Human Resources Committee on Feb. 20th, 2007

[Marla Israel]

Maybe I can clarify this. In order to be in receipt of the guaranteed income supplement, you need to be in receipt of the old age security benefit. We are reaching out to a lot of people, a tremendous number of seniors, and 99% of eligible seniors are in receipt of the old age security benefit.

That alone is only one step. You still need to be able to find out about the person's marital status.

[Chris Charlton, NDP, Hamilton Mountain, ON]

But that could change even after you've started to collect.

[Marla Israel]

It could change, yes.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Yet you have the adequate information to make those assessments after year one.

[Susan Scotti]

If I may, the legislation is prospective, so I think you're going to find that in the future there will be less of a discrepancy in the numbers, because we moved to the single application process; we are going to be much more reliant on CRA data to adjust the income levels; and we will have received all of the information that we need to put people into pay, including their marital status. We expect that the take-up is going to be pretty close to 100%.

There were two application forms, and we still had to go back and ask them about information, such as marital status and income level.

We need to look at this in a prospective fashion and continue all of our outreach efforts to ensure that financial literacy is not an issue and that we're reaching everybody as much as possible.

I don't know if that helps in any way.

[Chris Charlton, NDP, Hamilton Mountain, ON]

I'm not 100% convinced yet, but I know I should let the line of questioning go.

Do I have time for another question?

[The Chair, Conservative, Dean Allison]

You're about 99% convinced, right?

[Chris Charlton, NDP, Hamilton Mountain, ON]

Yes. Do I have the 1% of time to ask another question?

[The Chair, Conservative, Dean Allison]

You have 45 seconds left.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Perfect, I'll be really quick.

There's a section in the act that clarifies the contribution rate-setting formula for CPP. I don't pretend to understand it now, so I don't pretend to understand what's going to change. Could you please tell me what has changed, how it has changed, and why it needed to change—in about 35 seconds?

[Some hon. members]

Oh, oh!

[Susan Scotti]

I'll have my colleague from the Department of Finance explain it.

[Réal Bouchard, Senior Advisor, Expert Panel on Equalization and Territorial Formula Financing, Department of Finance]

Since the 1998 reforms, there has been a provision in the act that says that if benefits are enriched and enhanced or if a new benefit is introduced, that benefit must be in an actuarial sense fully funded. This provision has been in the act for ten years but never really operationalized; in fact, this is the first time since then that a benefit change is being contemplated. That's the other. That's a disability benefit change. So there was a need to operationalize that provision in the act and we needed some regulations to do that.

Fundamentally, what it says is if a benefit is enriched, there has to be a calculation of what the actuarial full cost of that change is and there has to be a need to determine whether it is an unfunded liability associated with introducing a change. The chief actuary would calculate it and this somehow would be reported in the actuarial report and people will know how it was calculated, what the cost of the benefit change was, and to what extent it impacts on the actual contribution rate being levied on people.

[Chris Charlton, NDP, Hamilton Mountain, ON]

What's the solvency period that you look at in terms of whether the CPP is solvent or not? I mean, it's not like a private sector company, which would be able to wind up—

[The Chair, Conservative, Dean Allison]

We're going to have to move that to the next round, because we are over time.

We're going to move to our last questioners of this round. We have Mr. Brown and Ms. Yelich. You have seven minutes, so fire away.

[Patrick Brown, Conservative, Barrie, ON]

I just note at the beginning that I'll be sharing half my time with Ms. Yelich.

I have three questions I would like you touch upon as much as possible in about three and a half minutes.

One, how do Canada's public pension program and income-tested benefits compare to other countries in the world?

Two, what was the reasoning behind these amendments, and did seniors lead the charge on this?

And three, if these amendments came from seniors themselves, how would seniors and stakeholders feel, in your impression, if this bill were stalled or not passed immediately?

[Réal Bouchard]

I'll respond to the first question. In fact I have some charts here. I am trying to illustrate in a single chart how we're doing relative to the other countries using two factors. One, what is the incidence of low income among seniors? In other words, to what extent do you have an adequate retirement income system to help seniors and to what extent is the system sustainable? In other words, how much does it cost to provide assistance, especially to low-income seniors? Essentially what the chart shows is that in terms of balance between having an affordable system versus to what extent you are protecting the low-income seniors, Canada is doing extremely well.

Once all the charts have been distributed, I can add an additional comment.

[Patrick Brown, Conservative, Barrie, ON]

Maybe while they are being distributed, we can touch upon the second question, which was about whether seniors led this charge for change.

[Susan Scotti]

Did seniors lead this charge for change? Yes, in part. We receive letters. Our offices across the country through Service Canada also have a lot of interaction with recipients and potential beneficiaries and we get a lot of feedback from our clients. Also, parliamentary committees such as this and parliamentarians who come across individual citizens on a daily basis also feed through our minister information about what's good and what isn't so good about the way we deliver our benefits.

When we knew that there were going to be substantive amendments recommended by the CPP triennial review process and when we knew that we had to make amendments to the OAS as a result of the Auditor General's observations, we also went back to a series of administrative amendments that were designed to simplify and streamline the delivery of services to seniors that had been accumulated over the years.

[Patrick Brown, Conservative, Barrie, ON]

Okay, that is the halfway point.

[Susan Scotti]

I'm sorry, we weren't fast enough in answering your question.

[Patrick Brown, Conservative, Barrie, ON]

Could you give me a very quick comment on what would seniors say if this were stalled?

[Susan Scotti]

I am sorry, what would seniors say if this—

[Patrick Brown, Conservative, Barrie, ON]

What is your impression, based on the letters you have been given and that have been received at the ministry, of what the reaction would be if this were stalled in any manner and not passed in a timely fashion? Would there be a level of disappointment?

[Susan Scotti]

Seniors would be disappointed, yes. Certainly any reduction in administrative red tape and complexity is certainly welcomed by seniors and seniors organizations. A number of these amendments, the improvements to the GIS in particular, are extremely important to seniors and seniors organizations. The easing of the eligibility requirements for persons with disabilities is a very important amendment, so there would be disappointment.