Human Resources Committee on Oct. 20th, 2016

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Good morning.

I would like to thank you for your presence here this morning, for the amazing, fantastic presentations, and for the work that you do in this area.

My first set of questions targets the effective measurement. That's what I would like to focus on.

Mrs. Notten, you spoke about, and I think it's amazing, the material deprivation indicators as important indicators.

My first question is very simple. Do those indicators define poverty in the same way that Mr. Cook did, where we're taking on economic, social, and spiritual? Does it involve all three?

[Geranda Notten]

No, the material deprivation indicator is focused on the material, or the economic aspect of poverty, and so it's the consequences of not having enough financial resources to finance a standard of living.

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

I think it's important that these are measured and that they are taken into account together with the low income. You mentioned other countries that now undertake this and it is included.

Is there an easy way to do this? How does it look concretely? How do we move forward so that when we are measuring, we in Canada can include this?

[Geranda Notten]

On how it works concretely, I'll link back to what MP Zimmer said about necessities. The first thing you do is track the typical Canadian things that are necessities of life. That's going to be your base. There has been some research done for Ontario already, which ended up with winter coats and needing dentist treatments, and so we have some idea of what would be typical outcomes.

The next step is that we collect not just one of those outcomes, but a series of them, maybe about 10 to 15 indicators maximum. That's typically 20 survey questions. You ask people if they have a winter coat and if they are able to afford it. It's the affordability that we care about.

We then put that information together in what we call an index. Then we do the same with the lens and the LICOs. Where do you set the threshold? Is it when someone can't afford that winter coat, or do they need to be having multiple issues? Typically, we say multiple issues, and that gives us a certain percentage of the population.

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Do you believe that social and spiritual should also be a part of the measure? Would you be open to adding those as a measure and as an indicator?

[Geranda Notten]

The first thing is that we should measure the complexity of poverty in many ways. In my talk, I focused on how we measure the economic dimension. I would argue that there are ways of looking, for instance, at the social dimension and the spiritual dimension. Quebec is experimenting with social inclusion indicators, which might tag into the social dimension.

I would prefer to keep those separate, because they tell you about a different dimension of poverty. Otherwise, we'll mix up economic with social and spiritual. That's what I would say.

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Mr. Cook, could I have your comments, and Mr. Shillington as well, on measures of those two components and how you believe they're important?

[Derek Cook]

I'd like to begin by responding to the question about what poverty is, the lead-off question, and I'm going to refer to Bill C-245, which provides a pretty useful definition, from our perspective, in the preamble:

poverty is the condition of a human being who does not have the resources, means, choices and power necessary to acquire and maintain economic self-reliance and to facilitate their integration into and participation in society;

I think you can't separate the economic and the social and the spiritual. They are all bound up together, and we need to be addressing it holistically as well.

[Richard Shillington]

Certainly I would include the social. I'm not sure what the spiritual means, but my bias is that we are social animals. Even Adam Smith, the economist, said that poverty is the inability to walk in public in a linen shirt. I think that's the quote.

I've written many reports on poverty measurement. The word “dignity” pops up over and over again. Amartya Sen, a Nobel Prize-winning economist, talked about the capacity to participate in your society in a life that you value.

I'm a mathematician by training, forgive me, so I want to talk about measurement. Yes, we have the LICOs and the LIMs. The only thing you need to know about a family to know whether it is poor using LIMs is its income, either before tax or after tax, compared to a threshold, and the family size. You don't know the number of disability issues. It's an arbitrary measure, but no more arbitrary than the unemployment rate: Did you look for work this week or this month?

[A voice]

It is this week.

[Richard Shillington]

It pushes together full-time, part-time, and whether you've given up looking. StatsCan actually, buried down in it, publishes 12 unemployment rates: long-term, short-term, part-time, all of this. The LICOs and the LIMs, all of these income-based measures, are arbitrary. No thoughtful person would say that they classify each family properly, of course not, but over time, do they measure something useful? I think so.

[The Chair, Liberal, Bryan May]

Thank you very much. Sorry, but that's time.

We're moving to MP Sansoucy.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

My first question is for Mr. Shillington.

This morning you chose, and rightly so in my opinion, to speak to us about seniors. Last Tuesday, Statistics Canada representatives gave us a status report on poverty in Canada. The statistics about seniors were very clear. In my opinion, all of the members around this table cannot go into their ridings without being made glaringly aware of this reality.

You discussed seniors' programs, but I would like to focus on the Guaranteed Income Supplement. This program targets the poorest seniors. There was a 10% increase for single seniors in Budget 2016, which left aside 50,000 seniors living in poverty who do not live alone.

How can we help these low-income seniors who do not live alone?

[Richard Shillington]

If you're interested in improving the circumstances of low-income seniors, the poverty rate for couples is actually quite low. The poverty rate for individuals, males and females, is quite high, so you're really going to be looking at the GIS. There are some things I've mentioned before, that pensions could be helpful, but not really for the lowest income seniors, because they don't have pension income.

The income of somebody who's retired without an employer pension plan is determined by the federal government. It's the old age security plus the CPP, and then GIS is calculated depending on the amount of CPP, and that's it. The federal government has basically determined their income, so if the poverty rate is 25%, that's a federal government decision.

One thing that drives me crazy about the design of the GIS is the clawback. About 30% of seniors on GIS have an RRSP—I looked it up—about $30 billion, on average about $70,000. They don't know that every time they take $1,000 out of their RRSP the federal government says, “Good, we can give you $500 or $750 less and it's still taxable, and it might affect your eligibility for prescription drugs and all sorts of other things.

Recently the rules were changed so the first $3,500 of wages is exempt in determining GIS—that's wages, not self-employment, but wages. That's for bizarre historical reasons. If it were up to me, I would actually say the first $3,500 of income, regardless of source, will be ignored for the GIS. In terms of simplicity, all those people with RRSPs don't have to rush out and switch them to TFSAs.

The C.D. Howe Institute published a paper that I wrote in 2003 containing the fact that all these seniors with low incomes had RRSPs, which in some people's minds led to one of the reasons for the TFSA.

I work with the financial literacy community. The banks are still telling people, regardless of income source, “Maximize your RRSPs. Do this, do that.” They have their cookie-cutter financial advice. All that advice is toxic. It's actually the worst possible advice for somebody who's going to be on GIS when they retire.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you for your recommendation.

My second question is for Ms. Notten.

To date, the federal government has not adopted any official measure targeting poverty. You described this situation very clearly. The Statistics Canada representatives who appeared before this committee also discussed this matter. People talk about low incomes, which is a rather vague concept.

You say that we mustn't confuse economic and social aspects. I must admit that I have trouble separating the two. To my mind they are closely related. When you talk about taking regional specificities into account, in my opinion these are social aspects. We are talking about social exclusion indicators and deprivation. In my opinion, when you talk about winter coats, you are touching on a social aspect, in this case, deprivation. To my mind these elements are inextricably linked.

You mentioned that Statistics Canada could make changes to data that would not be costly, and that there were some very clear examples in other countries. Mr. Tassi asked a question about this in connection with your presentation.

In light of what is being done in other countries, how could Statistics Canada make these low-cost changes?

[Geranda Notten]

I hear two questions or comments, one with respect to whether you should mix social and economic dimensions of poverty. That's the first part. The second comment you had was about how to implement such a measure. Is that correct?

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Yes.

[Geranda Notten]

Poverty is a complex problem and it has multiple dimensions. In my response to MP Tassi, I meant to say that when it comes to tracking our progress on poverty it makes more sense that we track the economic dimension using economic indicators of poverty and that we track the social dimension with social indicators of poverty. I'm a bit wary of putting all of this in one pile and then generating potentially a single statistic or a statistic that keeps all of those in there, because the two are related but they also have their separate aspects. You can have a lack of financial resources but still be part of a community.

[The Chair, Liberal, Bryan May]

Thank you. We do have to move on quickly.

[Geranda Notten]

Do we need to—

[The Chair, Liberal, Bryan May]

No, that's time, I'm sorry. Maybe we can come back in the second round.

We'll go to MP Ruimy, please.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Thank you all very much for coming today. They were great presentations.

We're faced with a huge task. In my career I'm an operations guy. I look at a problem, and I want to tear it apart. I want to come up with some potential things that can be acted on and then roll up the sleeves and get it done. One of the challenges we are all alluding to right now is what is poverty, how do we measure poverty, and how do we go about setting goals and executing. When we do talk about the measures that we have, I look around my riding, and it's not enough. I see people, all the seniors, who are getting the max, but it's not enough because housing is too expensive.

Yet my mom, who has lived in Montreal for the last 25 years, lives in the same place, and her rent is probably still at about $600, whereas in Vancouver that rent is anywhere from $900 and up. We have subsidies, for sure, but again, the first problem is measuring, and the second problem is how we target the people who actually do need it.

You mentioned that 25% of seniors actually are at that stage. How do we find those people? How do we measure those people and target our programs toward them? The second part of this whole process is the innovation.

My question is for you, Ms. Notten. You have a wealth of experience. Can you highlight some advice on what you think, be it policy or anything of that nature, will help us in actually taking a step forward and not taking any steps backward?

[Geranda Notten]

Thank you very much, MP Ruimy.

If you use, for instance, a material deprivation indicator to assess whether people are able to meet their necessities of life or not, you're able to take into account indirectly that living costs might be very different from one place to another. We're not actually trying to correct for it in our measure, but we're focusing on the outcomes that are associated with poverty-level living conditions.

As a researcher, if I want to see which groups we need to target with our policy, I'd be uncomfortable just focusing on low income as a measure of figuring out which group I need to focus on, so I'll study further what their problems are. If I include people who have issues in terms of material deprivation, of course, that's not where it ends. We have to look further. Why is it that they can't do it? Is that because of housing affordability, is that because of higher needs, or one of other causes? We need to search further.

I would say, by using a range of indicators, you're making sure that you have a better idea of what your potential target group is, and then you can figure out what their issues are and how to address them in the policy sense.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Okay, thank you.

The other thing that we're not really talking about here is the impact of, for instance, youth mental health and addictions. Those are two things that are probably not even getting measured. We heard from Stats Canada that technically some cities do measure homelessness, but we don't do that as a national standard, so I'm concerned as to what that problem is. How big is that problem? How can we possibly measure that on a national level?

[Geranda Notten]

I hear two questions. One is how we measure homelessness, and I think your idea is that a group of people who are homeless are the people who have serious mental health issues. Is that—