Thank you for this opportunity to speak to you about Bill C-36, which seeks to make some changes to the legislation for old age security, the guaranteed income supplement, and the Canada Pension Plan.
I would like to begin by emphasizing the critical importance of these programs to the financial health of seniors, particularly those who retire without an employer pension plan. Without these programs, these seniors would be destitute. Even with these programs, the circumstances of low-income seniors are not comfortable.
For a single senior without a pension plan, the average income is $15,000, and 82% of single seniors who don't have an employer pension plan live on less than $20,000 a year. So you can imagine the circumstances that they would live on if they weren't getting OAS, GIS, or CPP.
The purpose of these programs is income security. It was said to me very well by a friend the other day: income security, the security of their income. We want income security, so that seniors aren't destitute and so that working-age Canadians can work knowing that these programs will be in place when they retire.
This income security is only achieved if seniors receive the benefits that are provided for them in the legislation. The ultimate purpose of the legislation is to place money into the hands of seniors. I'd like people to remember that.
Some of you will know that I became involved in this issue in the fall of 2001, when it was discovered that some 300,000 seniors who were eligible for the guaranteed income supplement were not receiving it. We've made some progress in this area, and this committee's report at that time was called “The Guaranteed Income Supplement: the Duty to Reach All”. But I do not think we have achieved the objective of reaching all. We're some distance from it for each of the programs: OAS, GIS, and CPP.
Bill C-36 is the first legislation in the last six years that I recall actually addressing the procedures for applying for these benefits. It's the first legislation since the realization in 2001 that hundreds of thousands of seniors were not getting the benefits they were entitled to. To my mind, Bill C-36 makes some minor improvements, but it is some distance from addressing the major remaining problems with the administration and legislation of these programs.
The remaining problems are discussed in my brief. They include take-up, which is the policy wonk's term for people getting the benefits they're entitled to.
Retroactivity is the provision to provide benefits to people who, either because of an error on the department's part or their own, are not receiving the benefits they were entitled to.
Interest and retroactivity is an issue I would like people to discuss for a minute, and it's dealt with in Bill C-36. We could talk about the current practice, what the legislation provides for, and what it should provide for.
Application for early CPP is discussed in my brief very quickly.
Regarding the determination of administrative error, the current legislation provides full retroactive benefits when there is an administrative error. But I think there are problems in what we mean by administrative error and who decides when an administrative error has been made.
Regarding the design of the GIS clawback, some of you know that this is RRSP season, and my name appears in the press regularly advising low-income senior who will be on GIS when they retire that the last thing they want is an RRSP. Also if you're a low-income senior, working will not primarily benefit you. You'll face an effective tax rate of well over 75%. So presently the design of the GIS, in terms of the clawback, is dysfunctional.
In the first piece of legislation that we've seen in some years, I would have liked to see some provision to address all of these issues in Bill C-36.
Thank you very much for your time.