Human Resources Committee on May 13th, 2009

[Maria Minna, Liberal, Beaches—East York, ON]

Working income benefit....

[The Vice-Chair, Liberal, Raymonde Folco]

The working income tax benefit. I would like you to reframe the question, because we have lost track of it.

[Maria Minna, Liberal, Beaches—East York, ON]

Okay. With respect to the lower-income Canadians who don't have enough revenue, housing would be of great help, obviously, and child care. Those are two major pieces. But I'm also asking, what would be your take on the working income tax benefit? This is to Mr. Saillant.

[François Saillant]

I am not sure that I understood the question properly.

Someone said earlier that workers are finding it increasingly difficult to keep poverty at bay. Some individuals who used to have decent jobs no longer are able to make ends meet. The problem is less evident in Quebec than elsewhere in Canada, but even in Quebec, we now see more and more working people who have to rely on food banks despite being employed.

In this area, the federal government could, as part of its jurisdiction, intervene to help poor workers. I think that this would involve, in particular, an increase in the minimum wage set by the federal government. As Ms. Jetté said, this would set an example for the provinces. This would also result in an increase in employment insurance premiums, particularly the right for all to have access to employment insurance benefits. This would involve a range of measures.

I also agree with Ms. Jetté with respect to tax credits. We should increasingly be providing refundable tax credits, so that we do not deprive some individuals of various benefits, particularly in the area of public transit. That is not the only sector.

[Maria Minna, Liberal, Beaches—East York, ON]

Thank you. I agree.

Actually, Madame Jetté, I am just coming to you on something and then you can add your comments to that as well. I only have so much time, and I need to try to get some in.

I wanted to go to the taxation issue. I agree with you: there's no question, with respect to the tax credits, especially non-refundable tax credits, that they do not help people with families or individuals, because they don't have money to spend in the first place. There has been a trend, however, to deliver social programs through the tax system, and also a trend has started to bring in income splitting, which takes up a huge chunk of money, as you can appreciate.

I just wanted to have your input on the income splitting part of that, which is part of what we have started going down on the taxation side.

[Nicole Jetté]

Family income is taken into account in taxation, but that involves other limitations. In my opinion, income splitting for someone earning a lower salary does have advantages. However, even as far as refundable tax credits are concerned, we must remember that more and more people in the labour force are under the low-income threshold established by Statistics Canada. In order to obtain a refundable tax credit, you first of all have to pay. So there is also this problem when you are dealing with inadequate income. For example, some people who work on call do not have the money to buy a metro pass.

The labour market is becoming increasingly precarious. I recently had to use the services of a health care agency. In order to earn a decent income, the person who came to my home had to be registered with three agencies, and be available seven days a week, both day and evening. Job precariousness makes things difficult. For example, when it comes to transportation, you also have to work at the source. You cannot ask people with no means to pay in advance. When they are unable to pay for certain expenditures, they use credit. If they have to borrow in order to purchase a metro pass—

[Maria Minna, Liberal, Beaches—East York, ON]

So an income supplement would be best.

Would you go as far as developing a guaranteed income supplement in this country?

[Nicole Jetté]

Yes, if it does not exist. Then we would have an income and we could spend it when we needed it.

[The Vice-Chair, Liberal, Raymonde Folco]

You answered the question well, Ms. Jetté. That is the answer that Ms. Minna wanted to get.

Ms. Beaudin.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

My question will first of all be to Mr. Saillant. I am under the impression that we need to do a great deal of catch-up. For the past 10 years, we have been doing emergency intervention whereas in fact we should be doing prevention to prevent the problem of poverty from worsening. Indeed, we are investing. Quebec has, among other things, had framework legislation since 2002. We have a policy to fight against poverty which is the envy of the other provinces. I have heard this said on a regular basis.

Mr. Saillant, I am asking you this question because I have the impression that one of the biggest causes of poverty that we have not been able to eliminate is housing. Could you tell us what has not worked over the past few years, so that we could use this knowledge to improve the situation in the years that lie ahead?

[François Saillant]

The focus of this meeting is the federal contribution to reduce poverty in Canada. It is obvious that the federal contribution is really associated with the worsening problem of poverty and the growing gap between the rich and the poor.

Governments have elected to use budget surpluses which, and I repeat myself here, were huge at a certain time, in order to reduce taxes. However, tax cuts do not give money to people who are too poor to pay them. Governments elected to inject a massive amount of money into the military budget, which grew by approximately 70% since 1995. However, the budget for the social programs of the Canada Mortgage and Housing Corporation have remained the same. There has been no increase.

So, on the one hand, we have adopted policies to reduce the deficit—the government has withdrawn from social housing, there have been cutbacks in transfer payments to the provinces and to employment insurance, which contributed, among other things... And on the other hand, we have been very generous in giving tax cuts and deductions that profited the wealthy and big corporations. When we compare these measures, we should not be surprised that the OECD noted that Canada is one of the countries where the income gaps have increased the most.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

Despite everything, in Quebec, civil society has mobilized a great deal and chosen to implement programs and systems to fight against poverty.

[François Saillant]

We would have liked to have seen the Government of Quebec go further. It is truly inhumane to force people to live off welfare benefits at that level. The Government of Quebec has a responsibility. It did not read its legislation properly. Or if it did read it properly, it has not respected it completely.

Moreover, throughout Canada, welfare benefits have decreased. The provinces must assume responsibility, and there is a responsibility that lies with the government level that turned off the tap.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

You said that we needed to invest massively in housing. You talked about $2 billion per year. Where did you get this figure?

[François Saillant]

This demand has been made throughout Canada for several years now. In 1993, before the cutbacks were made, the government opted out of this sector entirely. The housing budget represented 1.3% of total government spending at the federal level. At that time, the UN told us that this was not enough and that we needed to increase the amount.

The Federation of Canadian Municipalities or the mayors of large cities said that 1% of their budget was earmarked for housing and that this figure had to be increased to 2%. The $2 billion correspond more or less to this additional budgetary amount, which is, moreover, an investment. Even the last budget recognized this to a certain extent because it called for investments in housing. When you invest in housing, you are helping people who are in difficulty, but you are also contributing to the economy. In times of economic crisis, investing in housing is a choice that is not only necessary but can be easily defended.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

Thank you very much.

My question would also be for Ms. Trudel, concerning credit cards. This is an issue that is of great interest to me because I think that right now interest rate on debts, depending on the card, can easily reach 28% or 24%.

[Marie-Édith Trudel]

That was part of what I didn't have time to talk about.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

Well, go ahead then.

[Marie-Édith Trudel]

People are always very surprised to find out what the legal interest rate is in Canada. It can go up to 60%. As you can imagine, it's not people with incomes like ours that are subjected to those rates; it's always the poorest among us. On Chambly Street, where our association offices are located, I can tell you that that type of lender can be found at every two or three doors. This is common currency in all large cities. In France and Belgium, they passed legislation about that. An effort must be made to fight against spiralling debt.

We've observed that workers seek out this type of credit. People who live on unemployment insurance or social assistance have incomes that are said to be "non-seizable". The problem for workers is that their incomes are seizable. They end up in the credit spiral, and that's very harmful. They lose their assets, everything they have been able to accumulate over a lifetime. Physical and mental health problems may develop at that stage. This year, we've seen reports in the newspapers of such situations, suicides by couples, the death of children. We're not immune to that.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

We should legislate to solve this problem; is that what you're saying?

[Marie-Édith Trudel]

Legislation is needed with regard to the 60% interest rate, which is reprehensible. In Quebec, we're at least slightly protected. There is caselaw that states that starting at 35%, the interest rate becomes abusive. Interest higher than that is not prohibited, but it is abusive. That word does protect us a little bit, but it only affects Quebec, not the rest of the country. I think that all Canadians should be protected against 60% or even 28% interest rates. There are also department store credit cards for which customers are heavily solicited. Do the math; it adds up fast.

[Josée Beaudin, Bloc, Saint-Lambert, QC]

Thank you very much.

[The Vice-Chair, Liberal, Raymonde Folco]

Thank you.

Mr. Mulcair, please.

[Thomas Mulcair, NDP, Outremont, QC]

Thank you, Madam Chair.

Mr. Saillant, Ms. Jetté, Mr. Vermette, Ms. Pothier, Ms. Trudel, thank you and welcome.

Mr. Saillant, you mentioned that Canada does not respect its international commitments. What commitments are you referring to?

[François Saillant]

I'm referring to the rights contained in article 11 of the International Covenant on Economic, Social and Cultural Rights which include among other things the right to adequate housing and sufficient food. These are rights that are not being respected right now if you consider the poverty that surrounds us and the gravity of the housing problem.

I'm not the only one to say this; there are UN committees that have said it, most notably the Committee on Economic, Social and Cultural Rights which produced a very exhaustive report in May 2006. The committee heard from organizations in civil society, but it also took note of the voluminous report by the Canadian government. The committee issued very strong criticisms particularly to the effect that Canada was not using its capacity, was not putting its economic growth to good use to reduce the income gap and fully respect rights. Unfortunately, the committee produced this report three years ago now and the Canadian government still hasn't responded to it.

In my opinion, that's inadmissible. Once an international covenant has been signed and a commitment made to earmark the maximum amount of resources available to a cause, to continue to progress in this area, to produce reports for expert committees, once recommendations are made and not followed up on by government, that is completely unacceptable, to my mind. I may be using strong words here but I think they are appropriate in this area: Canada is behaving like a "rogue state".