Evidence of meeting #82 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tfsa.
A recording is available from Parliament.
Conservative
Senior Economist, Social and Economic Policy, Canadian Labour Congress
Who are higher income—
Conservative
Andrew Saxton Conservative North Vancouver, BC
—that just about every single seniors organization in this country has praised that, including CARP. Are you aware of that?
Senior Economist, Social and Economic Policy, Canadian Labour Congress
That's in their best interest to do so.
Senior Economist, Social and Economic Policy, Canadian Labour Congress
It is in my best interest to provide advice that would benefit all workers, not simply workers that have had enough income to invest in RRSPs.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Are you aware the RRIF program hadn't been changed in almost 40 years and that returns had changed significantly?
Senior Economist, Social and Economic Policy, Canadian Labour Congress
That's kind of irrelevant to my point. My point is you've done nothing for low-income workers.
Conservative
Andrew Saxton Conservative North Vancouver, BC
It's not irrelevant to your point, because we're talking about improving a system that hadn't been changed in almost 40 years.
That's okay. Thank you.
I'll move to Bruce MacDonald of Imagine Canada.
Can you explain to us what in this budget 2015 has benefited charities?
President and Chief Executive Officer, Imagine Canada
The point I mentioned earlier in terms of individuals being able to convert real estate or shares into cash and make those contributions to charities is that it provides another tool in the tool kit for charitable organizations to be able to go to donors and offer them another benefit, not just from the passion and the desire to give.
For us, looking at the extension of the Mitacs program to charities is important, because as charities are under unprecedented pressure to be able to look at new sources of revenue and new opportunities, they're becoming more innovative and more creative. This kind of levels the playing field and provides opportunities for them to be able to access dollars that small and medium-sized enterprises do. There are a couple of examples.
Conservative
The Chair Conservative James Rajotte
Sorry to have to cut that off, but we are going to the next round.
Thank you, Mr. Saxton.
We'll go to Mr. Brison, please.
Liberal
Scott Brison Liberal Kings—Hants, NS
Mr. Fréchette, in annex B of your February 2015 report on TFSAs, you stated that 15% of the federal fiscal cost of TFSAs is due to additional GIS payments and 2% is due to additional OAS payments. Can you explain how TFSAs result in greater OAS and GIS payments?
Parliamentary Budget Officer, Library of Parliament
Essentially, in the old age security, the payments will not be affected, but they will be injected in the TFSA indirectly. It's interesting to see the behaviour of people. That's why I said in my remarks we should do some more study on it. In doing a study on the total savings in Canada, the rate of total savings will give us some information.
What is happening right now is that—to a question that was asked before about people who have incomes of $20,000 and who max out their TFSA—I suspect many people, senior people, wealthy people, inject money into their grandchildren's TFSAs, grandchildren who are 18 years old and older. That's the kind of behaviour you're going to see in the long run, but that's not new savings. It's basically just the same kind of transfer that we have.
Liberal
Scott Brison Liberal Kings—Hants, NS
On the increase in the OAS and GIS payments, what you're saying is seniors who would otherwise not qualify for OAS and GIS because they're income tested could shelter income from TFSAs and as such, qualify and benefit. Would you agree that's not consistent with the objective of OAS and GIS for the lower income seniors?
Parliamentary Budget Officer, Library of Parliament
I'm not commenting on the objective; I'm just saying it is a reality of the system.
Liberal
Scott Brison Liberal Kings—Hants, NS
Wealthier seniors will now qualify for GIS and OAS, and that's where your calculation has been leading.
Liberal
Scott Brison Liberal Kings—Hants, NS
Now that the government is increasing the TFSA limit to $10,000, do these proportions of 15% for GIS and 2% for OAS for the federal fiscal costs still hold, or would they go up?
Parliamentary Budget Officer, Library of Parliament
It would kind of hold. We have to double-check that, but it would kind of hold. I think it's in the same neighbourhood in terms of percentage.
Liberal
Scott Brison Liberal Kings—Hants, NS
You've stated the impact on the federal government will be eightfold as a share of the economy in terms of the fiscal framework by 2060. The impact on provincial government treasuries will be significant. Have you done some work on the impact on provincial treasuries?
Parliamentary Budget Officer, Library of Parliament
For the provinces, the cost is there for about one-third of that amount. That's why some provinces, including Quebec, are looking at that issue.
Liberal
Scott Brison Liberal Kings—Hants, NS
We've done some work on the demographic trajectory in Canada and the increase in health care costs, as an example, for provinces. Is this proposal, juxtaposed with that demographic trend, troubling in terms of the capacity for provinces to afford to pay for health care?
Parliamentary Budget Officer, Library of Parliament
Time will tell. This is what we will do in the future with our fiscal sustainability report later this year, in October actually. We will assess the impact of Bill C-59 on that, the kind of impacts Bill C-59 would have on the health systems of Canada.
One thing which is interesting is when the PBO did its update on the TFSA, we had a graph that showed the status quo and the $10,000 limit. In 2070, if the status quo had stayed, the contribution room would have been the same as with the $10,000. What I'm saying is that, if nothing had been done, we would not have that kind of discussion, but we would be at the same kind of contribution room in 2070.