Human Resources Committee on Oct. 5th, 2017

[Mark Janson]

Yes. It would be a simple amendment. It's a fiscal cost to do so, to have the program grow at the speed of the economy rather than the speed of prices. The actuaries who look at the OAS and GIS system show, and they've been saying the same thing for decades, that in the long run, because this program is indexed to prices rather than wages, it gets cheaper and cheaper as a proportion of our economy over the long run. There are demographic ups and downs. We're going into one now where there is a bit of an uptick, but the long-run cost curve of the program is still down because it's indexed to prices.

To me, that means we can afford increases in the OAS and GIS. I don't think Canadians should accept the idea that if living standards in Canada increase, we should leave seniors behind on that increase. I don't think that's a principle that Canadians would support.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you.

Can you give more examples of specific recommendations to this committee that we should look at in terms of protecting seniors from poverty?

[Mark Janson]

Yes. In terms of poverty, you need a pension system that's working for most Canadians. In terms of our pension system, we've put a lot of our eggs in Canada in the workplace pension basket. We have comparatively a pretty small public pension system. When you look at other equivalent OECD countries, our public pension system, our CPP and OAS, is actually comparatively pretty small.

We have put a lot of eggs in the basket of workplace pension plans. Our philosophy is that those have to work out for most people. The experience, of course, is that they don't. We've never in our history cracked 50% pension coverage. We got close, but it's been going down, and we're now at about 40%. The characteristic of that 40% has become less generous and less secure too. That's why the labour movement thinks that the only real solution is an expansion of public pensions, and that's why we've put such great effort into it. We've been saying the same thing for 50 years.

We started this campaign in 2009 to expand the CPP. I don't think the fact that we have a partial win is reason for us to back away from that philosophy. I don't think we expect a lot of Canadians to all of a sudden have workplace pension plans or tax-free savings accounts to save us all. Our view is that the one and only solution is bigger public pensions. We've had this increase in the CPP. We could certainly look at an increase in the OAS. Given this long-run indexing issue, I think there's fiscal room there and I think there's reason to do it.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you.

In your 2018 pre-budget brief, Mr. Soulière, the National Association of Federal Retirees is calling for action on a national seniors strategy. I'm wondering if you could tell me a bit more about how you envision this strategy. Who would be in charge? As well, should there be targets?

[Jean-Guy Soulière]

The first step is to get the provinces and the federal government on the same wavelength. There's duplication of work, programs, and costs.

You are dealing in the title of your study with the major aspects of a strategy. It all deals with healthy aging. Again, a report was produced by the National Seniors Council on that topic. It provides a whole lot of different recommendations on how that can be achieved.

Somebody mentioned it in one of the presentations. The strategy needs to involve seniors themselves in saying what they need and how it is going to be implemented. You need to have this coordinated somewhere, and that's why a minister of seniors is so important, in my view and in our view as an association. It's so you get all the information in one place, digest it in one place, and act in one place.

The key element, which we've not achieved in Canada in many instances, is to have the provinces and territories and the federal government working together. Unless you achieve that, it's going to be a failure, and we can't fail. As I said, the situation is with us today. It's not future planning; it's now.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you.

[The Chair, Liberal, Bryan May]

That's your time. Thank you.

We'll move now to Monsieur Robillard.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chair.

Mr. Beach, you have a PhD from Princeton University, in the United States, isn't that so?

[Prof. Charles M. Beach]

Yes.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

As an economist, are you able to draw any parallels between federal programs for seniors in the U.S. and those that exist in Canada? Beyond that, when we compare the situation in both countries, are you able to point to some specific measures that we might draw upon?

[Prof. Charles M. Beach]

I was a graduate student many years ago, and I was down there for just four years.

I'm not a policy wonk, so I'm afraid there's not much I can add. My gut feeling is that the Canadian social security system in general is more generous than it is in the States.

My sister died a few months ago, and I'm having to take care of the results. I was appalled by the lack of involvement of government transfers or programs and so on. A great deal of reliance had been given to private sector pensions. She worked all her career for a particular well-known organization, and in my view her pension was an absolute pittance. I was really quite shocked.

I probably shouldn't say this, but I wouldn't look to the U.S. on this particular matter as the place to go. I think Europe and Japan, which has one of the most rapidly aging populations, have far more experience and best practices for us to learn from.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Thank you.

Could you tell us about your work on the challenges to aging program? What studies are you conducting and what can you tell us about your findings thus far?

[Prof. Charles M. Beach]

Me...?

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Yes.

[Prof. Charles M. Beach]

I'm not really working on any such projects. My area of expertise has been on incomes, not just of seniors but of people in general, and particularly where these incomes come from in the labour market.

You can see why my concern, noted in one of my remarks, is that if wages or earnings in the long run are going down, this does not bode well for the role of CPP and QPP in being able to help support seniors, and it will put more burden on other pillars of support, such as OAS and GIS.

One other thing I would mention along that line—and this was my sixth point that I didn't get to say at the time—is that what's also happening in incomes in general, particularly earnings, is being driven by what's happening in the labour market, and that's a quite rapidly growing income inequality since the 1980s—again, far more so in the United States than in Canada, but it is still the case in Canada.

If earnings are growing further and further apart, particularly at the top end, and things like CPP depend upon earnings, that means you will have a growing fraction of people at the top end who will be at the top end of CPP and QPP. Also, private sector pensions, or private pensions no matter what sector you work in, are more generous for high-income workers. Also, high-income workers have a greater opportunity to save more, so private savings and the wealth that those savings provide will also be going up for a significant portion at the top end of the distribution.

My conclusion is that you shouldn't have to worry about those people. They're going to be doing very well, thank you very much. I think your perspective should be more on worrying about floors—not the people at the top 15% or 20% or so, but the floors and, if you wish, at income-contingent transfers, so that if one person had a substantially higher income than another, for the one with the higher income there would be a tax back right to the transfer, so that the transfer that person would get would be less, possibly none.

I have a good pension from where I worked for 40 years, so I don't get OAS. I think that's perfectly appropriate.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Thank you.

I will share the rest of my time with Mr. Jowhari.

[The Chair, Liberal, Bryan May]

You have literally six seconds, sir. Go.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

How about that?

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Bryan May]

That is the end of the first round, unless anybody needs to take a break.

Yes, sir?

[Prof. Charles M. Beach]

May I respond briefly to one question that Mona Fortier raised?

[The Chair, Liberal, Bryan May]

If Mona gets another opportunity, then we'll bring it up. I'm sorry, but we have to stick to the timing.

Does anybody need a quick break, or shall we just keep going? Okay, we will continue.

Next up we have Ramesh Sangha for six minutes.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Thank you.

I have one question for Mr. Beach, again.

We are doing a study of poverty reduction in Canada and in that we now have a chance to study the seniors living in poverty.

I have been an immigrant, and in my riding of Brampton Centre there are mostly immigrants living there.

Parents and grandparents who come to Canada, sponsored by their children, do not qualify for benefits because they have not been here for the required 10 years to get the pension, and they live in poverty. They have nothing, no earnings. They have medical coverage, and that is good, but no other things.

My question to you is this: can any government or any other agency help these people to improve their standard of living and take them out of poverty?

[Prof. Charles M. Beach]

That's a tough question. I don't know the answer. It's a very important question.

I've worked for a number of years on immigration issues, and the main reason I got into it is that there has been a gradual decline for about 30 years in the relative income and standard of living of immigrant families, not just in Canada but in essentially all developed countries. It appears to be based on a number of long-running basic economic events. The economy is shifting from manufacturing to services. Thirty years ago you could get a job putting on a windshield at a Ford plant with barely any English, whereas now, much of that has been outsourced.

The shift to services means there's a greater reliance on the role of language. For immigrants, particularly the first generation, that can be very difficult. The adjustments are indeed more difficult for those who come from very foreign areas. Again, 30 or 40 years ago most immigrants came from either English-speaking parts of the world, western Europe, or British Commonwealth-type countries, so they came with a common set of perspectives and experiences as to how labour markets operate and so on. Increasingly now, the majority of immigrants come from Asia and the Middle East, places like that, so the adjustment—not just language, but culture and everything else—is much more difficult.

One of the things the federal government has done—and I very much agree with them—in putting together the rules is to place a greater reliance, either within a point system or whatever, on the importance language. If I had to figure out two important things, as research has indicated, they would be education and language. Those are the two biggies.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

I'm not talking about those persons. Those who are coming on a point system are young enough. They can go into the labour market and start earning. I'm talking about those who are coming as aged persons, seniors sponsored by their children whose parents are the grandparents.