My name is Jan Westlund. I'm coordinator of Women Elders in Action.
WEACT, which is an acronym for the organization, is a provincial network concerned about economic security for unattached senior women, as most will be at some point in their lives. We've focused on the pension position of already retired women in our research.
We've also developed an understanding of the financial retirement readiness of women in the labour force today.
We've drawn heavily on current research from StatsCanada regarding women's average annual earnings, their prevalence in non-standard work, their overburden of society's caregiving duties, their lack of occupational pensions, and their inability to contribute significantly to RRSPs.
We see that many will be disadvantaged when the majority of retirement income depends on an individual's lifetime earnings and savings.
In 2004, 40% of employed women held non-standard jobs, commonly offering no benefits and low wages in Canada. These days it is being suggested that they need to work until 67, or even 73, to achieve some semblance of economic security. This warning fits with the government's desire to have aging workers stay in the workforce longer to increase productivity.
The calls to keep people working longer have been enabled by a movement to eliminate mandatory retirement where it exists. Inevitably, we also hear from those who want Canada to increase pension age or to eliminate access to an early Canada Pension Plan. These would be harsh developments for many employed women. A delayed pension age is an unreasonable imposition on those with low-paying work and little chance to contribute to RRSPs. Extending work life will do little to improve their financial situation when they do retire.
This is the scenario that exists as you posed the question regarding the targeting of taxes. Our members have noted a considerable reduction in the tax rate of corporations over the years. However, corporate investments in buildings, machines, equipment, research and development, skill-building, which would lead to higher productivity, have lagged.
Profits are being invested outside the country in record amounts, placed in offshore tax shelters, or paid out to corporate insiders and shareholders. In short, we are rewarding corporations for not improving our lagging productivity.
According to David Dodge, the Bank of Canada governor, in June 2007:
Canada’s disappointing productivity record is attributable to industry not taking full advantage of new information and communications technologies, and insufficient investments in equipment, research and technology and worker training.
WEACT would like the finance committee to focus on corporations as the most important source of productivity improvements. This is preferable to fretting Canadian women with part-time work or low-paying service sector jobs with the notion that they must work until they drop.
We need government leadership in strengthening corporate tax policy at a minimum, to require more reinvestments in this country with the goal of increasing productivity.
We would also like to suggest that you use personal taxation policy to diminish our inequalities. The government's use of tax policy should be designed to benefit those who need assistance the most. Many seniors qualify for this consideration. They are at the stage of life when they are least able to improve things for themselves.
We believe pension income-splitting denies the government revenue, while it ignores the needs of unattached women at greatest risk for poverty. We recommend a revised program that could be more equitably applied to low-income couples and the unattached alike.
The corporate profits that make their way to shareholders here are often enjoyed by individuals through their RRSP portfolios and through occupational pensions. The combined projected net tax expenditure for those Canadians able to contribute to these private plans for 2007 is more than $21 billion. This is an enormous figure when one considers that three out of ten Canadian families possess neither of these pension assets.
In 2005 WEACT published Pensions in Canada: Policy Reform Because Women Matter. It offered 23 recommendations to improve the pension position of women. To date, 40 organizations across the country have endorsed our call for change.
Our recommendations dealing specifically with personal taxation from that paper are relevant to today's subject. We suggest the elimination of taxation on income below the low-income cut-off, and we also suggest converting deductions for RRSP and RPP savings to credits. This would make the reward for contributions more equitable between those in higher and lower tax brackets.
This last recommendation has generated considerable discussion, as you can well imagine. Today we are willing to consider an alternative recently put forward by Monica Townson, in her brief for the Canadian Association of Social Workers, entitled “Financial Security for Women Seniors in Canada”. She recommends that the ceiling on RRSP contributions be reduced and that the resulting savings in tax expenditures be redirected to improved old age security and GIS benefits for low-income individuals. This would reflect the finding that RRSPs are of most interest to higher-income Canadians, who are in the least need.
One final point. For the last several years we've discussed economic issues with senior women all over the province. We hear that it's increasingly difficult for them to find affordable housing in their own communities. Some are now paying between 50% and 60% of their limited income for shelter. Their plight is only one facet of a severe housing crisis facing many middle- and lower-income Canadians today.
The government appears incapable of augmenting the guaranteed income supplement sufficiently to keep up with skyrocketing market housing costs. We would like to strongly suggest that the tax surpluses be assigned to begin funding a substantive national housing strategy that would benefit the poor of all ages.