Finance Committee on May 29th, 2012

[Andrew Jackson]

In terms of who's not very affected, certainly there are people who have good pension plans and who choose to retire at age 65 or may even choose to retire past the age of 65. What they're going to lose from OAS is not hugely significant to them in terms of their income. The major concern is with people at the lower end.

One in three of all people who are eligible for old age security also are eligible for some degree of supplementation from the guaranteed income supplement, though not necessarily the maximum amount. That's a pretty high percentage. Basically, what it's telling you is that 30% of people entering that age group don't have a sufficient income from pensions and investments to add up to what I guess we have said is an adequate income level in retirement.

As colleagues said earlier, there's not a particularly generous definition for the guaranteed income supplement. I agree with my colleague—certainly when you look at people in Toronto and Vancouver, where people are in high rental cost housing—that it's—

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

I am sorry, I have to interrupt you so that we do not repeat what has already been said.

As examples, take women who go on maternity leave or who have to be away from their jobs more often, or workers who cannot work any more because of a workplace accident or because their work is very physically demanding and affects their health. Are they more likely to feel the changes to the Old Age Security program?

[Andrew Jackson]

I think the assumption of the government is that, given adequate notice of this, people will adjust by working longer or conceivably saving more.

But in terms of who works longer, when Statistics Canada surveys ask people aged 65 why they have retired, about a quarter of people report that they took the retirement decision by reason of ill health or to care for another person. Certainly for women, caring for another person would likely be much more significant.

That's quite a significant chunk. The CCPA put out a report on this. But more and more people are working past age 65. When you look at this group, a very large chunk of those people are either working part-time—and the proportion of all the workers in areas such as retail is growing—or they're self-employed. For a very significant sub-group, they're not really earning very much income.

The most vulnerable are people who are in some financial and economic difficulties when they're turning age 65 and entering that age group. Certainly there are older workers who have lost their jobs and stable employment well before that age, who have been victims of industrial restructuring and so on. Women are more dependent on OAS and GIS than men, because they've typically built up less in pension income over the course of their lives, including CPP.

[The Chair, Conservative, James Rajotte]

You have a minute left.

[Lysane Blanchette-Lamothe, NDP, Pierrefonds—Dollard, QC]

I will try to be quick.

Old Age Security is not a pension. We know that private pensions, or those shared between employers and employees, are calculated on the fact that Old Age Security takes effect at 65.

Could you tell us what impact this could have on private pensions that count on Old Age Security to provide a part of their benefits?

[Andrew Jackson]

It's rather complex. Some employer pension plans do provide a bridge to old age security for workers who retire on a company pension before age 65. I don't have the figures on how common that is, but it's not uncommon. So there will be some cost to employer pension plans in raising the age of eligibility for OAS.

The vast majority of pension plans in Canada are integrated with the Canada pension plan, meaning that they provide a defined benefit on top of what CPP provides. That's less often the case with OAS, but there is that bridge provision there.

[The Chair, Conservative, James Rajotte]

Thank you.

[Andrew Jackson]

Sorry, but I hope I answered the question.

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

We'll go to Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

I'd like to begin with Mr. Jackson with a quick question. Do unions, or business, create jobs?

[Andrew Jackson]

I think employers create jobs. I think unions can help employers create jobs, and they can certainly turn jobs into good jobs, if I can put it that way.

[Mark Adler, Conservative, York Centre, ON]

But are trade unions in the job-creation business. That's an easy question—or are businesses?

[Andrew Jackson]

Not particularly. We advocate for good jobs and good job creation policies, but I will concede your point that private sector employment is created by the hiring decisions of employers.

[Mark Adler, Conservative, York Centre, ON]

Okay.

We have heard from a lot of various groups, going back to the pre-budget consultations, both from trade unions and business groups, and from social organizations, etc. Every single business and business group that has come before us has said that our government is on the right track, that creating three-quarters of a million jobs since the end of the recession says that we must be doing something right. Lowering corporate taxes to 15%—

[Scott Brison, Liberal, Kings—Hants, NS]

[Inaudible—Editor]

[Mark Adler, Conservative, York Centre, ON]

I fail to see the humour in—

[The Chair, Conservative, James Rajotte]

Mr. Brison, Mr. Adler has the floor.

[Mark Adler, Conservative, York Centre, ON]

Job creation is not humorous as far as I'm concerned. What we're doing here is a very serious matter.

So, Mr. Jackson, I'm a little taken aback would like you to clarify something for me, please. You are calling for an increase in taxes on business. Business, you must concede, does not really pay taxes. That's simply a cost that's passed on by it. Do you not think that business— which is in the business of employing people—would know better about how to employ productive resources, i.e., labour, than a trade union would?

I understand the role of trade unions in our society and it's a very important role, don't get me wrong. But what I am saying is that business is in the business of hiring people. They want to hire people. So if they say that lower taxes helps them to hire people, why do you think that raising taxes would be better? I don't quite understand that. Could you please clarify that for me?

[Andrew Jackson]

Well, I'm not sure I want to get into a whole debate about corporate taxes here. I would say that my position is that there are more effective ways of raising business investment in the economy than simply cutting the corporate tax rate. So when the CLC has discussed taxation issues, it has supported, for example, the position of Canadian Manufacturers and Exporters in favour of much faster write-offs for business investment and machinery and equipment. We would also certainly favour more incentives to employers to invest in training.

I don't think our position is, let's get big wads of cash from the corporations and spend it on a whole bunch of other things. The argument is that maybe we're not actually using the levers government has to raise private investment as we should.

One of our big disappointments about the recent recovery, really, is that the rate of business investment, outside the resource sector, has not been particularly strong and healthy. I think that should be of concern to everybody and we should have a serious discussion about how to address it.

[Mark Adler, Conservative, York Centre, ON]

So our government's policy, then, of staying on a strong fiscal track and creating 750,000 net new jobs since July 2009, you'd say is a pretty good thing. Just say yes or no.

[Andrew Jackson]

I think Canada's job creation record is far better than that of some other countries in the world, and it would be ridiculous to deny that. At the same time, the rate of unemployment is still significantly higher than it was before the recession. Twenty per cent of young people in Canada are out of work or underemployed.

[Mark Adler, Conservative, York Centre, ON]

You're an economist, are you not?

[Andrew Jackson]

I am.

[Mark Adler, Conservative, York Centre, ON]

Okay. You would know that once an economy gets stronger, more people jump into the labour force, and that tends to raise the unemployment—

[Andrew Jackson]

If you look at the figures, our employment rate is still well below where it was before the recession. We're about two percentage points down. Even the Bank of Canada, if you read their latest monetary policy report, says there's still a significant degree of slack in the Canadian job market. That's why we have a concern about these EI changes now.

So things are getting better—