Status of Women Committee on May 15th, 2007

[The Chair, Liberal, Yasmin Ratansi]

Members of the committee, I'd like to bring the committee to order.

As we are continuing our study on the economic security of women, we have witnesses from the Department of Finance and HRSD. They will not be making any presentations, but we will be asking them questions.

So we will go through our normal rounds. The first round will be seven minutes, the second round will be five minutes, and the third round will be five minutes, and then we will continue until you've exhausted your questions.

If the department doesn't have the information you ask for, I will blame the committee members, because the department did say, please present your questions if you have any specific stuff—But you will supply it later; we won't let you get away with it. Basically, we cannot blame you if you do not have the material here.

With that, I would like to start with Mr. Pearson for seven minutes. You can ask anyone a question here.

[Glen Pearson, Liberal, London North Centre, ON]

Thank you for coming.

I'm not sure of the best person to direct these to, but I do have a couple of questions. For example, we had some people from the Canadian Teachers' Federation visiting us last week who talked about how a woman who goes on maternity leave and comes back to work actually falls behind in her ability to upgrade; as a result of that year off, other people have moved ahead. So even though she's able to come back to work and has had that year off, she's actually somewhat further behind.

I was wondering if you folks have looked into that and if you have any opinions on it.

[Barbara Glover, Director General, Labour Market Policy, Department of Human Resources and Social Development]

Thank you for your question.

What I think I will say is that there is some academic literature supporting the thesis that one of the reasons there's a pay gap, even when you compare hourly wages, is that during the time off to raise kids, other people in the workforce will be doing either the work or training. That does seem to be a plausible hypothesis; I think that's fair.

[Glen Pearson, Liberal, London North Centre, ON]

That's one of the things we keep hearing.

As far as EI or employment insurance goes, and after looking at it here, we've been hearing that it is beneficial to the women who are working full-time.

To those who are in seasonal employment, or who actually aren't getting any of that at all, I wonder how much you have taken this into account—because trends are obviously changing there. We've had a lot of discussion about that with various groups before this committee. I'm just wondering if you could throw any further light on that and if you have any plans for addressing it. How would you see that moving ahead?

[Brenda Lundman, Director, Social Policy Division, Federal-Provincial Relations and Social Policy Branch, Department of Finance]

We don't have anybody specifically from EI here, but I will try to answer your question generally.

Currently, EI benefits provide a year off in terms of maternity and parental leave for women and their husbands with children. That's been going on for a few years now. Right now, the question of whether or not the government intends to expand that, or otherwise, would have to be addressed to the minister. Certainly with respect to, for example, protection of jobs, and so on, all of the provinces have taken on and made sure that when a woman does come back to a federally and provincially regulated job, the job is held for them.

With respect to the issue of movement in the ranks and seniority claims during maternity leave, that's up to the individual employer, and in most cases the province.

There's been a lot of change in this area, and we do find that people are taking up maternity and parental leave at fairly significant rates. If there is some idea of changing it in the future—this issue does comes up in the EI monitoring and assessment report that is done every year. So they may start looking at it—but not right now.

[Glen Pearson, Liberal, London North Centre, ON]

I realize what you're saying about EI not necessarily being your field, but the parental leave thing is definitely an issue for us as a committee.

Could you maybe describe in a nutshell how you feel about the parental leave issue in Canada and how we're handling it? How does it compare with, say, countries in Europe? Can somebody give us a comparison here?

[Barbara Glover]

I don't have a comparison. I can commit to bring something back to you on that.

I know there is a study by the IMF, the International Monetary Fund, saying there has been a range of policy and program changes in Canada supporting women's participation in the labour market. So maybe that study is one of the things I'll put in the package we send to you.

I guess the argument is that policies and programs like parental leave are supporting women's participation in the labour market.

It's not a complete answer, I know.

[Glen Pearson, Liberal, London North Centre, ON]

I understand.

Thank you, Madam Chair.

[The Chair, Liberal, Yasmin Ratansi]

While you have some time, I'd like to ask a couple of questions. The chair has never taken the privilege of asking questions.

When we had witnesses before us on the problem with economic security for women, one of their recommendations was to increase the guaranteed income supplement. There's the old age security and the GIS. If you were to increase the GIS, has the Department of Finance any idea what that would do to the kitty? I'm an accountant by trade, so that's why I'm asking. I'm trying to figure out if anybody has done any analysis, because that is one of the recommendations that has come to us.

The other recommendation that came to us was on CPP and survivor benefits. At the moment, if a widow were to receive the benefits, it's 50%. If it were to go up to 75%, what would the impact be?

[Virginia Poter, Director General, Economic Security and Policy, Department of Human Resources and Social Development]

With regard to the guaranteed income supplement, as you know, it has made a good contribution to reducing the low-income rate of seniors, many of whom are women. Recently—I believe it was in 1995—there was an increase of $18 a month for single seniors and $29 a month for couples. I believe the amount it was going to cost was in excess of $4 billion over five years. So those very modest increases would contribute to that.

With regard to the survivor benefits moving from 50% to 70%, I don't know what the fiscal impact of that is, but I do think it needs to be taken into the context of increasing labour market participation of women and whether or not in the future, when more women have contributed to the CPP and would be eligible themselves for actual benefits, the need would still be present, given the change of composition of the senior women population, many of whom in the future will be less likely to have been married moms who stayed home and looked after the family, and so on. But we could certainly endeavour to find out.

[The Chair, Liberal, Yasmin Ratansi]

I have a last comment.

Would you consider allowing stay-at-home moms to contribute to CPP? Is that a potential that somebody could think through from a finance perspective?

My time is up. You can answer it if you want.

[Brenda Lundman]

Sure. I'll answer just quickly.

In terms of the GIS, whenever you extend the GIS, as Virginia just said, by $18 or $29 a month, what happens is that you bring in a lot more people, and that's why it's very costly. You have a tail moving out there, and the population is actually distributed more like this, so the more you move the tail out, the more people you pick up. That's why those are very costly. It's not just adding $18 for each person already in the system; it brings a lot of people into the system.

In terms of the CPP survivor benefits, it's currently 60%. That is also integrated with your own benefits, so the maximum you can receive is your full retirement benefit.

In terms of stay-at-home moms and CPP, there has been a lot of work done on that. At various times we've asked the actuary to look at that, and the actuary tends to come back to us and say, “How would you define who was eligible and what they would pay? What is the rate of income that you would charge the mom? Would they have to pay single premiums or double, the full premium?” There are a lot of technical questions associated with that—differences in the cost, the effectiveness—and then there's the question of whether or not people would actually want to apply for that.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

We will now go to Madame Deschamps.

Vous avez sept minutes.

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Thank you, Madam Chair.

Welcome. We have decided to devote part of this sitting to the study of the economic security of women. We have heard from many witnesses who described the type of situation women face in today's society. The effects of poverty are often greater for women than for men. Senior women who live alone are more likely to have a lower income: 17% of them earn less than the low income cut-off. Thirty-six per cent of the heads of single parent household, most of them women, are low-wage earners. As single parents, they are in a more precarious situation than are most senior women. Women must often take part-time, unstable employment in order to reconcile work and family life.

That is just a general outline. Do you not think that we should develop some type of a national strategy that would take into account the roots of poverty as well as family responsibilities? Such a strategy would also address the choices that women must face when they have to decide whether or not to seek paid employment because they are likely to outlive their husband and could find themselves alone and possibly poor. Then there are the informal caregivers. They are often women who must take care of a parent. At least that is what most of the witnesses who appeared before this committee have told us.

Perhaps the government already realizes that a broader strategy would be preferable to having small ad hoc policies which are not terribly effective.

[Barbara Glover]

I think this takes more than one person to answer the question. I was going to start by saying there are programs, federally and provincially, that deal with some aspects of the broad issues you're raising. We were just talking about employment insurance and parental benefits, for example, which is a part of the answer insofar as when parents take time off to look after the kids. That's one program.

There is a range of other policies and programs that deal with different elements of the programs. I mentioned that last time. There are programs directly related to aboriginal peoples, for example, both at Indian and Northern Affairs and at my department, Human Resources. There are also programs targeted towards immigrant women and immigrants in general.

I guess part of my answer is there is a range of policies and programs, and part of what that's doing is parsing out different issues. I think it's worth saying that there were a number of things in the last budget, in 2007, that tried to get at some of the issues that were raised in the testimony. For example, women who are re-entering the labour market or are entering the labour market but not eligible for employment insurance would be eligible for the new program that was announced in Budget 2007. It's just called the labour market program, but $500 million was set out, aimed at women and men who were not eligible for employment insurance programs. So that's a specific improvement I think that addresses very directly the issue of women who are not eligible for employment insurance.

There were additional improvements, additional increases in programs for aboriginal peoples in the budget, for our department—for Human Resources—and there were improvements set out for immigrants to Canada around foreign credential recognition and improvements to the temporary foreign worker program.

So those are all changes that are incremental, I would say. Maybe you wanted to—

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Could you tell me more about the program for people who are not eligible for employment insurance? How would women who are not eligible for employment insurance apply for this program?

[Barbara Glover]

What was announced in Budget 2007 was $500 million, starting in 2008-09. It's $500 million a year of funding for programs that are to be delivered by the provinces and territories.

The budget made it clear the intent is for the eligibility to be very broadly determined. There's really one eligibility criterion, which is that you are not eligible for employment insurance.

This implies that a series of steps need to be taken to get from the budget announcement to programs that are up and running.

[The Chair, Liberal, Yasmin Ratansi]

Madame, c'est fini. I'm sorry.

We'll now go to Ms. Smith, for seven minutes.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Thank you very much.

Thank you for coming today. Your insightful comments are very beneficial to our committee.

We have studied a range of things. I would like to talk about the working income tax benefit.

We've talked a lot at committee about low-income Canadians who, despite their hard work and efforts, haven't been able to scale the welfare wall. When individuals receive social assistance, the tax system often discourages them from joining the workforce, by clawing back nearly 80% of their income. Our new benefit represents the difference between being better off or worse off as a result of taking a job. The working income tax benefit is very new and is a first step on which to build.

To whomever on the panel would like to answer this question, could you perhaps explain to this committee what the benefit is and what it does for low-income Canadians?

[Virginia Poter]

I'll start, but perhaps my colleagues from Finance can jump in and help as well.

There are two real objectives the WITB serves to address. First of all, as you mentioned, it helps encourage people to enter the labour market. But it also has a second benefit, which is to reward those people who are already in the labour market and are not earning a lot. They'll be topped up, which is very helpful for folks in those kinds of situations.

It's been designed so that you already have to be earning an income, and it tops up earned income. You can't just have a low income. You have to earn at least $3,000, at which point, for every dollar earned, you are given additional money, until you get to a point of $5,500. Single individuals would continue to get the maximum benefit of $500. When you earn over $9,500, it's reduced at a rate of 15%. It slowly reduces the amount so that by the time you earn over $12,800, you receive no more benefits. This is for singles.

It's a little different for families, including lone-parent types of families. There's also a top-up for those who have a disability.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Quite clearly, this would encourage people to get jobs. People who are on social assistance often say it's easier to be on social assistance than it is to get a job. Would you agree? Could I have some comments on that from the department?

[Barbara Glover]

There are similar arrangements in the United States and in the U.K. If there's interest, we could pull something together on those. But both of those examples were seen to increase participation in the labour market.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

I'll go on to another question. I don't want to belabour it. You've answered it very thoroughly. I just don't want to run out of time.

Support for low-income Canadians is something that is of paramount importance to our government. In actual fact, we have removed 885,000 low-income Canadians completely from the tax rolls in our first two budgets. There are some very tangible measures for Canadians. We've just talked about the working income tax benefit, but there's also a working family tax plan and a registered disability savings plan.

Could you elaborate on these two plans for low-income Canadians?

[Alexandra MacLean, Chief, Personal Income Tax Division, Tax Policy Branch, Department of Finance]

I can speak to the registered disability savings plan, certainly. It's a new measure that was developed on the basis of recommendations of an expert panel that was appointed by Minister Flaherty. The plan design is based on the registered education savings plan model; that is to say it's a savings plan with the same tax attributes as the registered education savings plan. There's no up-front deduction, but income grows within the plan tax free. It's recognized in the hands of the beneficiary when it's withdrawn.

Also, like the RESP program, it has grants associated with it—two types of grants. One is a matching grant, called the Canada disability savings grant, which will be similar to the Canada education savings grant. The matching occurs at different rates based on income and is quite generous for lower income levels. It's a three-to-one match for saving.

Also, I think the plan recognizes that some families don't have any capacity to save for a child with a severe disability. So there's an outright grant component that doesn't depend on contributions from the family or from other supporters of the individual. That's called the Canada disability savings bond, the final component.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Great.

Could I have some comments on the working families tax plan, because that has been brought up as well?