Thank you, Mr Chair.
Thank you for giving me the opportunity to present a major plan to you this morning. The intent is to alleviate rates of poverty, not only among seniors, but also among all Canadians. The plan could be carried out completely within the context of pensions in Canada. It has three distinct components.
Allow me to specify that Statistics Canada data indicate that the poverty rate among seniors is in the order of 5%. This is not bad, and compares well with the rest of the world. However, despite the low rate, at least one third of all seniors receive guaranteed income supplement benefits. That basically means that, although their actual poverty is alleviated, they cannot be said to be living with dignity.
The first of the three components of my plan is to put back on the table a plan that the federal government introduced in 1996 called the seniors benefit program. This program would merge the pension benefits from the old age security program and the guaranteed income supplement, in a way that would provide benefits only to those who need them.
Old age security benefits, unlike the guaranteed income supplement, are not based on need. They are provided to every Canadian who has lived in the country for a minimum number of years. This program is not really necessary. However, if a program like the one considered by the federal government in 1996 had been in place for 20 years, poverty would be alleviated a little more than the guaranteed income supplement does at the moment. We could improve it a little more and, quite surprisingly, we could save $10 billion annually. We would not save $10 billion from the beginning, however, it would be progressive.
The second component of my plan is an initiative that has been talked about for a long time and will likely be implemented either this year or next. This is to expand the Canada Pension Plan. This will certainly alleviate poverty. I want to point out here that, according to Liberal party resolutions, the expansion would be done in a way that would exclude workers earning less than $30,000 per year. This is based on the fact that they do not really need it because the guaranteed income supplement begins to be paid at age 65.
First, we must realize that the people earning less than $30,000 in any given year will not automatically be the same in subsequent years. Therefore, excluding people below a certain income level is not a good way to go.
Second, we are better off using the guaranteed income supplement, what I like to call the “Robin Hood” approach, as little as possible. We will always need it, as there will always be those who are poor. However, the more we can use other ways, such as helping people to save, for example—or rather, compelling them to save because they will not do it if they are not compelled to—the better things will be.
In that sense, expanding the Canada Pension Plan will help to reduce the number of people receiving the guaranteed income supplement. The percentage at the moment is between 33% and 35%, but it could be reduced to 25%. Of course, the people earning less than $30,000 in a year do not have the flexibility they need to put money aside and to pay additional Canada Pension Plan contributions. This problem of the working poor mostly goes back to the minimum wage, which is only $10. I understand that, for employers, paying people more than $10 per hour involves operating costs and that disturbs the economy. But the fact remains that paying a person $10 per hour, whatever kind of work they do, does not allow them to live with dignity.
The third component is about employer-sponsored defined benefit plans. This area is facing major financial problems. At both federal and provincial levels, this is principally because contributions holidays are still permitted. In other words, the sponsor of these programs is allowed to withdraw surpluses and pocket them, so to speak. That is a sure recipe for financial disaster, as the world of pensions amply proves. Defined benefits plans are in serious difficulty.
So these contributions holidays should be prevented, and the surplusses should instead be amortized, as is done with deficits by decreasing or increasing the contribution rate.
One last, more broader point concerns these three systems, and that is the age of entitlement to benefits—