Finance Committee on May 26th, 2015

[Miodrag Jovanovic]

I don't have this figure.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It would have increased.

[Miodrag Jovanovic]

Yes, the costs would have been higher.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

The costs would have been higher.

The government recognizes the impact on the federal treasury to de-index the TFSA, thereby trying to minimize the impact on the treasury.... It seems strange then that there's some recognition that the impact on the treasury is significant and therefore it changes the policy of the TFSA—not indexing it anymore—but it refuses to acknowledge that the costs into the future are so significant as to limit the government's ability to do anything in terms of contributions to health care, infrastructure, and the like. It seems to be, in part, a recognition that the costs would spiral out of control, yet it is not addressing the main and concerning question.

In the budget document itself around this bill, who is it that puts together the construct of the typical family? There's a typical family that is used to give some sense of the taxation policies. The government has been using it for how many years. It's usually a family of four: a husband, a wife, and two kids. Is that correct?

[Miodrag Jovanovic]

Yes, it's usually a family of four, with two kids.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

In previous years, the typical family that was used by the government had the woman or wife earning significantly more than the man. That reversed this year. Why is that?

[Miodrag Jovanovic]

It's an illustration. There's no real reason.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I know, but the illustration that was used suddenly changed the genders as to who was the top income earner.

In this year's example, the wife took the pay cut. In your example, then, you showed how income splitting would benefit that family and allow her to stay home—

[Miodrag Jovanovic]

Yes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

—as opposed to allowing the man to stay home in previous examples.

[Miodrag Jovanovic]

Yes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It's an interesting illustration choice by the government.

I'm still confused that you have not done any assessment of the savings rate as per the impact of the TFSA policy. It's a very large expenditure. It's intention was to help Canadians to save.

Are you telling the committee today that you don't have an analysis of whether that's actually worked or not?

[Miodrag Jovanovic]

What I'm saying is that the Department of Finance has not analyzed, as of now, the effect on the savings rate.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It's been six years since the TFSA was first introduced.

[Miodrag Jovanovic]

Yes, it was 2009.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It's intention was to help Canadians save, and in over six years we have not analyzed whether it's worked or not.

[Miodrag Jovanovic]

That's what—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

You can understand why that's.... If the intention of a policy, especially an expensive one like this is to do X and we don't study whether it's effective or not.... As the Prime Minister told the United Nations, if you don't measure then you can't manage.

I'm still concerned that the Department of Finance hasn't bothered to study the impact of this policy and whether it's worked or not.

[Miodrag Jovanovic]

The tax-free savings account has been designed to be attractive for specific individuals—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

To increase savings.

[Miodrag Jovanovic]

—and classes of individuals who, for instance, under an RRSP, may not have that level of attraction to savings. In that context, it's a nice complement to the different tools and different savings vehicles. The design of the TFSA is suggestive of that. This is something that would improve savings.

[The Chair, Conservative, James Rajotte]

Thank you.

There are a couple of minutes left. I want to follow up on this and then on a RRIF question.

The budget itself says, “As of the end of 2013, nearly 11 million individuals had opened a TFSA and the total value of assets held...was nearly $120 billion.” It also says that it's “a popular means of saving for Canadians at all income levels”. As well, it says, “Individuals with annual incomes of less than $80,000 accounted for more than 80 per cent of all TFSA holders and about 75 per cent of TFSA assets as of the end of 2013.”

I'm a little puzzled at the responses to the questions, because this and the other evidence that the department presented in the budget itself is evidence that the TFSA is in fact encouraging Canadians to save more for their retirement or other issues. The budget itself talks about the link between the TFSA and seniors.

Maybe I'll give you an opportunity to respond again, Mr. Jovanovic.

[Miodrag Jovanovic]

The TFSA has been extremely popular. There's now roughly a 45% take-up. We can see that adult Canadians of all ages and all income classes have opened TFSAs. It is extremely popular.

[The Chair, Conservative, James Rajotte]

Maybe just as a point of comparison, is there any other type of vehicle—RESPs, RDSPs—that has 11 million accounts open?

[Miodrag Jovanovic]

I don't have the numbers on RRSPs. RRSPs have been here since 1957, so we're comparing different systems.