Evidence of meeting #22 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was seniors.
A recording is available from Parliament.
Director General, Seniors and Pensions Policy Secretariat, Income Security and Social Development Branch, Department of Employment and Social Development
It's the chief actuary of Canada that does estimates for those expenditures.
Restoring the age of eligibility to 65 would increase OAS program costs by $11.6 billion in 2030, which is the first year it would be fully implemented. That takes into account the increase in July for the lowest-income seniors. It would move the OAS projected expenditures as a percentage of GDP by 0.33%, from 2.73% of the GDP up to 3.06%.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
The number that you said was $11.6 billion; that would be the increase.
Director General, Seniors and Pensions Policy Secretariat, Income Security and Social Development Branch, Department of Employment and Social Development
That's correct. That's the estimate from the office of the chief actuary.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
I think it's helpful to note that the net fiscal impact would be somewhat less than that because OAS benefits are taxable.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
What would the final cost be?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
I don't have the number with me. That's something we can provide.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
What would be the most it would be reduced, though—10%? I'd say it would still be well over $10 billion.
Director General, Seniors and Pensions Policy Secretariat, Income Security and Social Development Branch, Department of Employment and Social Development
The estimates are that it would reduce it by $1.6 billion.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
So $10 billion exactly, and that would be the cost to the taxpayers.
It's interesting that it is discussed and said that way because often when we were justifying the changes, we heard from the then-opposition Liberals how it was going to be cost neutral and that there was no cost to the taxpayer because it was already paid for, essentially, by the taxpayer. But there are significant costs, as much as we want to take care of our seniors.
I call them Joe and Jane Taxpayer, and they have to pay the bill at the end of the day. I'm concerned about how far we're getting ahead of ourselves in terms of public debt and deficits. When we first started here with this committee our briefing had a statistic on the CPP unfunded liability. Does anybody on the panel know what the unfunded liability of CPP is in Canada currently?
Director General, Seniors and Pensions Policy Secretariat, Income Security and Social Development Branch, Department of Employment and Social Development
Right now the core of the CPP is funded on a steady-state basis, and the chief actuary has estimated that it is financially sustainable for as long as it does forecasts, which is 75 years.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
That doesn't give it a number, though.
The number actually, as of 2012, is $829 billion of unfunded liability to the taxpayer.
A concern is that we definitely want to be generous, and as Conservatives the old analogy that I use often is that we have two versions of compassion. We have a compassion of giving the fish, and that's a Liberal compassion, I would say, and sometimes that's necessary. A Conservative version of compassion is helping that person to fish so they're fed for a lifetime.
My concern is that we're continuing to go down the road of planned dependence. That's what my concern is, as a Conservative, and it's a concern for the taxpayers of Canada. Certainly we want to take care of our seniors—
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
—and everybody who is attached.
Thank you, Mr. Chair.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Good morning to everybody, and thank you very much for your presentations. I found them very interesting.
Counter to my friend across the room, I feel government has a social and moral obligation to help those in need. Certainly from my experience going door to door during the election, there are so many people out there who need our help. If you look at the numbers in poverty—child poverty and poverty, in general—over the past 10 to 20 years, you'll see that they really haven't moved. I believe in my heart that the greatest change will come from federal initiatives and federal programs.
My first question is to Ms. Milroy-Swainson. I just want to talk about innovation and government programs and what you've seen, what you have discussed, and what opportunities you see. Again, our philosophy here is to get from you ideas, thoughts, as to what we can do to help people in need and make things better. I'd be very disappointed if we come up with another poverty study that sits on the shelf, that's just the same old, same old. I'm looking for your expertise, your input.
I want to talk, again, about innovation. What have you seen with respect to innovation, and what opportunities do you see in the future that, as a government, we can do to improve the lives of those who need our help?
Director General, Seniors and Pensions Policy Secretariat, Income Security and Social Development Branch, Department of Employment and Social Development
I think there are lots of opportunities for innovation, and I actually have colleagues who spend their days working on social innovation, social finance, which are initiatives that the government is undertaking to find creative ways to address really complex problems.
One of the ways that are really important is leveraging resources from various partners, and in particular bringing partners around the table. Many of the complex problems, like poverty, are multi-faceted. They require a number of partners to engage, they require different levels of government, and each partner has a role to play in that. I would say that the driver in a lot of the innovation that we anticipate will be coming and that is being initiated now has to do with partnerships and leveraging the capacity, resources, skill sets, and creativity of all of those partners.
There may be others who have views on that as well, but that would be my initial response.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
That was a good response. I have nothing to add.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Mr. Heisz? Okay.
I also want to get from you, Mr. LeBlanc, some thoughts on the tax-free savings account. Obviously, it was quite clear that the Conservative Party wanted to double the limit, and we're going to drop that back. Do you honestly feel, or have you felt, that the tax-free savings account is a good vehicle to reduce poverty and help those in need? Can you talk a bit about that, the potential doubling, and the fact that we're going to bring it back to where it was?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
I think the idea behind the tax-free savings account is to provide a flexible savings vehicle that would be a benefit to Canadians at all income levels. As I mentioned in my remarks, I think an important feature is that what does benefit low- and modest-income individuals is the exclusion of both investment income earned in TFSAs and withdrawals from TFSAs for the purpose of calculating income-tested benefits, whether it's the guaranteed income supplement, the CCB, other income, or generally provincial income-tested benefits, as well.
I guess the question that can be asked—with the impact or the ability of low- and modest-income individuals to use it as a savings vehicle—is whether that is sufficient under an annual contribution limit that's now been restored to $5,500 and indexed, or one that's $10,000. It could be the case that the lower limit is sufficient for the majority of low- and modest-income individuals to save in that way.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Can you tell us what percentage of Canadians maximize the tax-free savings account?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
The latest stat I have is from 2013, and it was about 6.7% of adult Canadians. That's not only for those who had a TFSA but also for those who potentially had a TFSA and maximized their TFSA contribution room.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Do you have a number in mind of what it would have cost Canadian taxpayers to double it?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
I don't have a number with me. The thing I will point out is that it's certainly less than double the revenue cost of a $5,500 limit, given that only so many Canadians would take advantage of the difference in contribution room. It's also something that the revenue costs of the TFSAs will grow over time under a $5,500 limit, but that would be also the case, or a bit more of the case, under a $10,000 limit.
