Evidence of meeting #9 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 40th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
A recording is available from Parliament.
Liberal
The Vice-Chair Liberal Raymonde Folco
To allow some time for the others to answer, please make it a short answer. We want to hear from you, but please make it short. Thank you.
President, Caledon Institute of Social Policy
I share your concern about the GST tax. This has taken an enormous whack out of federal fiscal capacity. It couldn't have been at a worse time.
The income tax cuts announced in Budget 2009.... By the way, I created the graphs, but the numbers came from the budget, in case people are worrying about where the numbers came from.
In fact, the selling in the budget of the income tax changes as being for low- and middle-income families is sheer nonsense. The largest amount goes to high-income families. Whenever you do broad-based changes in the income tax system, it's going to affect everybody in the income tax system—high, medium, or low.
In the context of the fiscal stimulus budget, our argument was that we should be pumping money into the hands of low- and modest-income families, who will go out and spend that money to stimulate the economy. Our counter-proposal to the use of income tax cuts was to double the refundable GST credit, which would have pumped a lot of money through the economy in a targeted, focused way.
I'll stop there.
Executive Director, Centre for the Study of Living Standards
I agree with you, obviously, that there was an inequity in the budget, in the sense that people at the top, or certain groups, did receive more than those at the bottom. In that sense, it was not a progressive budget.
However, there were a number of measures in the budget that were progressive from the point of view of people at the bottom of the income distribution. Again, we've already talked about the working income tax benefit. That certainly focuses on the bottom and is very good for equity. Also, the increased spending on the national child benefit, again, is very good for equity. Of course, there's the five-week extension of EI benefits, which I think should be even longer, but that's certainly better than nothing—although it doesn't go far enough. Then there were also a large number of measures for training in the budget. And those I think are very, very positive for the underprivileged.
Liberal
Michael Savage Liberal Dartmouth—Cole Harbour, NS
If I could just interrupt, as I have limited time, I noticed that in the paper you did on the budget, you specifically talked about income tax. I think the WITB is a good investment. I think we should do more.
Liberal
Michael Savage Liberal Dartmouth—Cole Harbour, NS
The child tax benefit could also be tinkered around with a little bit.
Liberal
Michael Savage Liberal Dartmouth—Cole Harbour, NS
But on the income tax measures, you did specifically indicate that it's not stimulative to reduce the income tax of those who make $150,000 versus those who make $20,000.
Executive Director, Centre for the Study of Living Standards
It is stimulative because some of those savings in taxes will be spent by the person; it's just less stimulative than it would be if you gave it to someone with low income, who would probably spend 100% of it. So it's certainly stimulative, but just not quite as stimulative.
I guess you can't have a budget that focuses exclusively on one set of Canadians. You have to have a budget that has policies for all Canadians, and I guess the government made a trade-off and decided to provide some tax cuts for the people at the top. It also benefits people at the bottom as well.
Liberal
The Vice-Chair Liberal Raymonde Folco
Dr. Sharpe, I really will have to cut you off. I'm so sorry, but I'd like to give Mr. Roberts a chance to say something.
Mr. Roberts, do you wish to add something?
Vice-President, Research and Development, Canadian Policy Research Networks
I'm not sure I have much more to add. I think that rather than looking at the history and what the budget is right now, if we look at our numbers on poverty, we still have a long way to go regardless of the budget just presented. I think there are some positive measures, but there is a lot more that needs to be done. So rather than trying to dig up the skeletons around previous budgets, my sense is, what do we need to do to go forward? I think we've outlined that there is still some work that needs to be done on the issues of social housing, child care, early childhood education, and then making sure that we're reinforcing our employment standards.
Liberal
Conservative
Maurice Vellacott Conservative Saskatoon—Wanuskewin, SK
Thank you, Madam Chair.
Statistics Canada's low-income cut-offs are widely used by people. We made reference to those today as a measure of poverty, but Statistics Canada insists that the LICO not be used for that purpose, that it's not an official poverty measure. They are talking more in terms of a social consensus, not the statistical LICO.
So I guess my question is—and maybe we'll go down the line here, and perhaps you can just give a quick yes or no, and maybe a sentence of two of explanation or gloss that way—do you believe that LICO itself overstates the measure of poverty in Canada?
Do you agree with that, starting with Ken?
President, Caledon Institute of Social Policy
Actually, it's interesting you'd raise that. Some years ago when I was working at the National Council of Welfare, there was controversy over LICO. That was 25 years ago. It's always been a controversial measure. At the time, the Gallup organization used to publish a poll every year, and the question was something like “What is absolutely the least amount of money that a family of four or five”--a couple with two kids or whatever--“needs to just get by in our society?” They asked people. They averaged. They got a very precise number. When I compare that number to the LICO--the low-income cut-off, which is a very complicated and kind of strange, weird measure--it was so close it was eerie. It was as if the LICO were very close to--
Conservative
Maurice Vellacott Conservative Saskatoon—Wanuskewin, SK
I need to move along here quickly because I have some other questions to ask you. I take it, then, that you don't agree that the LICO overstates the measure of poverty in Canada.
Executive Director, Centre for the Study of Living Standards
I would concur with that. I don't think it does.
My key point, though, is that if you transfer resources to the underprivileged, all measures of poverty will show the decline in poverty in Canada. In that sense, the measures are all very robust through a transfer of resources. In that sense, a lot of the debate about poverty I think is really counterproductive, because really, the key debate should be on the policies to transfer resources to the underprivileged and to help them develop themselves. That's really essential for the poverty debate, and the measure is not so much.
Vice-President, Research and Development, Canadian Policy Research Networks
I would say that in some instances it overstates and in some instances it understates. I'd be more interested in focusing on what the change over time is according to whatever measure you decide on. The critical measure is whether we are improving over time. Once you go to the improvement measure, you actually do away with the concern about the actual level.
Conservative
Maurice Vellacott Conservative Saskatoon—Wanuskewin, SK
Right.
We'll maybe just run down the line again, if we can, to some degree, in terms of proposals. Mr. Savage referred to some of the written stuff that Ken had done before as well. Could each group respond? I don't think we have a fix on that in terms of the numbers. We talk about the wonderful things that could and should be done, and I think a lot of us don't have differences all around the table here on that, but it would be great to do these things. What are the dollar tags, the dollar costs with respect to some of these things? Governments, whatever they state at times, don't have inexhaustible revenues. You can always increase taxes significantly. If you reduce those, as was done with the GST, the money gets back into the hands of some people, but then you have less government revenue too. What costs are we looking at in terms of your proposals, Ken and Sherri, and along the line here?
President, Caledon Institute of Social Policy
Can you wait just a second? I literally have it here in my briefcase.
Liberal
Conservative
Vice-President, Research and Development, Canadian Policy Research Networks
I'm happy to go first.
Vice-President, Research and Development, Canadian Policy Research Networks
We don't have a price tag associated with our numbers. Part of my argument here was that I think, frankly, there's an opportunity here to create those numbers by developing some kind of econometric model. I'm reflecting on some of the experiences I had with previous organizations, and I do believe the federal government is the place where leadership could be. Create an econometric model that you can actually do scenario work on, on which you can ask such questions as what the impact will be if we invest in affordable housing. I think that's really the value that could be added.