Status of Women Committee on June 8th, 2006

[The Chair, Liberal, Judy Sgro]

I call the meeting to order. This is the seventh meeting of our Standing Committee on the Status of Women. We are very pleased to welcome several people from the Department of Social Development who are with us today.

We have Susan Scotti, Assistant Deputy Minister, Social Development Sectors; Deborah Tunis, Acting Assistant Deputy Minister, Social Policy; Lenore Duff; Sandra Harder; Mitch Bloom; Caroline Weber; and Nancy Lawand.

Since we have all of you here, as well as the majority of our committee, thank you very much for agreeing to come and talk about an issue that's extremely important to all of us on this committee.

I would now welcome you and invite you to address the committee.

[Susan Scotti, Assistant Deputy Minister, Social Development Sectors, Income Security Programs, Department of Social Development]

Thank you, Madam Chair. Good morning, Madam Chair, vice-chairs, and members of the committee.

I would like to begin by thanking you for inviting us here today.

We're delighted to be able to be with you. I and my colleague, Deborah Tunis, look forward to sharing with you some of our perspectives and knowledge on women and poverty. We look forward to your questions and insights on this very important topic.

I'm going to turn it over to Deborah. We're going to be a bit of a tag team here this morning on the issues.

[Deborah Tunis, Acting Assistant Deputy Minister, Social Policy, Department of Social Development]

We will be within the 10 minutes allotted. We've divided up our time.

As you're already aware from the briefings you've received from Status of Women Canada and Statistics Canada, significant strides have been made in recent years in improving the low-income situation of women in Canada. The low-income rate among females in Canada has been steadily declining since the 1990s, and that trend is reflected in all provinces.

However, we still have significant challenges in addressing the gender differences in low income rates, particularly as they affect single senior women, single-parent families headed by women, and women with disabilities.

A number of federal mechanisms specifically address the needs and efforts of low-income women. Setting aside for a minute our discussion of programs for senior women, which Susan will address, I'll highlight five that are particularly important to women.

The child support reforms of 1997 ensure fairer, more predictable support amounts and improvements to the enforcement and tax treatment of child support, and thus help lone parents meet the needs of their children. Justice Canada is responsible for this initiative.

Since 1998, the child tax benefit has included a national child benefit supplement to provide additional monthly benefits to low-income families with children. An important feature of the child tax benefit is that the payment is generally made to mothers, which increases women's control over household resources.

The employment insurance family supplement provides additional help to low-income families claiming benefits by increasing the income replacement rate from 55% to a maximum of 80% of insurable earnings.

Fourth, the Canada Pension Plan disability benefits program is the largest long-term disability insurance program in Canada. It's designed to provide financial assistance to CPP contributors under 65 who are unable to work because of a severe and prolonged disability. Benefits are paid monthly to disabled workers and their dependent children.

Finally, under the proposed universal child care benefit, all families will receive $100 per month for each child under the age of six to help them balance their work and family life. Budget 2006 also announced that $250 million would be set aside next year to support the creation of new flexible child care spaces. These investments are particularly important to low-income women, including female lone parents.

Now, I would like to take a moment to discuss women's caregiving responsibilities and how they affect women's worklives.

The increased participation of women in the paid workforce, especially women with young children, has been one of the most significant social trends in Canada in the past 25 years. It's not possible to directly assess how the labour force participation rates for women are affected by the availability of non-parental child care alone.

Despite increases in the use of non-parental child care, the provision of care by parents remains the primary arrangement for almost half of families with young children. Many women work part-time or take on non-standard work to accommodate child care or other family responsibilities. This is true in particular for women aged 25 to 44. We also know that one-third of women aged 25 to 44 who were not in the labour force in 2005 cited family responsibilities as a key factor in their absence from the labour force.

We've been doing some work on broader caregiving responsibilities. Women traditionally play the predominant role in caregiving for the elderly. In Canada, this caring role affects a large proportion of the population, as roughly one million Canadian seniors receive formal and informal care for a long-term disability or physical limitation. Research has shown that working women are just as likely to become caregivers as their non-working counterparts, although working women who take on caregiving tasks may reduce their work hours. Providing this care is costly for those who provide it. Less time spent in the labour force may limit women's earnings and therefore the capacity to build up future retirement incomes.

As the Canadian population ages, there are also additional pressures on families to take care of elderly relatives. I know this is an area that the committee may have an interest in, and I want to take a few minutes on this point.

Employment-related costs arise when informal caregivers accommodate their employment to meet caregiving responsibilities by changing work patterns, reducing hours of work, declining promotions, or even quitting. In addition, those with elder care and/or child care responsibilities often find it difficult to balance work and personal lives and often experience stress as a result. The difficulties faced by caregivers in trying to find a work/life balance are also reflected in higher rates of work absenteeism, being unwilling or unable to work extra hours, and indirectly increasing the burden on co-workers.

We know the employment-related consequences of caregiving are not shared equally between men and women. Among men and women aged 45 to 64, almost twice as many women change work patterns to adjust to caregiving demands, and more women reduce their hours of work, compared to men.

That said, some caregivers may shoulder a costly burden, which can affect their income throughout their lives, by reducing their labour force participation, their ability to save for retirement, and their pension contributions. As such, they may be at greater risk of falling into low income than those who did not provide care.

The federal government has introduced a number of initiatives designed to support the informal caregiving activities of Canadians. The federal tax system allocates an estimated $70 million per year to caregivers via the caregiver tax credit, as well as $6 million via the infirm dependant tax credit. I think the committee may be bringing officials from the Department of Finance to talk more about the tax credits.

Through the employment insurance compassionate care program, workers receive benefits to provide care and support to a gravely ill family member. Other federal initiatives include the Canada Pension Plan general dropout provision, the veterans independence program, and the first nations and Inuit home and community care program.

At this point, I'll turn it back to Susan to talk about seniors.

[Susan Scotti]

Thanks, Deborah.

Let me give you a quick overview on some of the features of our retirement income system.

It's a retirement income system that is recognized worldwide as one of the best. Over the past 25 years, low income among seniors, including female seniors, has been significantly reduced, primarily as a result of the maturation of the Canada Pension Plan. Poverty among seniors aged 65-plus has fallen from a high of 20.8% in 1980 to 6.8% in 2003. It's quite a remarkable achievement.

Nevertheless, the incidents of low income among unattached women remain high. Consequently, a higher proportion of women receive the guaranteed income supplement, or GIS as it's known, along with old age security, OAS, as their main sources of income, compared to men. In 2003, OAS and GIS, the spouse's allowance, comprised 32% of senior women's annual incomes, compared to approximately 17% for senior men.

Of course, men and women have different life course trajectories, which lead to different retirement income needs. Women are also living longer than men, which causes them to fund retirement over longer periods of time. Because of their longevity, senior women are more likely to live alone later in life, potentially assuming overall responsibility for household financial burdens.

Due to increasing numbers of women who participate in the labour force, it is likely that future cohorts of women will be in a better financial position at retirement. However, women will continue to face unique retirement challenges, including greater life expectancy and continuing expectations to provide care, relative to men.

Turning for a few minutes to the federal programs that support senior women's income security, I'd like to briefly outline some of the features of old age security, the guaranteed income supplement, and the Canada Pension Plan.

Old age security is a residence-based pension program based on age and years of residence in Canada. It effectively recognizes the contribution made by seniors to society, regardless of whether they were doing paid or unpaid work.

Additional benefits that specifically target low-income seniors, the majority of whom are women, include the guaranteed income supplement, which is available to low-income OAS pensioners, and the allowance that is available to low-income spouses, common-law partners, or survivors between the ages of 60 and 65.

I'd also like to outline some of the key elements in the design of the Canada Pension Plan that either generally or specifically target women. The CPP is a contributory-based public pension program that includes the following provisions. It covers workers in all sectors of the economy and it is an important feature for women who tend to work in sectors with low rates of employer-sponsored pension coverage, such as business and personal services. It covers part-time and self-employed workers earning over $3,500 per year, many of whom are women, and it's a portable system, meaning it does not penalize workers who change jobs. It also provides an important provision, a child-rearing dropout provision known as the CRDO. This allows parents to exclude no-earning or low-earning periods associated with the care of a child aged seven and under, effectively increasing the value of a person's benefits. About 94% of persons who claim the CRDO are women.

The CPP also provides a general 15% dropout for periods of low earnings that can be used for periods while one is in school or providing caregiving. It also allows for credit splitting between former partners upon divorce or dissolution of a common-law union, which effectively ensures that CPP credits earned while living together are split equally.

The CPP also allows for pension sharing for spouses or common-law partners who are in receipt of a retirement pension. This allows for income to be shared between the spouses, potentially benefiting the couple for tax purposes.

The CPP also provides a survivors' pension, with women being the vast majority of recipients of this benefit, and a survivors' children's benefit, which is provided to dependent children of a deceased contributor, effectively helping to provide a surviving partner with additional income with which to raise children.

More recently, the Government of Canada increased the guaranteed income supplement for low-income seniors, the first non-inflation adjustment increase made to the GIS since 1984.

The last budget also proposed an increase to the pension income credit, and measures were introduced to provide some funding solvency relief to define the benefit pension plan sponsors under specified circumstances.

At the same time, our department continuously seeks information and best practices from other countries in order to help learn from them about measures that have been undertaken to reduce poverty among senior women. As well, we're continuously examining ways to bring more flexibility into the public pension system to reflect the varied life course trajectories of women.

This concludes our opening remarks.

We would be delighted to take your questions and to work with you on this very important issue.

[The Chair, Liberal, Judy Sgro]

Thank you very much. You've touched on many of the issues that are of concern to all of us in the committee.

I would ask Ms. Minna to take the lead.

[Maria Minna, Liberal, Beaches—East York, ON]

Thank you, Madam Chair. I have so many questions, I'm not quite sure where to start, but I'll get started and then hopefully come back to some of my other ones.

I have two kinds of questions, one that has to do with younger women, because, for me, income security starts younger. Obviously the reason we have poor seniors is because of what happened earlier--otherwise it might not have happened--and it's why we have such a large number of unattached women, seniors, who are in poverty.

You mentioned earlier the $100. I asked this of the Status of Women earlier: have you done any analysis as to the impact of dropping the young child supplement for children under six and increasing the actual taxation from 15% to 15.5% at that level, and then of course taxing the $100, because the families who are the poorest are the ones who actually end up paying more taxes on that because they're working?

Then of course there's no child care yet, because the child care agreement was cancelled.

So my question is, has there been any analysis done as to the impact of these measures on women, especially women at a certain income level?

[Deborah Tunis]

The acoustics in this room are not terrific. If I heard your questions correctly, they're about the elimination of the supplement, the taxation levels of the child care benefit and differential impacts between women and men on that, and was there a third component?

[Maria Minna, Liberal, Beaches—East York, ON]

I guess I'm looking at three pieces, the cumulative thing. I'm looking at the dropping of the supplement, the increasing of the tax brackets at the low-income level, the taxing of the $100 in the hands of the recipient when most people at the $35,000 level are actually working, and the elimination of the child care program.

Has there been an impact study on this? My analysis shows me that they're actually losing, not gaining, in that whole arrangement. I'm talking about young women, young mothers, who are going to be the poor seniors.

[Deborah Tunis]

In terms of folding the supplement into the universal child care benefit, for most of the mothers, because the supplement goes until age seven and the universal child care benefit is for children under the age of six, in terms of this, there is a transition year. So families this year, who have that child, are being protected.

For most families, the benefit is more generous than the supplement was. Under the supplement, they were getting about $250, about $20 a month. Under the benefit, they will be getting $100 a month, or $1,200 a year. So almost all families do benefit, except those few families who have children between the ages of six and seven, who are protected for this transition year.

[Maria Minna, Liberal, Beaches—East York, ON]

My question, though, was broader than that.

My question was, given that the $100 is taxed, they don't get the full $1,200, and it's taxed in the hands of the person who is working. So if you are a single mom making $25,000, you're going to pay taxes on that $1,200, as opposed to somebody else who won't pay taxes, who's not making that money. So they're not getting the full benefit.

[Deborah Tunis]

The benefit is taxable in the hands of the spouse with the lower income. The benefit is generally going to go--

[Maria Minna, Liberal, Beaches—East York, ON]

But my question was, have you done an impact evaluation of all these elements on the family? I guess that's what I'm asking. Has there been an evaluation done?

[Deborah Tunis]

We've certainly done analysis in terms of how many people the benefit is going to and what the distribution is in terms of family types, in terms of different income ranges and different family status, in terms of one earner or two earners, all of that.

It doesn't appear that there's a particular differential impact on women in terms of introducing this benefit.

[Maria Minna, Liberal, Beaches—East York, ON]

I guess we can go back and forth on this one, because I've read some of the studies done by the Caledon Institute and others that actually show the opposite.

If we're going to have a benefit, it should benefit all, especially low-income Canadians, but it doesn't. The $1,200 does not benefit 100%.

Can I move on to something else for a second? I'd like to deal with seniors.

One of the recommendations that the National Advisory Council on Aging made with respect to seniors was that the federal government allow seniors to earn an income of 10% of the benefit received through the old age security program before reducing the guaranteed income supplement and the allowance. Do you know if there is any discussion of that in the system at this time?

[Susan Scotti]

There already is an earnings exemption in the OAS.

[Maria Minna, Liberal, Beaches—East York, ON]

What is the percentage now?

[Susan Scotti]

It's 20% or $500 of earnings.

I would ask Mr. Bloom to respond as well.

[Mitch Bloom, Director General, Seniors and Pensions Policy Secretariat, Department of Social Development]

The challenge, of course, is that people's GIS is variable, based on their incomes. Not everybody gets the maximum GIS. But indeed, within the plan, there already is up to $500 of earnings exemption, as Madam Scotti mentioned. At the end of the day, the actual percentage will depend on the individual, but it's already there.

[Maria Minna, Liberal, Beaches—East York, ON]

I understand, but given the poverty, especially with unattached women, would you see that percentage being increased? Is there any discussion about increasing that?

[Susan Scotti]

Studies are always under way about how we might be able to improve what we have right now. I think the Ianno task force report recommended an increase of about $4,000 to the exemption.

There is work under way, but it's work and a study that are under way.

[Mitch Bloom]

This is certainly worth mentioning. I find it interesting that there aren't a lot of seniors on GIS who have earned income. We have looked at that, and the numbers are small. That's not surprising. These are low-income seniors over the age of 65, so there aren't many who are working.

[Maria Minna, Liberal, Beaches—East York, ON]

I'll be brief. On the dropout on CPP, have there been any studies to see how much it would cost and whether it's feasible to have a dropout for caregivers? We were talking about all the women who are having to take time for child rearing.

[Mitch Bloom]

Maybe I'll answer that one as well.

Yes, of course. We've always looked at that. We study the dropouts, both the 15% general dropout and the child rearing dropout, to see the impact they're having on Canadians and to see whether they're covering off periods where people have lower reduced earnings--for whatever reason. The work we've done has indicated that we haven't yet seen--and it doesn't mean it's not there, it's just that we haven't seen it in our data yet--evidence that there are periods of dropped out earnings due to caregiving or other reasons that aren't picked up under the existing 15% general dropout.

So certainly, we're interested in any data or information we can find on that. I myself have spoken with experts outside of government on this question, seeking the same kind of information. While we don't know, it looks like the trend is probably more that either it's a very small period of reduced earnings or they're actually working and doing caregiving at the same time.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Ms. Mourani.

[Maria Mourani, Bloc, Ahuntsic, QC]

Good morning, everyone, and thank you for your presentation.

There are a number of things I want to clarify. Earlier, you said that our system is the best in the world. I want to understand a bit better. Compared to all the other industrialized countries, or compared to an equal country, more or less, is our system the best because it is the most generous? What is it about the system?

Furthermore, I understood that poverty among senior women was dropping. How do you assess the poverty line? How many people currently are still not receiving the Guaranteed Income Supplement?

I am asking several questions at once.

Do you think, if we take a long-term approach, for example 20 or 50 years, let's say 20 years, that we can expect a continued drop in poverty, or an increase in poverty? How do you see the future in this regard?