Finance Committee on Nov. 2nd, 2011

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

And that was going to be my next question, because our population is doubling. I think somebody told me--it might have been our chair--that a thousand Canadians turn 65 every day. Is that right?

[Susan Eng]

Yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

So, that's 365,000 seniors. We're going to have a doubling of our seniors in 15 or 20 years. It's fairly amazing, and obviously the cost base for that is tremendous, because everything we pay out for senior citizens is going to be doubling in 20 years, in essence.

What innovative proposals has your organization come up with that might help us in Canada deal with the growing demographic as well as the problem with the recession, etc.?

[Susan Eng]

Thank you for the question.

I guess the first thing to say is that age 65, although the determinate of the definition of senior, does not mean that that person becomes non-productive and automatically a burden. I think that's an important one. Even with the Parliamentary Budget Office, they still continue to use something called an age-dependency ratio, which is dividing the number of 65-year-olds by those who are under 65, which suggests that anybody who is 65 is by definition dependent. That's the wrong way to look at it. We believe you have to look at actual dependency and actual disability in order to make broad public policy look a little bit more sensible. We don't need to be quite calling for a disaster because there is a larger population over 60 to 65.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

And I agree with you. I think your organization is correct on that. That's why, of course, we've moved in this legislation to eliminate the mandatory retirement. Now, what are your members saying about that? Are they pleased with that?

[Susan Eng]

Yes, absolutely.

First of all, we would like to see that legislation ASAP, because there are people still pushing back in this day and age against such legislation. The issue there is an issue of rights. Not everybody who has the occasion to keep working past 65 will take up the opportunity, but those who want to should be given that opportunity.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Are they saying that they are pleased with this legislation? Are they pleased with our Conservative government?

[Susan Eng]

We do poll our members. We have a bi-monthly newsletter that goes out to our membership. We get from 3,000 to 5,000 responses in a number of days, and we have asked them the question about mandatory retirement. There is strong support for getting rid of mandatory retirement. We see it as legislated age discrimination and unnecessary. Certainly when people hit the age of 65 there are some who prefer to keep working, but there are workplaces that ask people to leave at age 60. We think that is certainly wrong, because they are more than willing to keep working if they choose.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

My mother is 79, will be 80 in February, and she still works full-time, probably about 50 hours a week.

[Susan Eng]

More power to her.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

She's much more productive than I am and probably all my colleagues together, I have to tell you that as well--which is an insult to me; I don't know what happened to me.

Notwithstanding that, I did ask for some innovative ideas that your organization has. Could you give us some ideas what you would like to see in the next budget?

[Susan Eng]

Well, first of all, I think there should be incentives to help people keep working if they want to. That means that workplaces need to start introducing creative policies to keep older workers employed.

It means that they have to look at caregiver leave. They need to provide accessible working situations.

They need to apply some training to make sure that where you have a situation of a younger supervisor to an older worker, you actually train people around that sensitivity, which is important, and make sure they are using whatever technology they need in order to create that flexible work environment. That's something that could be introduced as a tax credit for employers. For example, job fairs is another one to keep people working, looking after their own retirement, and so on.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

We'll go to Ms. Sgro, please, for a five-minute round.

[Judy Sgro, Liberal, York West, ON]

Thank you very much.

I have many questions for everybody, but I'd like to hear from Mr. Wark a little bit further on this issue of the pension challenges you were talking about. It's an area I'm the critic for, and of course our party was supportive of a new initiative, which was the supplementary Canada Pension Plan. I'd like to hear more about some of the challenges you were referring to when you didn't have time to finish.

[Kevin Wark]

Thank you very much.

The people who are being impacted by these rules are typically small-business owners. That's the inclusion of the rule. They work very hard to build their business. They're often reinvesting in the business, and at some point in time they're in a position to build their own retirement income for themselves and for their other employees.

The issue is whether they have the same entitlement to participate in defined benefit pension plans like other employees in larger private and public companies. These rules create restrictions and costs associated with implementing these kinds of plans that often make it difficult to justify on a cost basis. The big question we have is why is the focus on the size of the plan, versus what type of planning is being done and trying to get at the planning that's considered to be abusive, as opposed to the nature of the business itself?

[Judy Sgro, Liberal, York West, ON]

Given the fact that you're talking about small business, do you have any comments or thoughts on the government's proposal for the PPRP plan--that is, pooled pension plans?

[Kevin Wark]

We are supportive of a program that will expand the number of people who are participating in retirement programs. We made another submission on the retirement income sufficiency issue. It is clearly individuals employed by small businesses who don't have pension plans of any sort in place, or self-employed individuals. In the current rules, there's a gap in their being able to participate in pension plans or retirement programs on an appropriate basis.

[Judy Sgro, Liberal, York West, ON]

Ms. Eng, we talk about not forcing people to retire at 65, but I would suggest that there are many people who have very limited opportunity to save for pension plans, whether they are in small business, farmers, homemakers, or whatever. When we talk about them choosing whether they want to work beyond 65, for many people it's going to be a fact of life that they'll be working beyond that. I just mention it because we discussed that earlier.

You also talked about Germany, and the kinds of choices when it came to caregivers and all of the other issues. Can you elaborate a little bit more on that, please?

[Susan Eng]

Yes. It's interesting.

First of all, I agree that some people want to work, and other people have to keep working to look after their own retirement in the absence of a savings vehicle like a workplace pension.

In Germany—and we're starting to study this a little bit more thoroughly—they actually have a long-term-care insurance plan. Again, it's a CPP-type instrument with mandatory contributions. Once you are eligible to start receiving the payments, they're quite substantial. They are paid to the care recipient. And depending on whether you need moderate or heavy care, it can range in Canadian dollars from $4,000 a year to $11,000 a year. You receive that money in cash in order to pay for caregiving, home care, and even long-term care. It's quite an extraordinary amount of money, but of course they are looking at funding it properly and having adequate contributions. When we look at the cost of care for a person, we have to look at 360 degrees. Is it just financial? Are there expenses, are there forgone salaries, are there professional services? All of these things are necessary.

[Judy Sgro, Liberal, York West, ON]

Some of the biggest issues you're referring to that are facing seniors are refundable tax credits and other areas. What else do you think we need to be doing, as parliamentarians and as messengers to the government? What else we can be doing to help not just the thousands of seniors who are retiring today, but the thousands of people who are going to be retiring in the future, so that they aren't retiring in poverty? We're looking into the future and trying to prepare.

[Susan Eng]

The bottom line is financial security in retirement. Whatever that means, it includes reducing expenses, and increasing income if they are at a marginal level. Certainly the GIS top-up was most welcome, but of course there are 1.7 million Canadians receiving GIS, which by definition means that they're in some financial insecurity. So we're recommending improving on that. Other people whose savings were devastated in the recent downturn need some relief from rules that exist, like the mandated RIF rules. They should be gotten rid of, or there should be at least a moratorium. There are clawback rules for OAS that should be reduced. Test-of-income rules.... All of these things need to be adjusted so that people can keep more of their own money, and help them to help themselves.

[The Chair, Conservative, James Rajotte]

Okay. Thank you, Ms. Sgro.

We'll go to Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Chair.

I'd like to start my questions with Mr. Koeller. Certainly you're talking about what is probably a very complex tax procedure. I do know that in budget 2010, identical changes were made to ensure that MICs could not be used in tax-free savings accounts, which was really to close an identical loophole.

Did your members object to this measure contained in budget 2010? And with respect to MICs, why should RSPs be treated differently than TFSAs, as they are similar savings vehicles?

[Dale Koeller]

I'm not aware of the TFSA rules that came in in budget 2010, but what I do know from my research is that when TFSAs were introduced, they were eligible for shareholders to invest in MICs through their TFSA—not for everybody. For instance, I'm connected to an owner who has over a prescribed amount, so I could not. And that was fine for me, because it was a known rule that was introduced with a new vehicle, whereas this rule is difficult for me to digest because it's retroactively imposed upon us. It reduces our total ability to invest in our company from 25% maximum to 10% maximum, and it includes a broader definition of “related parties”.

The big penalty is that we've structured ourselves to be within the rules, and we now find ourselves reduced retroactively and currently penalized as well.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

I'll now go to CARP.

We're here to talk about the Budget Implementation Act, Bill C-13, and I know sometimes it's nice in these environments to do a little "blue-skying". I think that blue-skying certainly needs to be done in partnership with the province. When you talk about one province is doing something and one isn't, really, many of the responsibilities.... Those conversations need to be had.

I certainly want to follow up on Mr. Jean's comments in terms of the huge host of measures that have already been taken, and then in the first part of the Budget Implementation Act the increase to the GIS and this measure here. To be quite frank, we're heading into very uncertain economic times. I have three children, and most of the people you represent have children. I would think that there comes a time when we have to also be thinking of the generations down the road. We've made significant measures.

To be quite frank, at this time I certainly support conversations, but I certainly couldn't support the changes you're asking for in this particular bill.