Finance Committee on June 1st, 2012

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you. I appreciate hearing that.

Switching to a different subject. Two economists from Hamilton's McMaster University—Byron Spencer and Frank Denton—released a report earlier this year, and they argued quite convincingly that the eligibility age for senior's benefits should be raised, because of longer lifespans and a crunch in public money. According to their statistical predictions, by 2035 there will be two workers for every one person over the age of 65. Today, the ratio is more four to one.

Do you agree with your McMaster colleagues about the inevitable consequence of an aging population, for example, reforming social programs, and how would modifications to old age security in today's act help address some of these long-term challenges facing Ottawa and our ability to pay?

[Dr. Arthur Sweetman]

I am 100% in accord with my colleagues in their projections. I think they are simple numbers; it's a question of what we do in response. I think that the elements in this budget are a good first step, but they're not a comprehensive response.

One of the things we might want to think about, which hasn't been discussed so far, is the need to give Canadians incentives to stay in the labour market longer. If we think about 1976, 66% of Canadian males between 60 and 64 were part of the labour force. That declined until 1996 when it was 44%, and it subsequently bounced back to 58%. We need to remove barriers and add positive incentives, to help Canadians who are in that age range stay in the labour market longer.

Earlier we talked about support for people who are not working. What we need is encouragement so people will work. I think some of the elements of this budget move in that direction, even if they're not comprehensive yet.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you.

Just with regard to that, programs like ThirdQuarter are being offered to try to encourage more people to get back into the labour force as they come to the third quarter of their lives, but earlier we also mentioned the deferral program for old age security.

In my riding of Okanagan—Coquihalla, we have quite a high number of seniors in proportion to other age groups, and a lot of people enjoy the flexibility of this particular measure.

What other programs would you suggest we look at to incentivize people to stay in the workforce longer?

[The Chair, Conservative, James Rajotte]

Just a brief response, Dr. Sweetman, please.

[Dr. Arthur Sweetman]

I think we want to think about the whole package: RRSPs, CPPs, the whole range of government public policies. I think that the voluntary deferral provisions in the budget are extremely good, and we want to think about that type of thing writ large across the retirement system.

[The Chair, Conservative, James Rajotte]

Thank you.

First, I want to thank our witnesses and ask if they can stay another 10 minutes.

Colleagues, I have another couple of rounds. I know some of you have House duty. I will not be entertaining any motions, so if you do have to get to the House, please feel free to do so.

I'll go now to Mr. Jean, please.

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

Thank you, Mr. Chair.

I have some questions for Mr. Nikias. I introduced myself to him earlier, and I've found his testimony very interesting.

Some of the information I discovered was that in Europe approximately 15% of people are disabled; Greece has a proportion of over 10%. When I started to break down the statistics, I discovered it's about 15% in Canada, but of that, 56% of people over 75 are disabled, and 33% of people between 65 and 74 are disabled. So it appears to me that a large proportion of Canada's population of the disabled are elderly. So the more we can do for the elderly in this country, such as some of the things we have done—income splitting and things like that—seems to indicate from my perspective that it would be better to remove more people from the category of disabled, or at least to help them with their daily lives. Would that be fair?

[Vangelis Nikias]

First, let me congratulate you on giving me your Braille card, it's highly appreciated.

The question of defining disability is a very complex one. I think what is important to understand is that, with the aging of the population, impairments are increased, but that is linked very closely to the question of barriers people face—and that is a question of disability.

So impairments with environmental problems are leading to disability. So what we can do in Canada is by improving our disability support systems, by improving accessibility, by all those things, while we have higher rates of impairment, we can maintain or reduce our levels of barriers, in other words, disability. So the question I think you raised is, should we support seniors with disabilities? The answer, of course, is absolutely, yes.

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

Thank you. I think you're right. Removing those barriers—communication, such as business cards, things like that—help to bring these communities together with people who don't have disabilities.

Mr. Sweetman, I was very interested in your testimony. I'm from Fort McMurray. I know Mr. Caron, who asked you questions earlier, was talking about seasonal workers. I want to let you know that I have 50,000 to 60,000 people, from all over the country, currently living in work camps in Fort McMurray. They're three weeks in, and they usually get one week off.

Is this something the government can concentrate on, the mobility of workers from one part of the country to another, to help seasonal workers, wherever they may be, find employment during the off-season?

[Dr. Arthur Sweetman]

Certainly mobility assistance for seasonal work could be very valuable.

If we look at the employment rates in Alberta, it is the one jurisdiction in Canada that basically has no seasonality anymore. It used to, 20 years ago, but it doesn't anymore. Whereas, in other parts of Canada seasonality has increased quite substantially.

Anything we can do to avoid part-year seasonal work and encourage people to be productive all year round is beneficial.

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

Absolutely.

I don't know if you've had an opportunity to see the National Post this morning, but Windsor has a Tim Hortons in a hospital. Did you see that article?

[Dr. Arthur Sweetman]

No, I'm sorry. I didn't.

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

I didn't know it was possible for Tim Hortons to lose money, but they have a Tim Hortons business in a hospital that has to pay rates of $26 an hour, instead of the usual $10 an hour that other Tim Hortons pay their staff. As a result, taxpayers are on the hook for $265,000 in losses per year.

I had a similar situation. I had a Quiznos in Fort McMurray, the busiest Quiznos in North America for a period of time. I had to pay $25 an hour, and I couldn't change the retail prices at that time.

Can you comment on that, as far as what's happening in the rest of the country—the artificial, inflated employment wages that aren't competitive?

[Dr. Arthur Sweetman]

I'm not sure how artificially inflated those wages are in all regions of the country. In Alberta, you're in the middle of a boom, and in booms, wages go up. I don't think that's artificial inflation; that's economics at work.

In other parts of the country—

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

In Windsor, it's a union issue. They can't employ anybody in the hospital who is not union. They have to pay $26 an hour, which is obviously a non-competitive rate.

[Dr. Arthur Sweetman]

I can't speak to that. I haven't read that article.

[The Chair, Conservative, James Rajotte]

Thank you.

I realize we're going past the time, but as the chair, I want to take advantage of the panel we have here. I do have a few questions.

A number of you have raised the issue of the need for a comprehensive approach to changes to retirement income, or income security.

Mr. Wolfson, you raised the issue of RRSPs. Perhaps I'll address my questions to Mr. Wolfson, Mr. Ambachtsheer, and Mr. Sweetman.

In terms of RRSPs and RRIFs, one of the other witnesses said we should look at the RRIF conversion rate, or the mandatory withdrawals for RRIFs. Is that what you're pointing to when you mention RRSPs?

[Dr. Michael Wolfson]

No, I wasn't thinking of that specifically. In fact, I invented the RRIF, in 1980, and I can tell you the story, if you want, about why I did that.

The kind of cacophony that one sees, where you have to mature your RRSP by age 71; CPP, you can claim at 65, plus or minus five years; OAS, in the fullness of time, you will start at 67, plus perhaps up to 72, but not below 67.... These things are uncoordinated.

[The Chair, Conservative, James Rajotte]

But should you have the same age for all of them?

[Dr. Michael Wolfson]

There should be flexibility. I agree with Keith on that.

We can think of a band, whether it's from 60 to 70, or 62 to 72, or eventually higher than that; that's fine with me. But we should be thinking of a band and coordination and integration.

Employers have plans that already have ages in them for workplace pensions.

[The Chair, Conservative, James Rajotte]

Mr. Ambachtsheer or Mr. Sweetman, do you want to comment briefly on that, the coordination between...?

[Prof. Keith Ambachtsheer]

I'll bring up a somewhat different issue. You have something like $300 billion or $400 billion of RRSP money in retail mutual funds. Those are currently being charged 2% plus, in terms of fees. In a low-return environment, it doesn't work.

To me, a lot of these technical things are interesting and important, but I believe we have a fundamental market failure, in the sense that we have this retirement income system—a large part of it is RRSP-driven—and people are not going to get any kind of return on their contributions in the current retail mutual fund environment.

That's one of the big things we could be doing through PRPPs, but as I say, I don't see it coming yet.

[The Chair, Conservative, James Rajotte]

Okay.

Mr. Sweetman, do you want to comment on that in terms of coordination between RRSPs, RIFFs, and the OAS changes?

[Dr. Arthur Sweetman]

I think that definitely the ages need not be the same, but they should be coordinated across those various public policy elements, and they probably shouldn't be fixed over time. As Canadians age—or at least as life expectancies increase—those fixed years should be adjusting accordingly.

[The Chair, Conservative, James Rajotte]

One witness actually said with respect to OAS that you don't fix the ages, but you actually adjust it as life expectancy changes. Is that what you would recommend?