Human Resources Committee on Feb. 22nd, 2007

[Henri Salembier]

It is very important because, if I remember correctly, the potential amount due to seniors in Quebec who had not been informed… We worked on this issue for quite some time with some members of Parliament. In Quebec alone, it represented an enormous amount of money for seniors, and that was at least five years ago now. I couldn’t tell you the exact amount, but I think it was around 5 million or $5 billion for Canada, and $1 million or $1 billion for Quebec seniors.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

As was mentioned earlier, there were some 320,000 people who were entitled to the benefit and didn’t receive it. In Quebec, there were 68,000 people. Out of these 68,000 people, there were 42,000 who obtained it thanks to the work done by individuals such as our then colleague, Mr. Gagnon. This amounted to $195 million in Quebec alone. Not a negligible amount by any means, and that doesn’t include the millions of dollars for people elsewhere in the country.

However, my question remains. Is there a specific reason why you haven’t raised this issue? Does it mean you have given up?

[Bernard Dussault]

When I spoke of retroactivity, I was only referring to errors relating to pensions, the amounts to be paid by federal pensioners. But if you mean someone who applied for Canada Pension Plan benefits late, say at 68 years of age, when he should have done it three years earlier, I agree with you that the benefits should be retroactive for more than one year. In fact, benefits should be retroactive for the entire three-year period for the good reason that the individual in question was really entitled to them. In order to be consistent, when administrative errors occur, retroactivity should cover the entire period.

Where I think it could be difficult not to apply retroactivity would be in cases of disability pensions. Sometimes, the one-year period should be used for reference only, and not as the absolute rule. There are situations where it is obvious the individual has been eligible for over a year.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

I seem to be in the position of making suggestions to you as I go along. I confess that I’m surprised that none of you raised the questions of making benefits retroactive for more than eleven months.

Are we missing something here? If so, I would like to know what it is, because we will be debating this topic when developing our recommendations to the House of Commons.

[Bernard Dussault]

I only started to read the bill late yesterday. Unless I missed something, the only thing I saw about retroactivity concerned payments pensioners owed to the government.

So I don’t know if there are provisions in the bill for people who apply for their benefits late. If there is anything, I didn’t notice it. That is why I didn’t mention it.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Do you have anything to add?

[Henri Salembier]

I would simply like to add that in Quebec alone, 13% of the people receive the Guaranteed Income Supplement in addition to their Canada Pension Plan benefits. Some do not receive benefits from the Quebec Pension Plan, especially women. Those are the poor in the population, if you will.

I think it is very important to that these people receive their benefits. We’re talking 13% but there is also another 37%, which means 50% of the people in Quebec have absolutely no pension plan. They are living on their Canada Pension Plan or Guaranteed Income Supplement benefits. 37% are getting Quebec Pension Plan, Canada Pension Plan and Guaranteed Income Supplement benefits. This means that 50% of seniors have incomes that are not very high.

[The Acting Chair, Liberal, Michael Savage]

Monsieur Lessard, that's time. That's seven minutes.

I would like bring to the attention of members, just because of the point that Mr. Dussault raised about overpayments being charged interest, that when the department was here on Tuesday, Ms. Scotti mentioned in one of her slides that neither OAS nor the CPP collects interest on overpayments. The officials will be back on Tuesday, and that's something we can follow up on.

Thank you, Mr. Lessard.

Ms. Charlton.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you, Chair.

I'll have a few questions for Mr. Bajwa later on.

Let me start, though, by following up on the questions on retroactivity. It's my understanding that if I were to introduce amendments to this bill that would significantly expand the retroactivity periods, those amendments would all be ruled out of order. That's a bit troubling. This is an opportunity for us to actually have a serious look at what happens to OAS, GIS, and CPP. I'm particularly concerned about CPP because, as you know, it's employers and employees who pay into that program and in essence it's their money. In my view, they have a right to their money, no matter what the retroactivity period is. Nonetheless, I'm told that those amendments can't be moved in this committee.

Let me try to flip the question around and see if you, as experts, have some advice for us, because the reality is that if take-up were 100%, nobody would have to worry about retroactivity. So if I can't deal with the question of retroactivity in this legislation, is there a way we can move this legislation forward by enhancing opportunities to create 100% take-up through either legislation or regulation?

I wonder if you have some advice on that, to start with.

[The Acting Chair, Liberal, Michael Savage]

You may respond, Mr. Shillington.

[Richard Shillington]

There are many things we could do to improve take-up, and I want to underline what you've said: the debate about retroactivity is there because of the take-up problem. If we could make the take-up problem go away, the retroactivity debate would be irrelevant.

One of the disturbing provisions in Bill C-36 is the provision to exclude estates from pursuing retroactive benefits. It's disturbing because it assumes that we're going to have this take-up problem for some time; otherwise, why would you have a provision that would reduce the burden of dealing with estates? It's disturbing in that we seem to be planning for more take-up problems in the future, rather than ensuring, as this committee said some years ago, that we fulfill the duty to reach all.

Can you do things in this legislation? I'm not sure you need the legislation, quite frankly. Can you make CPP take-up problems go away? For retirement benefits, I would say it's administrative practice, and Quebec has proved it. You don't need legislation to do that; you simply need practice to do it. In fact, it can't take that many people to make 50,000 phone calls. We do know--and I hear this from seniors and from the press all the time--that if you owed the government $10,000, they would phone eventually. They would find a way to phone you, and they would probably have the multilingual people who would do that.

Can we muster the resources in the size of this federal government to find some people to phone the seniors on CPP? I have in my files seniors who are 90 years old before they apply for CPP. I dug out some statistics. Last year there were about 900 seniors who applied for CPP retirement benefits for the first time when they were over the age of 80. Now those people are in the files. We know who they are and where they live.

With regard to GIS, there are similarly some real problems in finding those who don't file tax returns, but virtually all of these people are getting old age security. We know you just need two computer files: who is getting old age security, and who we know is eligible for CPP and hasn't applied. You don't need legislation to do that.

[Chris Charlton, NDP, Hamilton Mountain, ON]

I appreciate that, and I would love to share the optimism of this legislation, which would like us to believe we can achieve 100% take-up. I'm just a little concerned, because in my community of Hamilton we used to have dedicated Service Canada staff whose job it was to advise people on CPP and to advise them of their benefits--that was their sole job--and those job descriptions have now changed. People are asked to give advice on everything from boat licences to EI to CPP, and we're actually losing the very hands-on service that was designed to increase take-up. So I'm not optimistic that we're going to make progress without some significant changes.

Let me move on to another question, though. We do know that once you apply for GIS, this bill now contemplates that you do not need to reapply in years after the first application. This still assumes, though, that seniors have the ability--literacy, language, whatever abilities you want to talk about--to fill out the application in the first place. In your experience, do you think the application is necessary at all? I ask because, as you pointed out, we have the tax information and we know what people's incomes are; therefore, would you be advocating that it just be an automatic right, based on tax returns, or do we need that initial application?

[The Acting Chair, Liberal, Michael Savage]

Does anybody want to answer that one?

[Richard Shillington]

I will if nobody else wants to.

[The Acting Chair, Liberal, Michael Savage]

Well, go, Mr. Shillington. It's yours again.

[Richard Shillington]

My understanding is that the OAS application form collects information about residency, and the GIS application needs information about your income and also about who you're living with, so the vast majority of the information is on the income tax return. There may be a small modification needed for the income tax return so that it can trigger the GIS, but my understanding is--and I'm no expert on this--that you don't even need legislative change, because the act does not prescribe the application form, which is why the department now can mail prefilled letters to people to apply for the GIS. You don't need the legislation to do this based on the income tax return.

I want to make one comment about computer files and linking of computer files. When you apply for old age security, you give HRDC the right to see your income tax return, so the provision is there. For those who've applied for old age security, that's how they can claw back your OAS.

An example that comes to my mind is that if you cross the border and fill in one of those customs forms, and you're collecting EI, you could be in some serious problems because HRDC people, who run EI, will see your customs forms. We can compare files, and certainly HRDC uses income tax returns to make sure you've reported your income properly for the GIS and for the OAS clawback. All we have to do is ask if we can now use this computer linkage to find people and give them money, rather than use the computer linkage to find ways to deny benefits to people.

[The Acting Chair, Liberal, Michael Savage]

Thank you very much.

Thank you, Ms. Charlton.

Mr. Dussault.

[Bernard Dussault]

I have a quick clarification. Maybe I misled you when I talked about interest. You're right that no interest is charged presently, but in Bill C-36 there are two paragraphs to the effect that interest would be charged on overpayments. That was my concern.

[The Acting Chair, Liberal, Michael Savage]

Okay, we'll follow that up. Thank you, Monsieur Dussault.

Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I want to thank you all for coming today. It's nice to be having a discussion about issues that I think we all agree are very important, like fairness in the system, efficiency, making sure we have less administration and more benefit, and making sure it's a simpler program for seniors.

Mr. Dussault commented on administrative errors before, and I think we got some correction on that, but I don't believe this bill actually changes anything in that respect. The Auditor General has said that the fact that we don't charge interest on overpayments due to administrative errors is in contravention of the Financial Administration Act. On page 3 of the bill it says:

Section 66 of the Act is amended by adding the following after subsection (5):

(6) Section 155.1 of the Financial Administration Act does not apply in relation to amounts owing to Her Majesty under this Part.

We've basically removed the fact that it's in contravention of the FAA to not charge interest, so my understanding is that interest would not be charged on overpayments due to administrative errors.

Mr. Bajwa talked about some of the sponsorship agreements with other countries. I believe that in Canada we have 50 social security agreements with other countries, which is more than any other country has. When someone's here for one year from a country with a social security agreement, the Government of Canada picks up a very small portion of that and the source country picks up the rest.

My first question is for all of you. We've talked about ways that we can go further in this, or things you would add. I've heard some good suggestions there, but let's take a look at the bill we have right now. I want to make sure that the things in this bill are going to improve the system. Are there any changes in the bill that you don't agree with--not that they don't go far enough, but where you don't agree with the direction in which they're going?

We'll start with Mr. Shillington because he has his hand up.

[Richard Shillington]

I already mentioned the provision that would exempt the state from pursuing retroactive benefits, only because it would reduce the administrative burden of dealing with take-up issues. That is another provision that would go away if there were no take-up problem.

There's a flip side to this interest issue, and I want to talk about a woman. I'll use her name because it's been in the press. Her name is Marie Baxter, and she came to my attention when she contacted me. She had missed out on 15 years of Canada Pension Plan benefits. The department lost her application form. She applied for her retirement benefits and survivor benefits at the same time because her husband died just when she was turning 65.

When you get the cheque, there's no way of telling what it's for. You know it's CPP but it doesn't tell you how much is for what, so she didn't know. So 15 years later she discovered that she had been getting the wrong amount. Eventually, after my intervention and with the help of The Globe and Mail, she got her full retroactive cheque. She had made not one error whatsoever.

The legislation for CPP says that when you make a retroactive payment because of administrative error, the payment should put the person in the place they would have been in if the error had not been made.

Is there a lawyer in the room? Does that imply interest?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I just want to clarify that this isn't really addressing the bill at hand. This is something you'd like to see improved in the system.

[Richard Shillington]

I think that when the department makes an error, and the recipient of the payment has made no error whatsoever, and it involves 15 years of benefits, if you want to make restitution for the error you pay interest.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Mr. Shillington, you have lots of great ideas. What I'm looking for right now is, specifically in reference to this bill before us, whether there are any--

[Richard Shillington]

I would drop that provision. I would rather have the Financial Administration Act myself, frankly.