Mr. Speaker, it is my delight to enter into the debate on Bill C-490, which proposes some amendments to the Old Age Security Act.
I have thought long and hard about income for seniors after they are no longer gainfully employed. One of the questions I have always asked is, should a retiree's income be totally as a result of savings and investments the individual has made over his or her lifetime, or should it be totally paid for by the taxpayers in a current regime and money that is collected by taxation is transferred to the seniors of the day, or should it be some combination thereof?
I am quite convinced, in having studied this over the years, that we need to have a combination. We have to have a regime in which, through tax measures and other government initiatives, people are encouraged to save a certain amount for their own retirement income.
I used to teach math and finance at the Northern Alberta Institute of Technology, but I also taught exponentials. Those were the wonderful days when we went from slide rules to calculators and we could do these fancy computations. I remember one time challenging my students, who were then in their late teens or early twenties, that they should consider putting money away at that age for their retirement. I gave them a problem to solve. I will shorten the situation here, but at that time, a pack of cigarettes cost about five bucks and I told them to put away the equivalent of the cost of a pack of cigarettes a day over their lifetime, from age 20, when presumably a person would be starting his or her employed service, to age 65, when the person retired. At that time interest rates were really high, around 18% for mortgages and a little less for savings accounts. I said that properly invested, they could get 10% on the investment.
The students computed this. First, we had the mathematical problem and in a class of 40 students, I heard about 20 different answers after they had computed the formula. So, we first reconciled the number, and the number in the end was $1.3 million. I asked them if they knew what they had computed. I gave them the formula, and then I told them the story of the $5 per day over 45 years. It totalled $1.3 million just for saving the equivalent of the cost of a pack of cigarettes a day. Many of the students whom I meet and who remember me say, “You never smoked, did you?” I say, “No”. Then they say, “So how are you doing? Where is your $1.3 million?” I say, “I gave it to my wife.”
It is an interesting question, how we should look after the needs of seniors.
It is totally fair to say that under this government the financial position of seniors is much better than it has ever been. As my colleague previously mentioned, over the last 10 or so years, the income of seniors in this country has actually more than doubled. The OAS and the GIS, the Canada pension plan, and of course, the ability to put money away into RRSPs during one's early life and shield it from taxation until it is withdrawn are all wonderful measures that enable people to look after themselves to the degree that they can when they reach retirement age.
Of course, there is also a segment of our population which cannot or do not do this. We live in probably the best country in the whole world for people who either have not had the ability to save for their own future or have just been careless in not doing it. We have in Canada in our wonderful taxation system and our social programs the ability to provide at least a minimal income for people who have not done this.
I remember that my grandfather, who brought his family to this country in 1923, always put away a little. They were a poor family. There were 10 kids in the family. They worked very hard on the farm. Sometimes their crops were poor. They worked with animals and they had huge gardens to feed themselves.
But my grandfather always put a certain amount of money away and I remember my dad saying, talking about his dad, “My dad wasn't all that smart”. I asked, “How's that?” He said, “He always saved his money instead of spending it on meeting the needs of his family. He looked ahead and he planned for saving. Then when he finally did retire, lo and behold, he was ineligible for some of the social programs of the day because he had too much income. If only he would have done, as all the other equally poor neighbours in Saskatchewan did where we grew up, and like all of the other neighbours did and spent the money that the family needed. Some of them even went on vacation with their extra money, they did not save it. When they retired, they had such a low retirement income that they were eligible for the supplement”.
Therefore, I think that is another issue that needs to be addressed. I do not think that we should punish people who plan for their own retirement.
Nevertheless, I must speak a little about Bill C-490. This is a bill which takes certain measures to increase the amount of income that seniors would be eligible for and other measures. I would like to speak briefly about a few of those things.
First, it must be recognized that our government has taken some substantial measures to improve the lot of seniors. Not only have we increased the amount of pension, both the Old Age Security and the GIS that people are eligible for, we have followed the same formula as was done by governments previous to ours and in some cases we have enhanced it.
There is one which is not often mentioned when we talk about people's financial well-being. In this country, everybody, seniors and those still in the workforce alike, have seen huge decreases in the amount of their taxation. They have more disposable income, seniors included, especially because of the fact that the rates of taxation have gone done and the thresholds have gone down.
I think members will remember very well in the fall of 2007 when in our economic statement the finance minister announced that he was increasing the basic amount by $1,000 from $8,600 to $9,600. That means another $1,000 that everybody, including seniors, can earn before they pay any tax at all. If the income of a senior is based simply on some investment income or on some income from pensions and so on, and if that amount is relatively small, percentage wise that is a huge decrease in tax payable and similarly then, a considerable increase in the amount of money that is available at their disposal.
The economic statement went on to predict and to announce, and our government will do this, on January 1, 2009, just a scant seven months away or thereabouts, that the basic exemption is going to go up again to $10,100. When we increase that amount, that is a very significant percentage increase in disposable income for seniors.
Of course, we have not even talked about the reduction of the GST from 7%, to 6%, to 5%, which again, not only seniors but everybody who is earning wages and earning income, has the ability to pay.
Therefore, I think of Bill C-490 and I see that the measures in it are certainly well intentioned, but I believe that we must as a government look at the big picture. The idea of retroactivity for seniors who did not apply is a fine idea, if we want to do that to make people feel good, but as a government we also have to be fiscally responsible and the cost of that is estimated to be close to $6 billion, which could throw a serious wrench into our economic works.
In conclusion, we cannot support this bill because of that and other measures that are included in it. One thing that our government has done with respect to notice is if in the income tax system we recognize that individuals, when they file their income tax, if they are eligible, we send them a notice so they can apply and receive what they are entitled to.