Evidence of meeting #147 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was workers.
A video is available from Parliament.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
You just anticipate that it is an area of large potential.
Vice-President and Chief Economist, Research, Business Development Bank of Canada
Yes.
Liberal
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Okay. Thank you.
Mr. Janson, I just want to quickly ask about the drop-in provisions versus the drop-out provisions, because this was an issue I was very concerned about too and was happy to see the changes made. If the problem is that the details aren't out, then that's fine. We can have that information further on.
However, the way I understand it, the drop-in provisions are specifically to drop in the parents' average earnings during the years prior to birth or adoption, and that for persons with disabilities it is the same. It's dropping in for the years when they received the CPP disability pension, and the drop-in amount would be 70% of their average earning for the six years to the onset of the disability.
Where do you see the difference in the drop-in versus the drop-out if, from my understanding, it's somewhat functioning like the drop-out?
Research, Canadian Union of Public Employees
It's just the way they're organized. The way they're set up is, to us, quite clearly going to provide less benefit than the drop-out would have done.
In your example, you described the mechanics correctly. The drop-in for child-rearing is basically saying that you're not working that year, so we're going to credit you that year as though you worked and earned this amount. They calculate that amount based on the previous five years of earnings.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
It's just your average, so if you are making more.... I know I'm out of time, but you say that you think it will be worse. Can you give me an example of why?
Research, Canadian Union of Public Employees
It's quite clear to us that it will be on net, because if you think about when women tend to have a first child in Canada, it's around age 30. We'd be basically averaging their earnings from 25 to 30. If you look at the way people earn, you see that's when salaries and earnings are going up quite sharply for women in Canada.
When we look at the mechanics, we can speculate, but to us it looks like it's going to provide a whole lot less than the existing drop-out measure would have provided had it been there. We've asked for the data. We've asked, “Show us what this will provide”, because to us it looks like it's not going to provide nearly the same. We have not seen that.
Liberal
The Chair Liberal Wayne Easter
Thank you.
Mr. Milligan, in Vancouver, if you want in on any of these questions, just raise your hand if they're not asked of you directly, and we'll let you in.
Liberal
The Chair Liberal Wayne Easter
You're at a bit of a disadvantage, because you're so many miles away.
Mr. Albas.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Mr. Chair, he may be some miles away, but British Columbia is in my heart, so I'll start with Professor Milligan.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you for your presence here.
Obviously, we've had a few discussions over the years. Your work specifically targeting how government policy can help assist people, especially those with modest incomes, is to be applauded. I certainly appreciate your presence here today, Professor.
I just wanted to focus on two areas. First of all, you have said that raising the amount would be important and would also make it more salient.
Would you agree that changing the benefit from the current designation, the working income tax benefit, to the Canada workers benefit may alienate people who already know the benefit and identify it as being a tax measure? Do you think that that is a helpful thing for the government to do, or should we try to build upon the current name rather than creating a new one?
I'll just give the example where many members of Parliament still refer to the Minister of Innovation, Science and Economic Development as the Minister of Industry, just out of force of habit. Are we reinventing just for reinvention's sake?
Prof. Kevin Milligan
Thanks for the question. It raises the important question of making sure that people are aware of the benefits that are there and how they are structured, and of understanding how we can best make sure that people who earn benefits get the benefits they deserve.
As Mr. Albas has mentioned, when you change parts of a program and change its name, that certainly is something that could have impacts on the way people think about a program, but the contrary case is that if you never change anything, then you can't make any progress. I think there's a trade-off to be made there.
In this proposal in the legislation, I think there are some really exciting measures such as the auto-enrolment for those who haven't filled it in and the thinking about making it a monthly benefit rather than having it buried within the tax form. I think those are steps forward that deserve full consideration.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Again, I agree that if we can make it so that people who need this service and need the benefit can access it more quickly.... I would just say that if you talk to the member for Brampton, whom we have here, he would probably say that the change from “Coke” to “New Coke” wasn't a great change in branding.
Anyway, that said, I think we should try to build upon what can be improved but maintain it at the same time, and again, clearly identifying this as a tax measure, particularly because I have so many people who come into my office and often ask about provincial benefits, because there's not always a clear distinction as to what is a federal benefit and what's a provincial one.
Second, you did mention you could build upon a greater pickup, for example, if people were treated as individuals. Let's put it this way. If you have a situation where you have a breadwinner and a spouse, common law or married, and you allowed them both to be individuals, to have a higher benefit you might see someone consider going back to work, versus getting the current benefit.
Do you think, then, that the government should have a default where you have both but that information should be presented to them to encourage someone to join the workforce?
Prof. Kevin Milligan
The member characterizes this correctly: the idea would be to consider only one's own individual income. It's not an idea that I would advocate unconditionally right now. It's one that I think is worthy of some study and consideration. The member's idea of perhaps making it a default option and letting someone choose the right way to do it is interesting.
I'm sure the member will agree with me that this gets into a very contentious area of taxation and whether we have individual-based taxation or family-based taxation. There's a deeper issue there that is certainly one that's always a public debate. For this particular one, I think it's worthy of study, specifically because it would affect a lot of married women and potentially improve their contributions to the Canadian economy and also their position in society. I think it's something that we ought to at least have some study on.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I would agree with that assessment. Thank you again, Professor, for your contribution here today.
I would like to go to Mr. Cousineau now.
Sir, thank you for your service and for your presentation here today. I do think it's quite alarming to hear you say that the government is creating a marked difference in the way someone is treated, in that male and female Canadian Armed Forces members both would receive the same the lump sum payment, only to be given a different sum upon it being broken up, like into an annuity. I know the rationale behind it, but I think most Canadians wouldn't feel that it's fair.
What do you think was the rationale behind this? Is this to save money? Or was this something the government simply did not pick up? I'd love to hear your thoughts.
Co-Founder, Paws Fur Thought
What you're seeing with the annuitizing of the lump sum with a gender-based differential is what happens when you take a benefit from a defined benefit pension to a defined contribution pension. Once they make it a defined contribution pension by taking the amount of the lump sum and annuitizing it, or whatever formula they are about to use, they are in effect not providing what they said they were going to reinstate. They are creating yet a different benefit.
Where that fits in the overall suite of benefits within the new pension for life is hard to say, because VAC has not provided concrete numbers to date. Be aware they have created a massive angst within the veterans community. All veterans are incensed about this, because our lady veterans who stood shoulder to shoulder with us and assumed exactly the same risks should never under any circumstances be treated differently based on gender.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you for that, and I concur wholeheartedly. I'll be taking this issue back to my caucus for further discussion. Again, I appreciate your service and your presence here.
Mr. Janson, you mentioned the support for pay equity legislation. Obviously, we want every man and woman to be treated fairly and compensated fairly. One of the things the government has not done is.... Oftentimes, the Government of Canada is an employer, and oftentimes—and I've heard this because I sat on the pay equity legislative committee where we did an extensive study—the government, the union, or sometimes both will punt issues having to do with equity to the side during labour negotiations in favour of talking about benefits.
Do you think that the government is missing a big opportunity to start in its own backyard by saying that, if we believe in this, we should start by making sure that our own employees are treated fairly?
Research, Canadian Union of Public Employees
Yes, and just to note, CUPE represents public sector workers. We don't represent federal public sector workers, so I don't want to speak for—
Conservative
Research, Canadian Union of Public Employees
—the federal unions here. Obviously, they deserve pay equity just like anyone does. Part of our rationale in calling for proactive pay equity legislation is to remove it from bargaining, because in a lot of cases, much of the holdup has been in the bargaining and legal processes. We think this should be a proactive process outside the bargaining table.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
So you say that it should be a proactive process before it starts going out, because, again, we're dealing with federally regulated workplaces, and they are so disparate. You have everything from oil and gas to small companies to trucking firms right across the country. The banks and some of the larger telecommunications companies already meet those standards, but do you think that the government has missed a real opportunity to be proactive in its own backyard?