, removes the risk, and gives some benefit to students.

Did you dream this up on your own?

[Jeremy Amott]

Yes, sir.

[Garth Turner, Conservative, Halton, ON]

Have you consulted within the industry on it? Have you talked to some actuarial people, some underwriters?

[Jeremy Amott]

Yes. As far as the insurance industry is concerned...before I got it to the level of trying to make it work for the federal government, I had some interesting conversations in legal offices in Toronto on the insurance side to make sure that insurable interest is present within the model, as it now exists. Basically the model can be adjusted and formulated to any kind of strategy you want, based on the math I'm using.

[Garth Turner, Conservative, Halton, ON]

I think it's a very good idea; there's a lot of substance there. Our committee and I think most people in the political system tend to put a little more weight on groups than individuals. Have you given some thought to taking this to the Canadian life insurance industry?

[Jeremy Amott]

I'm in the life insurance industry right now, Mr. Turner. I'm a licensed—

[Garth Turner, Conservative, Halton, ON]

Right, but I mean to your industry association? Can you get some backing? I'd like to see this given—

[Jeremy Amott]

I'll explain to you how it's working, and I understand what you're trying to do to give this thing some credibility. Since this is such a large task, essentially what I'm trying to do is sell life insurance to first world nations.

What I have to do first is think creatively of a way to sell first world nations life insurance. Then I think of a way that they might actually like it. But before I can actually go back to access the resources from the life insurance industry that normally become available to brokers when they're dealing with clients on a client basis, I have to take this to the level and get some kind of interest or some kind of nod—

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Amott.

If there's any information or additional information you can forward to the committee through the clerk, we'd appreciate it.

Mr. McAvity, I'd like to apologize, because I didn't hear the words until afterwards.

Mr. Turner, I don't accept that kind of language. That's not very parliamentary--

[Garth Turner, Conservative, Halton, ON]

I'm sorry.

[The Vice-Chair, Liberal, Massimo Pacetti]

The witnesses are here to testify. If you don't agree with them, you can say so. But I don't think this committee is a forum to abuse them by using unparliamentary language.

I will go to the next MP, Mr. Bevington, for seven minutes.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you.

My question would be for Mr. Dinsdale, or I'll start off with him.

In terms of some of the recommendations you have in here with the friendship centres, I'm interested in the advancement of aboriginal children in the head start program. Maybe you could clarify some of the details around that program.

[Peter Dinsdale]

Sure, the aboriginal head start program is obviously geared to aboriginal children aged zero to six in communities, basically to have access to pre-education programs, cultural programs, and to give them a better head start in the education system by addressing some of the challenges they're facing.

Currently it's not widely available in urban communities across Canada, which is a great challenge, in all honesty, because the majority of aboriginal people live in the cities.

So I would recommend the expansion of the head start program to the committee in order to have an impact on these young people, as they grow up and go to school, and make sure they finish high school and have an opportunity to engage in some of the benefits we're hearing about elsewhere in the post-secondary field. This is one obvious way of making sure that early learning is reaching people in urban aboriginal communities across Canada.

[Dennis Bevington, NDP, Western Arctic, NT]

Yes, I note in my community that there is an aboriginal head start program in action in the Northwest Territories. My grandchildren attend it, and they have made remarkable progress.

They're actually looking at how they can open it up to the whole community as well. Of course, early childhood education is a gift, and I certainly think you should work very hard to promote this part of your program and this effort.

In terms of the role of the native friendship centres within the hierarchy of aboriginal organizations, perhaps you could elaborate a bit more on that, so we can see where we could take it.

[Peter Dinsdale]

Sure. Do you mean with respect to the other national aboriginal organizations, sir?

[Dennis Bevington, NDP, Western Arctic, NT]

Yes.