Human Resources Committee on Oct. 20th, 2016

[The Chair, Liberal, Bryan May]

Good morning, everybody. I hope everybody is wide awake today. We're going to get started right away with a continuation of witnesses on the poverty study.

I would like to welcome to the committee the witnesses this morning: Derek Cook, director, Canadian Poverty Institute; Philip Cross, senior fellow, Macdonald-Laurier Institute; Allan Moscovitch, professor emeritus, school of social work, Carleton University; Geranda Notten, associate professor, graduate school of public and international affairs, University of Ottawa; and Richard Shillington, who has degrees in statistics and has conducted 30 years of research on health, social, and economic policy, and who has worked variously for governments, the private sector, and NGOs. Welcome.

This morning we'll be hearing opening statements from each of you.

Again, thank you very much for being here early this morning. We're looking forward to asking you questions.

I will turn it over to Mr. Cook. Welcome, sir.

[Derek Cook, Director, Canadian Poverty Institute]

Good morning. Thank you for the opportunity to be here this morning and to share our thoughts about poverty and Canada's income security system.

I'd like to begin by commending the government for their renewed commitments to poverty reduction and for initiating this program review.

As the Government of Canada's discussion paper “Towards a Poverty Reduction Strategy” notes, poverty is a very complex and multidimensional issue. I want to begin by stating that, at the Canadian Poverty Institute, we share that view, and we understand poverty to be a condition of compromised economic, social, and spiritual well-being. By economic poverty, we mean lack of access to income and resources. By social poverty, we mean lack of connection to the social supports that we need to thrive. We think of spiritual poverty in terms of lack of meaning or connection to a spiritual tradition that can sustain us.

As this is a social as well as an economic condition, we believe that poverty reduction must focus as much on strengthening our interdependence as it does on building up our individual independence. Consequently, we understand income security to be a fourfold responsibility of the individual, the employer, the community, and the state, and we need to discuss income security within that context. As you all know, trends over the past decades have eroded our capacity on all these fronts. Job quality, as reported by the Canadian Imperial Bank of Commerce, has been eroding for some time, and precarious work has been growing. This puts increased pressure on individuals and the state.

The erosion of benefits, the reduced investments in social infrastructure, and the elimination of national standards have all contributed to a compromised social safety net.

As we have worked with and listened to people living in poverty or vulnerable to poverty, we have heard significant concerns regarding Canada's social safety net. They have told us that programs, services, and supports are increasingly difficult to access, particularly by those who need them the most. Services are fragmented, and they suffer from a lack of coordination. Benefits are largely inadequate. Crucial, life-altering decisions often seem arbitrary, and there is a lack of recourse to appeal. The design and delivery of programs and services compromise the dignity of people as human beings.

In 2013, I had the opportunity to work on the mayor's task force on poverty in Calgary. We held a conversation with some residents of a downtown homeless shelter, and we asked them, “What is the most important issue that you face as a person living in extreme poverty?” Surprisingly, to me, the answer was, unanimously, “a violation of my rights.”

Increasingly, we are coming to understand and acknowledge that poverty does constitute a violation of rights—economic, social, and cultural rights. Canada is a signatory to the International Covenant on Economic, Social and Cultural Rights, and as such, we bear certain obligations under that covenant. In our recent submission to the UN universal periodic review of Canada's progress on meeting those obligations, the Canadian Poverty Institute, along with a number of other civil society organizations, noted the following: inadequate welfare incomes and punitive welfare regulations, inadequate income support for seniors, inadequate minimum wages and growing employment precarity, rising food insecurity and homelessness, growing health inequalities, persistent gender inequalities, and inequitable access to child care and early childhood education.

In response, the United Nations commission recommended that Canada develop and implement a gender equity policy, strengthen the Employment Equity Act, ensure that minimum wages are raised in all jurisdictions, ensure that social assistance rates are adequate, revise the employment insurance program, and implement a national housing and homelessness strategy. We are pleased to see progress being made on almost all of these fronts. As a national institute with the mandate of addressing and eradicating poverty, we concur with these recommendations, while we also recognize the challenges of making progress in a federal structure like Canada's.

I'd like to propose some principles that we believe may guide a redesign of Canada's income security systems, and then offer some specific recommendations.

It's our position that the following principles should be foundational to Canada's income security programs. In keeping with our understanding of poverty and our international human rights obligations, we believe an effective income security regime must be rights based, based on the international covenant. It must be universal, based on the acknowledgement of our universal human vulnerability. It must be inclusive in its design and implementation, and it must be holistic, respecting the principle of the indivisibility of rights. It must be horizontally integrated, taking a whole-of-government approach. It must be designed to promote human dignity, based on principles of trust. It must also be fair, based on the principles of transparency, accountability, and the right of appeal.

These principles provide some guidance for how we may move forward in rethinking our social safety net. Accordingly, we submit the following approaches to a renewed income security framework. First is reinvesting in critical social infrastructure, such as housing, food security, child care, skills training, and access to health care and prescription medications. Eligibility and benefits under existing income security programs, such as employment insurance, social assistance, and seniors income supports need to be revised to ensure that benefits are sufficient to provide an adequate income.

We believe we need to restore national standards. With the elimination of the Canada assistance plan, the ability to influence the design and delivery of programs across the country was compromised. We believe we need to return to national standards, with some measure of conditionality in programs, such as the Canada social transfer.

We believe we need to work in partnership. While there's a need for national standards and principles, programs, in their design and implementation, must be tailored to local context, working in partnership with other orders of government such as first nations, civil society organizations, the business community, and with people living in poverty.

Last, we believe that we must have an integrated and holistic approach. As we are aware, poverty is complex. It's multi-dimensional, and responses to poverty often tend to be piecemeal as a result, and we end up addressing individual symptoms rather than structural causes.

We believe there are two opportunities that currently present themselves that could be the foundation of such an integrated approach. The first is the ongoing discussion of basic income, which guarantees rights and provides an adequate standard of living in a dignified manner. The other is to ensure a living wage, recognizing that income security is a partnership and a fourfold responsibility, including the responsibility of individuals and employers.

We believe that we can and need to ensure the provision of quality employment that pays a living wage with benefits. This can be accomplished through re-establishing a federal minimum wage, by providing tax incentives to companies paying living wages, and through the procurement power of the federal government and in its role as an employer.

[The Chair, Liberal, Bryan May]

Excuse me, Mr. Cook. I do have to cut you off. I'm sorry. Hopefully, we can get to the rest of your statement, but we have to get through everybody. Do you have one final comment?

[Derek Cook]

I was about to conclude.

[The Chair, Liberal, Bryan May]

Okay, go ahead.

[Derek Cook]

In conclusion, we commend the government once again on its renewed commitment to eradicating poverty and reviewing its income support architecture.

Thank you for the opportunity to present to you. I look forward to our ongoing conversation.

[The Chair, Liberal, Bryan May]

It's our pleasure, sir.

We'll go to Mr. Cross. I would like to thank you for appearing today on very short notice.

[Philip Cross, Senior Fellow, Macdonald-Laurier Institute]

Not at all. Thank you for the invitation.

Next week I'll be presenting to the pre-budget consultations on economic growth. As an economist, I believe the order should be the other way around. One addresses the fundamental problem of economic growth first and then decides on how to divvy up the pie.

Arthur Okun, the chair of the Council of Economic Advisers under President Johnson, wrote a book entitled Equality and Efficiency: The Big Tradeoff. That tradeoff still exists. If we emphasize redistribution issues too much, we neglect the incentives needed for growth.

The risks are heightened in the current environment of chronic slow growth throughout the advanced market economies. The most powerful anti-poverty program is rapid economic growth. This was true of Canada over the last two centuries, as our standard of living reached levels unimaginable in the early 19th century, and remains true for rapidly growing emerging market economies such as India and China, whose development has lifted billions of people out of poverty.

Before getting into the weeds of specific social programs, it's worth taking a look at the overall impact of income redistribution in Canada. Our tax and transfer system has become increasingly progressive over time, as noted in a paper I wrote for the Macdonald-Laurier Institute in April 2015. Without getting into the details, the big conclusion is that the two highest income quintiles fund redistribution to the majority of the low- and middle-income people in this country, with 80% coming from the highest income quintile. Most of this progressivity comes from transfers, not taxes. Several changes in the budget likely increased this progressivity, notably the Canada child benefit and the middle-class tax cuts.

We may be reaching the limits of redistribution via the tax and transfer system. The government had proposed funding its middle-class tax cuts with a tax on higher incomes; however, the Department of Finance calculated that this would not generate anywhere near the money the government had hoped for, which is consistent with findings from academics, such as UBC's Kevin Milligan, that marginal tax rates over 50% yield little additional revenue.

It is also noteworthy that governments have increased transfers and lowered taxes more for the middle-income quintiles than for lower incomes. We are increasingly using the tax and transfer system to enhance the living standard of the middle class, not to prop up the lower income earners. The 2016 budget continued this trend of using the tax and transfer system to boost middle-class incomes instead of creating conditions where it is the growth of income earned in the marketplace that drives middle-class incomes.

Given the limits to the redistribution of incomes, only the latter is a sustainable source of growth. To the degree that reconfiguring the tax and transfer system becomes a crutch for middle-class income growth, instead of adopting policies that would boost economic growth, it may even restrain the long-term growth of incomes.

If we pursue redistribution policies forcefully, we risk further dampening economic growth. In turn, slow growth carries its own risks. It drives down interest rates, which encourages people to make more risky decisions when investing in the stock market and the housing market.

Low income in our society is no longer so prevalent that society-wide measures are needed. Chronic low income is concentrated in specific groups, such as elderly women who never worked, single mothers with children, the disabled, and recent immigrants who lack language skills. These can be targeted by government programs.

Having said that society-wide measures to tackle low income are largely unnecessary, I note that the track record shows that changes to specific programs can be effective tools to reducing low income. Probably the greatest success was in changes to our pension system, which lowered low income among the elderly from 44% in 1961, to less than 10%. However, the reverse is also true. Sharp cuts to social assistance in the mid-1990s did not lead to the increase in low income that many people had predicted.

There are several ideas currently circulating on how to further reduce the incidence of low income in Canada. These include a guaranteed annual income, higher minimum wages, an expanded CPP and other changes to the pension system, and raising the Canada child benefit. I'll comment briefly on a couple of these.

The government is to be congratulated for dismissing hikes to the minimum wage. As Professor Pierre Fortin of UQAM said on Monday, a sharp increase in the minimum wage would be the economic equivalent of detonating “an atomic bomb”—his words, not mine—in the business community, leading to the increasing exclusion of youths and people with low skills whose jobs are already vulnerable to automation.

Higher minimum wages are likely to harm the very groups they're intended to help. Raising minimum wages in an economy that is struggling, such as the Alberta government is doing, will only worsen an already bad situation.

The expanded CPP government agreed to in the summer will do little to address low income. Indeed, this is why Quebec refused to join. The expansion is designed to help a sliver of middle-class workers who are possibly facing a large drop in income—although it's hard to believe forecasts decades ahead—but not large enough to push them into the lower income. The increase in benefits will not occur for years.

Meanwhile, we have clear evidence that there is a group of elderly people who could easily fall through the cracks of the current pension system—old women who have never worked. When their husbands die, the survivor benefits are not enough to live on, and they often do not have other pension or income sources to fall back on. There is no good reason to not expand benefits for this group, especially since the phenomenon of women who never worked will largely pass in the next decade or two.

I look forward to your comments.

[The Chair, Liberal, Bryan May]

Thank you very much, Mr. Cross.

Now we will go to professor emeritus of the school of social work from Carleton University, Allan Moscovitch. Thank you for being here, sir.

[Allan Moscovitch, Professor Emeritus, School of Social Work, Carleton University, As an Individual]

Good morning. Thank you.

What I wanted to do was review briefly some of the different kinds of work I've done on the issue of poverty and poverty reduction. I hope to give the committee an idea of what kinds of areas have been addressed, and if they have questions in those areas, I'm happy to try to respond to them.

My background is a bit different in that I've had the opportunity to work at all levels of government, not only in policy analysis but also in the implementation of programs. In the early 1990s, I chaired a process leading to the redesign of the Ontario welfare social assistance system.

Like Mr. Cook, we found, in one of the many background studies we did in which we asked social assistance recipients what their concerns primarily were, that they were concerned about the lack of human rights and the lack of dignity in the program they had to depend on. We tried in the redesign to focus on human rights, on training and education leading to an escape from poverty, and on job placement and job support ideas, which have been put aside, I think, by other governments since.

I also had the opportunity to work for the Royal Commission on Aboriginal Peoples, where I and a colleague did the background study on social assistance and the role of social assistance in first nations communities. What we found—and I think the results, unfortunately, are still relevant 20 years later—was an extraordinarily high level of dependency on social assistance. There are many communities where social assistance is the primary form of economic support. Even though there was some debate in the 1990s about the numbers, the department, as a result of pressure from the Auditor General of Canada, made some revisions to the data. Nonetheless, the dependency rates in first nations communities remain extraordinarily high, and that remains a significant issue to be addressed.

In the more recent past, I've had the opportunity to do some work on two issues more closely related to your program, as it is outlined in the resolution. The first was on the old age pension. In fact, with some data provided by one of my colleagues on this panel, Richard Shillington, and with some data we prepared ourselves, we found that the previous government's proposal to increase receipt of the old age pension from 65 to 67 years of age would, in fact, have a significant impact on people with low and modest incomes. We then explored a number of alternative ways of finding the same amount of money through, for example, reducing the floor at which the tax back begins or changing the tax-back rate. I can certainly provide a copy of that, which was prepared for “How Ottawa Spends”, an annual produced by Carleton University.

Last, I've had the opportunity to do some work on the issue of principles for the Canada social transfer. Members will probably be aware of the history. Between 1966 and 1996, there was a piece of legislation in place called the Canada assistance plan, which had a series of principles associated with it that were meant to provide standardized contexts for the delivery of social assistance and social services across the country.

When that was superseded by the Canada health and social transfer, and then eventually by two separate transfers, the Canada Health Act, which expressed principles for the health part, remained. However, other than the “no residence” requirement, there were no principles established for the Canada social transfer.

In a piece that I wrote recently, I argued in favour of some basic principles similar to the Canada Health Act for the delivery of social services across the country. I have also been a strong proponent of establishing some basic principles for the social assistance part of the Canada social transfer as well.

That's what I wanted to say this morning. Thank you very much for the opportunity to be here.

[The Chair, Liberal, Bryan May]

Thank you for being here. We appreciate that.

We will now move on to Geranda Notten, an associate professor from the graduate school of public and international affairs at the University of Ottawa. Welcome.

[Geranda Notten, Associate Professor, Graduate School of Public and International Affairs, University of Ottawa, As an Individual]

Thank you, Mr. Chair. I'm very honoured to be here.

In today's presentation I want to talk about how we measure poverty. I want to make a link to the mandate of this study, and that is about how well the delivery of federal programs works for poverty reduction.

In today's presentation I will make the argument that the way we measure poverty in Canada is not living up to international standards. Our near exclusive focus on low income as an indicator of poverty leads us to exclude a significant number of Canadians who may be experiencing poverty. If their situations improve, it is not counted as poverty reduction. Moreover, because we also don't count these people in our policy evaluations, we tend to underestimate how well our programs perform when it comes to poverty reduction. We're not only misdiagnosing the problem, but at the same time we're underestimating the effect of the solution.

The recommendation I want to make today is that we complement the low-income indicators with an indicator that measures how many people experience poverty level conditions of living. An indicator such as that one exists, and we call it material deprivation. Allow me to elaborate a bit further on this. I've also detailed the argument, together with Michael Mendelson from the Caledon Institute of Social Policy, in a brief that I've already submitted to the clerk.

Policy in Canada means that you cannot afford a very modest but still acceptable standard of living. That means, for instance, that you can't afford a warm winter coat. It may mean that you cannot afford to buy even a small gift for your child's birthday. It may mean that even though your tooth has been hurting for weeks, you cannot afford to go to the dentist, but low-income indicators don't measure that. They measure a family's income, and they compare that to the costs of living that you need to spend in order to finance that acceptable standard of living.

I don't want to say that low-income indicators are bad indicators of poverty, because they're fine, but they do focus on a single financial resource. It's an important one, and it's an important one for Canadians, but it's not the only thing. The indicator has its slots. Low-income indicators focus on income, which means we don't look at other financial resources, such as access to savings and access to credit. Another point which is very important is that families may have higher than average needs. They may have a family member that has a handicap or a severe food allergy, and that means they have to spend more than an otherwise similar family in order to get that minimum acceptable living standard. Families may live in an area where living costs are high, and we try to adjust for that with our low-income indicators, but that doesn't always work.

As another example, a family may have an okay income above the threshold, but they may be spending a large part of it on paying back loans. I could go on further, but I won't.

The consequence, which I mentioned earlier, is that by focusing nearly exclusively on low-income indicators, we miss out on people who have a combination. These types of issues are different ones, and those families are experiencing poverty level conditions. In addition to low income, when we tried to measure outcomes, it suggests that not being able to afford a warm winter coat and not being able to go to the dentist when you really need to means that we tackle that issue right away, and we have a much wider chance of identifying those families. That's what material deprivation indicators do.

I mentioned that the level of misdiagnosis is substantial. My research shows that we might be missing up to two million Canadians by just focusing on low income. That's about 5% of the Canadian population. If you compare that to the number of people who are considered to be in low income according to our normal indicators, which we find to be about 10% to 15%, that's a large number of people.

We misdiagnose the extent of the problem, and on top of that, we underestimate how our programs perform when it comes to poverty reduction. Take, for instance, a program such as the Canada child benefit. A family may have above the low-income level of income but may be having some of the challenges I just mentioned. When we're assessing the effectiveness of the Canada child benefit, which we know has broader goals than just poverty reduction, in light of a federal poverty reduction strategy it might make sense to look at how programs such as the Canada child benefit fare when it comes to reducing poverty.

Imagine that family with a child receiving the Canada child benefit. That family is going to be helped financially. It is going to get more financial support, but that effect is not taken into account when we look at low income, so the program seems to be reducing poverty less, because we're not counting that family as poor, and we're not counting the money that is going to that family as poor. That has an impact on the effectiveness of the program, but at the same time, it has an impact on how we assess the efficiency of that program with respect to poverty reduction, because the fiscal cost for that family is seen as a waste, at least from that perspective.

Material deprivation indicators are not perfect either. They have their challenges in tracking the needs of minority groups. People might under-report because they are ashamed that they cannot afford a small gift for their child.

The key message I want to end with is that by using both low-income and material deprivation indicators, we get a better assessment of economic poverty in Canada. Other countries do this. Ireland, the U.K., and the European Union do this. Statistics Canada has the capacity to do this. They did it for Ontario, but they're not doing it anymore. The costs are relatively modest.

What is needed now is that the government give Statistics Canada the mandate to do this and that the government, in assessing the effects of its policies on poverty reduction, use both types of indicators: low income and material deprivation.

Thank you very much.

[The Chair, Liberal, Bryan May]

Thank you very much.

Without further ado, last but not least, Mr. Richard Shillington. Thank you for joining us.

[Richard Shillington, As an Individual]

Thank you very much for this opportunity to discuss this important and timely issue.

I'm going to comment mostly on seniors poverty, because it is more clearly in the federal domain than poverty for younger families. Reducing poverty for non-seniors would usually look at things like minimum wage and child care policies, which are more properly in provincial jurisdiction. There is a federal minimum wage, but most people are governed by the provincial minimum wage.

Before I get into other issues, I want to raise one topic that we should be thinking more about. Baby boomers like me are retiring. Many of us are dealing with caregiving for frail parents. In a few years baby boomers are going to be demanding home care and support from available family members. I'm pretty sure our personal and professional support networks are not ready. I think we should be talking about this before my generation starts moving into home care or needing help mowing the lawn.

Before discussing policy, I'll say a few words on measurement. Using the 1992 LICO, low-income cut-off, poverty for seniors is declining. Using the low-income measure, LIM, seniors poverty is increasing. How can this be? LICO reflects an income standard set in 1992. It was set every few years, starting in 1968. The last time it was reset by StatsCan was 1992. LIM, the low-income measure, reflects living standards. It is roughly half of median income. Since 1992 LICO has been increased by about 50% to reflect inflation, and LIM has increased by about 100% in the same time period. They are both income-based poverty measures. Why is that?

The LICO is asking how your standard of living is compared to a standard that was set in 1992. The LIM is saying how your are doing compared to your contemporaries, other people in the same year.

You can have the same standard of living over time but be falling behind. It's a policy decision. What is our measure of poverty? Are we saying there's a basket of goods you should be able to purchase? The number of calories we need to sustain ourselves is probably the same now as it was 50 and 100 years ago. Or are we social animals, and what is a decent standard of living is one that allows people to participate in contemporary society? That policy decision will determine what type of poverty measure you might want to use.

You've asked for comments on a number of tax measures, and I'm going to say them very quickly.

Registered education savings plans are great for higher income families. It's a no-brainer, easy money.

The Canada learning bond was brought in in 2004, and I appeared before a committee like this when that happened. I said I was worried about the take-up rate because the federal government has a terrible track record in ensuring people are getting benefits they're entitled to. The last I saw, the take-up for the learning bonds—it's $500 free for low-income people with children—was less than 20%. It was $500 sitting on the table, because we haven't reached those people.

Registered retirement savings plans are toxic for low-income Canadians. The last thing a low-income Canadian wants is an RRSP, because GIS will take back at least 50% of it, sometimes 75%, and when you include a provincial GIS top-up, 100%. Put them in social housing, and it's 130%.

The Canada pension plan is absolutely critical for low-income Canadians. All the data shows that. But it is undermined by the GIS clawback, and the recent CPP increases—I'll take some credit for making this well known—are not going to be very helpful to low-income Canadians.

Again, the guaranteed income supplement helps you up. About 30% of seniors get it. This is not a fringe program. But it holds you back. It gives you an income support that's critical, and then claws back at 50%, 75%, 100% any other income you have.

The last government announced it was going to delay OAS for two years. This was going to create a problem for a lot of people.

I've been thinking more about this. I actually now think—and there's a paper coming out soon about this—that we should move OAS to 67, as it was proposed, but take GIS and leave it at 65, or put GIS back to 60. You can get OAS and GIS now at age 60 if you're a widow or if you're married to somebody over 65. Why don't we just say we're going to delay OAS, and people who are not low income are going to wait two more years? But for GIS, let's go back to 60 or leave it at 65. I think that's a good compromise between these two policies. I'm not a very good politician.

How many seniors are low income? About 25% to 30% of single seniors are low income, using the low-income measure. How can this be? For OAS, old age security, maximum benefits are around $7,000 or $8,000. For CPP, maximum benefits are $11,000, and the average is, the last I saw, $7,000, or $5,000 for women. Add those together and you're in the teens. GIS could give you up to $6,000 or $7,000, but for every dollar of CPP, it goes down by 50¢. So the median income of single seniors who don't have an employer pension plan is $18,000 to $19,000. We can bring up the statisticians and economists who debate whether they're poor.

I've checked, and it's the same figure in Victoria, Vancouver, and Toronto. It has to be. Look at the design of the program. That is not a lot of money. It's not the money you want your mother living on in Ottawa or Toronto. We can debate whether they're poor, but it's not very much money.

In the last 30 years, OAS has increased by 112% because it's indexed to CPI only. It's inflation adjusted. It hasn't been changed otherwise for 50 years.

GIS is again indexed to inflation, prices only. Occasionally it's incremented a bit by governments. It has increased in the same time period by 150%. Over the same time period, RRSP limits have gone up by 350%. I'm just saying. Are the RRSP limits indexed to prices? No, they're indexed to wages. OAS and GIS are indexed to prices. RRSP limits are indexed to wages.

I'm going to have to jump ahead, very quickly, to a couple of proposals I have.

Index OAS and GIS to wages instead of to prices. It won't have an effect in the short run. In the long run, the people who care about RRSPs and pensions have made sure those are indexed to wages, not prices. The economist at the table will tell you that in the long run, wages exceed prices, which is why the LIM is growing so much more than the LICO.

There are two provisions in the tax system that make sure that pension income is taxed at a lower rate than other income: pension splitting and pension credit. Did you know that CPP income is not pension? The pension plan for everyday Canadians is not eligible for the pension income credit.

RRSP withdrawals are taxed at normal income, regardless of your age. RRIF withdrawals are taxed as pension income if you're over 65. When I walked into my bank at age 65 and said, “I want to take $50,000 out of my RRSP and put it in the RRIF”, they said, “You're not 71; you don't have to do that yet.” I said, “No, it's taxed at a lower rate.” “Well, isn't that clever?” First of all, I would have expected them to tell me. In 2013, 200,000 seniors over the age of 65 took money out of their RRSPs. If they had received good tax advice, they would have taken it out of their RRIFs. That's $2.3 billion.

One of the principles of low-income policy is that complexity is inherently regressive, complexity in the tax system, complexity in the eligibility rules for OAS, GIS, and CPP, all of it. It's inherently regressive because low-income people are not going to get professional advice; they can't afford it. So if you want to help low-income people, make it simple. I wrote a report for the task force on financial literacy. It said one of the ways to help low-income people is to make it simple.

One of the things you could do would be to consider RRSP withdrawals as pension income for those over 65, so they wouldn't have to do this little RRSP to RRIF transfer to get an advantage. There are so many of those.

Thank you very much.

[The Chair, Liberal, Bryan May]

You're more than welcome, sir. Thank you very much.

Thank you to all the panellists. There was a lot of information there, and I know there will be a number of questions to elaborate on it.

First off, we are going to MP Zimmer.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thank you to the panellists. I guess you are here today to educate us, and we are definitely getting an education this morning about different factors around poverty.

I have a question for a couple you. First, I want to ask Philip and then Derek, could you define poverty?

[Philip Cross]

There are two ways of approaching this. One approach looks at relative poverty, how we are doing compared to other people, and it's a constantly moving target. That's what LICOs and LIMs do.

Then there is poverty in an absolute sense, can you just not afford to put the basics on the table, whereas the relative concept is how are we keeping up with economic growth with the average person in our society.

For current estimates of absolute poverty, there's—help me with the name—Chris...?

[A voice]

Christopher Sarlo, from the Fraser Institute.

[Philip Cross]

He publishes a lot on absolute poverty estimates. Something like 4% of the population is in absolute poverty.

The problem with all these measures, though, which goes back to what Geranda was talking about, is measuring outcomes. It was also the fundamental problem when I worked at Statistics Canada.

How are people really doing? Do you live in poverty or not? How is your standard of living? We can't measure these things very well so we basically cross our fingers and say, “Well, we're going to proxy this with incomes.” There are a lot of reasons to think—Geranda touched on some of them—that incomes do not equal outcomes.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thank you for that. I just need to keep going. I want to ask you some more questions. I'll move on, because the time is escaping quickly.

I would say that Geranda had the closest definition I can relate to. I remember being done university as a young dad with four kids. We might not have been close to the poverty line, but sometimes Kraft Dinner was all we could eat because we had to make the next payment, even though we had a decent income. The Concise Oxford English Dictionary defines “poverty line” as the estimated minimum level of income needed to secure the necessities of life. I think that defines quite well what I think of as poverty or the poverty line.

I want to get back to what I think Mr. Cross was saying. To me, the simplest way out of poverty—and it's not necessarily the absolute way out—is a job. If it's a low-income job, it doesn't always bring you out of there, but without it, you're almost destined to be poor. With a job, you have the opportunity to get out of poverty, or you're not in poverty anymore.

What I'm getting at, which Mr. Cross was referring to, are policies in this country that are hospitable to job creators. On the Conservative side, we see that the people who create jobs create opportunities for people. We see it as opportunities for regular Canadians to have a job.

As part of our conversation, Mr. Cross, what would you say would be the biggest bang for the buck in Canada in terms of tax policy for a government that's looking to help people out of poverty?

[Philip Cross]

I don't know that tax policy is the way out of this. Throughout the industrial world, in Europe, North America, and Japan, we're stuck in chronic slow growth. That is the million-dollar question. How do we get out of this mess?

There's an increasing consensus that the traditional tools of monetary and fiscal policy, including tax cuts, may not be the way out of this. We need something that's going to boost productivity—more supply-side issues. This may be tax changes that will keep older people in the labour force and keep them working longer. It may be changes to the pension plan, changes that reduce the incentives for people to retire and leave the labour force, things like that.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Right, and it goes with the next step. I was listening to Mr. Cook's presentation, and it's nice to have increases to the minimum wage and all those nice things, if it's affordable.

I've been referring to them as Joe and Jane Taxpayer, and I call them the middle-income earners in Canada. They're the ones who are always asked to ante up and pay the bill for all of this.

We have a new thing that was just released by the government of the day, which is the carbon tax. Estimates of the cost are as little as $1,000 per family up to $2,500 per family, to Joe and Jane Taxpayer, who are asked to keep paying the bill. They are being asked to pay the bill for the increase in the minimum wage, because they're going to have to pay more for their food at the grocery store. All the way up the line, we're asking them to constantly pay the bill. My concern is that we are overburdening that particular group, and we're pushing them down below the poverty line in doing so.

Mr. Cook, what are your thoughts on the carbon tax and its effect on those closest to poverty?

[The Chair, Liberal, Bryan May]

Very briefly please, sir.

[Derek Cook]

I'm not an expert on environmental policy, but with the carbon tax, we're concerned about the impact on low-income families, particularly. Our position would be that any carbon tax that would be introduced would need to have some provision to offset the impact of it on low-income families, certainly.

[The Chair, Liberal, Bryan May]

Thank you very much.

Over to MP Tassi, please.