Human Resources Committee on Oct. 5th, 2017

[Prof. Charles M. Beach]

Yes. It's always been the case that older people, whether sponsored or however they come here, have a tougher adjustment, whether it's language or whatever. The federal government, in changing the point system, has provided more points to younger people, to try to see that there are fewer older people who come in and are subjected to these problems. It doesn't address the question. Your question, as I understand it, is about the ones who are here and are facing a real problem. What can be done about it?

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Can I ask a question to you, Bonnie-Jeanne?

You are saying that we have to first see what they want, then see what their needs are, and then look at the financial burden and how we are going to accommodate them. Do you have anything in your mind as to how these people can be assisted? It's a very small category of people, but they are poor.

[The Chair, Liberal, Bryan May]

Very briefly, please....

[Dr. Bonnie-Jeanne MacDonald]

Right, they're poor. Basically the most direct way would be to alter the OAS regulation so as not to have this residency requirement. A change like that is going to depend on the cost for the government to implement it. We need tools to calculate this cost and to integrate the data. Also, through those tools, we could understand the benefit of bringing in immigrants to the long-term Canadian economy.

As I was asked before and was just getting to, what Canada actually needs more than anything, if we want to have a national seniors' program, are tools that are computer models that experts across Canada can use to test these ideas, get real numbers, and have authoritative answers to the questions.

We had this model. It was developed for 25 years. It was used to test the CPP enhancement. It was used to test the OAS enhancement. I'm now using it to test the CPP enhancement because the government discontinued the funding. As an analyst and somebody who's using the government model, which the government should actually be using, I'm getting calls from provinces, from private industry, from academics, from everybody, asking me to run these analyses because the government is no longer running the analyses within the government.

If you want to do a national strategy and get real answer to real questions, you need the tool that's going to bring the data together.

[The Chair, Liberal, Bryan May]

Thank you very much.

Now we will go over to MP Wong.

[Alice Wong, Conservative, Richmond Centre, BC]

Thank you very much.

First of all, I'd like to acknowledge a number of people who are here. The first is Mr. Soulière, for serving as the president of the national seniors council.

For your information, the seniors.ca map, which shows all the different provinces and their different benefits, is gone. They took it down in August.

The national seniors council has done a lot of studies, and those studies contain very valuable data on the healthy act of aging, seniors in social isolation, aging at home, and extending the work of seniors in the workforce. All of these are wonderful studies, and the data is still there. Hopefully it has not been taken away.

I thank Ms. Mackenzie for your work as an advocate in my province of British Columbia. I was there when you did the presentation for home care. Thank you very much for all the good work.

I thank the folks from academia as well, because the synergy is right there. It's in exactly the kind of panel we have here, with academics and government. We have at least two levels of government here.

I'll go back to the questions. The first is about caregiving. It may be related to Mr. Sangha's question about looking after seniors at home. I know that Australia supports family caregivers. I was also in London, England, with the minister and spoke with the carers' association. They have the term “carers”, which is informal. When we talk about caregiving, we have to distinguish between the unpaid, informal family caregivers and the paid, formal caregiver. I think I'm talking more about the informal caregiver .

Within our strategy we really need to look after those people as well, because they're there and their jobs are in jeopardy if their employers do not even recognize that their employees have those questions. I started the employers' panel and then, again because of the change of government, it's gone.

My question is this. Do you see the need for all three levels of government to be working together, and also for bringing back the federal-provincial-territorial forum, where two levels of government look at all the services so that there's no duplication, and then at the areas of need that both levels of government can identify? You need a leader in those areas.

This is open to all of you.

[Isobel Mackenzie]

I think if we don't involve the provincial government, we're not going to have equality in the basic income being provided to seniors throughout the country, because income is only half of the equation.

The other half is the expenses the senior has to pay out of pocket for what have become the necessities of life at the age of 85 or 90, when seniors are purchasing labour costs that are outstripping goods in terms of the cost of living. If we don't bring those two together, the federal government can increase income supports, but it will not be providing equality of income to all seniors until we get the provinces to the table and everybody agrees on the basic provision of services across the country.

[Jean-Guy Soulière]

Your basic question was whether we should reinstitute the process that existed before. That is, once every year, ministers responsible for seniors across the country—some provinces have a specific minister for seniors; some don't—met and decided on the issues they would be dealing with during the year. Absolutely, that's a key element to a strategy. For the federal government to fly away, thinking it can establish a strategy without provincial input, it's dreaming in colour. Maybe it's dreaming in colour that both of them can get together, but that's another story. It is absolutely essential that provinces and territories work together on this.

Also, many provinces have, if not a seniors advocate, a seniors group, usually within the ministry of health or the department of health. Each one of the provinces has a staff devoted to seniors. My concern has always been—and I mentioned this when I was chair of the national seniors council—the enormous waste of duplication that we have in Canada. We could put that money into doing things as opposed to.... For example, each province is looking at long-term care, doing all sorts of studies. Each province is looking at care at home, doing all sorts of studies. It's not coordinated. I'm taking off my professional hat now. That's a personal point of view.

There were even recommendations to encourage families to take care of their elderly relatives by establishing some kind of tax incentive. For example, if you gave so many hours to care at home, there would be a deduction that you could put on your tax return. These are the sorts of things we should be looking at.

Also, as mentioned, there are countries that are...I won't say far more advanced, because I don't think there are many more countries that are better than we are in taking care of our elderly people, and I'm an elderly person myself. We should look at what's being done in other countries and not force-fit it but adapt it to our country.

Yes. We need to coordinate a bit more.

[The Chair, Liberal, Bryan May]

Thank you very much. I have to step in there, sorry. Thank you.

Now for six minutes, we have MP Ruimy, please.

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

Thank you all very much for coming today and presenting to us.

I'm a data guy. To me, numbers are critical. Between testimony we've heard today and testimony we heard at the previous meeting, take your pick: seniors are doing better, or seniors are not doing better.

We have the National Association of Federal Retirees, most of whose members, I imagine, have pensions. I've run into many people in my riding who actually don't have any pension whatsoever. When we look at these numbers from StatsCan, presented by Mr. Beach, they show 14.3% in 2015. In looking at that statistic, one could say that 85% of Canadians are good to go for retirement, but that's not an accurate statement and that's the thing that's really bothering me right now.

I want to jump to Bonnie-Jeanne MacDonald. You talk about your living standard replacement rate. This is a study you've put together. Could you give us a sense of what that is and how it might play into getting us better numbers?

[Dr. Bonnie-Jeanne MacDonald]

Basically, when governments around the world want to evaluate how prepared their citizens are for retirement, they have two criteria. One is poverty. The second is that they want to see how well Canadian, American, or Australian workers will sustain their living standards in retirement.

Unfortunately, the target they use right now is to say, can they replace 70% of their employment earnings? For a long time we've realized that this is a completely inadequate benchmark. It actually makes no sense. When I did an extremely large research review of all the studies that have ever been done, I found that there was no scientific demonstration anywhere in the world that showed that people who replaced 70% of their income actually do sustain their living standards in retirement.

I present a new, alternative measure that basically says people want to sustain their living standards, which means they actually want to have enough money to buy the same level of goods and services after retirement as they do before retirement. That's what our living standards are really made up of: how much money we have to spend.

In terms of data, going back to the CPP question, that's critical because that's what the CPP is there for, to help people sustain their living standards. Currently, I'm testing the CPP enhancements using the model that the government developed—because it's outside their mandate to use this model—to understand who in Canada is actually benefiting from the CPP enhancements and by how much. Is it high-income Canadians or low-income Canadians?

My concern is that I hear of meetings such as this in industry, in the academic world, and everywhere. People have a lot of questions, and there are no answers. If you go to the United States, the government supports universities or different groups to actually develop very sophisticated models. They can then draw on this expertise and have the authoritative models to answer these questions. We don't have this in Canada. It's literally pennies for the government to continue to support the models where we can take all the data that we have available, put it together, and actually understand where the CPP enhancement went right and where it went wrong. Should it or should it not have been doubled?

I've now talked to leading Canadian thinkers across Canada. What's interesting in the results that happened in the CPP enhancement is that they actually weren't that punitive for low-income Canadians. This is very contrary to what's in the media. The problem is that people who speak in the media are researchers looking at it from a very narrow dataset. Once you look at data of all Canadians, across time, across their working careers, you get very different results. I really believe that before we put forward policy changes we have to understand how it's going to unfold into the future. It cannot just be an ideological debate and having people come together and put together whatever is popular at the time. We need to have informed evidence coming from authoritative sources.

It's funny, but I've spoken 20 times to industry and academia over the last three months. I'm constantly travelling and talking. To be honest, I just talk about my work and I'm never selling an idea. However, I am selling an idea today. I implore you, if there's one thing I can get across today, basically it's that the government needs to put some money back into the analytical tools.

It doesn't have to be housed in government. We can house it outside of government, in the university. It's going to be lot cheaper and will make it more accessible to all the academics across Canada, and for all the special interest groups to actually test their ideas and get real answers. Then, when government has questions, they can draw on this expertise and we can argue based on some baseline numbers. Right now, we don't even know what these numbers are, and neither does the government, I'm afraid, because, again, they cut the model.

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

Thank you.

When we came into power, we reinstated the long-form census. Would you have any data that has come out of that at this point that would be helpful to us in this study?

[Dr. Bonnie-Jeanne MacDonald]

The difficulty is that you can get a census, but if you're not using the data in some type of comprehensive model that's going to put the information together, it's just bits and pieces of data.

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

Is your program, the living standard replacement rate, something that—

[Dr. Bonnie-Jeanne MacDonald]

No, that's a statistic. That's something separate, but that's a way of understanding how well changes in the CPP have actually performed.

The model I'm talking about is something that the government developed in Statistics Canada for 25 years, using the top minds in government. In 2010, the government used it to test the CPP enhancements. They then used it to test the OAS changes. However, just a number of years ago they cut the funding to this model. This is our population microsimulation model, which was actually the gold standard in the world.

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

Wow.

[Dr. Bonnie-Jeanne MacDonald]

I was the only person outside of government who learned it, so guess what's happened to me. I am completely inundated with phone calls from provinces, from the industry, and from other academics, who want me to run this model. I can't do this alone. I don't have an interest in doing that, but the government could just put a couple of analysts in there and help support this model, and then suddenly it's going to open up the scope for so many answers and so much innovation, and it will all be done for free.

[The Chair, Liberal, Bryan May]

That's amazing. Thank you.

You're well over time. Sorry, Dan, you can't bank anything.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Bryan May]

Mr. Kent, you have five minutes, please.

[Peter Kent, Conservative, Thornhill, ON]

Thank you very much, Chair.

Thanks to all of you for your insight and advice here today.

One of the things I hear most often from seniors in my riding of Thornhill is a request that the age of mandatory withdrawal from RRIFs be raised significantly. Some folks say, why not raise it to 75? Others, who are still capable of working and are still generating income, say that because they have prepared for their retirement...and they recognize that it has been notched up somewhat to 71.

I wonder if all of you could offer a comment on that particular aspect.

[Jean-Guy Soulière]

It's something that we hear also. Of course, it was 71, then it went to 69, and now it's back to 71, I think. As people live longer, they probably don't need it at 71, because people say that 71 today is yesterday's 50 or 51. I'm 51. As people live longer, they want to ensure that the money is there later on in life, so forcing them to take their RRIFs at 71 defeats the purpose. Yes, we hear that as a recommendation as well.

[Dr. Bonnie-Jeanne MacDonald]

A lot of the analysis says that seniors want two things. They want to have flexibility over their savings in the beginning of their retirement, but at the same time they want long-term protection. One way of doing it is, as you say, to raise the RRIF age so that people aren't forced to withdraw the money and they can leave it for when they reach an elderly age.

However, the difficulty with that is that if people don't draw on their savings, they are not actually using their income in retirement and they may pass away without taking advantage of the savings.

One of the best solutions, which, as I mention in my talk, has been incredibly popular, is that people pool their money together and buy what's called longevity insurance. It's very cheap. They would put a very small fraction of their savings with a group of seniors, and then the half of them who do live past 85 will have a guaranteed income stream to support them in that advanced age. We could do this at a national level and make it very accessible.

They are not managing the money, and it's extremely cheap. Basically, half the people die, so people are not just getting the investment returns they would get in their RRIF, but they are also doubling their money. It's giving seniors what they want: flexibility over the majority of their savings during the early part, but also guaranteed income coming from this fund of savings, like a pension, at a later age.

[Peter Kent, Conservative, Thornhill, ON]

Is that advice widely available?

[Dr. Bonnie-Jeanne MacDonald]

I actually wrote it in a C.D. Howe pension policy paper, which will be released soon. It gives the details. I didn't invent this. This is an idea that has been used with incredible success around the world. It's popularly known as longevity insurance, but if we can do this as a national.... The difficulty with longevity insurance is that only the healthiest people buy it, but if you do it as a national program, that does amazing things in terms of reducing the cost, because a lot more people will buy it. What we know about seniors is that they actually want this protection in later life.

Again, this is a way to help Canada's economy later on, because we are getting the people with the money and the savings to save the money for when they need it so that they don't become dependent on the state later on in their retirement.